Exhibit 10.1
CREDIT AGREEMENT
DATED AS OF OCTOBER 15, 2003
AMONG
THE ARISTOTLE CORPORATION,
THE LENDERS,
BANK ONE, NA
AS AGENT,
AND AS LC ISSUER
AND
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER
TABLE OF CONTENTS
Note: Article VII needs to be edited each time table is
generated.
Page
Article I DEFINITIONS 1
Article II THE CREDITS 21
2.1.Commitment 21
2.2.Mandatory Prepayments; Amortization of Acquisition
Overadvances; Required Payment upon Termination. 21
2.3.Ratable Loans 22
2.4.Types of Advances 22
2.5.Commitment Fee; Reductions in Aggregate Commitment 22
2.6.Minimum Amount of Each Advance 22
2.7.Optional Principal Payments 23
2.8.Method of Selecting Types and Interest Periods for New
Advances 23
2.9.Conversion and Continuation of Outstanding Advances 23
2.10. Changes in Interest Rate, etc. 24
2.11. Rates Applicable After Default 24
2.12. Method of Payment 25
2.13. Notes 25
2.14. Telephonic Notices 25
2.15. Interest Payment Dates; Interest and Fee Basis 25
2.16. Notification of Advances, Etc. 26
2.17. [INTENTIONALLY OMITTED] 26
2.18. Non-Receipt of Funds by the Agent 26
2.19. Facility LCs. 27
2.20. Replacement of Lender 30
2.21. Increase of Aggregate Commitment. 31
Article III YIELD PROTECTION; TAXES 32
3.1.Yield Protection 32
3.2.Changes in Capital Adequacy Regulations 33
3.3.Availability of Types of Advances 33
3.4.Funding Indemnification 33
3.5.Taxes. 34
3.6.Lender Statements; Survival of Indemnity 35
Article IV CONDITIONS PRECEDENT 36
4.1.Initial Credit Extension 36
4.2.Each Credit Extension 38
Article V REPRESENTATIONS AND WARRANTIES 39
5.1.Existence and Standing 39
5.2.Authorization and Validity 39
5.3.No Conflict; Government Consent 40
5.4.Financial Statements 40
5.5.Material Adverse Change 40
5.6.Taxes 40
5.7.Litigation and Contingent Obligations 41
5.8.Subsidiaries 41
5.9.ERISA 41
5.10. Accuracy of Information 41
5.11. Regulation U 41
5.12. Material Agreements 41
5.13. Compliance With Laws 42
5.14. Ownership of Properties 42
5.15. Plan Assets; Prohibited Transactions 42
5.16. Environmental Matters 42
5.17. Investment Company Act 42
5.18. Public Utility Holding Company Act 43
5.19. Reportable Transaction 43
5.20. Insurance 43
Article VI COVENANTS 43
6.1.Financial Reporting 43
6.2.Use of Proceeds 45
6.3.Notice of Default 45
6.4.Conduct of Business 45
6.5.Taxes 46
6.6.Insurance 46
6.7.Compliance with Laws 46
6.8.Maintenance of Properties 46
6.9.Inspection 46
6.10. Dividends 46
6.11. Indebtedness 47
6.12. Merger 47
6.13. Sale of Assets 47
6.14. Investments and Acquisitions 47
6.15. Liens 48
6.16. Rentals 49
6.17. Affiliates 49
6.18. [INTENTIONALLY OMITTED.] 49
6.19. Operating Leases 49
6.20. Sale of Accounts 50
6.21. Sale and Leaseback Transactions 50
6.22. Contingent Obligations 50
6.23. Letters of Credit 50
6.24. Additional Guarantors and Collateral; Further Assurances.
50
6.25. Financial Covenants. 51
Article VII DEFAULTS 51
Article VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 55
8.1.Acceleration; Facility LC Collateral Account. 55
8.2.Amendments 56
8.3.Preservation of Rights 57
Article IX GENERAL PROVISIONS 57
9.1.Survival of Representations 57
9.2.Governmental Regulation 57
9.3.Headings 57
9.4.Entire Agreement 57
9.5.Several Obligations; Benefits of this Agreement 58
9.6.Expenses; Indemnification 58
9.7.Numbers of Documents 59
9.8.Accounting 59
9.9.Severability of Provisions 59
9.10. Nonliability of Lenders 59
9.11. Confidentiality 60
9.12. Nonreliance 60
9.13. Disclosure 60
Article X THE AGENT 61
10.1. Appointment; Nature of Relationship 61
10.2. Powers 61
10.3. General Immunity 61
10.4. No Responsibility for Loans, Recitals, etc. 61
10.5. Action on Instructions of Lenders 62
10.6. Employment of Agents and Counsel 62
10.7. Reliance on Documents; Counsel 62
10.8. Agent's Reimbursement and Indemnification 63
10.9. Notice of Default 63
10.10.Rights as a Lender 63
10.11.Lender Credit Decision 63
10.12.Successor Agent 64
10.13.Agent and Arranger Fees 64
10.14.Delegation to Affiliates 65
10.15.Execution of Collateral Documents 65
10.16.Collateral Releases 65
Article XI SETOFF; RATABLE PAYMENTS 65
11.1. Setoff 65
11.2. Ratable Payments 65
Article XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 66
12.1. Successors and Assigns 66
12.2. Participations. 66
12.3. Assignments. 67
12.4. Dissemination of Information 69
12.5. Tax Treatment 69
Article XIII NOTICES 69
13.1. Notices; Effectiveness; Electronic Communication 69
Article XIV COUNTERPARTS 70
Article XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL 71
15.1. CHOICE OF LAW 71
15.2. CONSENT TO JURISDICTION 71
15.3. WAIVER OF JURY TRIAL 71
EXHIBITS:
EXHIBITS A-1 - A-5 FORMS OF OPINIONS OF COUNSEL TO BORROWERS AND
OTHER LOAN PARTIES
EXHIBIT B FORM OF COMPLIANCE CERTIFICATE
EXHIBIT C FORM OF ASSIGNMENT AGREEMENT
EXHIBIT D FORM OF MONEY TRANSFER INSTRUCTIONS
EXHIBIT E FORM OF NOTE
EXHIBIT F FORM OF BORROWING BASE CERTIFICATE
SCHEDULES:
PRICING SCHEDULE
SCHEDULE 5.8 SUBSIDIARIES AND OTHER INVESTMENTS
SCHEDULE 5.14A INDEBTEDNESS AND LIENS
SCHEDULE 5.14B ELIGIBLE EQUIPMENT AND ELIGIBLE REAL ESTATE
CREDIT AGREEMENT
This Agreement, dated as of October 15, 2003, is among The
Aristotle Corporation, a Delaware corporation, the Lenders and
Bank One, NA, a national banking association having its principal
office in Chicago, Illinois, as LC Issuer and as Agent. The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Account" shall have the meaning given to such term in the
applicable Security Agreement.
"Account Debtor" means any Person obligated on an Account.
"Acquisition" means any transaction, or any series of
related transactions, consummated on or after the date of this
Agreement, by which the Borrower or any Guarantor (i) acquires
any going business or all or substantially all of the assets of
any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise
or (ii) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least
a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason
of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a
partnership or limited liability company.
"Acquisition Overadvance" means a Revolving Loan made to
finance a Permitted Acquisition to the extent that the amount of
such Revolving Loan, at the time when made, when added to all
other Aggregate Outstanding Credit Exposure at such time, exceeds
the Borrowing Base; provided that the outstanding amount of all
Acquisition Overadvances at any time (taking into account
required amortization of Acquisition Overadvances pursuant to
Section 2.2(iv) hereof) may not exceed $10,000,000.
"Advance" means a borrowing hereunder, (i) made by the
Lenders on the same Borrowing Date, or (ii) converted or
continued by the Lenders on the same date of conversion or
continuation, consisting, in either case, of the aggregate amount
of the several Loans of the same Type and, in the case of
Eurodollar Loans, for the same Interest Period.
"AEP" means American Educational Products, LLC, a Colorado
limited liability company.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control
with such Person. A Person shall be deemed to control another
Person if the controlling Person owns 10% or more of any class of
voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of
the controlled Person, whether through ownership of stock, by
contract or otherwise.
"Agent" means Bank One in its capacity as contractual
representative of the Lenders pursuant to Article X, and not in
its individual capacity as a Lender, and any successor Agent
appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the
Commitments of all the Lenders, as increased or reduced from time
to time pursuant to the terms hereof. The initial Aggregate
Commitment is $45,000,000.
"Aggregate Outstanding Credit Exposure" means, at any time,
the aggregate of the Outstanding Credit Exposure of all the
Lenders.
"Agreement" means this credit agreement, as it may be
amended or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in
a manner consistent with that used in preparing the financial
statements referred to in Section 5.4, but in any event without
giving effect to the provisions of Financial Accounting Standards
Board Statement No. 133.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (i) the Prime Rate for such day
and (ii) the sum of the Federal Funds Effective Rate for such day
plus 1/2% per annum.
"Applicable Fee Rate" means, at any time, the percentage
rate per annum at which (x) the commitment fee is accruing on the
Available Aggregate Commitment at such time or (y) the LC Fee is
accruing on standby Facility LCs at such time pursuant to Section
2.19.4, as the context may require, and in each case as set forth
in the Pricing Schedule.
"Applicable Margin" means, with respect to Advances of any
Type at any time, the percentage rate per annum which is
applicable at such time with respect to Advances of such Type as
set forth in the Pricing Schedule.
"Approved Fund" means any Fund that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a
Lender.
"Arranger" means Banc One Capital Markets, Inc., a Delaware
corporation, and its successors, in its capacity as Lead Arranger
and Sole Book Runner.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"ARTL" means ARTL, LLC, a Delaware limited liability
company.
"Authorized Officer" means any of the President, the Chief
Financial Officer, or any Vice President of the Borrower, acting
singly.
"Available Aggregate Commitment" means, at any time, the
Aggregate Commitment then in effect minus the Aggregate
Outstanding Credit Exposure at such time.
"Availability" means, at any time, an amount equal to the
lesser of (a) the Aggregate Commitment and (b) sum of the
Borrowing Base and the outstanding amount of all Acquisition
Overadvances, in each case, minus the Aggregate Outstanding
Credit Exposure.
"Bank One" means Bank One, NA, a national banking
association having its principal office in Chicago, Illinois, in
its individual capacity, and its successors.
"Borrower" means The Aristotle Corporation, a Delaware
corporation, and its successors and assigns.
"Borrower Security Agreement" means the Pledge and Security
Agreement of even date herewith between the Borrower and the
Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Borrowing Base" means, at any time, the sum of (a) 80% (or,
from May 31 through October 30 of each year, 85%) of the Eligible
Accounts of the Loan Parties at such time, plus (b) 50% (or, from
May 31 through October 30 of each year, 60%) of the Eligible
Inventory of the Loan Parties, valued at the lower of cost or
market value, determined on a first-in-first-out basis, at such
time, plus (c) 50% of the net book value of Existing Eligible
Equipment, subject to reduction monthly as if such value was
amortized evenly on a sixty-month basis beginning on the date of
this Agreement, plus (d) 80% of the net invoice price of New
Eligible Equipment, subject to reduction monthly as if such value
was amortized evenly on a sixty-month basis beginning on the date
of invoice, plus (e) 80% of the fair market value (established
pursuant to an appraisal current as of the date of this Agreement
and reasonably satisfactory to the Agent) of Eligible Real
Estate, subject to reduction monthly as if such value were
amortized evenly on a 240-month basis beginning on the date of
this Agreement; provided that the sum of the values of Spectrum's
Eligible Accounts, Eligible Inventory, Existing Eligible
Equipment and New Eligible Equipment included in the Borrowing
Base shall at no time exceed the outstanding principal balance of
the Spectrum Note.
"Borrowing Base Certificate" means a certificate, signed by
an Authorized Officer of the Borrower, in the form of Exhibit F
or another form which is acceptable to the Agent in its sole
discretion.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York City for the conduct of substantially all of
their commercial lending activities, interbank wire transfers can
be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.
"Canadian Included Subsidiaries" means Spectrum, SREH and
each other Included Subsidiary organized under the laws of a
Province of Canada.
"Capital Stock" means any and all corporate stock (including
any common stock or preferred stock), units, shares, partnership
interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (howsoever
designated) issued by any Person, or any warrant or option to
acquire any of the foregoing issued by any Person.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term
obligations of, or fully guaranteed by, the United States of
America, (ii) commercial paper rated A-1 or better by S&P or P-1
or better by Moody's, (iii) demand deposit accounts maintained in
the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether
domestic or foreign) having capital and surplus in excess of
$100,000,000; provided in each case that the same provides for
payment of both principal and interest (and not principal alone
or interest alone) and is not subject to any contingency
regarding the payment of principal or interest.
"Change in Control" means (i) the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or
more of the outstanding shares of voting stock of the Borrower;
or (ii) Geneve Corporation and its Subsidiaries shall cease to
own, free and clear of all Liens or other encumbrances,
collectively, at least 70% of the outstanding shares of voting
stock of the Borrower on a fully diluted basis; or (iii) Geneve
Holdings shall cease to own, directly or indirectly, free and
clear of all Liens or other encumbrances, at least 70% of the
outstanding shares of voting stock of each of Geneve Corporation
and NASCO Holdings on a fully diluted basis; or (iv) Mr. Edward
Netter and his family (including trusts for the benefit of Mr.
Netter and his family) shall cease to own, free and clear of all
Liens or other encumbrances, at least 50% of the outstanding
shares of voting stock of Geneve Holdings on a fully diluted
basis.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral" means any and all Property covered by the
Collateral Documents and any and all other Property of any Loan
Party, now existing or hereafter acquired, that may at any time
be or become directly or indirectly subject to a security
interest or Lien in favor of Agent, on behalf of itself and the
Lenders, to secure the Secured Obligations.
"Collateral Access Agreement" means any landlord waiver,
mortgagee waiver or other agreement, in form and substance
satisfactory to the Agent, between the Agent and any third party
(including any bailee, consignee, customs broker, or other
similar Person) in possession of any Collateral or any landlord
or mortgagee for any real Property where any Collateral is
located, as such landlord waiver, mortgagee waiver or other
agreement may be amended, restated, or otherwise modified from
time to time.
"Collateral Documents" means, collectively, the Security
Agreements and the Mortgages.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Commitment" means, for each Lender, the obligation of such
Lender to make Revolving Loans to, and participate in Facility
LCs issued upon the application of, the Borrower in an aggregate
amount not exceeding the amount set forth opposite its signature
below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 12.3.2,
as such amount may be modified from time to time pursuant to the
terms hereof.
"Consolidated EBITDA" means Consolidated Net Income plus,
(A) to the extent deducted from revenues in determining
Consolidated Net Income, (i) Consolidated Interest Expense, (ii)
expense for taxes paid or accrued, (iii) depreciation, (iv)
amortization and (v) extraordinary losses incurred other than in
the ordinary course of business, minus, (B) to the extent
included in Consolidated Net Income, extraordinary gains realized
other than in the ordinary course of business.
"Consolidated Funded Indebtedness" means at any time the
aggregate dollar amount of Consolidated Indebtedness which has
actually been funded and is outstanding at such time, whether or
not such amount is due or payable at such time.
"Consolidated Indebtedness" means at any time the
Indebtedness of the Borrower and its Included Subsidiaries
calculated on a consolidated basis as of such time.
"Consolidated Interest Expense" means, with reference to any
period, the interest expense of the Borrower and its Included
Subsidiaries calculated on a consolidated basis for such period.
"Consolidated Net Income" means, with reference to any
period, the net income (or loss) of the Borrower and its Included
Subsidiaries calculated on a consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated
stockholders' equity of the Borrower and its Included
Subsidiaries calculated on a consolidated basis as of such time.
"Consolidated Tangible Net Worth" means Consolidated Net
Worth, minus Intangibles.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as general partner
of a partnership with respect to the liabilities of the
partnership.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group
of corporations or other business entities and all trades or
businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Credit Extension" means the making of an Advance or the
issuance of a Facility LC hereunder.
"Credit Extension Date" means the Borrowing Date for an
Advance or the issuance date for a Facility LC.
"Default" means an event described in Article VII.
"Document" shall have the meaning given to such term in the
applicable Security Agreement.
