EXHIBIT 10.1
__________________________________________________
__________________________________________________
LOAN AND SECURITY AGREEMENT
DATED: October 31, 2001
$50,000,000
by and among
THE LENDERS NAMED HEREIN,
as Lenders
and
FLEET CAPITAL CORPORATION,
as Agent and a Lender
and
HOME PRODUCTS INTERNATIONAL - NORTH AMERICA, INC.,
as Borrower
__________________________________________________
__________________________________________________
Fleet Capital Corporation
A FleetBoston Financial Company
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY...................................... 1
1.1 Revolving Credit Loans............................... 1
1.2 Letters of Credit; LC Guaranties..................... 2
SECTION 2. INTEREST, FEES AND CHARGES........................... 3
2.1 Interest............................................. 3
2.2 Computation of Interest and Fees..................... 4
2.3 Letter of Credit and LC Guaranty Fees................ 4
2.4 Unused Line Fee...................................... 5
2.5 Audit and Appraisal Fees............................. 5
2.6 Reimbursement of Expenses............................ 5
2.7 Bank Charges......................................... 6
SECTION 3. LOAN ADMINISTRATION.................................. 6
3.1 Manner of Borrowing Revolving Credit Loans........... 6
3.2 Payments............................................. 9
3.3 Mandatory Prepayments................................ 10
3.4 Application of Payments and Collections.............. 11
3.5 All Loans to Constitute One Obligation............... 11
3.6 Loan Account......................................... 11
3.7 Statements of Account................................ 11
3.8 Increased Costs...................................... 11
3.9 Basis for Determining Interest Rate Inadequate or
Unfair............................................. 13
SECTION 4. TERM AND TERMINATION................................. 13
4.1 Term of Agreement.................................... 13
4.2 Termination.......................................... 13
SECTION 5. SECURITY INTERESTS................................... 14
5.1 Security Interest in Collateral...................... 14
5.2 Other Collateral..................................... 15
5.3 Lien Perfection; Further Assurances.................. 16
5.4 Lien on Realty....................................... 16
SECTION 6. COLLATERAL ADMINISTRATION............................ 17
6.1 General.............................................. 17
6.2 Administration of Accounts........................... 17
6.3 Administration of Inventory.......................... 19
6.4 Administration of Equipment.......................... 19
6.5 Payment of Charges................................... 20
SECTION 7. REPRESENTATIONS AND WARRANTIES....................... 20
7.1 General Representations and Warranties............... 20
7.2 Continuous Nature of Representations and Warranties.. 25
7.3 Survival of Representations and Warranties........... 25
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.................. 25
8.1 Affirmative Covenants................................ 25
8.2 Negative Covenants................................... 28
8.3 Specific Financial Covenants......................... 32
SECTION 9. CONDITIONS PRECEDENT................................. 32
9.1 Documentation........................................ 32
9.2 No Default........................................... 32
9.3 Other Loan Documents................................. 33
9.4 Availability......................................... 33
9.5 No Litigation........................................ 33
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.... 33
10.1 Events of Default.................................... 33
10.2 Acceleration of the Obligations...................... 35
10.3 Other Remedies....................................... 35
10.4 Remedies Cumulative; No Waiver....................... 37
10.5 Set Off and Sharing of Payments...................... 37
SECTION 11. THE AGENT............................................ 37
11.1 Authorization and Action............................. 37
11.2 Agent's Reliance, Etc................................ 38
11.3 FCC and Affiliates................................... 39
11.4 Lender Credit Decision............................... 39
11.5 Indemnification...................................... 39
11.6 Rights and Remedies to be Exercised by Agent Only.... 39
11.7 Agency Provisions Relating to Collateral............. 40
11.8 Successor Agent...................................... 40
11.9 Audit and Examination Reports; Disclaimer by Lenders. 41
SECTION 12. MISCELLANEOUS........................................ 41
12.1 Power of Attorney.................................... 41
12.2 Indemnity............................................ 42
12.3 Modification of Agreement; Sale of Interest.......... 42
12.4 Severability......................................... 45
12.5 Successors and Assigns............................... 45
12.6 Cumulative Effect; Conflict of Terms................. 45
12.7 Execution in Counterparts............................ 46
12.8 Notice............................................... 46
12.9 Consents............................................. 47
12.10 Credit Inquiries..................................... 47
12.11 Time of Essence...................................... 48
12.12 Entire Agreement..................................... 48
12.13 Interpretation....................................... 48
12.14 GOVERNING LAW; CONSENT TO FORUM...................... 48
12.15 WAIVERS BY BORROWER.................................. 49
12.16 Advertisement........................................ 49
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 31st day of October,
2001, by and among HOME PRODUCTS INTERNATIONAL_NORTH AMERICA, INC.
("Borrower"), a Delaware corporation with its chief executive office and
principal place of business at 4501 West 47th Street, Chicago, Illinois
60632; the lenders who are signatories hereto ("Lenders"); and FLEET CAPITAL
CORPORATION ("FCC"), a Rhode Island corporation with an office at One South
Wacker Drive, Suite 1400, Chicago, Illinois 60606, as agent for Lenders
hereunder (FCC, in such capacity, being "Agent"). Capitalized terms used in
this Agreement have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein
shall be construed in accordance with GAAP consistently applied.
Section 1. CREDIT FACILITY.
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to Fifty
Million Dollars ($50,000,000) available upon Borrower's request therefore,
as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. The aggregate amount of the
Revolving Credit Loans to be made by each Lender (such Lender's "Revolving
Credit Loan Commitment"), pursuant to the terms hereof, shall be the amount
set below such Lender's name on the signature pages hereof. The aggregate
principal amount of the Revolving Credit Loan Commitments is Fifty Million
Dollars ($50,000,000). The percentage equal to the quotient of (x) each
Lender's Revolving Credit Loan Commitment, divided by (y) the aggregate of
all Revolving Credit Loan Commitments, is that Lender's "Revolving Credit
Percentage". Subject to all of the terms and conditions of this Agreement,
each Lender agrees, for so long as no Default or Event of Default exists, to
make Revolving Credit Loans to Borrower from time to time, as requested by
Borrower in the manner set forth in subsection 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the product of (A) the
Borrowing Base at such time minus the LC Amount and reserves, if any,
multiplied by (B) such Lender's Revolving Credit Percentage. Agent shall
have the right to establish reserves in such amounts, and with respect to
such matters, as Agent shall deem necessary or appropriate, against the
amount of Revolving Credit Loans which Borrower may otherwise request under
this subsection 1.1.1, including, without limitation, with respect to:
(i) price adjustments, rebates, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the
ordinary course of Borrower's business; (ii) shrinkage, spoilage and
obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums
chargeable against Borrower's Loan Account as Revolving Credit Loans under
any section of this Agreement; (v) amounts owing by Borrower to any Person
to the extent secured by a Lien on, or trust over, any Property of Borrower
(other than a Permitted Lien); and (vi) such other matters, events,
conditions or contingencies as to which Agent, in its sole credit judgment,
determines reserves should be established from time to time hereunder. In
the event that Agent establishes any such reserve, Agent shall notify
Borrower of such event and shall discuss with Borrower the facts and
circumstances giving rise to the establishment of any such reserve.
The Revolving Credit Loans shall be evidenced by promissory notes
to be executed and delivered by Borrower at the time of the initial
Revolving Credit Loan, the form of which is attached hereto and made a part
hereof as Exhibit 1.1.1 (the "Revolving Credit Notes"). Each Revolving
Credit Note shall be payable to the order of a Lender and shall represent
the obligation of Borrower to pay the amount of such Lender's Revolving
Credit Loan Commitment or, if less, the aggregate unpaid principal amount of
all Revolving Credit Loans made by such Lender to Borrower with interest
thereon as prescribed in subsection 2.1.1.
Insofar as Borrower may request and Lenders may be willing in
their sole and absolute discretion to make Revolving Credit Loans to
Borrower at a time when the unpaid balance of Revolving Credit Loans plus
the LC Amount exceeds, or would exceed with the making of any such Revolving
Credit Loan, the Borrowing Base (any such Loan or Loans being herein
referred to individually as an "Overadvance" and collectively as
"Overadvances"), Agent shall enter such Overadvances as debits in the Loan
Account. All Overadvances shall be repaid on demand, shall be secured by
the Collateral and shall bear interest as provided in this Agreement for
Revolving Credit Loans generally. Any Overadvance to be made by Lenders
pursuant to the terms hereof shall be made by Lenders ratably in accordance
with their Revolving Credit Percentages. Overadvances in the aggregate
amount of Five Hundred Thousand Dollars ($500,000) or less may, prior to the
occurrence and during the continuation of a Default or Event of Default, be
made in the sole and absolute discretion of Agent. Overadvances in an
aggregate amount of more than Five Hundred Thousand Dollars ($500,000) but
less than One Million Five Hundred Thousand Dollars ($1,500,000) may, prior
to the occurrence and during continuation of a Default or an Event of
Default, be made in the sole and absolute discretion of Required Lenders.
Overadvances in an aggregate amount of One Million Five Hundred Thousand
Dollars ($1,500,000) or more and Overadvances to be made after the
occurrence and during the continuation of a Default or an Event of Default
shall require the consent of all Lenders. The forgoing notwithstanding, in
no event, unless otherwise consented to by all Lenders, (x) shall any
Overadvances be outstanding for more than sixty (60) consecutive days,
(y) after all outstanding Overadvances have been repaid, shall Agent or
Lenders make any additional Overadvances unless sixty (60) days or more have
expired since the last date on which any Overadvances were outstanding or
(z) shall Overadvances be outstanding on more than ninety (90) days within
any one hundred eighty day (180) period.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall
be used solely for the satisfaction of existing Indebtedness of Borrower to
the Chase Group, for Borrower's general operating capital needs in a manner
consistent with the provisions of this Agreement and all applicable laws and
for such other purposes as permitted by this Agreement.
1.2 Letters of Credit; LC Guaranties. (i) Agent agrees, on behalf of
Lenders, for so long as no Default or Event of Default exists and if
requested by Borrower, (x) to issue its, or cause to be issued its
Affiliate's Letters of Credit for the account of Borrower or (y) to execute
LC Guaranties by which Lenders shall guaranty the payment or performance by
Borrower of its reimbursement obligation with respect to Letters of Credit;
provided that the aggregate face amount of all Letters of Credit and
LC Guaranties outstanding at any time shall not exceed Six Million Dollars
($6,000,000). No Letter of Credit or LC Guarantee may have an expiration
date that is after the last day of the Original Term. Any amounts paid by
Agent or any Lender under any LC Guaranty or in connection with any Letter
of Credit (x) shall become part of the Obligations, (y) unless paid by
Borrower pursuant to subsection 1.3(iii) below, shall be paid from the
proceeds of a Revolving Credit Loan requested pursuant to subsection 3.1.1
below, to the extent Lenders are required to make Revolving Credit Loans
pursuant to the terms hereof and (z) otherwise, shall be payable on demand.
(ii) Immediately upon the issuance of each Letter of Credit by
Agent or its Affiliate or LC Guaranty by Agent or its Affiliate hereunder,
each Lender shall be deemed to have automatically, irrevocably and
unconditionally purchased from Agent an undivided interest and participation
in and to such Letter of Credit or LC Guaranty, the obligations of Borrower
in respect thereof and the liability of Agent or its Affiliate thereunder in
an amount equal to the maximum amount available for drawing under such
Letter of Credit or, in the case of a LC Guaranty, the amount guaranteed
thereunder, multiplied by such Lender's Revolving Credit Percentage. Agent
will notify each Lender promptly upon presentation to it of a draw under a
Letter of Credit or a demand for payment under a LC Guaranty. On a weekly
basis, or more frequently if requested by Agent, each Lender shall make
payment to Agent in immediately available funds, of an amount equal to such
Lender's pro rata share of the amount of any payment made by Agent in
respect to any Letter of Credit or LC Guaranty. The obligation of each
Lender to reimburse Agent under this Section 1.3 shall be unconditional,
continuing, irrevocable and absolute, except in respect of indemnity claims
arising out of Agent's willful misconduct. In the event that any Lender
fails to make payment to Agent of any amount due under this Section 1.3,
Agent shall be entitled to receive, retain and apply against such obligation
the principal and interest otherwise payable to such Lender hereunder until
Agent receives such payment from such Lender or such obligation is otherwise
fully satisfied; provided, however, that nothing contained in this sentence
shall relieve such Lender of its obligation to reimburse the Agent for such
amount in accordance with this subsection 1.3(ii).
(iii) Borrower agrees, unconditionally, irrevocably and
absolutely, to pay immediately to Agent, for the account of Lenders, the
amount drawn under a Letter of Credit or paid pursuant to a LC Guaranty. If
Borrower at any time fails to make such payment in accordance with the terms
of this Agreement, Borrower shall be deemed to have elected to borrow from
the Lenders on such date Revolving Credit Loans equal in aggregate amount to
the amount paid by Agent or the issuing Lender, as the case may be, under
such Letter of Credit or LC Guaranty. The provisions of subsections 1.3(i)
and (ii) notwithstanding, in the event that any Lender is prohibited by any
Legal Requirement from issuing or participating in any LC Guaranty (or
portion thereof), then Agent shall issue such LC Guaranty (or such Lender's
portion thereof) in lieu of such Lender and such Lender shall not be deemed
to have a participation therein. In such event, any payments received by
Agent pursuant to subsection 1.3(iii) of the Loan Agreement which would
otherwise be paid by Agent to such Lender shall be retained by Agent to
reimburse Agent for any amounts paid by Agent in respect to the LC Guaranty
(or portion thereof) Agent issued in lieu of such Lender.
Section 2. INTEREST, FEES AND CHARGES.
2.1 Interest.
2.1.1 Rates of Interest. Interest shall accrue on the
Revolving Credit Loans in accordance with the terms of the Revolving Credit
Note. Interest shall accrue on the principal amount of the Base Rate
Advances outstanding at the end of each day at a fluctuating rate per annum
equal to the Applicable Margin plus the Base Rate. Interest shall accrue on
the principal amount of each of the LIBOR Advances outstanding at the end of
each day at a fixed rate per annum equal to the Applicable Margin plus the
LIBOR for the applicable Interest Period. The rate of interest applicable
to Base Rate Advances shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate, effective as of the opening of
business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. At the option of Agent
or Required Lenders, upon and after the occurrence of an Event of Default,
and during the continuation thereof, the principal amount of all Loans shall
bear interest at a rate per annum equal to two percent (2%) above the
interest rate otherwise applicable thereto (the "Default Rate").
2.1.3 Maximum Interest. Notwithstanding anything to the
contrary set forth in this Section 2.1, if at any time until payment in full
of all of the Obligations, the interest rate calculated pursuant to
subsections 2.1.1 or 2.2.2 (the "Stated Rate") exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be
so exceeded, the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time thereafter the
Stated Rate is less than the Maximum Lawful Rate, Borrower shall continue to
pay interest hereunder at the Maximum Lawful Rate until such time as the
total interest received by Lenders from the making of advances hereunder is
equal to the total interest which Lenders would have received had the Stated
Rate (but for the operation of this subsection 2.1.3) been the interest rate
payable since the Closing Date. Thereafter, the interest rate payable
hereunder shall be the Stated Rate unless and until the Stated Rate again
exceeds the Maximum Lawful Rate, in which event this subsection 2.1.3 shall
again apply. In no event shall the total interest received by Lenders
pursuant to the terms hereof exceed the amount which Lenders could lawfully
have received had the interest due hereunder been calculated for the full
term hereof at the Maximum Lawful Rate.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and unused line fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed
over a year of 360 days.
2.3 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent
either for its benefit or the ratable benefit of Lenders, as provided below:
(i) for standby Letters of Credit and LC Guaranties of standby
Letters of Credit, the Applicable Margin per annum of the aggregate face
amount of such Letters of Credit and LC Guaranties outstanding from time to
time during the term of this Agreement, plus all normal and customary
charges associated with the issuance thereof (including, without limitation,
a fronting fee in the amount of one-eighth of one percent (?%) of the
maximum face amount of the applicable Letter of Credit or LC Guaranty),
which fees and charges shall be deemed fully earned upon issuance of each
such Letter of Credit or LC Guaranty, shall be due and payable on the first
Business Day of each month and shall not be subject to rebate or proration
upon the termination of this Agreement for any reason; and
(ii) for documentary Letters of Credit and LC Guaranties of
documentary Letters of Credit, a fee equal to the Applicable Margin per
annum of the face amount of each such Letter of Credit or LC Guaranty,
payable upon the issuance of such Letter of Credit or execution of such LC
Guaranty and an additional fee equal to the Applicable Margin per annum of
the face amount of such Letter of Credit or LC Guaranty payable upon each
renewal thereof and each extension thereof plus the normal and customary
charges associated with the issuance and administration of each such Letter
of Credit or LC Guaranty (including, without limitation, a fronting fee in
the amount of one-eighth of one percent (?%) of the maximum face amount of
the applicable Letter of Credit or LC Guaranty), which fees and charges
shall be fully earned upon issuance, renewal or extension, as the case may
be, of each such Letter of Credit or LC Guaranty, shall be due and payable
on the first Business Day of each month, and shall not be subject to rebate
or proration upon the termination of this Agreement for any reason.
(iii) Normal and customary charges associated with the issuance of
Letters of Credit or LC Guaranties (including, without limitation, any
fronting fee) shall be paid to Agent for its own benefit. All other amounts
paid to Agent pursuant to this Section 2.4 shall be payable to Agent for the
ratable benefit of Lenders.
2.4 Unused Line Fee. Borrower shall pay to Agent for the ratable
benefit of Lenders a fee equal to the Applicable Margin per annum of the
average monthly amount by which the Maximum Revolving Loan Amount exceeds
the sum of the outstanding principal balance of the Revolving Credit Loans
plus the LC Amount. The unused line fee shall be payable monthly in arrears
on the first day of each calendar month hereafter.
