EXHIBIT 10.3
SHORT-TERM CREDIT AGREEMENT
DATED AS OF NOVEMBER 4, 1998,
AMONG
ANICOM, INC.,
THE LENDERS
PARTY HERETO,
AND
HARRIS TRUST AND SAVINGS BANK,
INDIVIDUALLY AND AS AGENT
TABLE OF CONTENTS
SECTION DESCRIPTION
SECTION 1................................................THE REVOLVING CREDITS.
Section 1.1............................................The Revolving Credit.
Section 1.2......................................The Revolving Credit Notes.
Section 1.3................................Manner and Disbursement of Loans.
Section 1.4..........................Extensions of the Revolving Commitments
SECTION 2.................................INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1...........................................Interest Rate Options.
Section 2.2...................................Minimum LIBOR Portion Amounts
Section 2.3.........................................Computation of Interest.
Section 2.4........................................Manner of Rate Selection.
Section 2.5...................................................Change of Law.
Section 2.6....Unavailability of Deposits or Inability to Ascertain Adjusted
LIBOR.
Section 2.7......................................Taxes and Increased Costs.
Section 2.8.........................Change in Capital Adequacy Requirements.
Section 2.9................................................Funding Indemnity
Section 2.10.................................................Lending Branch.
Section 2.11..................Discretion of Lenders as to Manner of Funding.
SECTION 3....................................FEES, PREPAYMENTS AND TERMINATIONS.
Section 3.1............................................................Fees
Section 3.2...........................................Voluntary Prepayments.
Section 3.3....................................................Terminations.
Section 3.4...............................Place and Application of Payments.
Section 3.5.......................................................Notations.
SECTION 4............................................................GUARANTIES.
Section 4.1............................................Subsidiary Guaranties
SECTION 5..........................................DEFINITIONS; INTERPRETATION.
Section 5.1.....................................................Definitions.
Section 5.2..................................................Interpretation.
SECTION 6........................................REPRESENTATIONS AND WARRANTIES.
Section 6.1...................................Organization and Qualification
Section 6.2.....................................................Subsidiaries
Sectio 6.3..................Corporate Authority and Validity of Obligations
Section 6.4....................................Use of Proceeds; Margin Stock
Section 6.5................................................Financial Reports
Section 6.6.......................................No Material Adverse Change
Section 6.7..................................................Full Disclosure
Section 6.8.......................................................Good Title
Section 6.9...............................Litigation and Other Controversies
Section 6.10...........................................................Taxes
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Section 6.11.......................................................Approvals
Section 6.12..........................................Affiliate Transactions
Section 6.13..............Investment Company; Public Utility Holding Company
Section 6.14...........................................................ERISA
Section 6.15............................................Compliance with Laws
Section 6.16................................................Other Agreements
Section 6.17......................................................No Default
Section 6.18............................................Year 2000 Compliance
SECTION 7..................................................CONDITIONS PRECEDENT
Section 7.1....................................................All Advances.
Section 7.2..................................................Initial Advance
Section 7.3.........................Termination of Existing Credit Agreement
Section 7.4......................Novmber 19 as Earliest Effective Date
SECTION 8.............................................................COVENANTS
Section 8.1................................Corporate Existence; Subsidiaries
Section 8.2........................................Maintenance of Properties
Section 8.3............................................Taxes and Assessments
Section 8.4........................................................Insurance
Section 8.5................................................Financial Reports
Section 8.6....................................................Current Ratio
Section 8.7..........................................Interest Coverage Ratio
Section 8.8...............................................Tangible Net Worth
Section 8.9...........................................Debt to Earnings Ratio
Section 8.10..................................................Leverage Ratio
Section 8.11.................................Indebtedness for Borrowed Money
Section 8.12...........................................................Liens
Section 8.13.....................Investments, Loans, Advances and Guaranties
Section 8.14....................................................Acquisitions
Section 8.15............................................Sales and Leasebacks
Section 8.16.................Dividends and Certain Other Restricted Payments
Section 8.17...............................Mergers, Consolidations and Sales
Section 8.18...........................................................ERISA
Section 8.19............................................Compliance with Laws
Section 8.20............................Burdensome Contracts With Affiliates
Section 8.21.......................................No Changes in Fiscal Year
Section 8.22......................................Inspection and Field Audit
Section 8.23.......................................Formation of Subsidiaries
Section 8.24.......................................Subordinated Indebtedness
Section 8.25.................................................Use of Proceeds
Section 8.26............................................Year 2000 Compliance
SECTION 9.........................................EVENTS OF DEFAULT AND REMEDIES
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Section 9.1..............................................Events of Default.
Section 9.2........................................Non-Bankruptcy Defaults.
Section 9.3.............................................Bankruptcy Defaults
SECTION 10............................................................THE AGENT.
Section 10.1..................................Appointment and Authorization
Section 10.2.............................................Rights as a Lender
Section 10.3...............................................Standard of Care
Section 10.4.............................................Costs and Expenses
Section 10.5......................................................Indemnity
SECTION 11.......................................................MISCELLANEOUS.
Section 11.1..............................................Withholding Taxes
Section 11.2.............................................Non-Business Days.
Section 11.3................................No Waiver, Cumulative Remedies.
Section 11.4..........................Waivers, Modifications and Amendments
Section 11.5.............................................Costs and Expenses
Section 11.6.............................................Documentary Taxes.
Section 11.7...................................Survival of Representations.
Section 11.8.......................................Survival of Indemnities.