"Eligible Accounts" means, at any time, the Accounts of any
of the Loan Parties which the Agent determines are eligible as
the basis for Credit Extensions hereunder. Without limiting the
Agent's discretion provided herein, Eligible Accounts shall not
include any Account:
(a) which is not subject to a first priority perfected
security interest in favor of the Agent;
(b) which is subject to any Lien other than (i) a Lien
in favor of the Agent and (ii) a Permitted Lien which does
not have priority over the Lien in favor of the Agent;
(c) with respect to which more than 90 days have
elapsed since the date of the original invoice therefor or
which is more than 45 days past the due date for payment;
(d) which is owing by an Account Debtor for which more
than 20% of the Accounts owing from such Account Debtor and
its Affiliates are ineligible hereunder;
(e) which is owing by an Account Debtor to the extent
the aggregate amount of Accounts owing from such Account
Debtor and its Affiliates to any Loan Party exceeds 10% of
the aggregate Eligible Accounts;
(f) with respect to which any covenant,
representation, or warranty contained in this Agreement or
in the applicable Security Agreement has been breached or is
not true;
(g) which (i) does not arise from the sale of goods or
performance of services in the ordinary course of business,
(ii) is not evidenced by an invoice or other documentation
satisfactory to the Agent which has been sent to the Account
Debtor, (iii) represents a progress billing, (iv) is
contingent upon the applicable Loan Party's completion of
any further performance, or (v) represents a sale on a bill-
and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment, cash-on-delivery or any other
repurchase or return basis;
(h) for which the goods giving rise to such Account
have not been shipped to the Account Debtor or for which the
services giving rise to such Account have not been performed
by the applicable Loan Party;
(i) with respect to which any check or other
instrument of payment has been returned uncollected for any
reason;
(j) which is owed by an Account Debtor which has (i)
applied for, suffered, or consented to the appointment of
any receiver, custodian, trustee, or liquidator of its
assets, (ii) has had possession of all or a material part of
its property taken by any receiver, custodian, trustee or
liquidator, (iii) filed, or had filed against it, any
request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state
or federal bankruptcy laws, (iv) has admitted in writing its
inability, or is generally unable to, pay its debts as they
become due, (v) become insolvent, or (vi) ceased operation
of its business;
(k) which is owed by any Account Debtor which has sold
all or a substantially all of its assets;
(l) which is owed by an Account Debtor which (i) does
not maintain its chief executive office in the U.S. or
Canada (other than the Province of Newfoundland) or (ii) is
not organized under applicable law of the U.S., any state of
the U.S., Canada, or any province of Canada (other than the
Province of Newfoundland) unless, in either case, such
Account is backed by a Letter of Credit acceptable to the
Agent which is in the possession of the Agent;
(m) which is owed in any currency other than U.S.
dollars (or, in the case of Accounts owed to Spectrum, U.S.
dollars or Canadian dollars);
(n) which is owed by (i) the government (or any
department, agency, public corporation, or instrumentality
thereof) of any country other than the U.S. unless such
Account is backed by a Letter of Credit acceptable to the
Agent which is in the possession of the Agent, or (ii) the
government of the U.S., or any department, agency, public
corporation, or instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C.
3727 et seq. and 41 U.S.C. 15 et seq.), and any other
steps necessary to perfect the Lien of the Agent in such
Account have been complied with to the Agent's satisfaction;
(o) which is owed by any Affiliate, employee, or
director of any Loan Party;
(p) which, for any Account Debtor, exceeds a credit
limit determined by the Agent, to the extent of such excess;
(q) which is owed by an Account Debtor or any
Affiliate of such Account Debtor to which any Loan Party is
indebted, but only to the extent of such indebtedness;
(r) which is subject to any counterclaim, deduction,
defense, setoff or dispute;
(s) which is evidenced by any promissory note, chattel
paper, or instrument;
(t) which is owed by an Account Debtor located in any
jurisdiction which requires filing of a "Notice of Business
Activities Report" or other similar report in order to
permit the applicable Loan Party to seek judicial
enforcement in such jurisdiction of payment of such Account,
unless the applicable Loan Party has filed such report or
qualified to do business in such jurisdiction;
(u) with respect to which any Loan Party has made any
agreement with the Account Debtor for any reduction thereof,
other than discounts and adjustments given in the ordinary
course of business; or
(v) which the Agent determines may not be paid by
reason of the Account Debtor's inability to pay or which the
Agent otherwise determines is unacceptable for any reason
whatsoever.
In the event that an Account which was previously an Eligible
Account ceases to be an Eligible Account hereunder, the Borrower
shall notify the Agent thereof (i) within three (3) Business Days
of the date any Loan Party has obtained knowledge thereof if any
such Account is in excess of $25,000 in the aggregate and (ii) on
and at the time of submission to the Agent of the next Borrowing
Base Certificate in all other cases.
"Eligible Equipment" means the machinery and equipment of a
Loan Party located at the eligible equipment locations of such
Loan Party set forth on Schedule 5.14B so long as (a) Agent holds
a valid and effective first priority Lien in such machinery and
equipment pursuant to a Security Agreement, subject only to Liens
permitted pursuant to such Security Agreement, and (b) no
covenant, representation, or warranty with respect to such
machinery and equipment contained in this Agreement or the
applicable Security Agreement has been breached or is not true.
"Existing Eligible Equipment" means Eligible Equipment that
exists and is owned by a Loan Party as of the date of this
Agreement, and "New Eligible Equipment" means Eligible Equipment
that is acquired by a Loan Party after the date of this
Agreement.
"Eligible Inventory" means, at any time, the Inventory of
any of the Loan Parties which the Agent determines is eligible as
the basis for Credit Extensions hereunder. Without limiting the
Agent's discretion provided herein, Eligible Inventory shall not
include any Inventory:
(a) which is not subject to a first priority perfected
Lien in favor of the Agent;
(b) which is subject to any Lien other than (i) a Lien
in favor of the Agent and (ii) a Permitted Lien which does
not have priority over the Lien in favor of the Agent;
(c) which is, in the Agent's opinion, slow moving,
obsolete, unmerchantable, defective, unfit for sale, not
salable at prices approximating at least the cost of such
Inventory in the ordinary course of business or unacceptable
due to age, type, category and/or quantity;
(d) with respect to which any covenant,
representation, or warranty contained in this Agreement or
the applicable Security Agreement has been breached or is
not true;
(e) which does not conform to all standards imposed by
any governmental authority;
(f) which is not finished goods or which constitutes
work-in-process, raw materials spare or replacement parts,
subassemblies, packaging and shipping material,
manufacturing supplies, display items, bill-and-hold goods,
returned or repossessed goods, defective goods, goods held
on consignment, or goods which are not of a type held for
sale in the ordinary course of business;
(g) which is not located in the U.S. or the Province
of Ontario or is in transit with a common carrier from
vendors and suppliers;
(h) which is located in any location leased by the
applicable Loan Party unless the lessor has delivered to the
Agent a Collateral Access Agreement;
(i) which is located in any third party warehouse or
is in the possession of a bailee and is not evidenced by a
Document, unless such warehouseman or bailee has delivered
to the Agent a Collateral Access Agreement and such other
documentation as the Agent may require;
(j) which is the subject of a consignment by any Loan
Party as consignor;
(k) which is perishable;
(l) which contains or bears any Intellectual Property
Rights licensed to the applicable Loan Party unless the
Agent is satisfied that it may sell or otherwise dispose of
such Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of
royalties other than royalties incurred pursuant to sale of
such Inventory under the current licensing agreement;
(m) which is not reflected in a current perpetual
inventory report of the applicable Loan Party; or
(n) which the Agent otherwise determines is
unacceptable for any reason whatsoever.
"Eligible Real Estate" means the real Property of a Loan
Party at the eligible real estate locations of such Loan Party
set forth on Schedule 5.14B so long as (a) Agent holds a valid
and effective first priority Lien in such real Property pursuant
to a Mortgage, subject only Liens permitted pursuant to such
Mortgage, and (b) no covenant, representation, or warranty with
respect to such real Property contained in this Agreement or the
applicable Mortgage has been breached or is not true.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits, concessions, grants, franchises, licenses,
agreements and other governmental restrictions relating to (i)
the protection of the environment, (ii) the effect of the
environment on human health, (iii) emissions, discharges or
releases of pollutants, contaminants, hazardous substances or
wastes into surface water, ground water or land, or (iv) the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation
issued thereunder.
"Eurodollar Advance" means an Advance which, except as
otherwise provided in Section 2.11, bears interest at the
applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable British
Bankers' Association LIBOR rate for deposits in U.S. dollars as
reported by any generally recognized financial information
service as of 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period, and having a maturity
equal to such Interest Period, provided that, if no such British
Bankers' Association LIBOR rate is available to the Agent, the
applicable Eurodollar Base Rate for the relevant Interest Period
shall instead be the rate determined by the Agent to be the rate
at which Bank One or one of its Affiliate banks offers to place
deposits in U.S. dollars with first-class banks in the interbank
market at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, in the
approximate amount of Bank One's relevant Eurodollar Loan and
having a maturity equal to such Interest Period.
"Eurodollar Loan" means a Loan which, except as otherwise
provided in Section 2.11, bears interest at the applicable
Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the sum of (i) the
quotient of (a) the Eurodollar Base Rate applicable to such
Interest Period, divided by (b) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin (which may change during such Interest
Period pursuant to the Pricing Schedule).
"Excluded Subsidiaries" means Simulaids, Inc., NHI, ARTL and
S-A Subsidiary, Inc. and any Subsidiary hereafter created or
acquired for the sole purpose of continuing the business carried
out on the date hereof by Simulaids, Inc., NHI, ARTL or S-A
Subsidiary, Inc. or for the sole purpose of carrying on a
business other than that of the Borrower or an Included
Subsidiary.
"Excluded Taxes" means, in the case of each Lender or
applicable Lending Installation and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it, by (i)
the jurisdiction under the laws of which such Lender or the Agent
is incorporated or organized or (ii) the jurisdiction in which
the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless
another document is specifically referenced.
"Facility LC" is defined in Section 2.19.1.
"Facility LC Application" is defined in Section 2.19.3.
"Facility LC Collateral Account" is defined in Section
2.19.11.
"Facility Termination Date" means October 15, 2008.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the
quotations at approximately 10:00 a.m. (Chicago time) on such day
on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its
sole discretion.
"Floating Rate" means, for any day, a rate per annum equal
to (i) the Alternate Base Rate for such day plus (ii) the
Applicable Margin, in each case changing when and as the
Alternate Base Rate changes and when and as the Applicable Margin
changes.
"Floating Rate Advance" means an Advance which, except as
otherwise provided in Section 2.11, bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise
provided in Section 2.11, bears interest at the Floating Rate.
"Fund" means any Person (other than a natural person) that
is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.
"Geneve Corporation" means Geneve Corporation, a Delaware
corporation.
"Geneve Holdings" means Geneve Holdings, Inc., a Delaware
corporation.
"Guarantors" means Triarco, AEP, Haan Crafts, Hubbard, Nasco
Exports, Scott and any Person that shall become subject to a
Guaranty after the date hereof, and each of their respective
successors and assigns, and "Guarantor" means one of the
Guarantors.
"Guarantor Security Agreement" means the Pledge and Security
Agreement of even date herewith among Triarco, AEP, Haan Crafts,
Nasco Exports, Scott, Hubbard and the Agent, as the same may
hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Guaranty" means that certain Guaranty of even date herewith
executed by Triarco, AEP, Haan Crafts, Nasco Exports, Scott and
Hubbard in favor of the Agent, for the ratable benefit of the
Lenders, as it may be amended, restated, supplemented or
otherwise modified and in effect from time to time.
"Haan Crafts" means Haan Crafts, LLC, an Indiana limited
liability company.
"Hubbard" means Hubbard Scientific, LLC, a Colorado limited
liability company.
"Included Subsidiaries" means Triarco, AEP, Haan Crafts,
Hubbard, Nasco Exports, Scott, SREH and Spectrum, as well as each
other of the Borrower's Subsidiaries, whether now existing or
hereafter created or acquired, that carries out business
activities that are the same as, or substantially similar,
related or incidental to, that of the Borrower, Triarco, AEP,
Haan Crafts, Hubbard, Nasco Exports, Scott, SREH or Spectrum;
provided, however, that Included Subsidiaries shall not include
Subsidiaries created or acquired after the date hereof by any
Excluded Subsidiaries.
"Indebtedness" of a Person means, without duplication, such
Person's (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of Property or services
(other than accounts payable arising in the ordinary course of
such Person's business payable on terms customary in the trade),
(iii) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments,
(v) obligations of such Person to purchase securities or other
Property arising out of or in connection with the sale of the
same or substantially similar securities or Property, (vi)
Capitalized Lease Obligations, (vii) Contingent Obligations,
(viii) obligations in respect of Letters of Credit and (ix) any
other obligation for borrowed money or other financial
accommodation which in accordance with Agreement Accounting
Principles would be shown as a liability on the consolidated
balance sheet of such Person.
"Intangibles" means, as of any date, all of the intangible
assets of a Person including, without limitation, (a) any surplus
resulting from any write-up of assets subsequent to the date of
this Agreement; (b) deferred assets, other than prepaid insurance
and prepaid taxes; (c) Intellectual Property Rights, non-compete
agreements, franchises and other similar intangibles; (d)
goodwill, including any amounts, however designated on a balance
sheet, representing the excess of the purchase price paid for
assets or stock over the value assigned thereto on the books of
such Person; (e) Investments in Affiliates; (f) unamortized debt
discount and expense; and (g) Accounts, notes and other
receivables due from Affiliates or employees, all as determined
for the Borrower and its Included Subsidiaries on a consolidated
basis as of such date.
"Intellectual Property Rights" means, with respect to any
Person, all of such Person's patents, copyrights, trademarks and
licenses, all applications or registrations for any of the
foregoing, all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing, and all rights to
sue for past, present, and future infringement of any of the
foregoing.
"Intellectual Property Security Agreement" means any
security agreement executed and delivered by the Borrower or any
other Loan Party granting a security interest in Intellectual
Property Rights and intended for filing or recording with the
U.S. Patent and Trademark Office, the U.S. Copyright Office or a
comparable office in a foreign jurisdiction.
"Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on
a Business Day selected by the Borrower pursuant to this
Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six
months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding
month. If an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such
Interest Period shall end on the immediately preceding Business
Day.
"Inventory" has the meaning specified in the applicable
Security Agreement.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees
made in the ordinary course of business), extension of credit
(other than accounts receivable arising in the ordinary course of
business on terms customary in the trade) or contribution of
capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by
such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by
such Person.
"LC Fee" is defined in Section 2.19.4.
"LC Issuer" means Bank One (or any subsidiary or affiliate
of Bank One designated by Bank One) in its capacity as issuer of
Facility LCs hereunder.
"LC Obligations" means, at any time, the sum, without
duplication, of (i) the aggregate undrawn stated amount under all
Facility LCs outstanding at such time plus (ii) the aggregate
unpaid amount at such time of all Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.19.5.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or
the Agent, the office, branch, subsidiary or affiliate of such
Lender or the Agent listed on the signature pages hereof or
otherwise selected by such Lender or the Agent and designated in
written notice to the Agent and the Borrower.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the
ratio of (i) Consolidated Funded Indebtedness outstanding on such
date to (ii) Consolidated EBITDA for the Borrower's then most-
recently ended four fiscal quarters; provided, that in
calculating Consolidated EBITDA for purposes of this clause (ii)
the Consolidated EBITDA of any Person acquired by the Borrower
during such four fiscal quarters shall, unless such acquired
Person is or is to become an Excluded Subsidiary, be included for
the entire four fiscal quarter period as if such Person had been
acquired on the first day of such period.
"Lien" means any lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other
title retention agreement).
"Loan" means a Revolving Loan.
"Loan Documents" means this Agreement, the Notes, the
Spectrum Note, the Collateral Documents, the Guaranty and the
Facility LC Applications.
"Loan Parties" means the Borrower, the Guarantors and
Spectrum.
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, condition (financial or otherwise),
results of operations, or prospects of the Borrower, or of the
Borrower and its Subsidiaries taken as a whole, (ii) the ability
of the Borrower or any Loan Party to perform its obligations
under the Loan Documents to which it is a party, or (iii) the
validity or enforceability of any of the Loan Documents or the
rights or remedies of the Agent, the LC Issuer or the Lenders
thereunder.
"Material Indebtedness" means Indebtedness in an outstanding
principal amount of $500,000 or more in the aggregate (or the
equivalent thereof in any currency other than U.S. dollars).
"Material Indebtedness Agreement" means any agreement under
which any Material Indebtedness was created or is governed or
which provides for the incurrence of Indebtedness in an amount
which would constitute Material Indebtedness (whether or not an
amount of Indebtedness constituting Material Indebtedness is
outstanding thereunder).
"Modify" and "Modification" are defined in Section 2.19.1.
"Moody's" means Moody's Investors Service, Inc.
"Mortgages" means, collectively, each Mortgage and Deed of
Trust of even date herewith given by a Loan Party pursuant to
which such Person grants to the Agent a mortgage upon the
Eligible Real Estate owned by such Person, as any of the same may
be amended, restated, supplemented or otherwise modified from
time to time, and "Mortgage" means one of the Mortgages.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which
the Borrower or any member of the Controlled Group is a party to
which more than one employer is obligated to make contributions.
"Nasco Exports" means Nasco Exports, Inc., a Wisconsin
corporation.
"NASCO Holdings" means NASCO Holdings, Inc., a Wisconsin
corporation.
"Net Cash Proceeds" means, if in connection with (a) an
asset disposition, cash proceeds net of (i) commissions and other
reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by such
Included Subsidiary in connection therewith (in each case, paid
to non-Affiliates), (ii) transfer taxes, (iii) amounts payable to
holders of senior Liens on such asset (to the extent such Liens
constitute Permitted Liens hereunder), if any, and (iv) an
appropriate reserve for income taxes in accordance with GAAP
established in connection therewith, (b) the issuance or
incurrence of Indebtedness, cash proceeds net of attorneys' fees,
investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses
actually incurred in connection therewith or, (c) an equity
issuance, cash proceeds net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in
connection therewith; provided, however, that Net Cash Proceeds
shall not include the first $2,500,000 of proceeds in any
calendar year of Capital Stock issued upon exercise of any of
those options, authorized as of the date hereof, for purchase of
up to approximately 1.56 million shares of the Borrower's Capital
Stock.