2.5 Audit and Appraisal Fees. Borrower shall pay to Agent out-of-pocket
audit and appraisal cost and expenses incurred from time to time in
connection with audits and appraisals of Borrower's books and records and
such other matters as Agent shall deem appropriate. If an Event of Default
has occurred and is continuing, then Borrower shall also pay to Agent audit
and appraisal fees in accordance with Agent's current schedule of fees in
effect in connection with such audits or appraisals. Audit costs, expenses
and fees (if any) shall be payable on the first day of the month following
the date of issuance by Agent of a request for payment thereof to Borrower.
2.6 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent, any Lender or any
Participating Lender incurs reasonable (in respect to clauses (i), (ii) and
(v)) only legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with: (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or
modification of this Agreement or any of the other Loan Documents, or any
sale or attempted sale of any interest herein to another Lender or a
Participating Lender; (ii) the administration of this Agreement or any of
the other Loan Documents and the transactions contemplated hereby and
thereby; (iii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in
any way relating to the Collateral, this Agreement or any of the other Loan
Documents or Borrower's affairs; (iv) any attempt to enforce any rights of
Agent, any Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Agent and/or Lenders by virtue of this
Agreement or any of the other Loan Documents, including, without limitation,
the Account Debtors; or (v) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or
realize upon the Collateral; then all such legal and accounting expenses,
other costs and out of pocket expenses of Agent, any Lender or any
Participating Lender shall be charged to Borrower. All amounts chargeable
to Borrower under this Section 2.6 shall be Obligations secured by all of
the Collateral, shall be payable on demand to Agent, such Lender or to such
Participating Lender, as the case may be, and shall bear interest from the
date such demand is made until paid in full at the rate applicable to Base
Rate Advances from time to time. Borrower shall also reimburse Agent for
expenses incurred by Agent in its administration of the Collateral to the
extent and in the manner provided in Section 6 hereof.
2.7 Bank Charges. Borrower shall pay to Agent, on demand, any and all
fees, costs or expenses which Agent, any Lender or any Participating Lender
pays to a bank or other similar institution (including, without limitation,
any fees paid by Agent or any Lender to any Participating Lender) arising
out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Agent, any Lender or any Participating
Lender, of proceeds of loans made by Lenders to Borrower pursuant to this
Agreement and (ii) the depositing for collection, by Agent, any Lender or
any Participating Lender, of any check or item of payment received or
delivered to Agent, any Lender or any Participating Lender on account of the
Obligations.
Section 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests. A request for a Revolving Credit
Loan shall be made, or shall be deemed to be made, in the following manner:
(i) Borrower may give Agent a Notice of Revolving Credit Loan, in which
notice Borrower shall specify the amount of the proposed borrowing and the
proposed borrowing date, provided, however, that no such request may be made
at a time when there exists a Default or an Event of Default; and (ii) the
becoming due of any amount required to be paid under this Agreement, whether
as interest or for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the amount required
to pay such interest or other Obligation. As an accommodation to Borrower,
Agent may permit telephonic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower
from such authorized persons designated by Borrower from time to time.
Unless Borrower specifically directs Agent in writing not to accept or act
upon telephonic or electronic communications from Borrower, Agent shall have
no liability to Borrower for any loss or damage suffered by Borrower as a
result of Agent's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Agent
by Borrower and Agent shall have no duty to verify the origin of any such
communication or the authority of the person sending it, except for any loss
or damage resulting from Agent's gross negligence on willful misconduct.
Except as otherwise provided in subsection 3.1.4, each Revolving Credit Loan
shall be made on notice, given not later than 11:00 a.m. (Chicago time) on
the Business Day of the proposed Revolving Credit Loan, by Borrower to
Agent, which shall give to each Lender prompt written notice thereof by
telecopier or e-mail. Each such notice (a "Notice of Revolving Credit
Loan") shall be in writing or by telephone to Agent at (262) 798-4800,
confirmed immediately in writing, specifying therein the requested date and
amount of such Revolving Credit Loan. Each Lender shall, not later than
2:00 p.m. (Chicago time) on each requested date, wire to a bank designated
by Agent the amount of that Lender's Revolving Credit Percentage of the
requested Revolving Credit Loan. Agent shall, before 2:30 P.M. (Chicago
time) on the date of the proposed Revolving Credit Loan, subject to the
provisions hereof, wire to a bank designated by Borrower and reasonably
acceptable to Agent, the amount of such Revolving Credit Loan to the extent
received from Lenders. The failure of any Lender to make the Revolving
Credit Loan to be made by it shall not relieve any other Lender of its
obligation hereunder to make its Revolving Credit Loan. Neither Agent nor
any other Lender shall be responsible for the failure of any other Lender to
make the Revolving Credit Loan to be made by such other Lender. The
foregoing notwithstanding, unless otherwise notified by any Lender, Agent,
in its sole discretion, may, from its own funds, make a Revolving Credit
Loan on behalf of any Lender hereto. In such event, the Lender on behalf of
whom Agent made the Revolving Credit Loan shall reimburse Agent for the
amount of Revolving Credit Loan so made on its behalf, on a weekly (or more
frequent basis as determined by Agent, in its sole discretion) basis and the
entire amount of interest attributable to such Revolving Credit Loan for the
period from the date on which said Revolving Credit Loan was made by Agent
on such Lender's behalf until Agent is reimbursed by such Lender, shall be
paid to Agent.
If at any time one or more Lenders refuse or fail to make a
requested Revolving Credit Loan when all conditions to a Revolving Credit
Loan have been satisfied or waived, then Agent may, at its option, but shall
have no obligation whatsoever to, purchase all, but not less than all, of
the Revolving Credit Notes, held by the Lender(s) who so fail or refuse, and
to assume such Lender's commitments to make Revolving Credit Loans and each
such Lender shall be obligated to sell and transfer such Revolving Credit
Notes to Agent for a price in cash equal to the principal balance
outstanding plus all accrued but unpaid interest thereon plus all accrued
but unpaid fees due any such Lender under the terms hereof, and the
foregoing provisions of this Section will be applicable to Agent with
respect to the Revolving Credit Notes so purchased by it. Any such
purchase, however, shall not relieve any such Lender from any breach of
contract claims available to Agent and/or Borrower against such Lender as a
result of its failure to make any such Revolving Credit Loan.
3.1.2 Disbursement. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolving Credit Loan
requested, or deemed to be requested, pursuant to this subsection 3.1.2 as
follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 3.1.1(i) shall be disbursed by Agent in lawful money of the
United States of America in immediately available funds, in the case of the
initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and Agent
from time to time or elsewhere if pursuant to a written direction from
Borrower; and (ii) the proceeds of each Revolving Credit Loan requested
under subsection 3.1.1(ii) shall be disbursed by Agent by way of direct
payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably
authorizes Agent, in Agent's sole discretion, to advance to Borrower, and to
charge to Borrower's Loan Account hereunder as a Base Rate Advance, a sum
sufficient to pay all interest accrued on the Obligations during the
immediately preceding month and to pay all reasonable costs, fees and
expenses at any time owed by Borrower to Agent and/or any Lender hereunder.
3.1.4 LIBOR Advances. Notwithstanding the provisions of
subsection 3.1.1, in the event Borrower desires to obtain a LIBOR Advance,
Borrower shall give Agent prior, written, irrevocable notice no later than
11:00 A.M. Chicago time on the 3rd Business Day prior to the requested
borrowing date specifying (i) Borrower's election to obtain a LIBOR Advance,
(ii) the date of the proposed borrowing (which shall be a Business Day) and
(iii) the amount to be borrowed, which amount shall be in a minimum
principal amount of One Million Dollars ($1,000,000) and may increase in
integral multiples of One Hundred Thousand Dollars ($100,000). In no event
shall Borrower be permitted to have outstanding at any one time LIBOR
Advances with more than four (4) different Interest Periods.
3.1.5 Conversion of Base Rate Advances. Provided that
no Event of Default has occurred which is then continuing, Borrower may, on
any Business Day, convert any Base Rate Advance into a LIBOR Advance. If
Borrower desires to convert a Base Rate Advance, Borrower shall give Agent
not less than three (3) Business Days' prior written notice (prior to
11:00 A.M. Chicago Time on such Business Day), specifying the date of such
conversion and the amount to be converted. Each conversion into or
conversion of a LIBOR Advance shall be in a minimum principal amount of One
Million Dollars ($1,000,000) and may increase in integral multiples of One
Hundred Thousand Dollars ($100,000) in excess thereof. After giving effect
to any conversion of Base Rate Advances to LIBOR Advances, Borrower shall
not be permitted to have outstanding at any one time LIBOR Advances with
more than four (4) different Interest Periods. Upon the day after Agent
receives notice from Borrower electing to obtain a LIBOR Advance, to convert
a Base Rate Advance or to continue a LIBOR Advance, Agent shall notify
Borrower of the LIBOR applicable to the requested LIBOR Advance.
3.1.6 Continuation of LIBOR Advances. Borrower shall
have the right on three (3) Business Days' prior irrevocable written notice
given to Agent by Borrower (prior to 11:00 A.M. New York City Time on such
Business Day), subject to the provisions hereof, to continue any LIBOR
Advance into a subsequent Interest Period of the same or a different
permitted duration, in each case subject to the satisfaction of the
following conditions:
(i) in the case of a continuation of less than all LIBOR
Advances, the LIBOR Advances continued shall each be in a minimum
principal amount of One Million Dollars ($1,000,000) and may increase
in integral multiples of One Hundred Thousand Dollars ($100,000); and
(ii) no LIBOR Advance (or portion thereof) may be continued
as a LIBOR Advance if an Event of Default has occurred which is then
continuing or if, after giving effect to such continuation, Borrower
shall have outstanding LIBOR Advances with more than four (4) different
Interest Periods.
If Borrower shall fail to give timely notice of its election to
continue any LIBOR Advance or portion thereof as provided above, or if such
continuation shall not be permitted, such LIBOR Advance or portion thereof,
unless such LIBOR Advance shall be repaid, shall automatically be converted
into a Base Rate Advance at the end of the Interest Period then in effect
with respect to such LIBOR Advance.
Notice to Lenders. Agent shall promptly notify each Lender of any
notices received by Agent from Borrower in respect to LIBOR Advances,
conversions of Base Rate Advances into LIBOR Advances or continuations of
LIBOR Advances.
3.1.7 Inability to Make LIBOR Advances. Notwithstanding
any other provision hereof, if any applicable law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this
subsection 3.1.8, the term "Lender" shall include the office or branch where
Lender or any corporation or bank then controlling any Lender makes or
maintains any LIBOR Advances) to make or maintain its LIBOR Advances, or if
with respect to any Interest Period, Agent is unable to determine the LIBOR
relating thereto, or adverse or unusual conditions in, or changes in
applicable law relating to, the London interbank market make it, in the
reasonable judgment of Agent, impracticable to fund therein any of the LIBOR
Advances, or make the projected LIBOR unreflective of the actual costs of
funds therefore to Lenders, the obligation of Lenders to make LIBOR Advances
hereunder shall forthwith be suspended during the pendency of such
circumstances and Borrower shall, if any affected LIBOR Advances are then
outstanding, promptly upon request from Agent, convert such affected LIBOR
Advances into Base Rate Advances.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Agent or Lenders specifically containing
payment provisions which are in conflict with this Section 3.2 (in which
event the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of
Revolving Credit Loans shall be payable by Borrower to Agent, for the
ratable benefit of Lenders, immediately upon the earliest of (i) the receipt
by Agent or Borrower of any proceeds of any of the Collateral, to the extent
of said proceeds, (ii) the occurrence of an Event of Default in consequence
of which Agent or Required Lenders elects to accelerate the maturity and
payment of the Obligations, or (iii) termination of this Agreement pursuant
to Section 4 hereof; provided, however, that if an Overadvance shall exist
at any time, Borrower shall, on demand, repay the Overadvance. Each payment
(including principal prepayment) by Borrower on account of principal of the
Revolving Credit Loans shall be applied first to Base Rate Advances, then to
LIBOR Advances.
3.2.2 Interest. Interest accrued on the Revolving
Credit Loans shall be due on the earliest of (i) the first calendar day of
each month (for the immediately preceding month), computed through the last
calendar day of the preceding month, (ii) the last day of the applicable
Interest Period for any LIBOR Advance, (iii) the occurrence of an Event of
Default in consequence of which Agent or Required Lenders elects to
accelerate the maturity and payment of the Obligations or (iv) termination
of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges
payable pursuant to this Agreement shall be payable by Borrower as and when
provided in Section 2 hereof, to Agent for its benefit and/or the ratable
benefit of Lenders, as applicable, or to any other Person designated by
Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to
Agent for its benefit and/or the ratable benefit of Lenders, as applicable,
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.2.5 Prepayment of LIBOR Advances. Borrower may prepay
a LIBOR Advance only upon at least three (3) Business Days prior written
notice to Agent (which notice shall be irrevocable). Borrower shall pay to
Agent, upon request of Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of Agent) to compensate each Lender for any loss,
cost, or expense incurred as a result of: (i) any payment of a LIBOR
Advance on a date other than the last day of the Interest Period for such
Loan; (ii) any failure by Borrower to borrow a LIBOR Advance on the date
specified by Borrower's written notice; or (iii) any failure by Borrower to
pay a LIBOR Advance on the date for payment specified in Borrower's written
notice. Without limiting the foregoing, Borrower shall pay to Agent for the
ratable benefit of Lenders a "yield maintenance fee" in an amount computed
as follows: the current rate for United States Treasury securities (bills
on a discounted basis shall be converted to a bond equivalent) with a
maturity date closest to the Interest Period chosen pursuant to the LIBOR
Advance as to which the prepayment is made, shall be subtracted from the
LIBOR in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If the result is
a positive number, then the resulting percentage shall be multiplied by the
amount of the principal balance being prepaid. The resulting amount shall
be divided by 360 and multiplied by the number of days remaining in the
Interest Period chosen pursuant to the LIBOR Advance as to which the
prepayment is made. Said amount shall be reduced to present value
calculated by using the above referenced United States Treasury securities
rate and the number of days remaining in the term chosen pursuant to the
LIBOR Advance as to which prepayment is made. The resulting amount shall be
the yield maintenance fee due to Agent for the ratable benefit of Lenders
upon the prepayment of a LIBOR Advance. If by reason of an Event of
Default, Agent or Required Lenders elects or elect to declare the
Obligations to be immediately due and payable, then any yield maintenance
fee with respect to a LIBOR Advance shall become due and payable in the same
manner as though the Borrower had exercised such right of prepayment.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or
Condemnation of Collateral. Except as provided below or in subsection 6.4.2
hereof, if Borrower sells any of the Equipment or real Property, or if any
of the Collateral is lost or destroyed or taken by condemnation, Borrowers
shall pay to Agent for the ratable benefit of Lenders, unless otherwise
agreed by Required Lenders, as and when received by any Borrower and as a
mandatory prepayment of the Revolving Credit Loans, as herein provided, a
sum equal to the net cash proceeds (including insurance payments) received
by Borrower from such sale, loss, destruction or condemnation. To the
extent that the Collateral sold, lost, destroyed or condemned consists of
Equipment or real Property, then, except as otherwise provided below, the
applicable prepayment shall be applied to reduce permanently the Fixed Asset
Component. Notwithstanding the foregoing, if the proceeds of insurance with
respect to any loss or destruction of Equipment or real Property are less
than Five Hundred Thousand Dollars ($500,000) or if no Default or Event of
Default exists and is continuing, such larger amount as may be consented to
by Required Lenders upon Borrower's request, which consent shall not be
unreasonably withheld or delayed, Agent and Lenders shall apply such
proceeds to the outstanding principal balance of the Revolving Credit Loans
(and shall not permanently reduce the Fixed Asset Component) and shall
permit Borrower within 180 days (or such longer period as reasonably
consented to by Agent) after the receipt by Borrower of such proceeds to
reborrow such proceeds in accordance with the terms of this Agreement for
use in replacing or repairing the damaged or lost Collateral. If such
damaged or lost Collateral is not replaced or repaired within such 180 day
(or such longer period as reasonably consented to by Agent) period, then the
Fixed Asset Component shall be permanently reduced by the amount of such
proceeds.
3.3.2 Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) on account of the Revolving Credit Loans
made by it in excess of its ratable share of payments on account of the
Revolving Credit Loans made by all Lenders, such Lender shall forthwith
purchase from each other Lender such participations in the Revolving Credit
Loan as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each other Lender; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of such
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this subsection 3.3.2 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation.
3.4 Application of Payments and Collections. All items of payment
received by Agent by 12:00 noon, Chicago, Illinois time, on any Business Day
shall be deemed received on that Business Day. All items of payment
received after 12:00 noon, Chicago, Illinois time, on any Business Day shall
be deemed received on the following Business Day. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Agent or any Lender
from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Agent and Lenders shall have the continuing exclusive right to apply
and reapply any and all such payments and collections received at any time
or times hereafter by Agent or its agent against the Obligations, in such
manner as Agent and/or Required Lenders may deem advisable, notwithstanding
any entry by Agent or any Lender upon any of its books and records. If as
the result of collections of Accounts as authorized by subsection 6.2.6
hereof a credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrower, but shall be available to
Borrower at any time or times for so long as no Event of Default exists.
3.5 All Loans to Constitute One Obligation. The Loans and LC Guaranties
shall constitute one general Obligation of Borrower, and shall be secured by
Agent's Lien upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Agent, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrower.
3.7 Statements of Account. Agent will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Agent shall be deemed final, binding and
conclusive upon Borrower unless Agent is notified by Borrower in writing to
the contrary within thirty (30) days of the date each accounting is deemed
received by Borrower pursuant to Section 12.8 of this Agreement. Such
notice shall only be deemed an objection to those items specifically
objected to therein. In the event that any item charged to Borrower's loan
account is reversed, Agent shall also reverse or credit back to Borrower any
interest which accrued on such reversed item.