"NHI" means NHI, LLC, a Delaware limited liability company.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" is defined in Section 2.13.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all Reimbursement Obligations, all
accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent, the LC Issuer or any indemnified
party arising under the Loan Documents.
"Operating Lease" of a Person means any lease of Property
(other than a Capitalized Lease) by such Person as lessee which
has an original term (including any required renewals and any
renewals effective at the option of the lessor) of one year or
more.
"Operating Lease Obligations" means, as at any date of
determination, the amount obtained by aggregating the present
values, determined in the case of each particular Operating Lease
by applying a discount rate (which discount rate shall equal the
discount rate which would be applied under Agreement Accounting
Principles if such Operating Lease were a Capitalized Lease) from
the date on which each fixed lease payment is due under such
Operating Lease to such date of determination, of all fixed lease
payments due under all Operating Leases of the Borrower and its
Included Subsidiaries.
"Other Taxes" is defined in Section 3.5(ii).
"Outstanding Credit Exposure" means, as to any Lender at any
time, the sum of (i) the aggregate principal amount of its Loans
outstanding at such time, plus (ii) an amount equal to its Pro
Rata Share of the LC Obligations at such time.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each September,
December, March and June.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Permitted Acquisition" means any Acquisition in a
transaction that satisfies each of the following requirements:
(a) such Acquisition is not a hostile or contested
acquisition;
(b) the business acquired in connection with such
Acquisition is (i) located in the U.S. or Canada, (ii)
organized under applicable U.S. state laws or Canadian
provincial laws, and (iii) not engaged, directly or
indirectly, in any line of business other than the
businesses in which the Loan Parties are engaged on the date
of this Agreement and any business activities that are
substantially similar, related, or incidental thereto;
(c) both before and after giving effect to such
Acquisition and the Loans (if any) requested to be made in
connection therewith, each of the representations and
warranties in the Loan Documents is true and correct in all
material respects (except (i) any such representation or
warranty which relates to a specified prior date and (ii) to
the extent the Agent and the Lenders have been notified in
writing by the Loan Parties that any representation or
warranty is not correct and the Required Lenders have
explicitly waived in writing compliance with such
representation or warranty) and no Default exists, will
exist, or would result therefrom;
(d) as soon as available, but not less than fifteen
days prior to such Acquisition, the Borrower have provided
the Lenders (i) notice of such Acquisition and (ii) a copy
of all business and financial information reasonably
requested by the Agent including pro forma financial
statements, statements of cash flow, and Availability
projections;
(e) the Leverage Ratio, calculated as of the most
recent quarter end on a pro forma basis giving effect to
such Acquisition, shall not exceed 2.25 to 1.0 and the
Borrower shall be in compliance with each of the other
covenants set forth in Section 6.25, measured as of the most
recent quarter end on a pro forma basis giving effect to
such Acquisition;
(f) if the Accounts and Inventory acquired in
connection with such Acquisition are proposed to be included
in the determination of the Borrowing Base, the Agent shall
have had a reasonable opportunity to conduct an audit and
field examination of such Accounts and Inventory to its
satisfaction;
(g) the purchase price (i) in connection with any
single such Acquisition shall not exceed $15,000,000 and
(ii) for all such Acquisitions made during the term of this
Agreement shall not exceed $30,000,000;
(h) the aggregate outstanding Acquisition Overadvances
after giving effect to such Acquisition will not exceed
$10,000,000, and there shall have been no more than ten (10)
Acquisition Overadvances during the term of this Agreement
after giving effect to such Acquisition;
(i) if such Acquisition is an acquisition of the
Capital Stock of a Person, the Acquisition is structured so
that the Borrower or a Guarantor shall acquire equity
interests having at least 80% of the voting power in the
acquired Person and the acquired Person shall become a
Guarantor;
(j) if such Acquisition is an acquisition of assets,
the Acquisition is structured so that the Borrower or a
Guarantor shall acquire such assets;
(k) if such Acquisition is an acquisition of Capital
Stock, such Acquisition will not result in any violation of
Regulation U;
(l) no Loan Party shall, as a result of or in
connection with any such Acquisition, assume or incur any
direct or contingent liabilities (whether relating to
environmental, tax, litigation, or other matters) that could
have a Material Adverse Effect and that such Loan Party knew
or should, after standard due diligence, have known of; and
(m) in connection with an Acquisition of the Capital
Stock of any Person, all Liens on property of such Person
shall be terminated unless the Agent in its sole discretion
consents otherwise, and in connection with an Acquisition of
the assets of any Person, all Liens on such assets shall be
terminated.
"Permitted Liens" is defined in Section 6.15.
"Permitted Obligations" means obligations of the Borrower to
a Lender in respect of interest rate swap or foreign currency
exchange transactions between the Borrower and such Lender.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Borrower
or any member of the Controlled Group may have any liability.
"Preferred Funds" means funds that have been distributed to
the Borrower by Excluded Subsidiaries and set aside in a
segregated account and funds that the Borrower would, but for
their application to pay preferred dividends, have been permitted
to invest in Excluded Subsidiaries pursuant to Section 6.14(iv)
or to contribute to ARTL pursuant to Section 6.17(z).
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means a rate per annum equal to the prime rate
of interest announced from time to time by Bank One or its parent
(which is not necessarily the lowest rate charged to any
customer), changing when and as said prime rate changes.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
"Pro Rata Share" means, with respect to a Lender, a portion
equal to a fraction the numerator of which is such Lender's
Commitment and the denominator of which is the Aggregate
Commitment.
"Purchasers" is defined in Section 12.3.1.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by
banks for the purpose of purchasing or carrying margin stocks
applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the
aggregate of all obligations of the Borrower then outstanding
under Section 2.19 to reimburse the LC Issuer for amounts paid by
the LC Issuer in respect of any one or more drawings under
Facility LCs.
"Rentals" of a Person means the aggregate fixed amounts
payable by such Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure
to meet the minimum funding standard of Section 412 of the Code
and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means two or more Lenders (which Lenders
are not Affiliates, unless all Lenders are Affiliates) in the
aggregate having at least sixty six and two thirds percent (66
2/3%) of the Aggregate Commitment or, if the Aggregate Commitment
has been terminated, two or more Lenders (which Lenders are not
Affiliates, unless all Lenders are Affiliates) in the aggregate
holding at least sixty six and two thirds percent (66 2/3%) of
the Aggregate Outstanding Credit Exposure (unless, in either
case, there is at the relevant time only one Lender, in which
case such Lender shall constitute the "Required Lenders").
"Reserve Requirement" means, with respect to an Interest
Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.
"Revolving Loan" means, with respect to a Lender, such
Lender's loan made pursuant to its commitment to lend set forth
in Section 2.1 (or any conversion or continuation thereof).
"S&P" means Standard and Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other
transfer of Property by any Person with the intent to lease such
Property as lessee.
"Schedule" refers to a specific schedule to this Agreement,
unless another document is specifically referenced.
"Scott" means Scott Resources, LLC, a Colorado limited
liability company.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Secured Obligations" means, collectively, (i) the
Obligations and (ii) all Permitted Obligations owing to one or
more Lenders.
"Security Agreements" means the Borrower Security Agreement,
the Guarantor Security Agreement and the Spectrum Security
Agreement, as well as any Intellectual Property Security
Agreement(s) the Lenders may require from time to time, and
"Security Agreement" means one of the Security Agreements.
"Single Employer Plan" means a Plan maintained by the
Borrower or any member of the Controlled Group for employees of
the Borrower or any member of the Controlled Group.
"Spectrum" means Spectrum Educational Supplies, Ltd., an
Ontario corporation.
"Spectrum Note" shall mean, once it has been executed and
delivered, the promissory note to be dated as of October, 2003 by
Spectrum in favor of the Borrower and collaterally assigned to
the Agent for the benefit of the Lenders, the LC Issuer and
Affiliates of Lenders, as the same may be amended, restated,
extended, supplemented, replaced or otherwise modified from time
to time.
"Spectrum Security Agreement" shall mean, once it has been
executed and delivered, the General Security Agreement to be
dated as of October, 2003 by Spectrum in favor of the Borrower
and collaterally assigned to the Agent for the benefit of the
Lenders, the LC Issuer and Affiliates of Lenders, as the same may
be amended, restated, supplemented or otherwise modified from
time to time.
"SREH" means SREH, Inc., an Ontario corporation.
"Subordinated Indebtedness" of a Person means any
Indebtedness of such Person the payment of which is subordinated
to payment of the Secured Obligations to the written satisfaction
of the Required Lenders in their discretion.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, or (ii)
any partnership, limited liability company, association, joint
venture or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall
at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall
mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which represents more
than 10% of the consolidated assets of the Borrower and its
Subsidiaries or property which is responsible for more than 10%
of the consolidated net sales or of the consolidated net income
of the Borrower and its Subsidiaries, in each case, as would be
shown in the consolidated financial statements of the Borrower
and its Subsidiaries as at the beginning of the twelve-month
period ending with the month in which such determination is made
(or if financial statements have not been delivered hereunder for
that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending
immediately prior to that month).
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and
all liabilities with respect to the foregoing, but excluding
Excluded Taxes and Other Taxes.
"Transferee" is defined in Section 12.4.
"Triarco" means Triarco Arts & Crafts, LLC, a Delaware
limited liability company.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or a Eurodollar Advance and with respect to
any Loan, its nature as a Floating Rate Loan or a Eurodollar
Loan.
"Unfunded Liabilities" means the amount (if any) by which
the present value of all vested and unvested accrued benefits
under all Single Employer Plans exceeds the fair market value of
all such Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plans using
PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse
of time or the giving of notice, or both, would constitute a
Default.
"Wholly-Owned Subsidiary" of a Person means (i) any
Subsidiary all of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly,
by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or
controlled.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Commitment
. From and including the date of this Agreement and prior to the
Facility Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to (i) make
Loans to the Borrower and (ii) participate in Facility LCs issued
upon the request of the Borrower, provided that, after giving
effect to the making of each such Loan and the issuance of each
such Facility LC, (x) such Lender's Outstanding Credit Exposure
shall not exceed its Commitment and (y) subject to Acquisition
Overadvances permitted hereunder, the Aggregate Outstanding
Credit Exposure shall not exceed the Borrowing Base. Subject to
the terms of this Agreement, the Borrower may borrow, repay and
reborrow at any time prior to the Facility Termination Date. The
Commitments to extend credit hereunder shall expire on the
Facility Termination Date. The LC Issuer will issue Facility LCs
hereunder on the terms and conditions set forth in Section 2.19.
2.2. Mandatory Prepayments; Amortization of Acquisition
Overadvances; Required Payment upon Termination.
(i) The Borrower shall immediately repay the Revolving Loans and
Reimbursement Obligations if at any time the Aggregate
Outstanding Credit Exposure exceeds the lesser of (A) the
Aggregate Commitment and (B) except for Acquisition Overadvances
permitted hereunder, the Borrowing Base, to the extent required
to eliminate such excess. If any such excess remains after
repayment in full of all outstanding Revolving Loans and
Reimbursement Obligations, the Borrower shall provide cash
collateral for the LC Obligations in the manner set forth in
Section 2.19.11 to the extent required to eliminate such excess.
(ii) Immediately upon receipt by any Loan Party of the Net Cash
Proceeds of any asset disposition (other than sales of assets
permitted under clauses (i) or (ii) of Section 6.13), the
Borrower shall prepay the Obligations in an amount equal to all
such Net Cash Proceeds. Any such prepayment shall be applied to
pay the principal of the outstanding Revolving Loans and
Reimbursement Obligations with a concomitant reduction in the
Aggregate Commitment (pro rata among the Lenders according to
their respective Pro Rata Shares).
(iii) If the Borrower issues Capital Stock or any Loan Party
issues Subordinated Indebtedness, no later than the Business Day
following the date of receipt of any Net Cash Proceeds of such
issuance, the Borrower shall prepay the outstanding Acquisition
Overadvances in an amount equal to the lesser of all such Net
Cash Proceeds and the outstanding amount of all Acquisition
Overadvances (pro rata among the Lenders according to their
respective Pro Rata Shares).
(iv) The Borrower shall make monthly principal payments on each
Acquisition Overadvance such that the entire principal balance of
such Acquisition Overadvance is evenly amortized over a two year
period from the date of such Acquisition Overadvance.
(v) The Aggregate Outstanding Credit Exposure and all other
unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.
2.3. Ratable Loans
. Each Advance hereunder shall consist of Loans made from the
several Lenders ratably according to their Pro Rata Shares.
2.4. Types of Advances
. The Advances may be Floating Rate Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.
2.5. Commitment Fee; Reductions in Aggregate Commitment
. The Borrower agrees to pay to the Agent for the account of
each Lender according to its Pro Rata Share a commitment fee at a
per annum rate equal to the Applicable Fee Rate on the average
daily Available Aggregate Commitment from the date hereof to and
including the Facility Termination Date, payable on each Payment
Date hereafter and on the Facility Termination Date. The
Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in integral multiples
of $5,000,000, upon at least five Business Days' written notice
to the Agent, which notice shall specify the amount of any such
reduction, provided, however, that the amount of the Aggregate
Commitment may not be reduced below the Aggregate Outstanding
Credit Exposure. All accrued commitment fees shall be payable on
the effective date of any termination of the obligations of the
Lenders to make Credit Extensions hereunder.
2.6. Minimum Amount of Each Advance
. Each Eurodollar Advance shall be in the minimum amount of
$500,000 (and in multiples of $100,000 if in excess thereof), and
each Floating Rate Advance shall be in the minimum amount of
$250,000 (and in multiples of $50,000 if in excess thereof),
provided, however, that any Floating Rate Advance may be in the
amount of the Available Aggregate Commitment.
2.7. Optional Principal Payments
. The Borrower may from time to time pay, without penalty or
premium, all outstanding Floating Rate Advances, or, in a minimum
aggregate amount of $100,000, any portion of the outstanding
Floating Rate Advances upon one Business Day's prior notice to
the Agent. The Borrower may from time to time pay, subject to
the payment of any funding indemnification amounts required by
Section 3.4 but without penalty or premium, all outstanding
Eurodollar Advances, or, in a minimum aggregate amount of
$250,000 or any integral multiple of $50,000 in excess thereof,
any portion of the outstanding Eurodollar Advances upon three
Business Days' prior notice to the Agent.
2.8. Method of Selecting Types and Interest Periods for New
Advances
. The Borrower shall select the Type of Advance and, in the case
of each Eurodollar Advance, the Interest Period applicable
thereto from time to time. The Borrower shall give the Agent
irrevocable notice (a "Borrowing Notice") not later than 10:00
a.m. (Chicago time) at least one Business Day before the
Borrowing Date of each Floating Rate Advance and three Business
Days before the Borrowing Date for each Eurodollar Advance,
specifying:
(i) the Borrowing Date, which shall be a
Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance,
the Interest Period applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each
Lender shall make available its Loan or Loans in funds
immediately available in Chicago to the Agent at its address
specified pursuant to Article XIII. The Agent will make the
funds so received from the Lenders available to the Borrower at
the Agent's aforesaid address.
2.9. Conversion and Continuation of Outstanding Advances
. Floating Rate Advances shall continue as Floating Rate
Advances unless and until such Floating Rate Advances are
converted into Eurodollar Advances pursuant to this Section 2.9
or are repaid in accordance with Section 2.7. Each Eurodollar
Advance shall continue as a Eurodollar Advance until the end of
the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a
Floating Rate Advance unless (x) such Eurodollar Advance is or
was repaid in accordance with Section 2.7 or (y) the Borrower
shall have given the Agent a Conversion/Continuation Notice (as
defined below) requesting that, at the end of such Interest
Period, such Eurodollar Advance continue as a Eurodollar Advance
for the same or another Interest Period. Subject to the terms of
Section 2.6, the Borrower may elect from time to time to convert
all or any part of a Floating Rate Advance into a Eurodollar
Advance. The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a
Floating Rate Advance into a Eurodollar Advance or continuation
of a Eurodollar Advance not later than 10:00 a.m. (Chicago time)
at least three Business Days prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date, which shall be a
Business Day, of such conversion or
continuation,
(ii) the aggregate amount and Type of the
Advance which is to be converted or
continued, and
(iii) the amount of such Advance which is
to be converted into or continued as a
Eurodollar Advance and the duration of the
Interest Period applicable thereto.
2.10. Changes in Interest Rate, etc.
Each Floating Rate Advance shall bear interest on the
outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically
converted from a Eurodollar Advance into a Floating Rate Advance
pursuant to Section 2.9, to but excluding the date it is paid or
is converted into a Eurodollar Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any
Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate and
with each change in the Applicable Margin. Each Eurodollar
Advance shall bear interest on the outstanding principal amount
thereof from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined by the Agent as
applicable to such Eurodollar Advance based upon the Borrower's
selections under Sections 2.8 and 2.9 and otherwise in accordance
with the terms hereof (and will change during any such Interest
Period simultaneously with each change in the Applicable Margin).
The portion, if any, of each Advance (whether a Eurodollar
Advance or a Floating Rate Advance) comprising an Acquisition
Overadvance shall bear interest at the rate otherwise applicable
to such Advance plus 0.25% per annum. No Interest Period may end
after the Facility Termination Date.
2.11. Rates Applicable After Default
. Notwithstanding anything to the contrary contained in Section
2.8, 2.9 or 2.10, during the continuance of a Default or
Unmatured Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option
of the Required Lenders notwithstanding any provision of Section
8.2 requiring unanimous consent of the Lenders to changes in
interest rates), declare that no Advance may be made as,
converted into or continued as a Eurodollar Advance. During the
continuance of a Default the Required Lenders may, at their
option, by notice to the Borrower (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision
of Section 8.2 requiring unanimous consent of the Lenders to
changes in interest rates), declare that (i) each Eurodollar
Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum, (ii) each Floating Rate Advance shall
bear interest at a rate per annum equal to the Floating Rate in
effect from time to time plus 2% per annum and (iii) the LC Fee
shall be increased by 2% per annum, provided that, during the
continuance of a Default under Section 7.6 or 7.7, the interest
rates set forth in clauses (i) and (ii) above and the increase in
the LC Fee set forth in clause (iii) above shall be applicable to
all Credit Extensions without any election or action on the part
of the Agent or any Lender.
2.12. Method of Payment
. All payments of the Obligations hereunder shall be made,
without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of
the Agent specified in writing by the Agent to the Borrower, by
noon (local time) on the date when due and shall (except in the
case of Reimbursement Obligations for which the LC Issuer has not
been fully indemnified by the Lenders, or as otherwise
specifically required hereunder) be applied ratably by the Agent
among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to
such Lender in the same type of funds that the Agent received at
its address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from
such Lender. The Agent is hereby authorized to charge the
account of the Borrower maintained with Bank One for each payment
of principal, interest, Reimbursement Obligations and fees as it
becomes due hereunder. Each reference to the Agent in this
Section 2.12 shall also be deemed to refer, and shall apply
equally, to the LC Issuer, in the case of payments required to be
made by the Borrower to the LC Issuer pursuant to Section 2.19.6.
2.13. Notes
. Each Lender's Loans shall be evidenced by a separate
promissory note (each a "Note" and, collectively, the "Notes")
and the Borrower shall prepare, execute and deliver to each
Lender a Note payable to the order of such Lender in the form
attached hereto as Exhibit E.
2.14. Telephonic Notices
. The Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types
of Advances and to transfer funds based on telephonic notices
made by any person or persons the Agent or any Lender in good
faith believes to be acting on behalf of the Borrower, it being
understood that the foregoing authorization is specifically
intended to allow Borrowing Notices and Conversion/Continuation
Notices to be given telephonically. The Borrower agrees to
deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action
taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.
2.15. Interest Payment Dates; Interest and Fee Basis
. Interest accrued on each Floating Rate Advance shall be
payable on each Payment Date, commencing with the first such date
to occur after the date hereof, on any date on which the Floating
Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of
the outstanding principal amount of any Floating Rate Advance
converted into a Eurodollar Advance on a day other than a Payment
Date shall be payable on the date of conversion. Interest
accrued on each Eurodollar Advance shall be payable on the last
day of its applicable Interest Period, on any date on which the
Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar
Advance having an Interest Period longer than three months shall
also be payable on the last day of each three-month interval
during such Interest Period. Interest on each Eurodollar
Advance, commitment fees and LC Fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest on
each Floating Rate Advance shall be calculated for actual days
elapsed on the basis of a 365-day, or when appropriate 366-day,
year. Interest shall be payable for the day an Advance is made
but not for the day of any payment on the amount paid if payment
is received prior to noon (local time) at the place of payment.
If any payment of principal of or interest on an Advance shall
become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
2.16. Notification of Advances, Etc.
. Promptly after receipt thereof, the Agent will notify each
Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice, Conversion/Continuation Notice, and
repayment notice received by it hereunder. Promptly after notice
from the LC Issuer, the Agent will notify each Lender of the
contents of each request for issuance of a Facility LC hereunder.
The Agent will notify each Lender of the interest rate applicable
to each Eurodollar Advance promptly upon determination of such
interest rate and will give each Lender prompt notice of each
change in the Alternate Base Rate.
2.17. [INTENTIONALLY OMITTED]
2.18. Non-Receipt of Funds by the Agent
. Unless the Borrower or a Lender, as the case may be, notifies
the Agent prior to the date on which it is scheduled to make
payment to the Agent of (i) in the case of a Lender, the proceeds
of a Loan or (ii) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent
may assume that such payment has been made. The Agent may, but
shall not be obligated to, make the amount of such payment
available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be,
has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand by the Agent, repay to the Agent
the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (x) in
the case of payment by a Lender, the Federal Funds Effective Rate
for such day for the first three days and, thereafter, the
interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.19. Facility LCs.
2.19.1. Issuance. The LC Issuer hereby agrees, on the
terms and conditions set forth in this Agreement, to issue
standby and commercial letters of credit (each, a "Facility LC")
and to renew, extend, increase, decrease or otherwise modify each
Facility LC ("Modify," and each such action a "Modification"),
from time to time from and including the date of this Agreement
and prior to the Facility Termination Date upon the request of
the Borrower; provided that immediately after each such Facility
LC is issued or Modified, (i) the aggregate amount of the
outstanding LC Obligations shall not exceed $5,000,000 and (ii)
the Aggregate Outstanding Credit Exposure shall not exceed the
lesser of (x) the Aggregate Commitment and (y) the sum of the
Borrowing Base plus Acquisition Overadvances permitted under this
Agreement. No Facility LC shall have an expiry date later than
the earlier of (A) the fifth Business Day prior to the Facility
Termination Date and (B) one year after the date of its issuance,
provided that any Facility LC with a one-year tenor may provide
for the renewal thereof for additional one-year periods, so long
as no such period extends beyond the date specified in clause (A)
above.
2.19.2. Participations. Upon the issuance or Modification
by the LC Issuer of a Facility LC in accordance with this Section
2.19, the LC Issuer shall be deemed, without further action by
any party hereto, to have unconditionally and irrevocably sold to
each Lender, and each Lender shall be deemed, without further
action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such
Facility LC (and each Modification thereof) and the related LC
Obligations in proportion to its Pro Rata Share.
2.19.3. Notice. Subject to Section 2.19.1, the Borrower
shall give the LC Issuer notice prior to 10:00 a.m. (Chicago
time) at least five Business Days prior to the proposed date of
issuance or Modification of each Facility LC, specifying the
beneficiary, the proposed date of issuance (or Modification) and
the expiry date of such Facility LC, and describing the proposed
terms of such Facility LC and the nature of the transactions
proposed to be supported thereby. Upon receipt of such notice,
the LC Issuer shall promptly notify the Agent, and the Agent
shall promptly notify each Lender, of the contents thereof and of
the amount of such Lender's participation in such proposed
Facility LC. The issuance or Modification by the LC Issuer of
any Facility LC shall, in addition to the conditions precedent
set forth in Article IV (the satisfaction of which the LC Issuer
shall have no duty to ascertain), be subject to the conditions
precedent that such Facility LC shall be satisfactory to the LC
Issuer and that the Borrower shall have executed and delivered
such application agreement and/or such other instruments and
agreements relating to such Facility LC as the LC Issuer shall
have reasonably requested (each, a "Facility LC Application").
In the event of any conflict between the terms of this Agreement
and the terms of any Facility LC Application, the terms of this
Agreement shall control.
2.19.4. LC Fees. The Borrower shall pay to the Agent, for
the account of the Lenders ratably in accordance with their
respective Pro Rata Shares, (i) with respect to each standby
Facility LC, a letter of credit fee at a per annum rate equal to
the Applicable Fee Rate in effect from time to time on the
average daily undrawn stated amount under such standby Facility
LC, such fee to be payable in arrears on each Payment Date, and
(ii) with respect to each commercial Facility LC, a one-time
letter of credit fee in a customary amount of the initial stated
amount to be agreed between the Borrower and the Agent (or, with
respect to a Modification of any such commercial Facility LC
which increases the stated amount thereof, such increase in the
stated amount) thereof, such fee to be payable on the date of
such issuance or increase (each such fee described in this
sentence an "LC Fee"). The Borrower shall also pay to the LC
Issuer for its own account (x) at the time of issuance of each
standby Facility LC, a fronting fee in an amount equal to 0.125%
of the face amount of such standby Facility LC, and (y)
documentary and processing charges in connection with the
issuance or Modification of and draws under Facility LCs in
accordance with the LC Issuer's standard schedule for such
charges as in effect from time to time.
2.19.5. Administration; Reimbursement by Lenders. Upon
receipt from the beneficiary of any Facility LC of any demand for
payment under such Facility LC, the LC Issuer shall notify the
Agent and the Agent shall promptly notify the Borrower and each
other Lender as to the amount to be paid by the LC Issuer as a
result of such demand and the proposed payment date (the "LC
Payment Date"). The responsibility of the LC Issuer to the
Borrower and each Lender shall be only to determine that the
documents (including each demand for payment) delivered under
each Facility LC in connection with such presentment shall be in
conformity in all material respects with such Facility LC. The
LC Issuer shall endeavor to exercise the same care in the
issuance and administration of the Facility LCs as it does with
respect to letters of credit in which no participations are
granted, it being understood that in the absence of any gross
negligence or willful misconduct by the LC Issuer, each Lender
shall be unconditionally and irrevocably liable without regard to
the occurrence of any Default or any condition precedent
whatsoever, to reimburse the LC Issuer on demand for (i) such
Lender's Pro Rata Share of the amount of each payment made by the
LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the Borrower pursuant to Section 2.19.6 below, plus
(ii) interest on the foregoing amount to be reimbursed by such
Lender, for each day from the date of the LC Issuer's demand for
such reimbursement (or, if such demand is made after 11:00 a.m.
(Chicago time) on such date, from the next succeeding Business
Day) to the date on which such Lender pays the amount to be
reimbursed by it, at a rate of interest per annum equal to the
Federal Funds Effective Rate for the first three days and,
thereafter, at a rate of interest equal to the rate applicable to
Floating Rate Advances.
2.19.6. Reimbursement by Borrower. The Borrower shall be
irrevocably and unconditionally obligated to reimburse the LC
Issuer on or before the applicable LC Payment Date for any
amounts to be paid by the LC Issuer upon any drawing under any
Facility LC, without presentment, demand, protest or other
formalities of any kind; provided that neither the Borrower nor
any Lender shall hereby be precluded from asserting any claim for
direct (but not consequential) damages suffered by the Borrower
or such Lender to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of the LC Issuer
in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC or (ii)
the LC Issuer's failure to pay under any Facility LC issued by it
after the presentation to it of a request strictly complying with
the terms and conditions of such Facility LC. All such amounts
paid by the LC Issuer and remaining unpaid by the Borrower shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to (x) the rate applicable to Floating Rate
Advances for such day if such day falls on or before the
applicable LC Payment Date and (y) the sum of 2% plus the rate
applicable to Floating Rate Advances for such day if such day
falls after such LC Payment Date. The LC Issuer will promptly
pay to each Lender ratably in accordance with its Pro Rata Share
all amounts received by it from the Borrower for application in
payment, in whole or in part, of the Reimbursement Obligation in
respect of any Facility LC issued by the LC Issuer, but only to
the extent such Lender has made payment to the LC Issuer in
respect of such Facility LC pursuant to Section 2.19.5. Subject
to the terms and conditions of this Agreement (including without
limitation the submission of a Borrowing Notice in compliance
with Section 2.8 and the satisfaction of the applicable
conditions precedent set forth in Article IV), the Borrower may
request an Advance hereunder for the purpose of satisfying any
Reimbursement Obligation.
2.19.7. Obligations Absolute. The Borrower's obligations
under this Section 2.19 shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or
have had against the LC Issuer, any Lender or any beneficiary of
a Facility LC. The Borrower further agrees with the LC Issuer
and the Lenders that the LC Issuer and the Lenders shall not be
responsible for, and the Borrower's Reimbursement Obligation in
respect of any Facility LC shall not be affected by, among other
things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove
to be in any or all respects invalid, fraudulent or forged, or
any dispute between or among the Borrower, any of its Affiliates,
the beneficiary of any Facility LC or any financing institution
or other party to whom any Facility LC may be transferred or any
claims or defenses whatsoever of the Borrower or of any of its
Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in
connection with any Facility LC. The Borrower agrees that any
action taken or omitted by the LC Issuer or any Lender under or
in connection with each Facility LC and the related drafts and
documents, if done without gross negligence or willful
misconduct, shall be binding upon the Borrower and shall not put
the LC Issuer or any Lender under any liability to the Borrower.
Nothing in this Section 2.19.7 is intended to limit the right of
the Borrower to make a claim against the LC Issuer for damages as
contemplated by the proviso to the first sentence of Section
2.19.6.
2.19.8. Actions of LC Issuer. The LC Issuer shall be
entitled to rely, and shall be fully protected in relying, upon
any Facility LC, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other
experts selected by the LC Issuer. The LC Issuer shall be fully
justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems
appropriate or it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other
provision of this Section 2.19, the LC Issuer shall in all cases
be fully protected in acting, or in refraining from acting, under
this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders and any future
holders of a participation in any Facility LC.
2.19.9. Indemnification. The Borrower hereby agrees to
indemnify and hold harmless each Lender, the LC Issuer and the
Agent, and their respective directors, officers, agents and
employees from and against any and all claims and damages,
losses, liabilities, costs or expenses which such Lender, the LC
Issuer or the Agent may incur (or which may be claimed against
such Lender, the LC Issuer or the Agent by any Person whatsoever)
by reason of or in connection with the issuance, execution and
delivery or transfer of or payment or failure to pay under any
Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the LC Issuer may incur by
reason of or in connection with (i) the failure of any other
Lender to fulfill or comply with its obligations to the LC Issuer
hereunder (but nothing herein contained shall affect any rights
the Borrower may have against any defaulting Lender) or (ii) by
reason of or on account of the LC Issuer issuing any Facility LC
which specifies that the term "Beneficiary" included therein
includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any
drawing by any such successor Beneficiary be accompanied by a
copy of a legal document, satisfactory to the LC Issuer,
evidencing the appointment of such successor Beneficiary;
provided that the Borrower shall not be required to indemnify any
Lender, the LC Issuer or the Agent for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to
the extent, caused by (x) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request
presented under any Facility LC complied with the terms of such
Facility LC or (y) the LC Issuer's failure to pay under any
Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC.
Nothing in this Section 2.19.9 is intended to limit the
obligations of the Borrower under any other provision of this
Agreement.
2.19.10. Lenders' Indemnification. Each Lender shall,
ratably in accordance with its Pro Rata Share, indemnify the LC
Issuer, its affiliates and their respective directors, officers,
agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel
fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or
willful misconduct or the LC Issuer's failure to pay under any
Facility LC after the presentation to it of a request strictly
complying with the terms and conditions of the Facility LC) that
such indemnitees may suffer or incur in connection with this
Section 2.19 or any action taken or omitted by such indemnitees
hereunder.
2.19.11. Rights as a Lender. In its capacity as a Lender,
the LC Issuer shall have the same rights and obligations as any
other Lender.
2.20. Replacement of Lender
. If the Borrower is required pursuant to Section 3.1, 3.2 or
3.5 to make any additional payment to any Lender or if any
Lender's obligation to make or continue, or to convert Floating
Rate Advances into, Eurodollar Advances shall be suspended
pursuant to Section 3.3 (any Lender so affected an "Affected
Lender"), the Borrower may elect, if such amounts continue to be
charged or such suspension is still effective, to replace such
Affected Lender as a Lender party to this Agreement, provided
that no Default or Unmatured Default shall have occurred and be
continuing at the time of such replacement, and provided further
that, concurrently with such replacement, (i) another bank or
other entity which is reasonably satisfactory to the Borrower and
the Agent shall agree, as of such date, to purchase for cash the
Advances and other Obligations due to the Affected Lender
pursuant to an assignment substantially in the form of Exhibit C
and to become a Lender for all purposes under this Agreement and
to assume all obligations of the Affected Lender to be terminated
as of such date and to comply with the requirements of Section
12.3 applicable to assignments, and (ii) the Borrower shall pay
to such Affected Lender in same day funds on the day of such
replacement (A) all interest, fees and other amounts then accrued
but unpaid to such Affected Lender by the Borrower hereunder to
and including the date of termination, including without
limitation payments due to such Affected Lender under Sections
3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the payment
which would have been due to such Lender on the day of such
replacement under Section 3.4 had the Loans of such Affected
Lender been prepaid on such date rather than sold to the
replacement Lender.
2.21. Increase of Aggregate Commitment.
(a) The Borrower may from time to time, on the terms set forth
below, request that the Aggregate Commitment hereunder be
increased to an amount not to exceed $50,000,000; provided,
however, that no increase in the Aggregate Commitment shall be
made (i) at a time when a Default or Unmatured Default shall have
occurred and be continuing, or (ii) at any time after the
Aggregate Commitment has been reduced.