3.8 Increased Costs. If any law or any governmental or quasi-
governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which
Agent and Lenders operate (excluding, for the avoidance of doubt, the effect
of and phasing in of capital requirements or other regulations or guidelines
passed prior to the date of this Agreement), or any interpretation or
application thereof by any governmental authority charged with the
interpretation or application thereof, or the compliance of Agent or Lenders
therewith, shall:
(i) (1) subject any Lender to any tax with respect to this
Agreement (other than any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without limitation,
any franchise tax or any similar tax based on capital, net worth or
comparable basis for measurement or (2) change the basis of taxation of
payments to any Lender of principal, fees, interest or any other amount
payable hereunder or under any Loan Documents (other than in respect of any
tax based on or measured by net income or otherwise in the nature of a net
income tax, including, without limitation, any franchise tax or any similar
tax based on capital, net worth or comparable basis for measurement);
(ii) impose, modify or hold applicable any reserve (except any
reserve taken into account in the determination of the applicable LIBOR),
special deposit, assessment or similar requirement against assets held by,
or deposits in or for the account of, advances or loans by, or other credit
extended by, any office of any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or
(iii) impose on any Lender or the London interbank market any
other condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to any Lender
of making, renewing or maintaining Loans hereunder by an amount that any
Lender deems to be material or to reduce the amount of any payment (whether
of principal, interest or otherwise) in respect of any of the Loans by an
amount that any Lender deems to be material, then, in any such case,
Borrower shall pay Agent for the benefit of such Lender, upon demand and
certification not later than sixty (60) days following its receipt either
from Agent or the affected Lender of notice of the imposition of such
increased costs, such additional amount as will compensate the affected
Lender for such additional cost or such reduction, as the case may be, to
the extent such Lender has not otherwise been compensated, with respect to a
particular Loan, for such increased cost as a result of an increase in the
Base Rate or the LIBOR. An officer of the affected Lender shall determine
the amount of such additional cost or reduced amount using reasonable
averaging and attribution methods and shall certify the amount of such
additional cost or reduced amount to Borrower, which certification shall
include a written explanation of such additional cost or reduction to
Borrower. Such certification shall be conclusive absent manifest error. If
any Lender claims any additional cost or reduced amount pursuant to this
Section 3.8, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different lending office
or to file any certificate or document reasonably requested by Borrower if
the making of such designation or filing would avoid the need for, or reduce
the amount of, any such additional cost or reduced amount and would not, in
the sole discretion of such Lender, be otherwise disadvantageous to such
Lender. In the event that the provisions of this Section 3.8 result in the
effective interest rates being charged to Borrower being increased, on a
per annum basis, by more than one quarter percent (1/4%), Borrower may
require any such affected Lender to sell and transfer all its interest in
this Agreement and its Revolving Credit Note and Revolving Credit Loan
Commitments to a substitute Lender (who shall be reasonably acceptable to
Agent) for a price in cash equal to principal balance of such affected
Lender's outstanding Loans plus all accrued but unpaid interest thereon plus
all accrued but unpaid fees due any such affected Lender under the terms
hereof. Any such sale and transfer shall be made pursuant to the terms of
Section 12.3 hereof.
3.9 Basis for Determining Interest Rate Inadequate or Unfair. In the
event that Agent shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR for
any Interest Period; or
(ii) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank market with respect to a
proposed LIBOR Advance, or a proposed conversion of a Base Rate Advance into
a LIBOR Advance; then
Agent shall give Borrower prompt written, telephonic or electronic notice of
the determination of such effect. If such notice is given, (i) any such
requested LIBOR Advance shall be made as a Base Rate Advance, unless
Borrower shall notify Agent no later than 11:00 A.M. (Chicago Time) two (2)
Business Days prior to the date of such proposed borrowing that the request
for such borrowing shall be canceled or made as an unaffected type of LIBOR
Advance, and (ii) any Base Rate Advance which was to have been converted to
an affected type of LIBOR Advance shall be continued as or converted into a
Base Rate Advance, or, if Borrower shall notify Agent, no later than
11:00 A.M. (Chicago Time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of LIBOR Advance.
Section 4. TERM AND TERMINATION.
4.1 Term of Agreement. Subject to Agent's and Lenders' right to cease
making Loans to Borrower upon or after the occurrence of any Default or
Event of Default, this Agreement shall be in effect for a period of four (4)
years from the date hereof, through and including October 31, 2005 (the
"Original Term").
4.2 Termination.
4.2.1 Termination by Agent or Lenders. Agent may and,
at the direction of Required Lenders, shall terminate this Agreement without
notice upon the occurrence and during the continuance of an Event of
Default.
4.2.2 Termination by Borrower. Upon at least
thirty (30) days prior written notice to Agent, Borrower may, at its option,
terminate this Agreement; provided, however, no such termination shall be
effective until Borrower has paid all of the Obligations in immediately
available funds and all Letters of Credit and LC Guaranties have expired or
have been cash collateralized to Agent's satisfaction. Any notice of
termination given by Borrower shall be irrevocable unless Required Lenders
and Agent otherwise agree in writing, and Agent and Lenders shall have no
obligation to make any Loans or issue or procure any Letters of Credit or LC
Guaranties on or after the termination date stated in such notice. Borrower
may elect to terminate this Agreement in its entirety only. No section of
this Agreement or type of Loan available hereunder may be terminated singly.
4.2.3 Effect of Termination. All of the Obligations
shall be immediately due and payable upon the termination date stated in any
notice of termination of this Agreement. All undertakings, agreements,
covenants, warranties and representations of Borrower contained in the Loan
Documents shall survive any such termination and Agent shall retain its
Liens in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrower has paid the
Obligations to Agent for the ratable benefit of Lenders, in full, in
immediately available funds, together with the applicable termination
charge, if any. Notwithstanding the payment in full of the Obligations,
Agent shall not be required to terminate its security interests in the
Collateral unless, with respect to any loss or damage Agent or Lenders may
incur as a result of dishonored checks or other items of payment received by
Agent or any Lender from Borrower or any Account Debtor and applied to the
Obligations, Agent shall, at its option, (i) have received a written
agreement, executed by Borrower and by any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the
Obligations, indemnifying Agent and Lenders from any such loss or damage; or
(ii) have retained such monetary reserves and Liens on the Collateral for
such period of time as Agent, in its reasonable discretion, may deem
necessary to protect Agent and Lenders from any such loss or damage.
Section 5. SECURITY INTERESTS.
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, Borrower hereby grants
to Agent for its benefit and the ratable benefit of Lenders a continuing
Lien upon all of Borrower's assets, including all of the following Property
and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of any of the
foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment Intangibles and
Software;
(xii) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and
therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all other
personal property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, or
evidencing, embodying, incorporating or referring to any of the foregoing,
and all Proceeds, products, offspring, rents, issues, profits and returns of
and from any of the foregoing; provided that to the extent that the
provisions of any lease or license of Computer Hardware and Software or
Intellectual Property expressly prohibit (which prohibition is enforceable
under applicable law) any assignment thereof, and the grant of a security
interest therein, Agent will not enforce its security interest in Borrower's
rights under such lease or license (other than in respect of the Proceeds
thereof) for so long as such prohibition continues, it being understood that
upon request of Agent, Borrower will in good faith use reasonable efforts to
obtain consent for the creation of a security interest in favor of Agent
(and to Agent's enforcement of such security interest) in Agent's rights
under such lease or license.
5.2 Other Collateral.
5.2.1 Commercial Tort Claims. Borrower shall promptly
notify Agent in writing upon incurring or otherwise obtaining a Commercial
Tort Claim after the Closing Date against any third party and, upon request
of Agent, promptly enter into an amendment to this Agreement and do such
other acts or things deemed appropriate by Agent to give Agent a security
interest in any such Commercial Tort Claim.
5.2.2 Other Collateral. Borrower shall promptly notify
Agent in writing upon acquiring or otherwise obtaining any Collateral after
the date hereof consisting of Deposit Accounts, Investment Property, Letter-
of-Credit Rights or Electronic Chattel Paper and, upon the request of Agent,
promptly execute such other documents, and do such other acts or things
deemed reasonably appropriate by Agent to deliver to Agent control with
respect to such Collateral; promptly notify Agent in writing upon acquiring
or otherwise obtaining any Collateral after the date hereof consisting of
Documents or Instruments and, upon the request of Agent, will promptly
execute such other documents, and do such other acts or things deemed
reasonably appropriate by Agent to deliver to Agent possession of such
Documents which are negotiable and Instruments, and, with respect to
nonnegotiable Documents, to have such nonnegotiable Documents issued in the
name of Agent; and with respect to Collateral in the possession of a third
party, other than Certificated Securities and Goods covered by a Document
and obtain an acknowledgement from the third party that it is holding the
Collateral for the benefit of Agent.
5.3 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the UCC and such other
instruments, assignments or documents as are necessary to perfect Agent's
Lien upon any of the Collateral and shall take such other action as may be
required to perfect or to continue the perfection of Agent's Lien upon the
Collateral. Unless prohibited by applicable law, Borrower hereby
irrevocably authorizes Agent to execute and file any such financing
statements, including, without limitation, financing statements that
indicate the Collateral (i) as all assets of Borrower or words of similar
effect, or (ii) as being of an equal or lesser scope, or with greater or
lesser detail, than as set forth in Section 5.1, on Borrower's behalf.
Borrower also hereby ratifies its authorization for Agent to have filed in
any jurisdiction any like financing statements or amendments thereto if
filed prior to the date hereof. The parties agree that a photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Agent's request, Borrower shall also promptly execute or cause to be
executed and shall deliver to Agent any and all documents, instruments and
agreements deemed reasonably necessary by Agent to give effect to or carry
out the terms or intent of the Loan Documents.
5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages upon
all real Property described therein. If Borrower shall acquire at any time
or times hereafter any interest in other real Property (other than leasehold
interests in sales offices or storage facilities with an original lease term
of less than five years), Borrower agrees promptly to execute and deliver to
Agent, as additional security and Collateral for the Obligations, deeds of
trust, security deeds, mortgages or other collateral assignments reasonably
satisfactory in form and substance to Agent and its counsel (herein
collectively referred to as "New Mortgages") covering such real Property.
The Mortgages and each New Mortgage shall be duly recorded (at Borrower's
expense) in each office where such recording is required to constitute a
valid Lien on the real Property covered thereby. In respect to each
Mortgage and each New Mortgage, Borrower shall deliver to Agent, at such
Borrower's expense, mortgagee title insurance policies issued by a title
insurance company reasonably satisfactory to Agent insuring Agent, as
mortgagee; such policies shall be in form and substance reasonably
satisfactory to Agent and shall insure a valid first Lien in favor of Agent
on the Property covered thereby, subject only to those exceptions reasonably
acceptable to Agent and its counsel. Said policies shall be in form and
substance reasonably satisfactory to Agent. Such Borrower shall also
deliver to Agent such other documents, including, without limitation, ALTA
Surveys of the real Property, as Agent and its counsel may reasonably
request relating to the real Property subject to any such New Mortgage.
Section 6. COLLATERAL ADMINISTRATION.
6.1 General.
6.1.1 Location of Collateral. All Collateral, other
than Inventory in transit and motor vehicles, will at all times be kept by
Borrower and its Subsidiaries at one or more of the business locations set
forth in Exhibit 6.1.1 hereto and shall not, without the prior written
approval of Agent, be moved therefrom except, prior to an Event of Default
and Agent's or Required Lender's acceleration of the maturity of the
Obligations in consequence thereof, for (i) sales of Inventory in the
ordinary course of business; and (ii) removals in connection with
dispositions of Equipment that are authorized by subsection 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain
and pay for insurance upon all Collateral wherever located and with respect
to Borrower's business, covering casualty, hazard, public liability and such
other risks in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver the originals of
such policies to Agent with satisfactory lender's loss payable endorsements,
naming Agent as loss payee, assignee or additional insured, as appropriate.
Each policy of insurance or endorsement shall contain a clause requiring the
insurer to give not less than thirty (30) days prior written notice to Agent
in the event of cancellation of the policy for any reason whatsoever and a
clause specifying that the interest of Agent shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property
or by the occupation of the premises for purposes more hazardous than are
permitted by said policy. If Borrower fails to provide and pay for such
insurance, Agent may, at its option, but shall not be required to, procure
the same and charge Borrower therefor. Borrower agrees to deliver to Agent,
promptly as rendered, true copies of all reports made in any reporting forms
to insurance companies.
6.1.3 Protection of Collateral. All expenses of
protecting, storing, warehousing, insuring, handling, maintaining and
shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral
or in respect of the sale thereof shall be borne and paid by Borrower. If
Borrower fails to promptly pay any portion thereof when due, Agent may, at
its option, but shall not be required to, pay the same and charge Borrower
therefor. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is
in Agent's actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or
other person whomsoever, but the same shall be at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts.
Borrower shall keep accurate and complete records of its Accounts and all
payments and collections thereon and shall submit to Agent on such periodic
basis as Agent shall request a sales and collections report for the
preceding period, in form reasonably satisfactory to Agent. On or before
the fifteenth day of each month from and after the date hereof, Borrower
shall deliver to Agent, in form acceptable to Agent, a detailed aged trial
balance of all Accounts existing as of the last day of the preceding month,
specifying the names, addresses, face value, dates of invoices and due dates
for each Account Debtor obligated on an Account so listed ("Schedule of
Accounts"), and, upon Agent's request therefor, copies of proof of delivery
and the original copy of all documents, including, without limitation,
repayment histories and present status reports relating to the Accounts so
scheduled and such other matters and information relating to the status of
then existing Accounts as Agent shall reasonably request. If requested by
Agent, after and during the occurrence of an Event of Default, Borrower
shall execute and deliver to Agent formal written assignments of all of its
Accounts weekly or daily, which shall include all Accounts that have been
created since the date of the last assignment, together with copies of
invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower
grants any discounts, allowances or credits that are not shown on the face
of the invoice for the Account involved, Borrower shall report such
discounts, allowances or credits, as the case may be, to Agent as part of
the next required Schedule of Accounts. If any amounts due and owing in
excess of One Million Dollars ($1,000,000) are in dispute between Borrower
and any Account Debtor, Borrower shall provide Agent with written notice
thereof within five (5) Business Days of Borrower becoming aware of any such
dispute, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Agent shall have the right to settle or adjust all
disputes and claims directly with the Account Debtor and to compromise the
amount or extend the time for payment of the Accounts upon such terms and
conditions as Agent may deem advisable, and to charge the deficiencies,
costs and expenses thereof, including reasonable attorney's fees, to
Borrower.
6.2.3 Taxes. If an Account includes a charge for any
tax payable to any governmental taxing authority, Agent is authorized, in
its sole discretion, to pay the amount thereof to the proper taxing
authority for the account of Borrower and to charge Borrower therefor,
provided, however that Agent shall not be liable for any taxes to any
governmental taxing authority that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or
an Event of Default has occurred, any of Agent's officers, employees or
agents shall have the right, at any time or times hereafter, in the name of
Agent, any designee of Agent, or Borrower, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone, electronic
communication or otherwise. Borrower shall cooperate fully with Agent in an
effort to facilitate and promptly conclude any such verification process.
If no Default or Event of Default has occurred and is continuing, Agent
shall give Borrower reasonable advance written notice of any such telephone
confirmation.
6.2.5 Maintenance of Dominion Account. Borrower shall
maintain a Dominion Account pursuant to a lockbox arrangement acceptable to
Agent with such banks as may be selected by Borrower and be reasonably
acceptable to Agent. Borrower shall issue to any such banks an irrevocable
letter of instruction directing such banks to deposit all payments or other
remittances received in the lockbox to the Dominion Account for application
on account of the Obligations. All funds deposited in the Dominion Account
shall immediately become the property of Agent and Borrower shall obtain the
agreement by such banks in favor of Agent to waive any recoupment, setoff
rights, and any security interest in, or against the funds so deposited.
Agent assumes no responsibility for such lockbox arrangement, including,
without limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral.
To expedite collection, Borrower shall endeavor in the first instance to
make collection of its Accounts for Agent. All remittances received by
Borrower on account of Accounts, together with the proceeds of any other
Collateral, shall be held as Agent's property by Borrower as trustee of an
express trust for Agent's benefit and Borrower shall immediately deposit
same in kind in the Dominion Account. Agent retains the right at all times
after the occurrence of a Default or an Event of Default to notify Account
Debtors that Accounts have been assigned to Agent and to collect Accounts
directly in its own name, or in the name of Agent's agent, and to charge the
collection costs and expenses, including reasonable attorneys' fees to
Borrower.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall
keep accurate and complete records of its Inventory. Borrower shall furnish
to Agent Inventory reports in form and detail reasonably satisfactory to
Agent at such times as Agent may request, but at least once each month, not
later than the fifteenth (15th) day of such month, concurrently with the
delivery of the Borrowing Base Certificate as required by subsection 8.1.4.
Borrower shall conduct a physical inventory no less frequently than annually
and shall provide to Agent a report based on each such physical inventory
promptly thereafter, together with such supporting information as Agent
shall request.
6.3.2 Returns of Inventory. If at any time or times
hereafter any Account Debtor returns any Inventory to Borrower the shipment
of which generated an Account on which such Account Debtor is obligated in
excess of Five Hundred Thousand Dollars ($500,000), Borrower shall
immediately notify Agent of the same, specifying the reason for such return
and the location, condition and intended disposition of the returned
Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower
shall keep accurate records itemizing and describing the kind, type,
quality, quantity and value of its Equipment and all dispositions made in
accordance with subsection 6.4.2 hereof, and shall furnish Agent with a
current schedule containing the foregoing information on at least an annual
basis and more often if requested by Agent. Immediately on request therefor
by Agent, Borrower shall deliver to Agent any and all evidence of ownership,
if any, of any of the Equipment.
6.4.2 Dispositions of Equipment. Borrower will not
sell, lease or voluntarily otherwise dispose of or transfer any of the
Equipment or any part thereof without the prior written consent of Agent;
provided, however, that the foregoing restriction shall not apply, for so
long as no Default or Event of Default exists, to (i) dispositions of
Equipment which, in the aggregate during any consecutive twelve-month
period, has a fair market value or book value, whichever is less, of Five
Hundred Thousand Dollars ($500,000) or less, provided that all proceeds
thereof are remitted to Agent for application to the Revolving Credit Loans,
or (ii) in connection with replacements of Equipment with Equipment of like
or better kind, function or value, provided that the replacement Equipment
shall be acquired prior to, concurrently with or within 180 days (or such
longer period as reasonably consented to by Agent) after any disposition of
the Equipment that is to be replaced, the replacement Equipment shall be
free and clear of Liens other than Permitted Liens that are not Purchase
Money Liens, and Borrower shall have given Agent at least five (5) days
prior written notice of any such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral,
shall be payable on demand and shall bear interest from the date such
advance was made until paid in full at the rate applicable to Base Rate
Advances from time to time.
Section 7. REPRESENTATIONS AND WARRANTIES.
7.1 General Representations and Warranties. To induce Agent and Lenders
to enter into this Agreement and to make advances hereunder, Borrower
warrants, represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Each of Borrower
and its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
Each of Borrower and its Subsidiaries is duly qualified and is authorized to
do business and is in good standing as a foreign corporation in each state
or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions in which the failure of Borrower or any of its Subsidiaries to
be so qualified would have a material adverse effect on the financial
condition, business or Properties of Borrower or any of its Subsidiaries.
7.1.2 Corporate Power and Authority. Each of Borrower
and its Subsidiaries is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party. The execution, delivery and performance
of this Agreement and each of the other Loan Documents have been duly
authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the shareholders (or members, in the
case of a limited liability company) of Borrower or any of its Subsidiaries;
(ii) contravene Borrower's or any of its Subsidiaries' charter, articles or
certificate of incorporation or bylaws; (iii) violate, or cause Borrower or
any of its Subsidiaries to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award in effect having applicability to Borrower or any of its
Subsidiaries; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower or any of its Subsidiaries is a party or by
which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter
acquired by Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is,
and each of the other Loan Documents when delivered under this Agreement
will be, a legal, valid and binding obligation of each of Borrower and its
Subsidiaries enforceable against it in accordance with its respective terms,
subject, as to enforcement, to general principles of equity, and to
bankruptcy, insolvency and similar rights affecting creditors' rights
generally.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states
(i) the correct name of each of the Subsidiaries of Borrower, its
jurisdiction of incorporation and the percentage of its Voting Stock owned
by Borrower, (ii) the name of each of Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the number, nature and
holder of all outstanding Securities of Borrower and each Subsidiary of
Borrower and (iv) the number of authorized, issued and treasury shares of
Borrower and each Subsidiary of Borrower. Borrower has good title to all of
the shares it purports to own of the stock of each of its Subsidiaries, free
and clear in each case of any Lien other than Permitted Liens. All such
shares have been duly issued and are fully paid and non-assessable. There
are no outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell, or any
Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its
Subsidiaries. Except as set forth in Exhibit 7.1.4, there are no
outstanding agreements or instruments binding upon any of Borrower's
shareholders (or members, in the case of a limited liability company)
relating to the ownership of its shares of capital stock (or member
interests, in the case of a limited liability company).
7.1.5 Corporate Names, etc. Neither Borrower nor any of
its Subsidiaries has been known as or used any corporate, fictitious or
trade names within the last five (5) years, except those listed on
Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5, neither
Borrower nor any of its Subsidiaries has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets
of any Person. Each of Borrower's and its Subsidiaries' state(s) of
incorporation or organization, Type of Organization and Organizational I.D.
Number is set forth on Exhibit 7.1.5. The exact legal name of Borrower and
each of its Subsidiaries is set forth on Exhibit 7.1.5.
7.1.6 Business Locations. Each of Borrower's and its
Subsidiaries' chief executive office and other places of business are as
listed on Exhibit 6.1.1 hereto. During the preceding one-year period,
neither Borrower nor any of its Subsidiaries has had an office or place of
business other than as listed on Exhibit 6.1.1. Except as shown on
Exhibit 6.1.1, no Inventory is stored with a bailee, warehouseman or similar
party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each of
Borrower and its Subsidiaries has good, indefeasible and marketable title to
and fee simple ownership of, or valid and subsisting leasehold interests in,
all of its real Property, and good title to all of the Collateral and all of
its other Property, in each case, free and clear of all Liens except
Permitted Liens. Borrower has paid or discharged all lawful claims which,
if unpaid, might become a Lien against any of Borrower's Properties that is
not a Permitted Lien. The Liens granted to Agent for its benefit and the
ratable benefit of Lenders under Section 5 hereof are first-priority Liens,
subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made
by Borrower with respect to any Account or Accounts. Unless otherwise
indicated in writing to Agent, with respect to each Account:
(i) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by Borrower in the ordinary
course of its business and in accordance with the terms and conditions
of all purchase orders, contracts or other documents relating thereto
and forming a part of the contract between Borrower and the Account
Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy
of which has been furnished or is available to Agent;
(iv) Such Account, and Agent's security interest therein, is
not, and will not (by voluntary act or omission of Borrower) be in the
future, subject to any offset, Lien, deduction, recoupment, defense,
dispute, counterclaim or any other adverse condition except for
disputes resulting in returned goods where the amount in controversy is
deemed by Agent to be immaterial, and each such Account is absolutely
owing to Borrower and is not contingent in any respect or for any
reason;
(v) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except discounts or
allowances which are granted by Borrower in the ordinary course of its
business for prompt payment and which are reflected in the calculation
of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Agent pursuant to
subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any
way impair the validity or enforceability of any Accounts or tend to
reduce the amount payable thereunder from the face amount of the
invoice and statements delivered to Agent with respect thereto;
(vii) To Borrower's knowledge, the Account Debtor thereunder
(1) had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(viii) To Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor
thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such
Account.
7.1.9 Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment
shall be maintained and preserved, reasonable wear and tear excepted, except
where the failure to maintain, replace or repair any item of Equipment could
not reasonably be expected to have a Material Adverse Effect. Borrower will
not permit any of the Equipment to become affixed to any real Property
leased to Borrower so that an interest arises therein under the real estate
laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of
and in form acceptable to Agent, and Borrower will not permit any of the
Equipment to become an accession to any personal Property other than
Equipment that is subject to first-priority (except for Permitted Liens)
Liens in favor of Agent.
7.1.10 Financial Statements; Fiscal Year. The
Consolidated and consolidating balance sheets of Borrower and such other
Persons described therein (including the accounts of all Subsidiaries of
Borrower for the respective periods during which a Subsidiary relationship
existed) as of September 1, 2001, and the related statements of income,
changes in stockholder's equity, and changes in financial position for the
periods ended on such dates, have been prepared in accordance with GAAP, and
present fairly the financial positions of Borrower and such Persons at such
dates and the results of Borrower's and such Persons' operations for such
periods. Since June 30, 2001, there has been no material change in the
condition, financial or otherwise, of Borrower and such other Persons as
shown on the Consolidated balance sheet as of such date and no change in the
aggregate value of Equipment and real Property owned by Borrower or such
other Persons, except changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse. The
fiscal year of Borrower and each of its Subsidiaries ends on or about
December 31 of each year.
7.1.11 Full Disclosure. The financial statements
referred to in subsection 7.1.10 hereof do not, nor does this Agreement or
any other written statement of Borrower to Agent, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact
which Borrower has failed to disclose to Agent in writing which has or
evidences a Material Adverse Effect or, so far as Borrower can now foresee,
could reasonably be expected to have or evidence a Material Adverse Effect.
7.1.12 Solvent Financial Condition. Each of Borrower
and its Subsidiaries is now and, after giving effect to the Loans to be made
and the Letters of Credit and LC Guaranties to be issued hereunder, at all
times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of
its Subsidiaries is obligated as surety or indemnitor under any surety or
similar bond or other contract, or has issued or entered into any agreement
to assure payment, performance or completion of performance of any
undertaking or obligation of any Person.
7.1.14 Taxes. Borrower's federal tax identification
number is 36-2490451. The federal tax identification number of each of
Borrower's Subsidiaries is shown on Exhibit 7.1.14 hereto. Borrower and
each of its Subsidiaries has filed all federal, state and local tax returns
and other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees, levies and other
governmental charges upon it, its income and Properties as and when such
taxes, assessments, fees, levies and charges are due and payable, unless and
to the extent any thereof are being actively contested in good faith and by
appropriate proceedings and Borrower maintains reasonable reserves on its
books therefor. The provision for taxes on the books of Borrower and its
Subsidiaries are adequate, in Borrower's reasonable opinion, for all years
not closed by applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses.
Each of Borrower and its Subsidiaries owns or possesses all the patents,
trademarks, service marks, tradenames, copyrights and licenses necessary for
the present and planned future conduct of its business without any known
conflict with the rights of others. All such registered patents,
trademarks, service marks, tradenames, copyrights, licenses and other
similar rights are listed on Exhibit 7.1.16 hereto.
7.1.17 Governmental Consents. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate
its Properties as now owned or leased by it, except where the failure to
have or be in good standing with respect to any such governmental consult,
approval, license, authorization, permit, certificate, inspection or
franchise could not reasonably be expected to have a Material Adverse
Effect.
7.1.18 Compliance with Laws. Each of Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations
and leaseholds are in compliance in all material respects with, the
provisions of all federal, state and local laws, rules and regulations
applicable to Borrower or such Subsidiary, as applicable, its Properties or
the conduct of its business and there have been no citations, notices or
orders of noncompliance issued to Borrower or any of its Subsidiaries under
any such law, rule or regulation. Each of Borrower and its Subsidiaries has
established and maintains an adequate monitoring system to insure that it
remains in compliance with all federal, state and local laws, rules and
regulations applicable to it. No Inventory has been produced in violation
of the Fair Labor Standards Act (29 U.S.C. S201 et seq.), as amended.
7.1.19 Restrictions. Neither Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its
business or the use or ownership of any of its Properties. Neither Borrower
nor any of its Subsidiaries is a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit 7.1.19 hereto, none of which prohibit the
execution of or compliance with this Agreement or the other Loan Documents
by Borrower or any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on
Exhibit 7.1.20 hereto, there are no actions, suits, proceedings or
investigations pending, or to the knowledge of Borrower, threatened, against
or affecting Borrower or any of its Subsidiaries, or the business,
operations, Properties, prospects, profits or condition of Borrower or any
of its Subsidiaries: (i) claiming damages against Borrower of One Hundred
Thousand Dollars ($100,000) or more either individually or in the aggregate
when consolidated with similar or related matters; (ii) involving any claim
for injunctive relief; or (iii) involving other matters which could
reasonably be expected to have a Material Adverse Effect. Neither Borrower
nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or
arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no
condition exists which would, upon or after the execution and delivery of
this Agreement or Borrower's performance hereunder, constitute a Default or
an Event of Default. Neither Borrower nor any of its Subsidiaries is in
default, and no event has occurred and no condition exists which
constitutes, or which with the passage of time or the giving of notice or
both would constitute, a default in the payment of any Indebtedness to any
Person for Money Borrowed with a principal amount of One Hundred Thousand
Dollars ($100,000) or more.
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete
listing of all capitalized leases of Borrower and its Subsidiaries and
Exhibit 7.1.22(b) hereto is a complete listing of all operating leases of
Borrower and its Subsidiaries involving annual lease payments of Fifty
Thousand Dollars ($50,000) or more. Each of Borrower and its Subsidiaries
is in compliance in all material respects with all of the terms of each of
its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on
Exhibit 7.1.23 hereto, neither Borrower nor any of its Subsidiaries has any
Plan. Borrower and each of its Subsidiaries is in compliance, in all
material respects, with the requirements of ERISA and the regulations
promulgated thereunder with respect to each Plan. No fact or situation that
could result in a material adverse change in the financial condition of
Borrower or any of its Subsidiaries exists in connection with any Plan.
Neither Borrower nor any of its Subsidiaries has any withdrawal liability in
connection with a Multi-employer Plan.
7.1.24 Trade Relations. There exists no actual or, to
Borrower's knowledge, threatened termination, cancellation or limitation of,
or any modification or change in, the business relationship between Borrower
or any of its Subsidiaries and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of
Borrower or any of its Subsidiaries, or with any material supplier, and
there exists no present condition or state of facts or circumstances which
would materially affect adversely Borrower or any of its Subsidiaries or
prevent Borrower or any of its Subsidiaries from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on
Exhibit 7.1.25 hereto, neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other
organization of Borrower's or any of its Subsidiaries' employees, or threats
of strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.
7.1.26 Mexican Subsidiary. Agent and Lenders
acknowledge that all warranties and representations made with respect to
Mexican Subsidiary shall be deemed to have been made to Borrower's
knowledge.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be made on the Closing Date and each subsequent
date on which Borrower draws down any Revolving Credit Loan or requests Bank
or Agent to issue or execute any Letters of Credit or LC Guaranty and shall
be accurate, complete and not misleading as of each of such date, except for
changes in the nature of Borrower's or its respective Subsidiaries' business
or operations that would render the information in any exhibit attached
hereto or to any other Loan Document either inaccurate, incomplete or
misleading, so long as (i) Agent has consented to such changes, (ii) such
changes are expressly permitted or contemplated by this Agreement or (iii)
such changes could not reasonably be expected to have or evidence a Material
Averse Effect.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by
Agent and Lenders and the parties thereto and the closing of the
transactions described therein or related thereto.
Section 8. COVENANTS AND CONTINUING AGREEMENTS.
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by Required Lenders
in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of
Agent and any representatives as of any Lender who wish to accompany Agent's
representatives, from time to time, as often as may be reasonably requested,
but only during normal business hours and if no Default or Event of Default
has occurred and is continuing, upon twenty-four (24) hours advance notice,
to visit and inspect the Properties of Borrower and each of its
Subsidiaries, inspect, audit and make extracts from its books and records,
and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of
operations.
8.1.2 Notices. Promptly notify Agent in writing of the
occurrence of any event or the existence of any fact that renders any
representation or warranty in this Agreement or any of the other Loan
Documents inaccurate, incomplete or misleading, in any manner that could
reasonably be expected to have or evidence a Material Adverse Effect.
8.1.3 Financial Statements. Keep, and cause each
Subsidiary to keep, adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with
GAAP reflecting all its financial transactions; and cause to be prepared and
furnished to Agent (with sufficient copies for all Lenders) the following
(all to be prepared in accordance with GAAP applied on a consistent basis,
unless Borrower's certified public accountants concur in any change therein
and such change is disclosed to Agent and is consistent with GAAP):
(i) not later than ninety (90) days after the close of each
fiscal year of Borrower, unqualified, audited financial statements of
Parent, Borrower and Borrower's Subsidiaries as of the end of such
year, on a Consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Parent but acceptable to Agent (except for a qualification
for a change in accounting principles with which the accountant
concurs);
(ii) not later than thirty (30) days after the end of each
month hereafter, including the last month of Borrower's fiscal year,
unaudited, interim financial statements of Parent, Borrower and
Borrower's Subsidiaries as of the end of such month and of the portion
of Borrower's financial year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Parent,
Borrower and Borrower's Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that
such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which Borrower has made available to its shareholders (or
members, in the case of a limited liability company) and copies of any
regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange; provided, however, that with respect to
Form 8-K or any registration statements, Borrower shall notify Agent of
the filing of any such form or statement and shall supply a copy
thereof to Agent upon Agent's request.
(iv) promptly after the filing thereof, notice that Borrower
has filed any annual report to be filed with ERISA in connection with
each Plan; upon request of Agent, Borrower shall deliver to Agent a
copy of any such report; and
(v) such other data and information (financial and otherwise)
as Agent or Required Lenders, from time to time, may reasonably
request, bearing upon or related to the Collateral or Borrower's and
each of its Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, Borrower shall forward to
Agent a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause
to be prepared and shall furnish to Agent a confirmation by such public
accountants of Borrower's calculations of the financial covenants contained
in Section 8.3. Concurrently with the delivery of the financial statements
described in clauses (i) and (ii) of this subsection 8.1.3, or more
frequently if requested by Agent, Borrower shall cause to be prepared and
furnished to Lender a Compliance Certificate in the form of Exhibit 8.1.3
hereto executed by the Chief Financial Officer of Borrower.
Within five (5) days after the earlier of the last day of each
fiscal year of Borrower and the date Parent or Borrower engaged independent
certified public accountants to audit Parent and Borrower's financial
statements, Borrower shall deliver to such independent certified public
accountants a letter from Parent and/or Borrower addressed to such
independent certified public accountants indicating that it is a primary
intention of Parent and Borrower in engaging such accountants that Agent and
Lenders rely upon such financial statements of Parent, Borrower and
Borrower's Subsidiaries.
8.1.4 Borrowing Base Certificates. On or before the
15th day of each month from and after the date hereof, Borrower shall
deliver to Agent a Borrowing Base Certificate, in the form attached hereto
as Exhibit 8.1.4 (as modified from time to time by Agent), as of the last
day of the immediately preceding month (or shorter period as is applicable),
with such supporting materials as Agent shall reasonably request. If
Borrower deems it advisable, or Agent shall request, Borrower shall execute
and deliver to Agent Borrowing Base Certificates more frequently than
monthly.
8.1.5 Landlord, Storage and Other Agreements. Provide
Agent with copies of all agreements (other than modifications or amendments
to existing agreements that do not affect, in any material respect, either
Borrower's or any other party's respective obligations) between Borrower or
any of its Subsidiaries and any landlord, warehouseman, processor,
distributor or consignee which owns or is the lessee of any premises at
which any Collateral may, from time to time, be kept. With respect to any
lease (other than leases for sales offices), warehousing agreement or any
processing agreement in any case entered into after the Closing Date,
Borrower shall provide Agent with landlord waivers, bailee letters or
processor letters with respect to such premises. Such landlord waivers,
bailee letters or processor letters shall be in a form supplied by Agent to
Borrower with such reasonable revisions as are customarily accepted by Agent
or by similar financial institutions in similar financial transactions.