(b) In the event of such a requested increase in the Aggregate
Commitment, (i) each of the Lenders shall be given the
opportunity to participate in the increased Commitments (x)
initially to the extent of such Lender's Pro Rata Share of the
requested increase and (y) to the extent that the requested
increase of Commitments is not fulfilled pursuant to the
preceding clause (x), ratably in the proportion that the
respective Commitments of the Lenders desiring to participate in
any such increase bear to the total of the Commitments of the
increasing Lenders, and (ii) to the extent that the Lenders do
not elect so to participate in such increased Commitments after
an opportunity to do so, then the Borrower shall consult with the
Agent and the Arranger as to the number, identity and requested
Commitments of additional financial institutions that the
Arranger may invite to participate in the Commitments. The Agent
and the Arranger will not unreasonably refuse to so invite a
commercial bank organized under the laws of the United States or
of any State thereof, identified and requested by the Borrower,
that has capital and surplus satisfactory to the Agent and the
Arranger in light of the Commitment which such commercial bank
would assume hereunder.
(c) No Lender shall have any obligation to increase its
Commitment pursuant to a request by the Borrower hereunder.
(d) In the event that the Borrower and one or more of the
Lenders (or other financial institutions) shall agree upon such
an increase in the aggregate Commitment (i) the Borrower, the
Agent and each Lender or other financial institution increasing
its Commitment or extending a new Commitment shall enter into an
amendment to this Agreement setting forth the amounts of the
Commitments, as so increased, providing that the financial
institutions extending new Commitments shall be Lenders for all
purposes of this Agreement, and setting forth such additional
provisions as the Agent shall consider reasonably appropriate and
(ii) the Borrower shall furnish a new Note to each financial
institution that is extending a new Commitment or increasing its
Commitment. No such amendment shall require the approval or
consent of any Lender whose Commitment is not being increased.
Upon the execution and delivery of such amendments and Note(s) as
provided above, and upon satisfaction of such other conditions as
the Agent may reasonably specify upon the request of the
financial institutions that are increasing or extending new
Commitments (including, without limitation, the Agent
administering the reallocation of any outstanding Loans ratably
among the Lenders after giving effect to such increase in the
Aggregate Commitment, the delivery of certificates, evidence of
corporate authority and legal opinions on behalf of the
Borrower), this Agreement shall be deemed to be amended
accordingly.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection
. If, on or after the date of this Agreement, the adoption of
any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having
the force of law), or any change in the interpretation or
administration thereof by any governmental or quasi-governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender or applicable Lending Installation or the LC Issuer with
any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation
or the LC Issuer to any Taxes, or changes the basis of taxation
of payments (other than with respect to Excluded Taxes) to any
Lender or the LC Issuer in respect of its Eurodollar Loans,
Facility LCs or participations therein, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending
Installation or the LC Issuer (other than reserves and
assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation or the LC Issuer of making, funding or maintaining
its Eurodollar Loans, or of issuing or participating in Facility
LCs, or reduces any amount receivable by any Lender or any
applicable Lending Installation or the LC Issuer in connection
with its Eurodollar Loans, Facility LCs or participations
therein, or requires any Lender or any applicable Lending
Installation or the LC Issuer to make any payment calculated by
reference to the amount of Eurodollar Loans, Facility LCs or
participations therein held or interest or LC Fees received by
it, by an amount deemed material by such Lender or the LC Issuer
as the case may be,
and the result of any of the foregoing is to increase the cost to
such Lender or applicable Lending Installation or the LC Issuer,
as the case may be, of making or maintaining its Eurodollar Loans
or Commitment or of issuing or participating in Facility LCs or
to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in
connection with such Eurodollar Loans, Commitment Facility LCs or
participations therein, then, within 15 days of demand by such
Lender or the LC Issuer, as the case may be, the Borrower shall
pay such Lender or the LC Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or
the LC Issuer, as the case may be, for such increased cost or
reduction in amount received.
3.2. Changes in Capital Adequacy Regulations
. If a Lender or the LC Issuer determines the amount of capital
required or expected to be maintained by such Lender or the LC
Issuer, any Lending Installation of such Lender or the LC Issuer
or any corporation controlling such Lender or the LC Issuer is
increased as a result of a Change, then, within 15 days of demand
by such Lender or the LC Issuer, the Borrower shall pay such
Lender or the LC Issuer the amount necessary to compensate for
any shortfall in the rate of return on the portion of such
increased capital which such Lender or the LC Issuer determines
is attributable to this Agreement, its Outstanding Credit
Exposure or its Commitment to make Loans and issue or participate
in Facility LCs, as the case may be, hereunder (after taking into
account such Lender's or the LC Issuer's policies as to capital
adequacy). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any
adoption of or change in any other law, governmental or quasi-
governmental rule, regulation, policy, guideline, interpretation,
or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender or
the LC Issuer. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on
the date of this Agreement, including transition rules, and (ii)
the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to
the date of this Agreement.
3.3. Availability of Types of Advances
. If any Lender determines that maintenance of its Eurodollar
Loans at a suitable Lending Installation would violate any
applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine
that (i) deposits of a type and maturity appropriate to match
fund Eurodollar Advances are not available or (ii) the interest
rate applicable to Eurodollar Advances does not accurately
reflect the cost of making or maintaining Eurodollar Advances,
then the Agent shall suspend the availability of Eurodollar
Advances and require any affected Eurodollar Advances to be
repaid or converted to Floating Rate Advances, subject to the
payment of any funding indemnification amounts required by
Section 3.4.
3.4. Funding Indemnification
. If any payment of a Eurodollar Advance occurs on a date which
is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will
indemnify each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Advance.
3.5. Taxes.
(i) All payments by the Borrower to or for the account of any
Lender, the LC Issuer or the Agent hereunder or under any Note or
Facility LC Application shall be made free and clear of and
without deduction for any and all Taxes. If the Borrower shall
be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, the LC Issuer or the Agent,
(a) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this Section 3.5) such Lender,
the LC Issuer or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such
deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted
to the relevant authority in accordance with applicable law and
(d) the Borrower shall furnish to the Agent the original copy of
a receipt evidencing payment thereof within 30 days after such
payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present
or future stamp or documentary taxes and any other excise or
property taxes, charges or similar levies which arise from any
payment made hereunder or under any Note or Facility LC
Application or from the execution or delivery of, or otherwise
with respect to, this Agreement or any Note or Facility LC
Application ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent, the
LC Issuer and each Lender for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes
imposed on amounts payable under this Section 3.5) paid by the
Agent, the LC Issuer or such Lender as a result of its
Commitment, any Credit Extension made by it hereunder, or
otherwise in connection with its participation in this Agreement
and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Payments due under
this indemnification shall be made within 30 days of the date the
Agent, the LC Issuer or such Lender makes demand therefor
pursuant to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S.
Lender") agrees that it will, not more than ten Business Days
after the date of this Agreement, (i) deliver to the Agent two
duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI, certifying in either case that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes, and (ii) deliver to the Agent a United States Internal
Revenue Form W-8 or W-9, as the case may be, and certify that it
is entitled to an exemption from United States backup withholding
tax. Each Non-U.S. Lender further undertakes to deliver to each
of the Borrower and the Agent (x) renewals or additional copies
of such form (or any successor form) on or before the date that
such form expires or becomes obsolete, and (y) after the
occurrence of any event requiring a change in the most recent
forms so delivered by it, such additional forms or amendments
thereto as may be reasonably requested by the Borrower or the
Agent. All forms or amendments described in the preceding
sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly
completing and delivering any such form or amendment with respect
to it and such Lender advises the Borrower and the Agent that it
is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause
(iv), above (unless such failure is due to a change in treaty,
law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring
subsequent to the date on which a form originally was required to
be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.5 with respect to Taxes
imposed by the United States; provided that, should a Non-U.S.
Lender which is otherwise exempt from or subject to a reduced
rate of withholding tax become subject to Taxes because of its
failure to deliver a form required under clause (iv), above, the
Borrower shall take such steps as such Non-U.S. Lender shall
reasonably request to assist such Non-U.S. Lender to recover such
Taxes.
(vi) Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant
jurisdiction or any treaty shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country
or any political subdivision thereof asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered or properly completed, because such Lender failed to
notify the Agent of a change in circumstances which rendered its
exemption from withholding ineffective, or for any other reason),
such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and
including taxes imposed by any jurisdiction on amounts payable to
the Agent under this subsection, together with all costs and
expenses related thereto (including attorneys fees and time
charges of attorneys for the Agent, which attorneys may be
employees of the Agent). The obligations of the Lenders under
this Section 3.5(vii) shall survive the payment of the
Obligations and termination of this Agreement.
3.6. Lender Statements; Survival of Indemnity
. To the extent reasonably possible, each Lender shall designate
an alternate Lending Installation with respect to its Eurodollar
Loans to reduce any liability of the Borrower to such Lender
under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Advances under Section 3.3, so long as such
designation is not, in the judgment of such Lender,
disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to
the Agent) as to the amount due, if any, under Section 3.1, 3.2,
3.4 or 3.5. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender determined such
amount and shall be final, conclusive and binding on the Borrower
in the absence of manifest error. Determination of amounts
payable under such Sections in connection with a Eurodollar Loan
shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining
the Eurodollar Rate applicable to such Loan, whether in fact that
is the case or not. Unless otherwise provided herein, the amount
specified in the written statement of any Lender shall be payable
on demand after receipt by the Borrower of such written
statement. The obligations of the Borrower under Sections 3.1,
3.2, 3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Credit Extension
. The Lenders shall not be required to make the initial Credit
Extension hereunder unless:
(i) The Borrower has furnished to the Agent, with sufficient
copies for the Lenders:
(a) Copies of the articles or certificate of incorporation of
the Borrower, together with all amendments, and a certificate of
good standing, each certified by the appropriate governmental
officer in its jurisdiction of incorporation;
(b) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of its by-laws and of its Board of Directors'
resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which the
Borrower is a party;
(c) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name
and title and bear the signatures of the Authorized Officers and
any other officers of the Borrower authorized to sign the Loan
Documents to which the Borrower is a party, upon which
certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by the Borrower;
(d) For each Guarantor, copies of its articles of organization
or articles or certificate of incorporation, together with all
amendments, and a certificate of good standing, each certified by
the appropriate governmental officer in such Guarantor's
jurisdiction of organization or incorporation;
(e) For each Guarantor, copies, certified by its Secretary or
Assistant Secretary (or, if applicable, Manager), of its
operating agreement or bylaws and of its Board of Directors' (or,
if applicable Managers' or Members') resolutions and of
resolutions or actions of any other body authorizing the
execution of the Loan Documents to which such Guarantor is a
party;
(f) For each Guarantor, an incumbency certificate, executed by
its Secretary or Assistant Secretary (or, if applicable,
Manager), which shall identify by name and title and bear the
signatures of the officers (or, if applicable, managers) of such
Guarantor authorized to sign the Loan Documents to which such
Guarantor is a party, upon which certificate the Agent and the
Lenders shall be entitled to rely until informed of any change in
writing by such Guarantor;
(g) For each of Spectrum and SREH, the equivalent certificates,
charter documents and resolutions to those required of the
Guarantors pursuant to clauses (d) through (f) above, as
applicable to Ontario corporations;
(h) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Credit Extension Date no
Default or Unmatured Default has occurred and is continuing;
(i) A written opinion or opinions of the counsel of Borrower and
the Guarantors including opinions of Borrower's internal counsel
and local counsel security interest and mortgage opinions from
Borrower's Wisconsin, California, Colorado and Ontario counsel,
addressed to the Lenders in substantially the forms of Exhibits A-
1 through A-5, respectively;
(j) The Notes;
(k) Written money transfer instructions, in substantially the
form of Exhibit D, addressed to the Agent and signed by an
Authorized Officer, together with such other related money
transfer authorizations as the Agent may have reasonably
requested;
(l) If the initial Credit Extension will be the issuance of a
Facility LC, a properly completed Facility LC Application;
(m) The Guaranty, duly executed by the Guarantors;
(n) The Collateral Documents, duly executed by the Borrower and
the appropriate Loan Parties, along with all share certificates,
instruments and other documents and certificates required to be
delivered to the Agent pursuant thereto (including, without
limitation, the Spectrum Note), with such endorsements, stock
powers and the like as the Agent may require;
(o) With respect to each Mortgage, (i) an ALTA or other
mortgagee's title policy (including such endorsements as Agent
may reasonably request) showing fee simple title to the Property
subject to such Mortgage in the relevant Loan Party, subject to
the Mortgage but subject to no additional or prior Liens or
clouds on title other than those exceptions and exclusions from
coverage which are acceptable to the Agent in all respects as
determined by the Agent in its sole discretion, (ii) an ALTA
survey prepared and certified to the Agent by a surveyor
acceptable to the Agent, and (iii) any requested environmental
review reports from firm(s) satisfactory to the Agent, which
review reports shall be acceptable to the Agent;
(p) Confirmation that any documents (including, without
limitation, financing statements) required to be filed,
registered or recorded in order to create, in favor of the Agent
for the benefit of the Lenders, perfected security interests in
the Collateral shall have been properly filed, registered or
recorded in each office in each such jurisdiction in which such
filings, registrations and recordations are required; the Agent
shall have received acknowledgment copies of all such filings,
registrations and recordations stamped by the appropriate filing,
registration or recording officer (or, in lieu thereof, other
evidence satisfactory to the Agent that all such filings,
registrations and recordations have been made); and the Agent
shall have received such evidence as it may deem satisfactory
that all necessary filing, recording and other similar fees, and
all taxes and other expenses related to such filings,
registrations and recordings have been paid in full;
(q) Such lien searches and other evidence of the priority the
Liens granted to the Agent for the benefit of the Lenders under
the Collateral Documents as the Agent or the Lenders may require;
(r) A Borrowing Base Certificate which calculates the Borrowing
Base as of the end of the last Business Day of the month
immediately preceding the date of the initial Credit Extension;
(s) Evidence satisfactory to the Agent in form and substance
that (i) the Borrower's existing credit agreement(s) with Bank of
America, N.A., as agent, and various lenders, shall have been
terminated, all Indebtedness outstanding thereunder shall have
been paid in full and all Liens, if any, granted thereunder,
shall have been released and (ii) all other financing statements
and mortgages identified in the lien searches and title reports
obtained by the Agent in connection with this Agreement shall
have been terminated or released, other than those filed or
recorded in order to perfect Permitted Liens, and that
appropriate "non-sheltering letters" shall have been obtained
with respect to PPSA filings against Spectrum;
(t) One or more appraisals of the Eligible Real Estate
satisfactory to the Agent and Lenders in form and substance;
(u) The insurance certificate described in Section 5.20;
(v) Collateral Access Agreements for Spectrum's facility at 150
Pony Drive, Newmarket, Ontario and for the other leased locations
of goods the Borrower wishes to be included in Eligible Equipment
and Eligible Inventory; and
(w) Such other documents as any Lender or its counsel may have
reasonably requested; and
(ii) The Agent shall have determined that (a) since July 15,
2003, there is an absence of any material adverse change or
disruption in primary or secondary loan syndication markets,
financial markets or in capital markets generally that would
likely impair syndication of the Loans hereunder and (b) the
Borrower has fully cooperated with the Agent's syndication
efforts including, without limitation, by providing the Agent
with information regarding the Borrower's and its Subsidiaries'
operations and prospects and such other information as the Agent
deems necessary to successfully syndicate the Loans hereunder.
4.2. Each Credit Extension
. The Lenders shall not be required to make any Credit Extension
unless on the applicable Credit Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V
are true and correct (subject to such standards of materiality as
may be expressed within Article V) as of such Credit Extension
Date except to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct on
and as of such earlier date.
(iii) All legal matters incident to the making of such Credit
Extension shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice or request for issuance of a Facility
LC with respect to each such Credit Extension shall constitute a
representation and warranty by the Borrower that the conditions
contained in Sections 4.2(i) and (ii) have been satisfied. Any
Lender may require a duly completed compliance certificate in
substantially the form of Exhibit B as a condition to making a
Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Existence and Standing
. Each of the Borrower and its Subsidiaries is a corporation or
limited liability company (in the case of Subsidiaries only) duly
and properly incorporated or organized, as the case may be,
validly existing and (to the extent such concept applies to such
entity) in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite authority to
conduct its business in each jurisdiction in which its business
is conducted except for such jurisdictions where the failure to
have such authority could not reasonably be expected to have a
Material Advance Effect.
5.2. Authorization and Validity
. The Borrower has the corporate power and authority and legal
right to execute and deliver the Loan Documents to which it is a
party and to perform its obligations thereunder. The execution
and delivery by the Borrower of the Loan Documents to which it is
a party and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the
Loan Documents to which the Borrower is a party constitute legal,
valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
generally.