8.1.6 Projections. No later than thirty (30) days prior
to the end of each fiscal year of Borrower, deliver to Agent Projections of
Borrower for the forthcoming fiscal year, month by month and, to the extent
available, any Projections (or partial Projections) for succeeding years.
8.1.7 Deposit and Brokerage Accounts. For each deposit
account or brokerage account that Borrower at any time opens or maintains,
Borrower shall, at Agent's request and option, pursuant to an agreement in
form and substance reasonably satisfactory to Agent, cause the depository
bank or securities intermediary, as applicable, to agree to comply at any
time with instructions from Agent to such depository bank or securities
intermediary, as applicable, directing the disposition of funds from time to
time credited to such deposit or brokerage account, without further consent
of Borrower.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless Required Lenders has first consented thereto
in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions; Structural
Changes. Except for Permitted Acquisitions, merge or consolidate, or permit
any Subsidiary of Borrower to merge or consolidate, with any Person; nor
change its or any of its Subsidiaries' state of incorporation or
organization or Type of Organization or Organizational I.D. Number; nor
change its or any of its Subsidiaries' legal names; nor acquire, nor permit
any of its Subsidiaries to acquire all or any substantial part of the
Properties of any Person, except for:
(i) mergers of any Subsidiary of Borrower into Borrower or
another wholly-owned Subsidiary of Borrower; and
(ii) acquisitions of assets consisting of fixed assets or
real Property that constitute Capital Expenditures permitted under
subsection 8.2.8.
(iii) changes in Borrower's or any Subsidiaries' state of
incorporation, name, Type of Incorporation or Organization I.D. Number
if Borrower gives Agent thirty (30) days' advance written notice of any
such change and executes any UCC statement or amendment which Agent
reasonably requests Borrower to execute as a result of such change.
8.2.2 Loans. Make, or permit any Subsidiary of Borrower
to make, any loans or other advances of money to any Person other than (i)
for salary, travel advances, advances against commissions and other similar
advances in the ordinary course of business), (ii) extensions of trade
Credit in the ordinary course of business, (iii) deposits with financial
institutions permitted under this Agreement and (iv) prepaid expenses.
8.2.3 Total Indebtedness. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of Borrower to create, incur or
suffer to exist, any Indebtedness, except:
(i) Obligations owing to Agent and Lenders;
(ii) Indebtedness arising from Borrower's guarantee of
Parent's obligations under the Senior Subordinated Note Documents;
(iii) Indebtedness of any Subsidiary of Borrower to Borrower;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than ninety (90) days from billing date or more than thirty (30)
days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful
proceedings; and Borrower or such Subsidiary shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrower or such Subsidiary and its independent
accountants;
(v) Obligations to pay Rentals permitted by subsection 8.2.13
(vi) Permitted Purchase Money Indebtedness;
(vii) Contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business;
(viii) Indebtedness existing on the Closing Date and listed
on Exhibit 8.2.3 (including, without limitation the IRB Indebtedness);
and
(ix) Indebtedness not included in paragraphs (i) through
(viii) above which does not exceed at any time, in the aggregate, the
sum of Five Hundred Thousand Dollars ($500,000).
Agent and Lenders acknowledge that Borrower may repay the IRB
Indebtedness either in accordance with scheduled terms or by voluntary
prepayment.
8.2.4 Affiliate Transactions. Enter into, or be a party
to, or permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
or such Subsidiary's business and upon fair and reasonable terms which are
fully disclosed to Agent and are no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not an
Affiliate or stockholder of Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist,
or permit any Subsidiary of Borrower to create or suffer to exist, any Lien
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of Agent for its
benefit and the ratable benefit of Lenders;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in Agent's
judgment such Lien does not adversely affect Agent's rights or the
priority of Agent's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required and such Liens do
not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the
operation of Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) Such other Liens as appear on Exhibit 8.2.5 hereto;
(vii) Liens incurred or deposits made in the ordinary course
of business (1) in connection with worker's compensation, social
security, unemployment insurance and other like laws, or (2) in
connection with sales contracts, leases, statutory obligations, work in
progress advances and other similar obligations not incurred in
connection with the borrowing of money or the payment of the deferred
purchase price of property;
(viii) Title exceptions or encumbrances granted in the
ordinary course of business, affecting real Property owned by Borrower;
provided that such exceptions do not in the aggregate materially
detract from the value of such Property or materially interfere with
its use in the ordinary conduct of Borrower's business;
(ix) Such other Liens which are not reasonably expected to
have a material adverse effect on the value of the Collateral as Agent
may hereafter approve in writing; and
(x) Distributions to Parent to permit Parent to fund Mexican
Subsidiary's working capital needs or Capital Expenditures; provided
that after giving effect to any such Distribution, the aggregate amount
of Parent and/or Borrower's investment in Mexican Subsidiary as
represented by Borrower's or Parent's inter-company account, accounted
for on a consistent basis, does not exceed One Million Five Hundred
Thousand Dollars ($1,500,000).
8.2.6 Subordinated Debt. Except as provided below,
make, or permit any Subsidiary of Borrower to make, any direct or indirect
prepayment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with the subordination provisions or agreement relative
thereto. Make or permit any Subsidiary of Borrower to make any other direct
or indirect payment of any part or all of any Subordinated Debt or take any
other action or omit to take any other action in respect of any Subordinated
Debt in contravention of the subordination provisions or agreement relative
thereto. Amend or modify any of the terms of the Senior Subordinated Note
Documents in any manner materially adverse to Borrower or Agent and Lenders.
The foregoing notwithstanding, Borrower may make repurchases of Senior
Subordinated Notes or may make Distributions to Parent to permit Parent to
make repurchases of Senior Subordinated Notes if after giving effect to any
such repurchase or Distribution each of the following conditions are
satisfied: (i) no Default or Event of Default exists and is outstanding;
(ii) there had occurred no event of Default resulting from the failure to
comply with the financial covenants contained in Section 8.3 in either of
the two most recently ended fiscal quarters; (iii) Borrower shall have given
Agent at least five (5) Business Days' prior written notice of its intent to
make any such repurchase; and (iv) average Net Availability for the thirty
days immediately prior to the date of the proposed repurchase or
Distribution and, on a pro forma basis for the thirty days immediately after
the date of the proposed repurchase or distribution equals or exceeds:
(x) Five Million Dollars ($5,000,000) if the date of the proposed repurchase
or Distribution is on or between January 1 and March 31 of any year within
the Original Term; and (y) Ten Million Dollars ($10,000,000) if the date of
the proposed repurchase or Distribution is on or between April 1 and
June 30, July 1 and September 30 or October 1 and December 31 of any year
within the Original Term.
8.2.7 Distributions. Declare or make, or permit any
Subsidiary of Borrower to declare or make, any Distributions, except for:
(i) Distributions by any Subsidiary of Borrower to Borrower;
(ii) Distributions paid solely in capital stock of Borrower
or any of its Subsidiaries;
(iii) Distributions by Borrower to Parent in amounts
necessary to permit Parent to repurchase capital stock of Parent from
employees of Borrower or Parent or any of Borrower's Subsidiaries upon
the termination of their employment, so long as no Default or Event of
Default exists at the time of or would be caused by such making of such
Distributions and the aggregate cash amount of such Distributions,
measured at the time when made, does not exceed One Million Dollars
($1,000,000) in any fiscal year of Borrower;
(iv) So long as no Default or Event of Default exists at the
time of or would be caused by the making of such Distributions,
Distributions by Borrower in an amount sufficient to permit Parent to
pay Consolidated tax liabilities of Parent, Borrower and Borrower's
Subsidiaries, so long as Parent applies the amount of such
Distributions for such purpose;
(v) Distributions by Borrower to the extent necessary to
permit Parent to pay administrative costs and expenses related to the
business of Borrower and its Subsidiaries, not to exceed Five Million
Dollars ($5,000,000) in any fiscal year of Borrower, so long as Parent
applies the amount of such Distributions for such purpose;
(vi) Distributions by Borrower to Parent to the extent
necessary to permit Borrower to make regularly scheduled payments of
interest due on the Senior Subordinated Notes [and the IRB
Indebtedness]; and
(vii) Distributions permitted by subsection 8.2.6 above.
8.2.8 Capital Expenditures. Make Capital Expenditures
(including, without limitation, by way of capitalized leases) which, in the
aggregate, as to Borrower and its Subsidiaries, exceed Nine Million Dollars
($9,000,000) during any fiscal year of Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise
dispose of any of, or permit any Subsidiary of Borrower to sell, lease or
otherwise dispose of any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except (i) sales of Inventory in the ordinary course of business for
so long as no Event of Default exists hereunder and Agent has not requested
Borrower to cease such sales of Inventory, (ii) a transfer of Property to
Borrower by a Subsidiary of Borrower or (iii) dispositions expressly
authorized by this Agreement or (iv) dispositions of investments described
in paragraphs (iv), (v), (vi) and (vii) of the term "Restricted
Investments."
8.2.10 Stock of Subsidiaries. Permit any of its
Subsidiaries to issue any additional shares of its capital stock except
director's qualifying shares.
8.2.11 Bill-and-Hold Sales, Etc. Make a sale to any
customer on a bill-and-hold, guaranteed sale, sale and return, sale on
approval or consignment basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit
any Subsidiary of Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit any of its
Subsidiaries to become, a lessee under any operating lease (other than a
lease under which Borrower or any of its Subsidiaries is lessor) of Property
if the aggregate Rentals payable during any current or future period of
twelve (12) consecutive months under the lease in question and all other
leases under which Borrower or any of its Subsidiaries is then lessee would
exceed Eight Million Dollars ($8,000,000). The term "Rentals" means, as of
the date of determination, all payments which the lessee is required to make
by the terms of any lease.
8.2.14 Tax Consolidation. File or consent to the filing
of any consolidated income tax return with any Person other than a
Subsidiary of Borrower or Parent.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Agent or Lenders,
Borrower covenants that it will be in full compliance with each of the
financial covenants set forth on Exhibit 8.3 hereto. If GAAP changes from
the basis used in preparing the audited financial statements delivered to
Agent by Borrower on or before the Closing Date, Borrower will provide Agent
with certificates demonstrating compliance with such financial covenants and
will include, at the election of Borrower or upon the request of Agent,
calculations setting forth the adjustments necessary to demonstrate how
Borrower is in compliance with such financial covenants based upon GAAP as
in effect on the Closing Date.
Section 9. CONDITIONS PRECEDENT.
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of
Agent or Lenders under the other sections of this Agreement, Lenders shall
not be required to make any Loan under this Agreement unless and until each
of the following conditions has been and continues to be satisfied:
9.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent, a duly executed copy of this Agreement and the other
Loan Documents, together with such additional documents, instruments,
opinions and certificates as Agent shall require in connection therewith
from time to time, all in form and substance satisfactory to Agent and its
counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 Availability. Agent shall have determined that immediately after
Lenders have made the initial Loans and issued the initial Letters of Credit
and LC Guaranties contemplated hereby, and paid all closing costs incurred
in connection with the transactions contemplated hereby, Net Availability
shall not be less than Twenty Million Dollars ($20,000,000).
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the consummation of the transactions
contemplated hereby.
Section 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Interest, Principal or Fees. Borrower
fails to pay any installment of principal, interest or premium, if any, due
in respect to outstanding Revolving Credit Loans or fees payable in respect
to unused Revolving Credit Loans or outstanding Letters of Credit or LC
Guaranties on the due date thereof, whether as mandatory prepayments, as
payments necessary to eliminate Overadvances or otherwise.
10.1.2 Payment of Other Obligations. Borrower shall
fail to pay any of the Obligations not covered by subsection 10.1.1 hereof
on the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty
or other statement made or furnished to Agent and/or Lenders by or on behalf
of Borrower, any Subsidiary of Borrower, or any Parent in this Agreement,
any of the other Loan Documents or any instrument, certificate or financial
statement furnished in compliance with or in reference thereto proves to
have been false or misleading in manner which could reasonably be expected
to have or evidence a Material Adverse Effect when made or furnished or when
reaffirmed pursuant to Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall
fail or neglect to perform, keep or observe any covenant contained in
Sections 5.2, 5.3, 5.4, 6.1.1, 6.1.2, 6.2.5, 6.2.6, 8.1.1, 8.1.2, 8.1.4,
8.1.7, 8.2 or 8.3 hereof on the date that Borrower is required to perform,
keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail
or neglect to perform, keep or observe any covenant contained in this
Agreement (other than a covenant which is dealt with specifically elsewhere
in Section 10.1 hereof) and the breach of such other covenant is not cured
to Agent's satisfaction within fifteen (15) days (five (5) days with respect
to Section 8.1.3) after the sooner to occur of Borrower's receipt of notice
of such breach from Agent or the date on which such failure or neglect first
becomes known to any executive officer or the controller of Borrower or
Parent.
10.1.6 Default Under Security Documents/Other
Agreements. Any event of default shall occur under, or Borrower shall
default in the performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents or the Other
Agreements and such default shall continue beyond any applicable grace
period.
10.1.7 Other Defaults. There shall occur any default or
event of default on the part of Borrower under any agreement, document or
instrument to which Borrower is a party or by which Borrower or any of its
Property is bound, creating or relating to any Indebtedness (other than the
Obligations), in a principal amount of One Hundred Thousand Dollars
($100,000) or more if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made.
10.1.8 Uninsured Losses. Any loss, theft, damage or
destruction of any of the Collateral with a fair market value of Five
Hundred Thousand Dollars ($500,000) or more not fully covered (subject to
such deductibles and self-insurance retentions as Agent shall have
permitted) by insurance.
10.1.9 Insolvency and Related Proceedings. Borrower or
Parent shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an
assignment for the benefit of creditors, or any petition for an order for
relief shall be filed by or against Borrower or Parent under the Bankruptcy
Code (if against Borrower or Parent, the continuation of such proceeding for
more than sixty (60) days), or Borrower or Parent shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
10.1.10 Business Disruption; Condemnation. There shall
occur a cessation of a substantial part of the business of Borrower, any
Subsidiary of Borrower or Parent for a period which significantly affects
Borrower's or Parent's capacity to continue its business, on a profitable
basis; or Borrower, any Subsidiary of Borrower or Parent shall suffer the
loss or revocation of any license or permit now held or hereafter acquired
by Borrower or Parent which is necessary to the continued or lawful
operation of its business; or Borrower or Parent shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or
any material lease or agreement pursuant to which Borrower or Parent's
leases, uses or occupies any Property shall be canceled or terminated prior
to the expiration of its stated term; or any part of the Collateral shall be
taken through condemnation or the value of such Property which event, with
respect to all of the foregoing, could reasonably be expected to have a
Material Adverse Effect.
10.1.11 There shall occur a Change in Control or Parent
shall cease to own and control, beneficially and of record, all of the
issued and outstanding capital stock of Borrower.
10.1.12 ERISA. A Reportable Event shall occur which
Agent, in its sole discretion, shall determine in good faith constitutes
grounds for the termination by the Pension Benefit Guaranty Corporation of
any Plan or for the appointment by the appropriate United States district
court of a trustee for any Plan, or if any Plan shall be terminated or any
such trustee shall be requested or appointed, or if Borrower, any Subsidiary
of Borrower or Parent is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multi-employer Plan resulting from
Borrower's, such Subsidiary's or Parent's complete or partial withdrawal
from such Plan and any such event could reasonably be expected to have or
evidence a Material Adverse Effect.
10.1.13 Challenge to Agreement. Borrower, any
Subsidiary of Borrower or Parent, or any Affiliate of any of them, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement, or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Agent.
10.1.14 Repudiation of or Default Under Guaranty
Agreement. Parent shall revoke or attempt to revoke the Guaranty Agreement
signed by Parent, or shall repudiate Parent's liability thereunder or shall
be in default under the terms thereof.
10.1.15 Criminal Forfeiture. Borrower, any Subsidiary
of Borrower or Parent shall be criminally indicted or convicted under any
law that could lead to a forfeiture of any Property of Borrower, any
Subsidiary of Borrower or Parent.
10.1.16 Judgments. Final judgment or judgments (after
the expiration of all times to appeal therefrom) for the payment of money in
excess of Two Hundred Fifty Thousand Dollars ($250,000) with respect to any
one judgment or Five Hundred Thousand Dollars ($500,000) with respect to all
outstanding judgments in the aggregate shall be rendered against Borrower
and the same shall not (i) be fully covered by insurance, or (ii) within
thirty days after the entry thereof, have been discharged or paid or bonded
over or execution thereof stayed pending appeal, or shall not have been
discharged within five days after the expiration of any such stay.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Agent or Required Lenders, to demand payment of any portion of the
Obligations payable on demand in accordance with Section 3.2 hereof, upon or
at any time after the occurrence of an Event of Default, all or any portion
of the Obligations shall, at the option of Agent either acting on its own or
at the direction of Required Lenders and without presentment, demand,
protest or further notice by Agent, become at once due and payable and
Borrower shall forthwith pay to Agent for its benefit and the ratable
benefit of Lenders, the full amount of such Obligations, provided, that upon
the occurrence of an Event of Default specified in subsection 10.1.9 hereof,
all of the Obligations shall become automatically due and payable without
declaration, notice or demand by Agent or Required Lenders.
Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; provided that, unless
and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable
and in the best interests of Agent and Lenders taken as a whole, including
any action (or the failure to act) pursuant to the Loan Documents.
10.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Agent and/or Lenders shall have and may exercise from time to time
the following other rights and remedies:
10.3.1 All of the rights and remedies of a secured party
under the UCC or under other applicable law, and all other legal and
equitable rights to which Agent or Lenders may be entitled, all of which
rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other
Loan Documents, and none of which shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store
the Collateral on said premises until sold (and if said premises be the
Property of Borrower, Borrower agrees not to charge Agent for storage
thereof).
10.3.3 The right to sell or otherwise dispose of all or
any Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as
may be required by law, in lots or in bulk, for cash or on credit, all as
Agent, in its sole discretion, may deem advisable. Agent may, at Agent's
option, disclaim any and all warranties regarding the Collateral in
connection with any such sale. Borrower agrees that ten (10) days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at
such locations as Agent may designate in said notice. Agent shall have the
right to conduct such sales on Borrower's premises, without charge therefor,
and such sales may be adjourned from time to time in accordance with
applicable law. Agent shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for
collection, first to the reasonable costs, expenses and attorneys' fees
incurred by Agent in collecting the Obligations, in enforcing the rights of
Agent and Lenders under the Loan Documents and in collecting, retaking,
completing, protecting, removing, storing, advertising for sale, selling and
delivering any Collateral; second to the interest due upon any of the
Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower and Parent shall remain liable to Agent and
Lenders therefor.
10.3.4 Agent is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, tradenames, trademarks and advertising
matter, or any Property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall
inure to Agent's benefit.
10.3.5 Agent or Required Lenders may, at its or their
option, require Borrower to deposit with Agent funds equal to the LC Amount
and, if Borrower fails to promptly make such deposit, Lenders may advance
such amount as a Base Rate Advance (whether or not an Overadvance is created
thereby). Any such deposit or advance shall be held by Agent as a reserve
to fund future payments on such LC Guaranties and future drawings against
such Letters of Credit. At such time as all LC Guaranties have been paid or
terminated and all Letters of Credit have been drawn upon or expired, any
amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary
hereto or in any schedule or in any Guaranty Agreement given to Agent or
Lenders or contained in any other agreement between Agent and/or Lenders,
and Borrower, heretofore, concurrently, or hereafter entered into, shall be
deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained.
The failure or delay of Agent or Lenders to require strict performance by
Borrower of any provision of this Agreement or to exercise or enforce any
rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as
a waiver of such performance, Liens, rights, powers and remedies, but all
such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent and/or Lenders shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other
Loan Documents and no Default or Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended
or waived by Agent or Lenders, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by
a duly authorized representative of Agent, Lenders or Required Lenders (as
applicable) and directed to Borrower.
10.5 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, each Lender is
hereby authorized by Borrower at any time or from time to time, with prior
written consent of Agent and with reasonably prompt subsequent notice to
Borrower (any prior or contemporaneous notice to Borrower being hereby
expressly waived) to set off and to appropriate and to apply any and all (i)
balance held by such Lender at any of its offices for the account of
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to Borrower or its Subsidiaries), and (ii) other property at any
time held or owing by such Lender to or for the credit or for the account of
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations. Any Lender exercising a right to set off shall, to the extent
the amount of any such set off exceeds its Revolving Credit Percentage of
the amount set off, purchase for cash (and the other Lenders shall sell)
interests in each such other Lender's pro rata share of the Obligations as
would be necessary to cause such Lender to share such excess with each other
Lender in accordance with their respective Revolving Credit Percentages.
Borrower agrees, to the fullest extent permitted by law, that any Lender may
exercise its right to set off with respect to amounts in excess of its pro
rata share of the Obligations and upon doing so shall deliver such excess to
Agent for the benefit of all Lenders in accordance with the Revolving Credit
Percentages.
Section 11. THE AGENT
11.1 Authorization and Action. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such
powers under this Agreement, and the other Loan Documents as are delegated
to Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Each Lender hereby acknowledges that Agent
shall not have by reason of this Agreement assumed a fiduciary relationship
in respect of any Lender. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and shall not assume,
or be deemed to have assumed, any obligation toward, or relationship of
agency or trust with or for, Borrower. As to any matters not expressly
provided for by this Agreement and the other Loan Documents (including,
without limitation, enforcement or collection of the Notes, Agent may, but
shall not be required to, exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
Required Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders;
provided, however, that Agent shall be fully justified in failing or
refusing to take any action under this Agreement or the other Loan
Documents, or in relation hereto or thereto, unless Agent shall first be
indemnified (upon requesting such indemnification) to its satisfaction by
Lenders against any and all liability and expense which it may incur by
reason of taking or continuing to take any such action. If Agent seeks the
consent or approval of Required Lenders (or a greater or lesser number of
Lenders as required in this Agreement), with respect to any action
hereunder, Agent shall send notice thereof to each Lender and shall notify
each Lender at any time that Required Lenders (or such greater or lesser
number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.
11.2 Agent's Reliance, Etc. Neither Agent, any Affiliate of Agent, nor
any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for its
or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, Agent: (i) may treat the payee of any
Notes or Note as the holder thereof until Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts;
(iii) makes no warranties or representations to any Lender and shall not be
responsible to any Lender for any recitals, statements, warranties or
representations made in or in connection with this Agreement or any other
Loan Documents; (iv) shall not have any duty beyond Agent's customary
practices in respect of loans in which Agent is the only lender, to
ascertain or to inquire as to the performance or observance of any terms,
covenants or conditions of this Agreement or performance or observance of
any of the terms, covenants or conditions of this Agreement or the other
Loan Documents on the part of Borrower, to inspect the property (including
the books and records) of Borrowers or to monitor the financial condition of
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be liable to
any Lender for any action taken, or inaction, by Agent upon the instructions
of Required Lenders pursuant to Section 11.1 hereof or refraining to take
any action pending such instructions; (vii) shall not be liable for any
apportionment or distributions of payments made by it in good faith pursuant
to the terms hereof; (viii) shall incur no liability under or in respect of
this Agreement or the other Loan Documents by acting upon any notice,
consent, certification, message or other instrument or writing (which may be
by telephone, facsimile, telegram, cable or telex) believed in good faith by
it to be genuine and signed or sent by the proper party or parties; and
(ix) may assume that no Event of Default has occurred and is continuing,
unless Agent has actual knowledge of the Event of Default, has received
notice from Borrower or Borrower's independent certified public accountants
stating the nature of the Event of Default, or has received notice from a
Lender stating the nature of the Event of Default and that such Lender
considers the Event of Default to have occurred and to be continuing. In
the event any apportionment or distribution described in clause (vii) above
is determined to have been made in error, the sole recourse of any Person to
whom payment was due but not made shall be to recover from the recipients of
such payments any payment in excess of the amount to which they are
determined to have been entitled.
11.3 FCC and Affiliates. With respect to its commitment hereunder to
make Revolving Credit Loans and to issue or procure Letters of Credit and LC
Guaranties, FCC shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same
as though it were not Agent; and the terms "Lender", "Lenders" or "Required
Lenders" shall, unless otherwise expressly indicated, include FCC in its
individual capacity as a Lender. FCC and its Affiliates may lend money to,
and generally engage in any kind of business with, Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of
Borrower or any such Subsidiary, all as if FCC were not Agent and without
any duty to account therefor to Lenders.
11.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based
on the financial statements referred to in subsection 7.1.10 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent 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. Except as otherwise
explicitly provided for herein, Agent shall not have any duty or
responsibility, either initially or on an ongoing basis, to provide any
Lender with any credit information as similar information regarding
Borrowers.
11.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower), ratably according to the respective principal
amounts of the Notes then held by each of them, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent in any way
relating to or arising out of this Agreement or any other Loan Document or
any action taken or omitted by Agent under this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for its ratable shares of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Borrowers.
11.6 Rights and Remedies to be Exercised by Agent Only. In the event any
remedy may be exercised with respect to this Agreement, any other Loan
Document or the Collateral, Agent shall pursue remedies designated by
Required Lenders, provided that Agent shall not be required to act or not to
act if to do so would expose Agent to liability or would be contrary to this
Agreement, any other Loan Document or to applicable law. Each Lender agrees
that without the consent of Agent, except as otherwise set forth in Section
10.5 of the Agreement, no Lender shall have any right individually (i) to
realize upon the security created by this Agreement or any other Loan
Document, (ii) to enforce any provision of this Agreement or any other Loan
Document (other than such Lender's Notes and this Agreement to the extent
necessary to enforce any such note), or (iii) to make demand under this
Agreement or any other Loan Document (other than such Lender's Notes and
this Agreement to the extent necessary to enforce any such note).
11.7 Agency Provisions Relating to Collateral. Each Lender authorizes
and ratifies Agent's entry into this Agreement and the Security Documents
for the benefit of Lenders. Each Lender agrees that any action taken by
Agent with respect to the Collateral in accordance with the provisions of
this Agreement or the Security Documents, and the exercise by Agent of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all
Lenders. Agent is hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and
maintain perfected Agent's Liens upon the Collateral, for its benefit and
the ratable benefit of Lenders. Lenders hereby irrevocably authorize Agent,
at its option and in its discretion, to release any Lien granted to or held
by Agent upon any Collateral: (i) upon termination of the Agreement and
payment and satisfaction of all Obligations; or (ii) constituting property
being sold or disposed of if Borrower certifies to Agent that the sale or
disposition is made in compliance with subsection 3.3.1 and subsection 7.2.9
hereof (and Agent may rely conclusively on any such certificate, without
further inquiry); or (iii) in connection with any foreclosure sale or other
disposition of Collateral after the occurrence and during the continuation
of an Event of Default or (iv) if approved, authorized or ratified in
writing by Agent at the direction of all Lenders. Upon request by Agent at
any time, Lenders will confirm in writing Agent's authority to release
particular types or items of Collateral pursuant hereto. Agent shall have
no obligation whatsoever to any Lender or to any other Person to assure that
the Collateral exists or is owned by Borrower or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent herein or
pursuant to the Security Documents have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or
under any duty of care, disclosure or fidelity, or to continue exercising,
any of its rights, authorities and powers granted or available to Agent in
this Section 11.7 or in any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
sole discretion, but consistent with the provisions of this Agreement, given
Agent's own interest in the Collateral as a Lender.
11.8 Successor Agent. Agent may resign at any time by giving written
notice thereof to Lenders and Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent which
shall be reasonably acceptable to Borrower. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a commercial bank or financial institution
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least Five Hundred
Million Dollars ($500,000,000) and unless an Event of Default has occurred
and is continuing, which shall be reasonably acceptable to Borrower. 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 retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 11 shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
11.9 Audit and Examination Reports; Disclaimer by Lenders. By signing
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each audit or examination
report (each a "Report" and collectively, "Reports") prepared by or on
behalf of Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make
any representation or warranty as to the accuracy of any Report and (ii)
shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrower and will rely significantly upon Borrower's books and records, as
well as on representations of Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner, in accordance with the provisions of Section
12.3; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any
such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach
or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to
Borrower, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of a loan or loans of Borrower; and (ii) to pay and
protect, and indemnify, defend and hold Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including
attorney's fees and expenses) incurred by Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.
Section 12. MISCELLANEOUS.
12.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or
Agent's agent, may, without notice to Borrower and in either Borrower's or
Agent's name, but at the cost and expense of Borrower:
12.1.1 At such time or times upon or after the
occurrence of a Default or an Event of Default as Agent or said agent, in
its sole discretion, may determine, endorse Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Agent or under
Agent's control.
12.1.2 At such time or times upon or after the
occurrence of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of Borrower's rights and remedies with
respect to the collection of the Accounts; (ii) settle, adjust, compromise,
discharge or release any of the Accounts or other Collateral or any legal
proceedings brought to collect any of the Accounts or other Collateral;
(iii) sell or assign any of the Accounts and other Collateral upon such
terms, for such amounts and at such time or times as Agent deems advisable
and, at Agent's option, with all warranties regarding the Collateral
disclaimed; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any
Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive,
open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as
Agent may designate; (vii) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral and deposit the same
to the account of Agent on account of the Obligations; (viii) endorse the
name of Borrower upon any chattel paper, document, instrument, invoice,
freight bill, bill of lading or similar document or agreement relating to
the Accounts, Inventory and any other Collateral; (ix) use Borrower's
stationery and sign the name of Borrower to verifications of the Accounts
and notices thereof to Account Debtors; (x) use the information recorded on
or contained in any data processing equipment and computer hardware and
software relating to the Accounts, Inventory, Equipment and any other
Collateral; (xi) make and adjust claims under policies of insurance; and
(xii) do all other acts and things necessary, in Agent's determination, to
fulfill Borrower's obligations under this Agreement.
12.2 Indemnity. Borrower hereby agrees to indemnify Agent and Lenders
and hold Agent and Lenders harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by Agent or any
Lender (including reasonable attorneys fees and legal expenses) as the
result of Borrower's failure to observe, perform or discharge Borrower's
duties hereunder. In addition, Borrower shall defend Agent and Lenders
against and save it harmless from all claims of any Person with respect to
the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Agent or any Lender
by any Person under any Environmental Laws or similar laws by reason of
Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the obligation of
Borrower under this Section 12.2 shall survive the payment in full of the
Obligations and the termination of this Agreement.
12.3 Modification of Agreement; Sale of Interest.
(i) The Loan Documents constitute the complete agreement between
the parties with respect to the subject matter hereof and may not be
modified, altered or amended except by an agreement in writing signed by
Borrower, Required Lenders or all Lenders as required by the terms hereof,
and, if required by the terms hereof, Agent. Borrower may not sell, assign
or transfer any of the Loan Documents or any portion thereof, including
without limitation, such Borrower's rights, title, interests, remedies,
powers and duties hereunder or thereunder. Borrower hereby consents to
Agent's and any Lender's sale of participations, assignment, transfer or
other disposition in accordance with the terms hereof, at any time or times,
of any of the Loan Documents or of any portion thereof or interest therein,
including, without limitation, Agent's and any Lender's rights, title,
interests, remedies, powers or duties thereunder, whether evidenced in
writing or not; Borrower agrees that it will use commercially reasonable
efforts to assist and cooperate with Agent and any Lender in any manner
reasonably requested by Agent or such Lender to effect the sale of
participations in or assignment of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation,
assistance in the preparation of appropriate disclosure documents or
placement memoranda and executing appropriate amendments to the signature
pages hereto to reflect the addition of any Lenders and such Lender's
respective commitments. In addition, Borrower will make their management
available to meet with potential Lenders or Participating Lenders from time
to time as reasonably requested by Agent. The foregoing notwithstanding,
except with respect to sales, assignments or transfers to Affiliates under
common control pursuant to which the selling, assigning or transferring
Lender retains its voting rights, no Lender shall sell participations or
assign, transfer or otherwise dispose of any of the Loan Documents or any
portion thereof or interest therein, without the prior written consent of
Agent, [and if no Event of Default has occurred and is continuing,
Borrower,] which consent shall not be unreasonably withheld or delayed.
(ii) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Credit Loans owed
to it and the Revolving Credit Note held by it), (x) each such assignment
shall be of a uniform, and not a varying, percentage of all rights and
obligations, (y) except in the case of an assignment of all of a Lender's
rights and obligations under this Agreement, (A) the aggregate amount of the
Revolving Loan Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000, and in integral multiples of $1,000,000 thereafter, or such
lesser amount as to which Borrower and Agent may consent to and (B) after
giving effect to each such assignment, the amount of the Revolving Loan
Commitment of the assigning Lender shall in no event be less than
$5,000,000, (z) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance, an Assignment and Acceptance in
the form of Exhibit 12.3(ii) hereto (an "Assignment and Acceptance"),
together with any Revolving Credit Note, subject to such assignment and a
processing and recordation fee of $3,500, and (aa) any Lender may without
the consent of Borrower or the Agent, and without paying any fee, assign to
any Affiliate of such Lender that is a bank or financial institution all of
its rights and obligations under this Agreement. The foregoing
notwithstanding, no Person may become a Lender or a Participating Lender
hereunder, unless such Person is a financial institution having
stockholders' equity (or the equivalent) of at least One Hundred Million
Dollars ($100,000,000). Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment
and Acceptance (x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). If, pursuant to this Section 12.3, any
interest in this Agreement or any Revolving Credit Loan, Revolving Credit
Note, Letter of Credit or LC Guaranty is transferred to any transferee which
is organized under the laws of any jurisdiction other than the United States
or any state thereof, the transferor Lender shall cause such transferee
(other than any Participating Lender), and may cause any Participating
Lender, concurrently with the effectiveness of such transfer, (a) to
represent to the transferor Lender (for the benefit of the transferor
Lender, Agent, and Borrower) that under applicable law and treaties no Taxes
will be required to be withheld by Agent, Borrower or the transferor Lender
with respect to any payments to be made to such transferee in respect of the
Revolving Credit Loans, Revolving Credit Notes, Letters of Credit or LC
Guaranties, (b) to furnish to the transferor Lender, Agent and Borrower
either U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue
Service Form W-8ECI (wherein such transfer claims entitlement to complete
exemption form U.S. federal withholding tax on all interest payments
hereunder), and (c) to agree (for the benefit of the transferor Lender,
Agent and Borrower) to provide the transferor Lender, Agent and Borrower a
new Form W-8BEN or Form W-8ECI upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
transferee, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
(iii) In the event any Lender assigns or otherwise transfers all
or any part of its Revolving Credit Note, any such Lender shall so notify
Borrower and Borrower shall, upon the request of such Lender, issue new
Revolving Credit Notes in exchange for the old Revolving Credit Note.
(iv) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of Borrowers
(a "Participating Lender") participating interests in any Loans, the
commitments of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents;
provided, however, that (x) no participation shall be for an amount of less
than Five Million Dollars ($5,000,000), (y) the originating Lender's
obligations under this Agreement shall remain unchanged, (z) the originating
Lender shall remain solely responsible for the performance of such
obligations, (aa) Borrower and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (bb) no Lender shall grant any participation under which the
Participating Lender shall have rights to approve any amendment to or waiver
of this Agreement or the Loan Documents, except to the extent such amendment
or waiver would: (A) extend the final maturity date for payment of the Loans
in which such Participating Lender is participating; (B) reduce the interest
rate or the amount of principal or fees applicable to the Loans in which
such Participating Lender is participating; or (C) release all or
substantially all of the Collateral, except as expressly provided herein.