5.3. No Conflict; Government Consent
. Neither the execution and delivery by the Borrower of the Loan
Documents to which it is a party, nor the consummation of the
transactions therein contemplated, nor compliance with the
provisions thereof will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the
Borrower or any of its Subsidiaries or (ii) the Borrower's or any
Subsidiary's articles or certificate of incorporation,
partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other
management agreement, as the case may be, or (iii) the provisions
of any indenture, instrument or agreement to which the Borrower
or any of its Subsidiaries is a party or is subject, or by which
it, or its Property, is bound, or conflict with or constitute a
default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Borrower
or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action
in respect of any governmental or public body or authority, or
any subdivision thereof, which has not been obtained by the
Borrower or any of its Subsidiaries, is required to be obtained
by the Borrower or any of its Subsidiaries in connection with the
execution and delivery of the Loan Documents, the borrowings
under this Agreement, the payment and performance by the Borrower
of the Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents.
5.4. Financial Statements
. The audited, December 31, 2002 consolidated financial
statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with
generally accepted accounting principles in effect on the date
such statements were prepared and fairly present the consolidated
financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change
. Since December 31, 2002 there has been no change in the
business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries
which could reasonably be expected to have a Material Adverse
Effect.
5.6. Taxes
. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns (including Canadian
tax returns) which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to
which adequate reserves have been provided in accordance with
Agreement Accounting Principles and as to which no Lien exists.
The United States income tax returns of the Borrower and its
Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended December 31, 1996. No tax liens
have been filed and no claims are being asserted with respect to
any such taxes. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or
other governmental charges are adequate. If the Borrower or any
of its Subsidiaries is a limited liability company, each such
limited liability company qualifies for partnership tax treatment
under United States federal tax law.
5.7. Litigation and Contingent Obligations
. There is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge
of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Credit Extensions.
Other than any liability incident to any litigation, arbitration
or proceeding which could not reasonably be expected to have a
Material Adverse Effect, the Borrower has no material contingent
obligations not provided for or disclosed in the financial
statements referred to in Section 5.4.
5.8. Subsidiaries
. Schedule 5.8 contains an accurate list of all Subsidiaries of
the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage
of their respective capital stock or other ownership interests
owned by the Borrower or other Subsidiaries. All of the issued
and outstanding shares of capital stock or other ownership
interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests)
duly authorized and issued and are fully paid and non-assessable.
5.9. ERISA
. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $1,000,000. Neither the Borrower nor any
other member of the Controlled Group has incurred, or is
reasonably expected to incur, any withdrawal liability to
Multiemployer Plans in excess of $1,000,000 in the aggregate.
Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has
occurred with respect to any Plan, neither the Borrower nor any
other member of the Controlled Group has withdrawn from any Plan
or initiated steps to do so, and no steps have been taken to
reorganize or terminate any Plan.
5.10. Accuracy of Information
. No information, exhibit or report furnished by the Borrower or
any of its Subsidiaries to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the
statements contained therein not misleading.
5.11. Regulation U
. Margin stock (as defined in Regulation U) constitutes less
than 25% of the value of those assets of the Borrower and its
Included Subsidiaries which are subject to any limitation on
sale, pledge, or other restriction hereunder.
5.12. Material Agreements
. Neither the Borrower nor any Included Subsidiary is a party to
any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any Included
Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse
Effect or (ii) any agreement or instrument evidencing or
governing Indebtedness.
5.13. Compliance With Laws
. The Borrower and its Subsidiaries have complied with all
applicable statutes, rules, regulations, orders and restrictions
of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their
respective businesses or the ownership of their respective
Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a
Material Adverse Effect.
5.14. Ownership of Properties
. Except as set forth on Schedule 5.14A, on the date of this
Agreement, the Borrower and its Included Subsidiaries will have
good title, free of all Liens other than those permitted by
Section 6.15, to all of the Property and assets reflected in the
Borrower's most recent consolidated financial statements provided
to the Agent as owned by the Borrower and its Included
Subsidiaries. The Eligible Equipment of each Loan Party is
located at the locations of such Loan Party described on Schedule
5.14B.
5.15. Plan Assets; Prohibited Transactions
. The Borrower is not an entity deemed to hold "plan assets"
within the meaning of 29 C.F.R. 2510.3-101 of an employee
benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the meaning of
Section 4975 of the Code), and neither the execution of this
Agreement nor the making of Credit Extensions hereunder gives
rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters
. In the ordinary course of its business, the officers of the
Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of
which they identify and evaluate potential risks and liabilities
accruing to the Borrower due to Environmental Laws. On the basis
of this consideration, the Borrower has concluded that
Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary
has received any notice to the effect that its operations are not
in material compliance with any of the requirements of applicable
Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act
. Neither the Borrower nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as
amended.
5.18. Public Utility Holding Company Act
. Neither the Borrower nor any Subsidiary is a "holding company"
or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.19. Reportable Transaction
. The Borrower does not intend to treat the Credit Extensions
and related transactions as being a "reportable transaction"
(within the meaning of Treasury Regulation Section 1.6011-4). In
the event the Borrower determines to take any action inconsistent
with such intention, it will promptly notify the Agent thereof.
5.20. Insurance
. The certificate signed by the President or Chief Financial
Officer of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property and casualty insurance
program carried by the Borrower with respect to itself and its
Included Subsidiaries and that has been furnished by the Borrower
to the Agent and the Lenders, is complete and accurate in all
material respects. This summary includes the insurer's or
insurers' name(s), policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, exclusion(s), and
deductibles. This summary also includes similar information, and
describes any reserves, relating to any self-insurance program
that is in effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1. Financial Reporting
. The Borrower will maintain, for itself and each Subsidiary, a
system of accounting established and administered in accordance
with Agreement Accounting Principles, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years,
an unqualified audit report certified by independent certified
public accountants acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated
and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and its Subsidiaries,
including balance sheets as of the end of such period, related
profit and loss and reconciliation of surplus statements, and a
statement of cash flows, accompanied by (a) any management letter
prepared by said accountants, and (b) a certificate of said
accountants that, in the course of their examination necessary
for their certification of the foregoing, they have obtained no
knowledge of any Default or Unmatured Default, or if, in the
opinion of such accountants, any Default or Unmatured Default
shall exist, stating the nature and status thereof.
(ii) Within 60 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and its
Subsidiaries, consolidated and consolidating unaudited balance
sheets as at the close of each such period and consolidated and
consolidating profit and loss and reconciliation of surplus
statements and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter, all
certified by its chief financial officer.
(iii) As soon as available, but in any event within 90 days
after the beginning of each fiscal year of the Borrower, a copy
of the plan and forecast (including a projected consolidated and
consolidating balance sheet, income statement and funds flow
statement) of the Borrower for such fiscal year.
(iv) as soon as available but in any event within 20 days of the
end of each calendar month, and at such other times as may be
requested by the Agent, as of the period then ended, a Borrowing
Base Certificate and supporting information in connection
therewith.
(v) Together with the financial statements required under
Sections 6.1(i) and (ii), a compliance certificate in
substantially the form of Exhibit B signed by its chief financial
officer showing the calculations necessary to determine
compliance with Section 6.25 of this Agreement and stating that
no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(vi) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer
Plan, certified as correct by an actuary enrolled under ERISA.
(vii) As soon as practicable and in any event within 10 days
after the Borrower knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by the chief
financial officer of the Borrower, describing said Reportable
Event and the action which the Borrower proposes to take with
respect thereto.
(viii) As soon as practicable and in any event within 10 days
after receipt by the Borrower, a copy of (a) any notice or claim
to the effect that the Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or
local environmental, health or safety law or regulation by the
Borrower or any of its Subsidiaries, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
(ix) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(x) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with
the Securities and Exchange Commission.
(xi) On each yearly anniversary of the Closing Date, a
certificate of good standing for the Borrower and each other
Person which has pledged collateral in support of the Obligations
from the appropriate governmental officer in its jurisdiction of
incorporation or organization.
(xii) Such other information (including non-financial
information) as the Agent or any Lender may from time to time
reasonably request.
If any information which is required to be furnished to the
Lenders under this Section 6.1 is required by law or regulation
to be filed by the Borrower with a government body on an earlier
date, then the information required hereunder shall be furnished
to the Lenders at such earlier date.
6.2. Use of Proceeds
. The Borrower will, and will cause each Included Subsidiary to,
use the proceeds of the Credit Extensions for general corporate
purposes, to refinance existing Indebtedness and finance
Permitted Acquisitions. The Borrower will not, nor will it
permit any Included Subsidiary to, use any of the proceeds of the
Credit Extensions to purchase or carry any "margin stock" (as
defined in Regulation U).
6.3. Notice of Default
. The Borrower will, and will cause each Subsidiary to, give
prompt notice in writing to the Lenders of the occurrence of any
Default or Unmatured Default and of any other development,
financial or otherwise, which could reasonably be expected to
have a Material Adverse Effect.
6.4. Conduct of Business
. The Borrower will, and will cause each Included Subsidiary to,
carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it
is presently conducted and do all things necessary to remain duly
incorporated or organized, validly existing and (to the extent
such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case
may be, and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted
except for such jurisdictions where the failure to have such
authority could not reasonably be expected to have a Material
Adverse Effect.
6.5. Taxes
. The Borrower will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when
due all taxes, assessments and governmental charges and levies
upon it or its income, profits or Property, except those which
are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles. At any time
that the Borrower or any of its Subsidiaries is organized as a
limited liability company, each such limited liability company
will qualify for partnership tax treatment under United States
federal tax law.
6.6. Insurance
. The Borrower will, and will cause each Included Subsidiary to,
maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the
Borrower will furnish to any Lender upon request full information
as to the insurance carried.
6.7. Compliance with Laws
. The Borrower will, and will cause each Subsidiary to, comply
with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws, except to
the extent that noncompliance could not reasonably be expected to
have a Material Adverse Effect.
6.8. Maintenance of Properties
. The Borrower will, and will cause each Subsidiary to, do all
things necessary to maintain, preserve, protect and keep its
Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be
properly conducted at all times.
6.9. Inspection
. The Borrower will, and will cause each Included Subsidiary to,
permit the Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, books
and financial records of the Borrower and each Included
Subsidiary, to examine and make copies of the books of accounts
and other financial records of the Borrower and each Included
Subsidiary, and to discuss the affairs, finances and accounts of
the Borrower and each Included Subsidiary with, and to be advised
as to the same by, their respective officers at such reasonable
times and intervals as the Agent or any Lender may designate.
6.10. Dividends
. The Borrower will not, nor will it permit any Included
Subsidiary to, declare or pay any dividends or make any
distributions on its capital stock (other than dividends payable
in its own common stock) or redeem, repurchase or otherwise
acquire or retire any of its capital stock at any time
outstanding, except that (i) any Subsidiary may declare and pay
dividends or make distributions to the Borrower or to a
Guarantor; and (ii) so long as no Default or Unmatured Default
shall have occurred and be continuing, or would result therefrom,
the Borrower may pay preferred dividends on its Series I and
Series J Preferred Stock from Preferred Funds.
6.11. Indebtedness
. The Borrower will not, nor will it permit any Included
Subsidiary to, create, incur or suffer to exist any Indebtedness,
except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the date hereof and described in
Schedule 5.14A.
(iii) Indebtedness secured by Liens described in Section
6.15(vii), provided such Indebtedness does not exceed an
aggregate of $500,000 outstanding at any one time.
(iv) Unsecured Subordinated Indebtedness issued to finance
Permitted Acquisitions.
6.12. Merger
. The Borrower will not, nor will it permit any Included
Subsidiary to, merge or consolidate with or into any other
Person, except that an Included Subsidiary may merge into the
Borrower or a Guarantor.
6.13. Sale of Assets
. The Borrower will not, nor will it permit any Included
Subsidiary to, lease, sell or otherwise dispose of its Property
to any other Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Sales of (x) fixed assets that have been replaced with fixed
assets of substantially equal or greater value which replacement
assets are subject to the first priority (subject to Liens
permitted under Section 6.15(vii)) perfected security interest of
the Agent for the benefit of the Lenders pursuant to the
applicable Collateral Documents and (y) fixed assets that are
obsolete or no longer used or useful in the business of the
Borrower or its Included Subsidiaries the aggregate net book
value of which does not exceed $300,000 in any of the Borrower's
fiscal years.
(iii) Asset dispositions the Net Cash Proceeds of which have
been used to prepay the Obligations pursuant to Section 2.2(ii).
6.14. Investments and Acquisitions
. The Borrower will not, nor will it permit any Included
Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments
in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or
joint venture, or to make any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments
in existence on the date hereof and described in Schedule 5.8.
(iii) Permitted Acquisitions.
(iv) Investments in Excluded Subsidiaries, so long as (x) the
Borrower shall be in compliance with each of the covenants set
forth in Section 6.25, measured as of the most recent quarter end
on a pro forma basis giving effect to such Investment and (y) no
Default or Unmatured Default has occurred and is continuing or
would result from such Investment.
(v) Investments in the Borrower or, so long as no Default or
Unmatured Default has occurred and is continuing, any Guarantor.
6.15. Liens
. The Borrower will not, nor will it permit any Included
Subsidiary to, create, incur, or suffer to exist any Lien in, of
or on the Property of the Borrower or any of its Included
Subsidiaries, except the following (collectively, "Permitted
Liens"):
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and
for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more
than 60 days past due or which are being contested in good faith
by appropriate proceedings and for which adequate reserves shall
have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in
the business of the Borrower or its Included Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule
5.14A.
(vi) Liens in favor of the Agent, for the benefit of the Lenders,
the LC Issuer and Affiliates of the Lenders, granted pursuant to
any Collateral Document.
(vii) Purchase money Liens on property (other than Inventory)
acquired in the ordinary course of business, to finance or secure
a portion of the purchase price thereof, and Liens on property
acquired existing at the time of acquisition; provided that in
each case such Lien shall be limited to the property so acquired
and the liability secured by such Lien does not exceed either the
purchase price or the fair market value of the asset acquired.
(viii) Liens in favor of the Borrower pursuant to the Spectrum
Security Agreement and assigned as Collateral to the Agent for
the benefit of the Lenders, the LC Issuer and Affiliates of the
Lenders.
6.16. Rentals
. The Borrower will not, nor will it permit any Included
Subsidiary to, create, incur or suffer to exist obligations for
Rentals in excess of $1,000,000 during any one fiscal year on a
non-cumulative basis in the aggregate for the Borrower and its
Included Subsidiaries.
6.17. Affiliates
. The Borrower will not, and will not permit any Subsidiary to,
enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would reasonably
expect to obtain in a comparable arms-length transaction.
Notwithstanding the foregoing, the Borrower shall be entitled to
make the following annual payments to ARTL, so long as the
Borrower shall be in compliance with each of the covenants set
forth in Section 6.25, measured as of the most recent quarter end
on a pro forma basis giving effect to such payment and no Default
or Unmatured Default has occurred and is continuing or would
result from such payment: (x) management fees in amounts not in
excess of $1,810,800 during 2003, $1,919,500 during 2004,
$2,034,600 during 2005, $2,156,200 during 2006, $2,285,500 during
2007 and $2,422,700 during 2008; (y) payments in an amount not in
excess of all federal, state, local and foreign taxes that would
have been payable on the earnings for such year of the Borrower
and its Included Subsidiaries but for tax loss carryovers accrued
to the Borrower as of the date hereof; and (z) any other cash
contribution with prior written notice given to the Agent.
6.18. [INTENTIONALLY OMITTED.]
6.19. Operating Leases
. The Borrower will not, nor will it permit any Subsidiary to,
enter into or remain liable upon any Operating Lease, except for
Operating Leases which have Operating Lease Obligations of not
more than $5,000,000 at any one time outstanding.
6.20. Sale of Accounts
. The Borrower will not, nor will it permit any Subsidiary to,
sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse.
6.21. Sale and Leaseback Transactions
. The Borrower will not, nor will it permit any Subsidiary to,
enter into or suffer to exist any Sale and Leaseback Transaction.
6.22. Contingent Obligations
. The Borrower will not, nor will it permit any Included
Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in the
ordinary course of business, (ii) the Reimbursement Obligations
and (iii) for the Guaranty.
6.23. Letters of Credit
. The Borrower will not, nor will it permit any Included
Subsidiary to, apply for or become liable upon or in respect of
any Letter of Credit other than Facility LCs.
6.24. Additional Guarantors and Collateral; Further
Assurances.
(i) Subject to applicable law, each Loan Party shall, unless the
Required Lenders otherwise consent, (a) cause each of its
Included Subsidiaries (other than the Canadian Included
Subsidiaries) to become or remain a Guarantor and (b) cause each
of its Included Subsidiaries (other than Canadian Included
Subsidiaries) formed or acquired after the date of this Agreement
in accordance with the terms of this Agreement to guarantee
payment and performance of the Secured Obligations pursuant to
the Guaranty.
(ii) Upon the request of the Agent or the Required Lenders, each
Guarantor shall (i) grant Liens to the Agent, for the benefit of
the Agent and the Lenders, pursuant to such documents as the
Agent may reasonably deem necessary and deliver such property,
documents, and instruments as the Agent may request to perfect
the Liens of the Agent in any Property of such Guarantor which
constitutes Collateral, including any parcel of real Property
located in the U.S. owned by any Guarantor, and (ii) in
connection with the foregoing requirements, or either of them,
deliver to the Agent all items of the type required by Section
4.1 (as applicable). Upon execution and delivery of such Loan
Documents and other instruments, certificates, and agreements,
each such Person shall automatically become a Guarantor hereunder
and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents.
(iii) Each of the Borrower and the Guarantors will cause 100%
(or, in the case of the Included Subsidiaries that are not
organized under the laws of the United States or any State
thereof, 65%) of the issued and outstanding Capital Stock of each
of its Included Subsidiaries to be subject at all times to a
first priority, perfected Lien in favor of the Agent pursuant to
the terms and conditions of the Loan Documents or other security
documents as the Agent shall reasonably request.
(iv) Without limiting the foregoing, each of the Borrower and the
Guarantors shall, and shall cause each of the Subsidiaries which
is required to become a Guarantor pursuant to the terms of this
Agreement to, execute and deliver, or cause to be executed and
delivered, to the Agent such documents and agreements, and shall
take or cause to be taken such actions as the Agent may, from
time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
6.25. Financial Covenants.
6.25.1. Debt Service Coverage Ratio. The Borrower
will not permit the ratio, determined for each of its fiscal
quarters, of (i) Consolidated EBITDA, minus (A) 50% of
depreciation included in computing Consolidated EBITDA for
such period pursuant clause (A)(iii) of the definition of
Consolidated EBITDA in Article I hereof, minus, (B) without
duplication, (x) an amount equal to all federal, state,
local and foreign taxes that would have been payable during
the period of measurement on the earnings of the Borrower
and its Included Subsidiaries, but for tax loss carryovers
accrued to the Borrower as of the date hereof and (y) all
Investments made during the period of measurement by the
Borrower or any Included Subsidiary in any Excluded
Subsidiary and all cash contributions made during the period
of measurement to ARTL pursuant to clause (z) of the second
sentence of Section 6.17, to (ii) Consolidated Interest
Expense plus current maturities of principal Indebtedness
during such quarter, to be less than 1.75 to 1.0.
6.25.2. Leverage Ratio. The Borrower will not permit
its Leverage Ratio, determined as of the end of each of its
fiscal quarters, to be greater than 2.75 to 1.0.
6.25.3. Minimum Tangible Net Worth. The Borrower will
at all times maintain Consolidated Tangible Net Worth of not
less than $17,000,000.
1.1. ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1.
Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Included Subsidiaries and/or
Excluded Subsidiaries, as the case may be, to the Lenders or the
Agent under or in connection with this Agreement, any Credit
Extensions, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall
be materially false on the date as of which made.
7.2.
Nonpayment of principal of any Loan when due, nonpayment of any
Reimbursement Obligation within one Business Day after the same
becomes due, or nonpayment of interest upon any Loan or of any
commitment fee, LC Fee or other obligations under any of the Loan
Documents within five days after the same becomes due.
7.3.
The breach by the Borrower of any of the terms or provisions of
Article VI.
7.4.
The breach by the Borrower (other than a breach which constitutes
a Default under another Section of this Article VII) of any of
the terms or provisions of this Agreement which is not remedied
within thirty (30) days after the earlier of the Borrower
obtaining knowledge of such breach or the date of written notice
from the Agent or any Lender.
7.5.
Failure of the Borrower or any of its Subsidiaries to pay when
due any Material Indebtedness; or the default by the Borrower or
any of its Subsidiaries in the performance (beyond the applicable
grace period with respect thereto, if any) of any term, provision
or condition contained in any Material Indebtedness Agreement, or
any other event shall occur or condition exist, the effect of
which default, event or condition is to cause, or to permit the
holder(s) of such Material Indebtedness or the lender(s) under
any Material Indebtedness Agreement to cause, such Material
Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to
be terminated prior to its stated expiration date; or any
Material Indebtedness of the Borrower or any of its Subsidiaries
shall be declared to be due and payable or required to be prepaid
or repurchased (other than by a regularly scheduled payment)
prior to the stated maturity thereof; or the Borrower or any of
its Subsidiaries shall not pay, or admit in writing its inability
to pay, its debts generally as they become due.
7.6.
The Borrower or any of its Subsidiaries shall (i) have an order
for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any
proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any
corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.6 or (vi) fail to
contest in good faith any appointment or proceeding described in
Section 7.7.
7.7.
Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the
Borrower or any of its Subsidiaries or any Substantial Portion of
its Property, or a proceeding described in Section 7.6(iv) shall
be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive
days.
7.8.
Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of, all or
any portion of the Property of the Borrower and its Subsidiaries
which, when taken together with all other Property of the
Borrower and its Subsidiaries so condemned, seized, appropriated,
or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs,
constitutes a Substantial Portion.
7.9.
The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond (including bond on appeal) or otherwise discharge
one or more (i) judgments or orders for the payment of money in
excess of $500,000 (or the equivalent thereof in currencies other
than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect,
which judgment(s), in any such case, is/are not stayed on appeal
or otherwise being appropriately contested in good faith.
7.10.
The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $1,000,000 or any Reportable Event shall
occur in connection with any Plan.
7.11.
Nonpayment by the Borrower of any Permitted Obligation when due
or the breach by the Borrower of any term, provision or condition
contained in any documents or agreements governing any Permitted
Obligations or any transaction of the type described in the
definition of "Permitted Obligation," whether or not any Lender
or Affiliate of a Lender is a party thereto.
7.12.
Any Change in Control shall occur.
7.13.
The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it
has incurred withdrawal liability to such Multiemployer Plan in
an amount which, when aggregated with all other amounts required
to be paid to Multiemployer Plans by the Borrower or any other
member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds
$1,000,000.
7.14.
The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if as a
result of such reorganization or termination the aggregate annual
contributions of the Borrower and the other members of the
Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or
will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which
the reorganization or termination occurs by an amount exceeding
$1,000,000.
7.15.
The Borrower or any of its Subsidiaries shall (i) be the subject
of any adverse determination in a proceeding or investigation
pertaining to the release by the Borrower, any of its
Subsidiaries or any other Person of any toxic or hazardous waste
or substance into the environment, or (ii) violate any
Environmental Law, which, in the case of an event described in
clause (i) or clause (ii), could reasonably be expected to have a
Material Adverse Effect.
7.16.
The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement),
which default or breach continues beyond any period of grace
therein provided.
7.17.
The Guaranty or the Spectrum Note shall fail to remain in full
force or effect or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of the Guaranty or the
Spectrum Note, or any Guarantor shall fail to comply with any of
the terms or provisions of the Guaranty or Spectrum shall fail to
comply with any of the terms or provisions of the Spectrum Note,
or any Guarantor shall deny that it has any further liability
under the Guaranty, or shall give notice to such effect, or
Spectrum shall deny that it has any further liability under the
Spectrum Note, or shall give notice to such effect.
7.18.
Any Collateral Document shall for any reason fail to create a
valid and perfected first priority Lien in any collateral
purported to be covered thereby, except as permitted by the terms
of any Collateral Document, or any Collateral Document shall fail
to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of
any Collateral Document, or the Borrower or any Loan Party shall
fail to comply with any of the terms or provisions of any
Collateral Document.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration; Facility LC Collateral Account.
(i) If any Default described in Section 7.6 or 7.7 occurs with
respect to the Borrower, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuer to
issue Facility LCs shall automatically terminate and the
Obligations shall immediately become due and payable without any
election or action on the part of the Agent, the LC Issuer or any
Lender and the Borrower will be and become thereby
unconditionally obligated, without any further notice, act or
demand, to pay to the Agent an amount in immediately available
funds, which funds shall be held in the Facility LC Collateral
Account (defined below), equal to the difference of (x) the
amount of LC Obligations at such time, less (y) the amount on
deposit in the Facility LC Collateral Account at such time which
is free and clear of all rights and claims of third parties and
has not been applied against the Obligations (such difference,
the "Collateral Shortfall Amount"). If any other Default occurs,
the Required Lenders (or the Agent with the consent of the
Required Lenders) may (a) terminate or suspend the obligations of
the Lenders to make Loans hereunder and the obligation and power
of the LC Issuer to issue Facility LCs, or declare the
Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which
the Borrower hereby expressly waives, and (b) upon notice to the
Borrower and in addition to the continuing right to demand
payment of all amounts payable under this Agreement, make demand
on the Borrower to pay, and the Borrower will, forthwith upon
such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be
deposited in a special collateral account satisfactory to the
Agent (the "Facility LC Collateral Account") maintained at the
Agent's office at the address specified pursuant to Article XIII,
in the name of such Borrower but under the sole dominion and
control of the Agent, for the benefit of the Lenders and in which
such Borrower shall have no interest other than as set forth in
this Section 8.1. The Borrower hereby pledges, assigns and
grants to the Agent, on behalf of and for the ratable benefit of
the Lenders and the LC Issuer, a security interest in all of the
Borrower's right, title and interest in and to all funds which
may from time to time be on deposit in the Facility LC Collateral
Account to secure the prompt and complete payment and performance
of the Obligations.
(ii) If at any time while any Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is
greater than zero, the Agent may make demand on the Borrower to
pay, and the Borrower will, forthwith upon such demand and
without any further notice or act, pay to the Agent the
Collateral Shortfall Amount, which funds shall be deposited in
the Facility LC Collateral Account.
(iii) The Agent may at any time or from time to time after
funds are deposited in the Facility LC Collateral Account, apply
such funds to the payment of the Obligations and any other
amounts as shall from time to time have become due and payable by
the Borrower to the Lenders or the LC Issuer under the Loan
Documents.
(iv) At any time while any Default is continuing, neither the
Borrower nor any Person claiming on behalf of or through the
Borrower shall have any right to withdraw any of the funds held
in the Facility LC Collateral Account. After all of the
Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the
Facility LC Collateral Account shall be returned by the Agent to
the Borrower or paid to whomever may be legally entitled thereto
at such time.
(v) If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to
make Loans and the obligation and power of the LC Issuer to issue
Facility LCs hereunder as a result of any Default (other than any
Default as described in Section 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of
the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
8.2. Amendments
. Subject to the provisions of this Section 8.2, the Required
Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the
Lenders or the Borrower hereunder or waiving any Default
hereunder; provided, however, that no such supplemental agreement
shall, without the consent of all of the Lenders:
(i) Extend the final maturity of any Loan, or extend the expiry
date of any Facility LC to a date after the Facility Termination
Date or forgive all or any portion of the principal amount
thereof or any Reimbursement Obligation related thereto, or
reduce the rate or extend the time of payment of interest or fees
thereon or Reimbursement Obligations related thereto.
(ii) Amend the definition of Required Lenders.
(iii) Extend the Revolving Credit Termination Date, or reduce
the amount or extend the payment date for, the mandatory payments
required under Section 2.2, or increase the amount of the
Commitment of any Lender hereunder or the commitment to issue
Facility LCs, or increase the Aggregate Commitment to greater
than $50,000,000, or permit the Borrower to assign its rights
under this Agreement.
(iv) Increase the advance rates set forth in the definition of
Borrowing Base, or increase the permitted amount of Acquisition
Overadvances.
(v) Amend this Section 8.2.
(vi) Release any guarantor of any Advance or, except as provided
in the Collateral Documents, release all or substantially all of
the Collateral of the Borrower, Triarco, AEP, Haan Crafts or
Spectrum.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the
Agent, and no amendment of any provision relating to the LC
Issuer shall be effective without the written consent of the LC
Issuer. The Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party
to this Agreement.
8.3. Preservation of Rights
. No delay or omission of the Lenders, the LC Issuer or the
Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Credit
Extension shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required
pursuant to Section 8.2, and then only to the extent in such
writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent, the LC Issuer and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations
. All representations and warranties of the Borrower contained
in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
9.2. Governmental Regulation
. Anything contained in this Agreement to the contrary
notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. Headings
. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.4. Entire Agreement
. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, the LC Issuer and
the Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent, the LC Issuer and the Lenders
relating to the subject matter thereof other than those contained
in the fee letter described in Section 10.13 which shall survive
and remain in full force and effect during the term of this
Agreement.
9.5. Several Obligations; Benefits of this Agreement
. The respective obligations of the Lenders hereunder are
several and not joint and no Lender shall be the partner or agent
of any other (except to the extent to which the Agent is
authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement and their
respective successors and assigns, provided, however, that the
parties hereto expressly agree that the Arranger shall enjoy the
benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the
extent specifically set forth therein and shall have the right to
enforce such provisions on its own behalf and in its own name to
the same extent as if it were a party to this Agreement.
9.6. Expenses; Indemnification
(i) . (i) The Borrower shall reimburse the Agent and the
Arranger for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys
for the Agent, which attorneys may be employees of the Agent)
paid or incurred by the Agent or the Arranger in connection with
the preparation, negotiation, execution, delivery, syndication,
distribution (including, without limitation, via the internet),
review, amendment, modification, and administration of the Loan
Documents. This obligation is independent of the Borrower's
obligation to pay the fees described in the fee letter referenced
in Section 10.13. The Borrower also agrees to reimburse the
Agent, the Arranger, the LC Issuer and the Lenders for any costs,
internal charges and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent, the Arranger,
the LC Issuer and the Lenders, which attorneys may be employees
of the Agent, the Arranger, the LC Issuer or the Lenders) paid or
incurred by the Agent, the Arranger, the LC Issuer or any Lender
in connection with the collection and enforcement of the Loan
Documents. Expenses being reimbursed by the Borrower under this
Section include, without limitation, the cost and expense of
obtaining an appraisal of each parcel of real property or
interest in real property described in the Mortgages, which
appraisal shall be in conformity with the applicable requirements
of any law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law),
or any interpretation thereof, including, without limitation, the
provisions of Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, reformed or
otherwise modified from time to time, and any rules promulgated
to implement such provisions and costs and expenses incurred in
connection with the Reports described in the following sentence.
The Borrower acknowledges that from time to time Bank One may
prepare and may distribute to the Lenders (but shall have no
obligation or duty to prepare or to distribute to the Lenders)
certain audit reports (the "Reports") pertaining to the
Borrower's assets for internal use by Bank One from information
furnished to it by or on behalf of the Borrower, after Bank One
has exercised its rights of inspection pursuant to this
Agreement. In the event that the Agent, in its sole discretion,
prepares a collateral audit Report of the Collateral of the
Borrower and/or the other Loan Parties, the Agent will provide
such Report to the Lenders and the Agent will not be responsible
for any errors or omissions in such Report.
(ii) The Borrower hereby further agrees to indemnify the Agent,
the Arranger, the LC Issuer, each Lender, their respective
affiliates, and each of their directors, officers and employees
against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all
expenses of litigation or preparation therefor whether or not the
Agent, the Arranger, the LC Issuer, any Lender or any affiliate
is a party thereto) which any of them may pay or incur arising
out of or relating to this Agreement, the other Loan Documents,
the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Credit
Extension hereunder except to the extent that they are determined
in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this Section 9.6 shall survive
the termination of this Agreement.
9.7. Numbers of Documents
. All statements, notices, closing documents, and requests
hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the
Lenders.
9.8. Accounting
. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with
Agreement Accounting Principles.
9.9. Severability of Provisions
. Any provision in any Loan Document that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
9.10. Nonliability of Lenders
. The relationship between the Borrower on the one hand and the
Lenders, the LC Issuer and the Agent on the other hand shall be
solely that of borrower and lender. Neither the Agent, the
Arranger, the LC Issuer nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent, the
Arranger, the LC Issuer nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's
business or operations. The Borrower agrees that neither the
Agent, the Arranger, the LC Issuer nor any Lender shall have
liability to the Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower in connection
with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the
party from which recovery is sought. Neither the Agent, the
Arranger, the LC Issuer nor any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases and
agrees not to sue for, any special, indirect, consequential or
punitive damages suffered by the Borrower in connection with,
arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
9.11. Confidentiality
. Each Lender agrees to hold any confidential information which
it may receive from the Borrower in connection with this
Agreement in confidence, except for disclosure (i) to its
Affiliates and to other Lenders and their respective Affiliates,
(ii) to legal counsel, accountants, and other professional
advisors to such Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person
in connection with any legal proceeding to which such Lender is a
party, (vi) to such Lender's direct or indirect contractual
counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such
counterparties, (vii) permitted by Section 12.4 and (viii) to
rating agencies if requested or required by such agencies in
connection with a rating relating to the Advances hereunder. If
any Lender is required to disclose any portion of the
confidential information of the Borrower under clause (iv) or (v)
of the preceding sentence (other than in connection with any
legal proceeding in which such Lender is seeking to enforce this
Agreement or the other Loan Documents against the Borrower or its
Subsidiaries), such Lender endeavors to make a good faith effort,
to the extent reasonably feasible, to notify the Borrower prior
to the date on which such disclosure is required, and such Lender
shall reasonably cooperate in any effort of the Borrower to
maintain the confidentiality of such confidential information,
including without limitation the application for protective court
orders. Without limiting Section 9.4, the Borrower agrees that
the terms of this Section 9.11 shall set forth the entire
agreement between the Borrower and each Lender (including the
Agent) with respect to any confidential information previously or
hereafter received by such Lender in connection with this
Agreement, and this Section 9.11 shall supersede any and all
prior confidentiality agreements entered into by such Lender with
respect to such confidential information. Notwithstanding
anything herein to the contrary, confidential information shall
not include, and each Lender (and each employee, representative
or other agent of any Lender) may disclose to any and all
Persons, without limitation of any kind, the "tax treatment" and
"tax structure" (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated
hereby and all materials of any kind (including opinions or other
tax analyses) that are or have been provided to such Lender
relating to such tax treatment or tax structure; provided that
with respect to any document or similar item that in either case
contains information concerning such tax treatment or tax
structure of the transactions contemplated hereby as well as
other information, this sentence shall only apply to such
portions of the document or similar item that relate to such tax
treatment or tax structure.