In those cases in which an originating Lender grants rights to a
Participating Lender to approve any amendment to or waiver of this Agreement
or the other Loan Documents respecting the matters described in clauses
(A) through (C) of the preceding sentence, the relevant participation
agreements shall provide for a voting mechanism whereby a majority of the
amount of such Lender's portion of the Loans (irrespective of whether held
by such Lender or a Participating Lender) shall control the vote for all of
such Lender's portion of the Loans. In the case of any participation, the
Participating Lender shall not have any rights under this Agreement or any
of the other Loan Documents entered into in connection herewith (the
Participating Lender's right against such Lender in respect of such
participation to be those set forth in the participation or other agreement
executed by such Lender and the Participating Lender relating thereto). In
no event shall any Participating Lender grant a participation in its
participation interest in the Loans without the prior written consent of
Agent, which approval shall not be unreasonably withheld or delayed. All
amounts payable by Borrower hereunder shall be determined as if the
originating Lender had not sold any such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participating Lender shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(v) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board or U.S.
Treasury Regulation 31 CFR S203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(vi) No amendment or waiver of any provision of this Agreement or
the Notes or any other Loan Document, nor consent to any departure by
Borrowers therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however: (x) that no amendment,
waiver or consent shall, unless in writing and signed by each Lender
affected thereby do any of the following: a) increase the aggregate
Revolving Loan Commitments or subject any Lender to any additional
obligations, (b) reduce the principal of, or decrease the rate of interest
on, the Notes or other amount payable hereunder other than those payable
only to FCC in its capacity as Agent which may be reduced by FCC
unilaterally, (c) postpone any date fixed for any payment of principal of,
or interest on, the Notes or other amounts payable hereunder, other than
those payable only to FCC in its capacity as Agent which may be postponed by
FCC unilaterally, (d) reduce the aggregate unpaid principal amount of the
Notes, or the number of Lenders which shall be required for the Lenders or
any of them to take any action hereunder, (e) release or discharge any
Person liable for the performance of any obligations of Borrower hereunder
or under any of the Loan Documents except in accordance with the terms of
such Loan Documents or as otherwise permitted herein, (f) increase the
advance rates contained in the definition of the Borrowing Base, (g) to the
extent Agent's or Lenders' consent is required by the terms hereof, release
all or substantially all of the Collateral or (h) amend this Section 12.3;
and (y) that no amendment, waiver or consent shall be effective unless in
writing and signed by either Required Lenders or all Lenders, as required by
the terms hereof and, if such amendment, waiver or consent affects Agent or
its rights hereunder, Agent.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 12.3
hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2
hereof and except as otherwise provided in any of the other Loan Documents
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which counterparts taken together shall
constitute but one and the same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing
and shall be sent by certified or registered mail, return receipt requested,
by personal delivery against receipt, by overnight courier against receipt
or by facsimile and, unless otherwise expressly provided herein, shall be
deemed to have been validly served, given or delivered immediately when
delivered against receipt, three (3) Business Days after deposit in the
mail, postage prepaid, one (1) Business Day after delivery to an overnight
courier or, in the case of facsimile notice, when sent (with electronic
confirmation of receipt), addressed as follows:
(A) If to Agent: Fleet Capital Corporation
One South Wacker Drive
Suite 1400
Chicago, Illinois 60606
Attention: Loan Administration Manager
Facsimile No.: 312.332.6537
With copies to: Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Suite 2500
Chicago, Illinois 60601
Attention: John T. McEnroe
Facsimile No.: 312.609.5005
and
Fleet Capital Corporation
20800 Swenson Drive
Suite 350
Waukesha, WI 53187
Attention: Edward Bartkowski
Facsimile No.: 262.798.4882
(B) If to Borrower: c/o Home Products International, Inc.
4501 West 47 th Street
Chicago, Illinois 60632
Attention: Chief Financial Officer
Facsimile No.: 773.890.0523
With a copy to: Much Shelist Freed Denenberg Ament &
Rubenstein, P.C.
200 North LaSalle Street
Suite 2100
Chicago, Illinois 60601
Attention: Jeffrey C. Rubinstein
Facsimile No.: 312.621.1750
(C) If to any Lender, as its address indicated on the signature pages
hereof or in a notice to borrower of an assignment of a Note,
or to such other address as each party may designate for itself by notice
given in accordance with this Section 12.8; provided, however, that any
notice, request or demand to or upon Agent pursuant to subsections 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent.
12.9 Consents. Whenever Agent's, Required Lenders' or Lenders' consent
is required to be obtained under this Agreement, any of the Other Agreements
or any of the Security Documents as a condition to any action, inaction,
condition or event, unless otherwise specifically provided, Agent, Required
Lenders or Lenders, as applicable, shall be authorized to give or withhold
such consent in its or their sole and absolute discretion and to condition
its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent to
respond to usual and customary credit inquiries from third parties
concerning Borrower or any of its Subsidiaries or any Guarantor.
12.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by
the parties in connection therewith or with reference thereto, embody the
entire understanding and agreement between the parties hereto and thereto
with respect to the subject matter hereof and thereof and supersede all
prior agreements, understandings and inducements, whether express or
implied, oral or written.
12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage
of any party hereto by any court or other governmental or judicial authority
by reason of such party having or being deemed to have structured or
dictated such provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE
IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT
IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN
ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF AGENT'S OR LENDERS' OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT
FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR AGENT OR ANY
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK
COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR LENDERS
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER
MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF
THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING AGENT OR LENDERS TO EXERCISE ANY OF AGENT'S OR LENDERS'
REMEDIES (EXCEPT AS OTHERWISE WOULD BE PERMITTED OR UNENFORCEABLE BY LAW);
(iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS;
(v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY
RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT
TO AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND THAT AGENT AND
LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
12.16 Advertisement. Borrower hereby authorizes Agent to publish the name
of Borrower and the amount of the credit facility provided hereunder in any
"tombstone" or comparable advertisement which Agent elects to publish.
(Signature Page to Follow)
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.
HOME PRODUCTS
INTERNATIONAL-NORTH
AMERICA, INC.
("Borrower")
By: /s/ James E. Winslow
-----------------------------
Name: James E. Winslow
Title: Executive V.P. and CFO
Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By: /s/ Andrew Pappas
-----------------------------
Name: Andrew Pappas
Title: Vice President
Address:
One South Wacker Drive
Suite 1400
Chicago, Illinois 60601
Attention: Loan Administration Manager
Telecopier No.: 312.332.6537
Revolving Loan Commitment: $50,000,000
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of October 31,
2001, by and among the lenders signatory hereto ("Lenders"), Fleet Capital
Corporation ("FCC") as agent for such Lenders (FCC, in such capacity,
"Agent") and Home Products International - North America, Inc., a Delaware
corporation ("Borrower"), (a) the terms Account, Certificated Security,
Chattel Paper, Deposit Account, Document, Equipment, Financial Asset,
Fixture, General Intangibles, Goods, Instrument, Inventory, Investment
Property, Security, Proceeds, Security Entitlement and Uncertificated
Security have the respective meanings assigned thereto under the UCC (as
defined below); (b) the terms Commercial Tort Claims, Electronic Chattel
Paper, Health-Care-Insurance Receivables, Letter-of-Credit Rights, Payment
Intangibles, Software, Supporting Obligations and Tangible Chattel Paper
have the respective meanings assigned thereto in the UCC Revisions (as
defined below); (c) all terms indicating Collateral having the meanings
assigned thereto under the UCC or the UCC Revisions shall be deemed to mean
such Property, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest;
(d) capitalized terms which are not otherwise defined have the respective
meanings assigned thereto in said Loan and Security Agreement; and (e) the
following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated on or under
or on account of any Account, Contract Right, Chattel Paper or General
Intangible.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, a Person; (ii) which beneficially owns or
holds 5% or more of any class of the Voting Stock of a Person; or (iii) 5%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
ALTA Survey - a survey prepared in accordance with the standards
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1997, known as the "Minimum Standard Detail
Requirements of Land Title Surveys". The ALTA Survey shall be in sufficient
form to satisfy the requirements of Chicago Title Insurance Company to
provide extended coverage over survey defects and shall also show the
location of all easements, utilities, and covenants of record, dimensions of
all improvements, encroachments from any adjoining property, and certify as
to the location of any flood plain area affecting the subject real estate.
The ALTA Survey shall contain the following certification: "To Home
Products International-North America, Inc., Fleet Capital Corporation, as
Agent, and Chicago Title Insurance Company. This is to certify that this
map of plat and the survey on which it is based were made in accordance with
the "Minimum Standard Detail Requirements for Land Title Surveys" jointly
established and adopted by ALTA and ACSM in 1997. (signed (SEAL) License
No. __________".
Applicable Margin - the percentages set forth below with respect to
Base Rate Advances, LIBOR Advances, letter of credit fees and unused line
fees, which percentages shall be set on the Closing Date and adjusted on the
first day of the month following the month in which the Borrowing Base
Certificate for the period ended April 30, 2002 is delivered to Agent
pursuant to subsection 8.1.4 and quarterly thereafter on the first day of
the month following the month in which the Borrowing Base Certificates for
periods ending on each subsequent June 30, September 30, December 31 and
March 31 are delivered to Agent pursuant to subsection 8.1.4 by reference to
Borrower's Average Gross Availability for the one-month period ended on
April 30, 2002 or the most recent June 30, September 30, December 31 or
March 31, as applicable, in accordance with the following:
Applicable Margin
Letter of Credit
Average Gross LIBOR Base Rate Unused Line and LC
Availability Advances Advances Fee Guaranty Fees
----------------- -------- --------- ----------- ----------------
> $30,000,000 2.25% .25% .375% 2.125%
<$30,000,000, but 2.50% .50% .50% 2.375%
>$20,000,000
<$20,000,000 2.75% .75% .50% 2.625%
Each change in Applicable Margin shall be effective prospectively as of
the first day of the fiscal month of Borrower next following the fiscal
month during which the applicable Borrowing Base Certificates for the
periods ended April 30, 2002 and each subsequent June 30, September 30,
December 31 and March 31 of Borrower are delivered to Agent pursuant to
subsection 8.1.4, commencing with the delivery of the Borrowing Base
Certificate for the period ending April 30, 2002.
From the Closing Date until the first adjustment date as provided
above, the Applicable Margin shall be 2.50% (LIBOR Advances), .50% (Base
Rate Advances), .50 % (unused line fee) and 2.50% (Letter of Credit and LC
Guaranty fee). At any time when Borrower has failed to deliver to Agent
Borrowing Base Certificates for any period ended on June 30, September 30,
December 31 and March 31 within the Original Term and such failure has not
been cured to Agent's reasonable satisfaction, the Applicable Margin shall
be the highest percentages set forth in the above schedule.
Average Gross Availability - the average of Borrower's Gross
Availability as determined by Agent for any three-month period ended on any
June 30, September 30, December 31 or March 31 within the Original Term.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its prime rate for commercial loans, whether or not such rate is
the lowest rate charged by Bank to its most preferred borrowers; and, if
such prime rate for commercial loans is discontinued by Bank as a standard,
a comparable reference rate designated by Bank as a substitute therefor
shall be the Base Rate.
Base Rate Advances - any Loan bearing interest computed by reference to
the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the Maximum Revolving Credit Amount of such date; or
(ii) an amount equal to the sum of:
(a) eighty-five percent (85%) of the net amount of Eligible
Accounts outstanding at such date;
PLUS
(b) the lesser of (1) Twenty-Five Million Dollars
($25,000,000) or (2) sixty percent (60%) of the value of Eligible
Inventory at such date calculated on the basis of the lower of cost or
market with the cost of raw materials and finished goods calculated on
a first-in, first-out basis.
PLUS
(c) the Fixed Asset Component.
The sum of (a), (b) and (c) above is hereinafter referred to as the
"Collateral Borrowing Base." For purposes hereof, the net amount of
Eligible Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which may, at Agent's
option, be calculated on shortest terms), credits, allowances or excise
taxes of any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Accounts at such
time.
Borrowing Base Certificate - a certificate by a reasonably responsible
officer of Borrower, substantially in the form of Exhibit 8.1.4 (or another
form acceptable to Agent) setting forth the calculation of the Borrowing
Base, including a calculation of each component thereof, all in such detail
as shall be reasonably satisfactory to Agent. All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by Borrower and certified to Agent;
provided, that Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation after
giving notice thereof to the Borrower to the extent that such calculation is
not in accordance with this Agreement.
Business Day - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the States of Illinois or Wisconsin or is
a day on which banking institutions located in such state are closed.
Capital Expenditures - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Change of Control - means the occurrence of any of the following
events: (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than forty percent (40%) of the total
voting power of the Voting Stock of Parent (or its successor by merger,
consolidated or purchase of all or substantially all of its assets); and the
Permitted Holders "beneficially own" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of Parent (or its
successor by merger, consolidated or purchase of all or substantially all of
its assets) than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority; of the board of directors of Parent or such successor; or (ii)
during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of Parent (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of Parent was approved by a vote
of at least a majority of the directors of Parent then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved or is a designee of the
Permitted Holders or was nominated or elected by such Permitted Holders or
any of their designees) cease for any reason to constitute a majority of the
Board of Directors of Parent then in office; or (iii) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Parent and Borrower taken as a whole to
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than a Permitted Holder; or (iv) the adoption by the
stockholders of a plan for the liquidation or dissolution of Parent or
Borrower.
Chase Group - the Chase Manhattan Bank and the other lenders party to
that certain Senior Secured Credit Agreement by and among Borrower, the
Chase Manhattan Bank, as Administrative Agent, and the lender signatories
thereto.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Collateral Borrowing Base - as defined within the definition of
Borrowing Base.
Computer Hardware and Software - all of Borrower's rights (including
rights as licensee and lessee) with respect to (i) computer and other
electronic data processing hardware, including all integrated computer
systems, central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware;
(ii) all Software and all software programs designed for use on the
computers and electronic data processing hardware described in
clause (i) above, including all operating system software, utilities and
application programs in any form (source code and object code in magnetic
tape, disk or hard copy format or any other listings whatsoever); (iii) any
firmware associated with any of the foregoing; and (iv) any documentation
for hardware, Software and firmware described in clauses (i), (ii) and
(iii) above, including flow charts, logic diagrams, manuals, specifications,
training materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Contract Right - any right of Borrower to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at
the time not yet earned by performance.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes:
(i) the payment of any dividends or other distributions on capital stock of
the corporation (except distributions in such stock) and (ii) the redemption
or acquisition of Securities unless made contemporaneously from the net
proceeds of the sale of Securities.
Dominion Account - a special account established by Borrower pursuant
to the Agreement at a bank selected by Borrower, but acceptable to Agent in
its reasonable discretion, and over which Agent shall have sole and
exclusive access and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which
Agent, in its sole credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
(i) it arises out of a sale made by Borrower to a Subsidiary or
an Affiliate of Borrower or to a Person controlled by an Affiliate of
Borrower; or
(ii) it is unpaid for more than sixty (60) days after the original
due date shown on the invoice; or
(iii) it is due or unpaid more than ninety (90) days after the
original invoice date; or
(iv) 25% or more of the Accounts from the Account Debtor are not
deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account Debtor (other than
Wal-Mart, Target or KMart so long as any of the foregoing's credit rating is
5-A3 or better) exceed 20% of the net amount of all Accounts, to the extent
of such excess; the total unpaid Accounts of any of Wal-Mart, Target or
Kmart (to the extent either of the foregoing's credit rating is 5-A2 or
better) exceed 35% of the net amount of all Accounts, to the extent of such
excess; or the total unpaid Accounts of any of Wal-Mart, Target or Kmart (to
the extent any of the foregoing's credit rating is 5-A3 or better, but is
less than 5-A2) exceed 30% of the net amount of all Accounts, to the extent
of such excess; or
(vi) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or
(vii) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect to such
Account, or the Account Debtor has made any claim with respect to any other
Account due from such Account Debtor to Borrower, or the Account otherwise
is or may become subject to any right of setoff by the Account Debtor or
other contra situation provided that any such Account shall only be deemed
to be not eligible to the extent of any such dispute, claim or setoff; or
(viii) the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors, or a decree or order for
relief has been entered by a court having jurisdiction in the premises in
respect of the Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
petition or other application for relief under the federal bankruptcy laws
has been filed against the Account Debtor, unless the Account Debtor in
question has obtained debtor-in-possession financing, with terms and
conditions acceptable to Agent in its sole discretion, or if the Account
Debtor has failed, suspended business, ceased to be Solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; or
(ix) it arises from a sale to an Account Debtor outside the United
States or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion or
unless the Account Debtor is Wal-Mart Mexico; or
(x) it arises from a sale to the Account Debtor on a bill-and-
hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any
other repurchase or return basis; or
(xi) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its
right to payment of such Account to Lender, in a manner satisfactory to
Agent, so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
S203 et seq., as amended); or
(xii) the Account is subject to a Lien other than a Permitted
Lien; or
(xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a final sale; or
(xiv) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xv) Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances which are made
in the ordinary course of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each
invoice related to such Account; or
(xvi) Borrower has made an agreement with the Account Debtor
to extend the time of payment thereof or has made any compromise,
modification or settlement of such Account; or
(xvii) the Account is for amounts owing with respect to service
charges, late fees or other similar charges.
Eligible Inventory - such Inventory of Borrower (other than
work-in-process, packaging materials and supplies) which Agent, in its sole
credit judgment, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory if:
(i) it is not raw materials or finished goods that is, in Agent's
opinion, readily marketable in its current form; or
(ii) it is not in good, new and saleable condition; or
(iii) it is slow-moving, obsolete or unmerchantable; or
(iv) it does not meet, in all material respects, all standards
imposed by any governmental agency or authority; or
(v) it does not conform in all respects to the warranties and
representations set forth in the Agreement; or
(vi) it is not at all times subject to Agent's duly perfected,
first-priority security interest and no other Lien except a Permitted Lien;
or
(vii) it is not situated at a location in compliance with the
Agreement or is in transit.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Equipment Percentage - as of any date, the percentage equal to (x) one
hundred percent (100%) minus (y) the percentage obtained by dividing the
number of full calendar months elapsed since the Closing Date by eighty-four
(84).