9.12. Nonreliance
. Each Lender hereby represents that it is not relying on or
looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the
repayment of the Credit Extensions provided for herein.
9.13. Disclosure
. The Borrower and each Lender hereby acknowledge and agree that
Bank One, Johnson Bank and/or their Affiliates from time to time
may hold investments in, make other loans to or have other
relationships with the Borrower and its Affiliates.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship
. Bank One, NA is hereby appointed by each of the Lenders as its
contractual representative (herein referred to as the "Agent")
hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the
contractual representative of such Lender with the rights and
duties expressly set forth herein and in the other Loan
Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent,"
it is expressly understood and agreed that the Agent shall not
have any fiduciary responsibilities to any Lender by reason of
this Agreement or any other Loan Document and that the Agent is
merely acting as the contractual representative of the Lenders
with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the
Lenders' contractual representative, the Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders, (ii) is
a "representative" of the Lenders within the meaning of the term
"secured party" as defined in the Illinois Uniform Commercial
Code and (iii) is acting as an independent contractor, the rights
and duties of which are limited to those expressly set forth in
this Agreement and the other Loan Documents. Each of the Lenders
hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.
10.2. Powers
. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are
reasonably incidental thereto. The Agent shall have no implied
duties to the Lenders, or any obligation to the Lenders to take
any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3. General Immunity
. Neither the Agent nor any of its directors, officers, agents
or employees shall be liable to the Borrower, the Lenders or any
Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection
herewith or therewith except to the extent such action or
inaction is determined in a final non-appealable judgment by a
court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc.
Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any
borrowing hereunder; (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan
Document, including, without limitation, any agreement by an
obligor to furnish information directly to each Lender; (c) the
satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to the Agent;
(d) the existence or possible existence of any Default or
Unmatured Default; (e) the validity, enforceability,
effectiveness, sufficiency or genuineness of any Loan Document or
any other instrument or writing furnished in connection
therewith; (f) the value, sufficiency, creation, perfection or
priority of any Lien in any collateral security; or (g) the
financial condition of the Borrower or any guarantor of any of
the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. The Agent shall have no
duty to disclose to the Lenders information that is not required
to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its
capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders
. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder and under any other Loan
Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the
Lenders. The Lenders hereby acknowledge that the Agent shall be
under no duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement or any
other Loan Document unless it shall be requested in writing to do
so by the Required Lenders. The Agent shall be fully justified
in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking
or continuing to take any such action.
10.6. Employment of Agents and Counsel
. The Agent may execute any of its duties as Agent hereunder and
under any other Loan Document by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning the contractual
arrangement between the Agent and the Lenders and all matters
pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7. Reliance on Documents; Counsel
. The Agent shall be entitled to rely upon any Note, notice,
consent, certificate, affidavit, letter, telegram, facsimile,
telex, electronic mail message, statement, paper or document
believed by it to be genuine and correct and to have been signed
or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent. For purposes of
determining compliance with the conditions specified in Sections
4.1 and 4.2, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder
to be consented to or approved by or acceptable or satisfactory
to a Lender unless the Agent shall have received notice from such
Lender prior to the applicable date specifying its objection
thereto.
10.8. Agent's Reimbursement and Indemnification
. The Lenders agree to reimburse and indemnify the Agent ratably
in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any
amounts not reimbursed by the Borrower for which the Agent is
entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses
incurred by the Agent in connection with any dispute between the
Agent and any Lender or between two or more of the Lenders) and
(iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection
with any dispute between the Agent and any Lender or between two
or more of the Lenders), or the enforcement of any of the terms
of the Loan Documents or of any such other documents, provided
that (i) no Lender shall be liable for any of the foregoing to
the extent any of the foregoing is found in a final non-
appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the
Agent and (ii) any indemnification required pursuant to Section
3.5(vii) shall, notwithstanding the provisions of this Section
10.8, be paid by the relevant Lender in accordance with the
provisions thereof. The obligations of the Lenders under this
Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. Notice of Default
. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Unmatured Default hereunder
unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or
Unmatured Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice,
the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender
. In the event the Agent is a Lender, the Agent shall have the
same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any
Lender and may exercise the same as though it were not the Agent,
and the term "Lender" or "Lenders" shall, at any time when the
Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction,
in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Subsidiaries in
which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person.
10.11. Lender Credit Decision
. Each Lender acknowledges that it has, independently and
without reliance upon the Agent, the Arranger or any other Lender
and based on the financial statements prepared by the Borrower
and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and
the other Loan Documents.
10.12. Successor Agent
. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no
successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. The
Agent may be removed at any time with or without cause by written
notice received by the Agent from the Required Lenders, such
removal to be effective on the date specified by the Required
Lenders. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Agent.
Notwithstanding the previous sentence, the Agent may at any time
without the consent of the Borrower or any Lender, appoint any of
its Affiliates which is a commercial bank as a successor Agent
hereunder. If the Agent has resigned or been removed and no
successor Agent has been appointed, the Lenders may perform all
the duties of the Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders.
No successor Agent shall be deemed to be appointed hereunder
until such successor Agent has accepted the appointment. Any
such successor Agent shall be a commercial bank having capital
and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the
resignation or removal of the Agent, the resigning or removed
Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness
of the resignation or removal of an Agent, the provisions of this
Article X shall continue in effect for the benefit of such Agent
in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other
Loan Documents. In the event that there is a successor to the
Agent by merger, or the Agent assigns its duties and obligations
to an Affiliate pursuant to this Section 10.12, then the term
"Prime Rate" as used in this Agreement shall mean the prime rate,
base rate or other analogous rate of the new Agent.
10.13. Agent and Arranger Fees
. The Borrower agrees to pay to the Agent and the Arranger, for
their respective accounts, the fees agreed to by the Borrower,
the Agent and the Arranger pursuant to that certain letter
agreement dated July 15, 2003 or as otherwise agreed from time to
time.
10.14. Delegation to Affiliates
. The Borrower and the Lenders agree that the Agent may delegate
any of its duties under this Agreement to any of its Affiliates.
Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with
this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which
the Agent is entitled under Articles IX and X.
10.15. Execution of Collateral Documents
. The Lenders hereby empower and authorize the Agent to execute
and deliver to the appropriate Loan Parties on their behalf the
Collateral Documents and all related financing statements and to
prepare, execute, deliver, file and/or record any financing
statements, agreements, documents or instruments as shall be
necessary or appropriate to effect the purposes of the Collateral
Documents.
10.16. Collateral Releases
. The Lenders hereby empower and authorize the Agent to execute
and deliver to the appropriate Loan Parties on their behalf any
agreements, documents or instruments as shall be necessary or
appropriate to effect any releases of Collateral which shall be
permitted by the terms hereof or of any other Loan Document or
which shall otherwise have been approved by the Required Lenders
(or, if required by the terms of Section 8.2, all of the Lenders)
in writing.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff
. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default occurs, any and all deposits
(including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness
at any time held or owing by any Lender or any Affiliate of any
Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Secured Obligations
owing to such Lender, whether or not the Secured Obligations, or
any part thereof, shall then be due.
11.2. Ratable Payments
. If any Lender, whether by setoff or otherwise, has payment
made to it upon its Outstanding Credit Exposure (other than
payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a
greater proportion than that received by any other Lender, such
Lender agrees, promptly upon demand, to purchase a portion of the
Aggregate Outstanding Credit Exposure held by the other Lenders
so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure. If any
Lender, whether in connection with setoff or amounts which might
be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their
respective Pro Rata Shares of the Aggregate Outstanding Credit
Exposure. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be
made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns
. The terms and provisions of the Loan Documents shall be
binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns permitted
hereby, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents without
the prior written consent of each Lender, (ii) any assignment by
any Lender must be made in compliance with Section 12.3, and
(iii) any transfer by Participation must be made in compliance
with Section 12.2. Any attempted assignment or transfer by any
party not made in compliance with this Section 12.1 shall be null
and void, unless such attempted assignment or transfer is treated
as a participation in accordance with Section 12.3.2. The
parties to this Agreement acknowledge that clause (ii) of this
Section 12.1 relates only to absolute assignments and this
Section 12.1 does not prohibit assignments creating security
interests, including, without limitation, (x) any pledge or
assignment by any Lender of all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank or
(y) in the case of a Lender which is a Fund, any pledge or
assignment of all or any portion of its rights under this
Agreement and its Note to its trustee in support of its
obligations to its trustee; provided, however, that no such
pledge or assignment creating a security interest shall release
the transferor Lender from its obligations hereunder unless and
until the parties thereto have complied with the provisions of
Section 12.3. The Agent may treat the Person which made any Loan
or which holds any Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 12.3;
provided, however, that the Agent may in its discretion (but
shall not be required to) follow instructions from the Person
which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person. Any assignee of
the rights to any Loan or any Note agrees by acceptance of such
assignment to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person,
who at the time of making such request or giving such authority
or consent is the owner of the rights to any Loan, shall be
conclusive and binding on any subsequent holder or assignee of
the rights to such Loan.
12.2. Participations.12.2.1 Permitted Participants; Effect
. Any Lender may at any time sell to one or more banks or other
entities ("Participants") participating interests in any
Outstanding Credit Exposure of such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of
such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations,
such Lender shall remain the owner of its Outstanding Credit
Exposure and the holder of any Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined
as if such Lender had not sold such participating interests, and
the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under the Loan Documents.
12.2.2 Voting Rights
. Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any
amendment, modification or waiver with respect to any Credit
Extension or Commitment in which such Participant has an interest
which would require consent of all of the Lenders pursuant to the
terms of Section 8.2 or of any other Loan Document.
12.2.3 Benefit of Certain Provisions
. The Borrower agrees that each Participant shall be deemed to
have the right of setoff provided in Section 11.1 in respect of
its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under the Loan Documents, provided that each Lender shall retain
the right of setoff provided in Section 11.1 with respect to the
amount of participating interests sold to each Participant. The
Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in
Section 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such
amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender. The Borrower further agrees that each
Participant shall be entitled to the benefits of Sections 3.1,
3.2, 3.4 and 3.5 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to Section 12.3,
provided that (i) a Participant shall not be entitled to receive
any greater payment under Section 3.1, 3.2 or 3.5 than the Lender
who sold the participating interest to such Participant would
have received had it retained such interest for its own account,
unless the sale of such interest to such Participant is made with
the prior written consent of the Borrower, and (ii) any
Participant not incorporated under the laws of the United States
of America or any State thereof agrees to comply with the
provisions of Section 3.5 to the same extent as if it were a
Lender.
12.3. Assignments.
12.3.1 Permitted Assignments
. Any Lender may at any time assign to one or more banks or
other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit C or in such other form as
may be agreed to by the parties thereto. Each such assignment
with respect to a Purchaser which is not a Lender or an Affiliate
of a Lender or an Approved Fund shall either be in an amount
equal to the entire applicable Commitment and Outstanding Credit
Exposure of the assigning Lender or (unless each of the Borrower
and the Agent otherwise consents) be in an aggregate amount not
less than $5,000,000. The amount of the assignment shall be
based on the Commitment or Outstanding Credit Exposure (if the
Commitment has been terminated) subject to the assignment,
determined as of the date of such assignment or as of the "Trade
Date," if the "Trade Date" is specified in the assignment.
12.3.2 Consents
. The consent of the Borrower shall be required prior to an
assignment becoming effective unless the Purchaser is a Lender,
an Affiliate of a Lender or an Approved Fund, provided that the
consent of the Borrower shall not be required if a Default has
occurred and is continuing. The consent of the Agent and the LC
Issuer shall be required prior to an assignment becoming
effective unless the Purchaser is a Lender. Any consent required
under this Section 12.3.2 shall not be unreasonably withheld or
delayed.
12.3.3 Effect; Effective Date
. Upon (i) delivery to the Agent of an assignment, together with
any consents required by Sections 12.3.1 and 12.3.2, and (ii)
payment of a $3,500 fee to the Agent for processing such
assignment (unless such fee is waived by the Agent), such
assignment shall become effective on the effective date specified
in such assignment. The assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and
Outstanding Credit Exposure under the applicable assignment
agreement constitutes "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, such Purchaser shall
for all purposes be a Lender party to this Agreement and any
other Loan Document executed by or on behalf of the Lenders and
shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original
party thereto, and the transferor Lender shall be released with
respect to the Commitment and Outstanding Credit Exposure
assigned to such Purchaser without any further consent or action
by the Borrower, the Lenders or the Agent. In the case of an
assignment covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a
Lender hereunder but shall continue to be entitled to the
benefits of, and subject to, those provisions of this Agreement
and the other Loan Documents which survive payment of the
Obligations and termination of the applicable agreement. Any
assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 12.3 shall
be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in
accordance with Section 12.2. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.3, the
transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
12.3.4 Register
. The Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Chicago,
Illinois a copy of each Assignment and Assumption delivered to it
and a register for the recordation of the names and addresses of
the Lenders, and the Commitments of, and principal amounts of the
Outstanding Credit Exposure of, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the
Borrower at any reasonable time and from time to time upon
reasonable prior notice.
12.4. Dissemination of Information
. The Borrower authorizes each Lender to disclose to any
Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports;
provided that each Transferee and prospective Transferee agrees
to be bound by Section 9.11 of this Agreement.
12.5. Tax Treatment
. If any interest in any Loan Document is transferred to any
Transferee which is not incorporated under the laws of the United
States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section
3.5(iv).ARTICLE XIII
NOTICES
13.1. Notices; Effectiveness; Electronic Communication
(a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and
except as provided in paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall
be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows:
(i) if to the Borrower, at its address or telecopier number set
forth on the signature page hereof;
(ii) if to the Administrative Agent, at its address or telecopier
number set forth on the signature page hereof;
(iii) if to the Issuing Bank, at its address or telecopier
number set forth on the signature page hereof;
(iv) if to a Lender, to it at its address (or telecopier number)
set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given
when received; notices sent by telecopier shall be deemed to have
been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been
given at the opening of business on the next Business Day for the
recipient). Notices delivered through electronic communications
to the extent provided in paragraph (b) below, shall be effective
as provided in said paragraph (b).
(b) Electronic Communications. Notices and other communications
to the Lenders and the Issuing Bank hereunder may be delivered or
furnished by electronic communication (including e-mail and
internet or intranet websites) pursuant to procedures approved by
the Agent or as otherwise determined by the Agent, provided that
the foregoing shall not apply to notices to any Lender or the
Issuing Bank pursuant to Article II if such Lender or the Issuing
Bank, as applicable, has notified the Agent that it is incapable
of receiving notices under such Article by electronic
communication. Each of the Agent, each Lender and the Borrower
may, in its respective discretion, agree to accept notices and
other communications to it hereunder by electronic communications
pursuant to procedures approved by it or as it otherwise
determines, provided that such determination or approval may be
limited to particular notices or communications.
Unless the Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received
upon the sender's receipt of an acknowledgement from the intended
recipient (such as by the "return receipt requested" function, as
available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not given
during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening
of business on the next Business Day for the recipient, and (ii)
notices or communications posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or
communication is available and identifying the website address
therefor.
(c) Change of Address, Etc. Any party hereto may change its
address or telecopier number for notices and other communications
hereunder by notice to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall
be effective when it has been executed by the Borrower, the
Agent, the LC Issuer and the Lenders and each party has notified
the Agent by facsimile transmission or telephone that it has
taken such action. ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW
. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS, OF THE STATE OF WISCONSIN, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION
. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR WISCONSIN STATE
COURT SITTING IN MILWAUKEE, WISCONSIN IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT, THE LC
ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE LC ISSUER
OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN MILWAUKEE,
WISCONSIN.
15.3. WAIVER OF JURY TRIAL
. THE BORROWER, THE AGENT, THE LC ISSUER AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer
and the Agent have executed this Agreement as of the date first
above written.
THE ARISTOTLE CORPORATION, a
Delaware corporation
By: /s/Steven B. Lapin
Title:President
96 Cummings Point Road
Stamford, CT 06902
Attention: President
Telephone: (203) 358-
8000
FAX: (203) ___-____
And
901 Janesville Avenue
Fort Atkinson, WI 53538
Attention: Chief Financial
Officer
Telephone: (920) 568-
5576
FAX: (920) 563-0234
Commitments
$30,000,000 BANK ONE, NA (MAIN OFFICE
CHICAGO),
Individually and as Agent
By: /s/Mark P. Bruss
Title: First Vice President
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Mark P. Bruss
Telephone: (414) 765-
3254
FAX: (414) 765-3190
[Signature Page 1 of 2 to Credit Agreement]
$