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Fee Letter - that certain letter agreement dated on or about the
Closing Date between Agent and Borrower.
Fixed Asset Component - as of any date, the lesser of (1) the sum of
(x) Six Million Dollars ($6,000,000) multiplied by the Equipment Percentage
plus (y) Four Million Dollars ($4,000,000) multiplied by the Real Property
Percentage or (2) the sum of (x) the product of eighty percent (80%) of the
orderly liquidation value of Borrower's Equipment less liquidation expenses
(as estimated by Agent) multiplied by the Equipment Percentage plus (y) the
product of sixty percent (60%) of the fair market value of Borrower's owned
real Property less liquidation expenses (as estimated by Agent) multiplied
by the Real Property Percentage. For purposes of this definition, the
orderly liquidation value of Borrower's Equipment and the fair market value
of Borrower's owned real Property shall be established by Agent in the
reasonable exercise of its discretion on the Closing Date. After the
Closing Date, Agent, in the reasonable exercise of its discretion, may
adjust the orderly liquidation value of Borrower's Equipment and/or the fair
market value of Borrower's owned real Property to reflect increases or
decreases in either such value. To that end, Borrower agrees that Agent, in
the reasonable exercise of its discretion, may, on an annual basis, or more
frequently as requested by Agent, if an Event of Default exists, obtain or
require Borrower to obtain appraisals of Borrower's Equipment and owned real
Property to evidence the orderly liquidation value of Borrower's Equipment
or fair market value of Borrower's owned real Property. If no Default or
Event of Default exists, Agent shall notify Borrower prior to obtaining or
authorizing any such appraisal. The cost of any such appraisal such be paid
by Borrower pursuant to Section 2.6 of the Agreement.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
Gross Availability - as of any date, the excess (if any) of the
Collateral Borrowing Base as of such date over the sum of the principal
amount of the Revolving Loans then outstanding (including any amounts which
Agent may have paid for the account of Borrower pursuant to the Loan
Documents and which have not been reimbursed by Borrower) and the LC Amount.
Guaranty Agreement - the Continuing Guaranty Agreement which is to be
executed by Parent in form and substance satisfactory to Agent.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person as at the date as of which Indebtedness is to be
determined, including, without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the account of such
Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Intellectual Property - all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain
names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been
or may hereafter be issued thereon throughout the world; copyrights
(including copyrights for computer programs) and copyright registrations or
applications for registrations which have heretofore been or may hereafter
be issued throughout the world and all tangible property embodying the
copyrights, unpatented inventions (whether or not patentable); patent
applications and patents; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object
codes, executable code, data, databases and other physical manifestations,
embodiments or incorporations of any of the foregoing; the right to sue for
all past, present and future infringements of any of the foregoing; all
other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
Interest Period - as applicable to any LIBOR Advance, a period
commencing on the date a LIBOR Advance is made, and ending on the date which
is one (1) month, two (2) months, three (3) months, or six (6) months later,
as may then be requested by Borrower; provided that (i) any Interest Period
which would otherwise end on a day which is not a Business Day shall end in
the next preceding or succeeding Business Day as is Agent's custom in the
market to which such LIBOR Advance relates; (ii) there remains a minimum of
one (1) month, two (2) months, three (3) months or six (6) months (depending
upon which Interest Period Borrower selects) in the Original Term; and
(iii) all Interest Periods of the same duration which commence on the same
date shall end on the same date.
Interest Rate Obligations - all obligations in connection with
contracts or hedging programs, including, but not limited to, all interest
rate swaps, caps, collar agreements, or similar arrangements, designed to
provide certain protections with respect to interest rate fluctuations, or
any assurances, guarantees or other contractual obligations related thereto,
including all such obligations (i) which are incurred by any Borrower to
Agent, any Lender or any Affiliate of Agent, and (ii) which are incurred in
any manner by Agent, any Lender or any Affiliate of Agent in connection with
a Borrower's interest rate protection program or contract.
IRB Indebtedness - all Indebtedness for Money Borrowed of Borrower
pursuant to those certain Illinois Development Finance Authority $4,000,000
Variable Rate Demand Industrial Development Revenue Bonds (Selfix, Inc.
Project) Series 1990 dated _________, issued to _______________, that
certain [Loan Agreement] dated ________________ by and between Borrower and
__________________ and all related documents, agreements, contracts and
instruments..
LC Guaranty - any guaranty pursuant to which Agent or any Affiliate of
Agent shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
Legal Requirement - any requirement imposed upon any Lender by any law
of the United States of America or the United Kingdom or by any regulation,
order, interpretation, ruling or official directive (whether or not having
the force of law) of the Federal Reserve Board, the Bank of England or any
other board, central bank or governmental or administrative agency,
institution or authority of the United States of America, the United Kingdom
or any political subdivision of either thereof.
Letter of Credit - any letter of credit issued by Agent or any of
Agent's Affiliates for the account of Borrower.
LIBOR - as applicable to any LIBOR Advance, the rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as determined on
the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Advance which appears on the Telerate
page 3750 as of 11:00 a.m. (London time) on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Advance; provided,
however, if the rate described above does not appear on the Telerate System
on any applicable interest determination date, the LIBOR rate shall be the
rate (rounded upwards as described above, if necessary) for deposits in U.S.
dollars for a period substantially equal to the interest period on the
Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as of 11:00 a.m. (London
Time), on the day that is two (2) London Banking Days prior to the beginning
of such interest period. If both the Telerate and Reuters systems are
unavailable, then the rate for that date will be determined on the basis of
the offered rates for deposits in U.S. dollars for a period of time
comparable to such LIBOR Advance which are offered by four (4) major banks
in the London interbank market at approximately 11:00 a.m. (London time), on
the day that is two (2) London Banking Days preceding the first day of such
LIBOR Advance as selected by Agent. The principal London office of each of
the major London Banks so selected will be requested to provide a quotation
of its U.S. dollar deposit offered rate. If at least two (2) such
quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested,
the rate for that date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a period of time
comparable to such LIBOR Advance offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two
(2) London Banking Days preceding the first day of such LIBOR Advance. In
the event that Agent is unable to obtain any such quotation as provided
above, it will be determined that LIBOR pursuant to a LIBOR Advance cannot
be determined. In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of Bank then for any period during which such Reserve Percentage
shall apply, LIBOR shall be equal to the amount determined above divided by
an amount equal to 1 minus the Reserve Percentage.
LIBOR Advance - any Loan bearing interest computed by reference to the
LIBOR.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements, rights-of-
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purpose of the Agreement,
Borrower shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Agent
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - all loans and advances of any kind made by Lenders, and/or by
any affiliate of any Lender, pursuant to the Agreement.
London Banking Day - any date on which commercial banks are open for
business in London, England.
Material Adverse Effect - (i) a material adverse effect on the
business, condition (financial or otherwise), operation, performance or
properties of Borrower or any of its Subsidiaries, (ii) a material adverse
effect on the rights and remedies of Agent or Lenders under the Loan
Documents, (iii) the material impairment of the ability of Borrower or any
of its Subsidiaries to perform its obligations hereunder or under any Loan
Document, or (iv) a material adverse effect on the value of the Collateral
or Agent's or Lenders' rights therein.
Maximum Revolving Loan Amount - shall mean, as of any date, Fifty
Million Dollars ($50,000,000), as reduced from time to time as provided
herein. In addition, Borrower may reduce, upon three days' prior written
notice to Agent, the amount of the Maximum Revolving Loan. Any such
reduction (i) shall be in a minimum amount of Two Million Dollars
($2,000,000), (ii) shall be an integral amount of One Million Dollars
($1,000,000) and (iii) shall not exceed an aggregate amount of Five Million
Dollars ($5,000,000) in any one calendar year or Ten Million Dollars
($10,000,000) during the Original Term. Once the Maximum Revolving Loan
Amount has been reduced it may not be subsequently increased.
Mexican Subsidiary _Seymour S.A. de C.V.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower,
(A) which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (C) upon which interest charges
are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations
with respect to letters of credit or guaranties of letters of credit and
(v) Indebtedness of Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by Borrower.
Mortgage[s] - the [mortgage] [deed of trust] [security deed] to be
executed by Borrower on or about the Closing Date in favor of Agent, for its
benefit and the ratable benefit of Lenders, and by which Borrower shall
grant and convey to Agent, as security for the Obligations, a Lien upon the
real Property of Borrower located at (i) 885 N. Chestnut, Seymour, Indiana;
(ii) 201 S. Jackson Park Drive, Seymour, Indiana; (iii) 400 S. Airport Road,
Seymour, Indiana; (iv) 3016 W. Georgia Street, Louisiana, Missouri; (v) 323
Industrial Boulevard, Thomasville, Georgia; and (vi) 4501 W. 47th Street,
Chicago, Illinois.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
New Mortgages - as defined in Section 5.4 of the Agreement.
Net Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Agent may have paid for
the account of Borrower pursuant to any of the Loan Documents and which have
not been reimbursed by Borrower) and the LC Amount is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Net Availability is zero (0).
Notes - collectively, Revolving Credit Notes.
Notice of Revolving Credit Loan and Notice of Equipment Loan - as
defined in subsection 3.1.1 of the Agreement.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from any Borrower to
Agent, any Lender or any of Agent's Affiliates, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under the Agreement or any of the other Loan
Documents or otherwise, and whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due
or to become due, now existing or hereafter arising and however acquired,
and any replacements, renewals, extensions or other modifications of any of
them. Without limiting the generality of the foregoing, all obligations of
any Borrower to Agent, any Lender or any of Agent's Affiliates with respect
to Interest Rate Protection Obligations shall be deemed Obligations
hereunder.
Organizational I.D. Number - with respect to Borrower, the
organizational identification number assigned to Borrower by the applicable
governmental unit or agency of the jurisdiction of organization of Borrower.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements (including without
limitation, the Fee Letter), instruments and documents (other than the
Agreement and the Security Documents), heretofore, now or hereafter executed
by Borrower, any Subsidiary of Borrower or any other third party and
delivered to Agent or any Lender in respect of the transactions contemplated
by the Agreement.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Borrowing
Base.
Parent - Home Products International, Inc., a Delaware corporation.
Participating Lender - each Person who shall be granted the right by a
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to such Lender, which participation agreement shall conform to
the provisions of subsection 11.3(iv) of the Agreement.
Patent Security Agreement - the Patent and License Security Agreement
executed by Borrower on or about the Closing Date in favor of Agent for its
benefit and the ratable benefit of Lenders, as such Patent and License
Agreement has been or will be amended from time to time.
Permitted Acquisition(s) - means any acquisition(s) by Borrower of the
business and substantially all of the assets or all of the outstanding
capital stock or other ownership interests of a Person or a merger of a
Person with Borrower or a Subsidiary of Borrower so long as each of the
following conditions precedent (collectively, the "Acquisition Conditions")
have been fulfilled to the satisfaction of Agent: (i) no Default or Event
of Default shall have occurred and be continuing at the time of such
acquisition or would occur as a result thereof; (ii) the business unit being
acquired (the "Target") is primarily located in the United States of America
and is in the same or related line of business as Parent and Borrower; (iii)
if the acquisition in question is not an asset acquisition, Borrower and
Target shall have executed such amendments to the Agreement, assumption
agreements, security agreements, guarantees, financing statements,
promissory notes or other loan documentation as reasonably requested by
Agent to, inter alia, make the Target a guarantor of the Obligations or co-
borrower under the Loan Agreement and to grant to Agent for its benefit and
the ratable benefit of Lenders a perfected security interest, subject only
to Permitted Liens, in substantially all of the assets of the Target or if
the acquisition in question is an asset acquisition, Borrower shall have
executed such financing statements and other collateral documents as
reasonably requested by Agent to grant to Agent a perfected security
interest, subject only to Permitted Liens in substantially all of the
acquired assets; (iv) Agent shall have received (x) copies of Target's
historical financial statements for the [two] annual periods preceding the
proposed acquisition date and for the most recently available interim
period, (y) a sources and uses statement, in form and substance reasonably
acceptable to Agent, in respect to the proposed acquisition and (z) the
projections referred to in clause (vi) below; (v) Target's EBITDA (as
adjusted by Borrower which adjustments shall be subject to Agent's approval)
for the most recently ended annual period and the year to date is equal to
or greater than Zero Dollars ($0); (vi) Agent shall have received Borrower's
and the Target's pro forma financial projections, which projections shall
demonstrate that Borrower and the Target, on a Consolidated basis, will be
in compliance with the provisions of this Loan Agreement, including, but
without limitations, Section 8.3 of the Loan Agreement immediately prior to
and after the consummation of the proposed acquisition; (vii) prior to the
consummation of any such transaction, Agent shall have had the opportunity
to audit the books, records and operations of the Target, including, without
limitation, the accounts, inventory, machinery and equipment and real estate
of the Target, which after the consummation of the proposed acquisition
would be included in the Borrowing Base; (viii) Borrower shall have given
Agent written notice of any such transaction at least thirty (30) days prior
to the consummation of any such transaction; and (ix) prior to the
consummation of any such transaction, Borrower shall have delivered to Agent
copies of the transaction documents in substantially final form.
Permitted Holders - (i) directors and officers of Parent on the Closing
date and (ii) Chase Venture Capital Associates, L.P. and any Affiliate
thereof.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of
the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed Seven Million Five Hundred Thousand Dollars
($7,500,000). For the purposes of this definition, the principal amount of
any Purchase Money Indebtedness consisting of capitalized leases shall be
computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Pledge Agreement - the Stock Pledge Agreement executed by Parent on or
about the Closing Date in favor of Agent for its benefit and the ratable
benefit of Lenders, as such Stock Pledge Agreement has been or will be
amended from time to time.
Pledge Agreement (Subsidiary) - the Stock Pledge Agreement executed by
Borrower and the Closing Date in favor of Agent for its benefit and the
ratable benefit of Lenders, as such Stock Pledge Agreement has been or will
be amended from time to time.
Projections - Borrower's forecasted Consolidated and consolidating
(a) balance sheets, (b) profit and loss statements, (c) cash flow
statements, and (d) capitalization statements, all prepared on a consistent
basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within ten (10) days prior to or
after the acquisition of any fixed assets for the purpose of financing all
or any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof, but not any increases in the principal
amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined
solely to the fixed assets the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
Real Property Percentage - as of any date, the percentage equal to
(x) one hundred percent (100%) minus the percentage obtained by dividing the
number of full calendar months elapsed since the Closing Date by one hundred
twenty (120).
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Required Lenders - as of any date, the Lenders with more than fifty
percent (50%) of the aggregate principal amount of the Revolving Loan
Commitments; provided, that if any time there are two or fewer Lenders,
Required Lenders shall mean all Lenders; and provided, further, that if
there are three Lenders, Required Lenders shall mean any two Lenders with
more than fifty percent (50%) of the aggregate principal amount of the
Revolving Loan Commitments.
Reserve Percentage - the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against "Euro-currency
Liabilities" as defined in Regulation D.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or
other obligation or Security, or by loan, advance or capital contribution,
or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to the
extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one (1) year
from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
(1) year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof having
capital surplus and undivided profits aggregating at least $100,000,000; and
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the
date of creation thereof.
Revolving Credit Commitments - as defined in subsection 1.1.1 of the
Agreement.
Revolving Credit Loan - a Loan made by Lenders as provided in
Section 1.1 of the Agreement.
Revolving Credit Note - the Revolving Credit Notes to be executed by
Borrower on or about the Closing Date in favor of each Lender to evidence
the Revolving Credit Loan, which shall be in the form of Exhibit 1.1.1 to
the Agreement.
Revolving Credit Percentage - as defined in subsection 1.1.1 of the
Agreement.
Schedule of Accounts - as defined in subsection 6.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreement, the Mortgages, any new
Mortgage, the Patent Security Agreement, the Pledge Agreement, the Pledge
Agreement (Subsidiary), the Trademark Security Agreement and all other
instruments and agreements now or at any time hereafter securing the whole
or any part of the Obligations.
Senior Subordinated Notes - those certain subordinated promissory notes
dated on or about May 14, 1998 in the original aggregate principal amount of
One Hundred Twenty-Five Million Dollars ($125,000,000) executed by Borrower
in favor of the holders thereof.
Senior Subordinated Note Documents - that certain Indenture dated on or
about May 14, 1998 by and among Parent, the subsidiary signatories thereto
(including, without limitation, Borrower) and LaSalle National Bank, as
Trustee, the Senior Subordinated Notes and all schedules, exhibits and other
documents and agreements executed and/or delivered in connection therewith.
Solvent - as to any Person, that such Person (i) owns Property whose
fair saleable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all
of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Agent.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
Tax - in relation to any LIBOR Advance and the applicable LIBOR, any
tax, levy, impost, duty, deduction, withholding or charges of whatever
nature required by any Legal Requirement (i) to be paid by Agent or any
Lender and/or (ii) to be withheld or deducted from any payment otherwise
required hereby to be made by Borrower to Agent or any Lender; provided,
that the term "Tax" shall not include any taxes imposed upon the net income
of Agent or any Lender.
Termination Date - the date on which the Agreement has been terminated
in accordance with Section 4.
Total Credit Facility - Fifty Million Dollars ($50,000,000).
Trademark Security Agreement - the Trademark and License Security
Agreement executed by Borrower on or about the Closing Date in favor for
Agent for its benefit and the ratable benefit of Lenders, as such Trademark
and License Agreement has been or will be amended from time to time.
Type of Organization - with respect to Borrower, the kind or type of
entity by which Borrower is organized, such as a corporation or limited
liability company.
UCC - the Uniform Commercial Code as in effect in the State of Illinois
on the date of this Agreement, as the UCC may be amended or otherwise
modified, including by the UCC Revisions.
UCC Revisions - the revisions to Article 9 and other Articles of the
Uniform Commercial Code, as adopted by the State of Illinois, effective
July 1, 2001.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles,
table of contents and list of exhibits appear as a matter of convenience
only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations. All references to any
of the Loan Documents shall include any and all modifications thereto and
any and all extensions or renewals thereof.