Section 11.9.................................................Participations
Section 11.10.........................................Assignment Agreements
Section 11.11.......................................................Notices
Section 11.12..................................................Construction
Section 11.13......................................................Headings
Section 11.14....................................Severability of Provisions
Section 11.15..................................................Counterparts
Section 11.16..........................................Entire Understanding
Section 11.17............................Binding Nature, Governing Law, Etc
Section 11.18..............Submission to Jurisdiction; Waiver of Jury Trial
Signature
Exhibit A - Revolving Credit Note
Exhibit B - Compliance Certificate
Exhibit C - Subordinated Indebtedness
Exhibit D - Subordination Provisions Applicable to Subordinated Debt
Exhibit E - Form of Guaranty Schedule 6.2 - Subsidiaries
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SHORT-TERM CREDIT AGREEMENT
To each of the Lenders party hereto:
Ladies and Gentlemen:
The undersigned, Anicom, Inc., an Delaware corporation (the "Company"),
applies to you for your several commitments, subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, to extend credit to the Company, all as more fully hereinafter set forth.
SECTION 1. THE REVOLVING CREDITS.
Section 1.1. The Revolving Credit. Subject to the terms and conditions
hereof, each Lender severally agrees to extend a revolving credit (the
"Revolving Credit") to the Company which may be availed of by the Company from
time to time during the period from and including the date hereof to but not
including the Revolving Credit Termination Date, at which time the commitments
of the Lenders to extend credit under the Revolving Credit shall expire. The
maximum amount of the Revolving Credit which each Lender agrees to extend to the
Company shall be as set forth opposite such Lender's signature hereto under the
heading "Revolving Credit Commitment" or as otherwise provided in Section
11.10 hereof, as such amount may be reduced pursuant hereto. The Revolving
Credit may be utilized by the Company in the form of Loans, all as more fully
hereinafter set forth, provided that (i) the aggregate principal amount
of Loans under the Revolving Credit outstanding at any one time shall not exceed
the Revolving Credit Commitments and (ii) no additional Loans shall be
available under the Revolving Credit unless the commitments under the Long-Term
Credit Agreement are fully utilized. During the period from and including the
date hereof to but not including the Revolving Credit Termination Date, the
Company may use the Revolving Credit Commitments by borrowing, repaying and
reborrowing Loans in whole or in part, all in accordance with the terms and
conditions of this Agreement. For purposes of this Agreement, where a
determination of the unused or available amount of the Revolving Credit
Commitments is necessary, the Loans outstanding under the Revolving Credit shall
be deemed to utilize the Revolving Credit Commitments. The obligations of the
Lenders hereunder are several and not joint, and no Lender shall under any
circumstances be obligated to extend credit under the Revolving Credit in excess
of its Revolving Credit Commitment.
Section 1.2. The Revolving Credit Notes. Subject to the terms and
conditions hereof, the Revolving Credit may be availed of by the Company in the
form of loans (individually a "Loan" and collectively the "Loans"). Each
Borrowing of Loans under the Revolving Credit shall be made ratably by the
Lenders in accordance with their Percentages of the Revolving Credit
Commitments. Each Borrowing of Loans under the Revolving Credit shall be in an
amount of $500,000 or such greater amount which is an integral multiple of
$100,000; provided, however, that a Borrowing of Loans under the Revolving
Credit which bears interest with reference to the Adjusted LIBOR shall be in
such greater amount as is required by Section 2 hereof. All Loans made by
a Lender under the Revolving Credit shall be made against and evidenced by a
single Short-Term Revolving Credit Note of the Company (individually a "Note"
and collectively the "Notes") payable to the order of such Lender in the amount
of its Revolving Credit Commitment, with each Note to be in the form (with
appropriate insertions) attached hereto as Exhibit A. Each Note shall be
dated the date of issuance thereof, be expressed to bear interest as set forth
in Section 2 hereof, and be expressed to
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mature on the Revolving Credit Termination Date. Without regard to the principal
amount of each Note stated on its face, the actual principal amount at any time
outstanding and owing by the Company on account thereof shall be the sum of all
advances then or theretofore made thereon less all payments of principal
actually received.
Section 1.3. Manner and Disbursement of Loans. The Company shall give
written or telephonic notice to the Agent (which notice shall be irrevocable
once given and, if given by telephone, shall be promptly confirmed in writing)
by no later than 11:00 a.m. (Chicago time) on the date the Company requests that
any Borrowing of Loans be made to it under the Revolving Credit Commitments, and
the Agent shall promptly notify each Lender of the Agent's receipt of each such
notice. Each such notice shall specify the date of the Borrowing of Loans
requested (which must be a Business Day), the type of Loan being requested, and
the amount of such Borrowing. Each Borrowing of Loans shall initially constitute
part of the applicable Domestic Rate Portion except to the extent the Company
has otherwise timely elected that such Borrowing, or any part thereof,
constitute part of a LIBOR Portion as provided in Section 2 hereof. The
Company agrees that the Agent may rely upon any written or telephonic notice
given by any person the Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation and, in the
event any telephonic notice conflicts with the written confirmation, such
telephonic notice shall govern if the Agent and the Lenders have acted in
reliance thereon. Not later than 1:00 p.m. (Chicago time) on the date specified
for any Borrowing of Loans to be made hereunder, each Lender shall make the
proceeds of its Loan comprising part of such Borrowing available to the Agent in
Chicago, Illinois in immediately available funds. Subject to the provisions of
Section 7 hereof, the proceeds of each Loan shall be made available to
the Company at the principal office of the Agent in Chicago, Illinois, in
immediately available funds, upon receipt by the Agent from each Lender of its
Percentage of such Borrowing. Unless the Agent shall have been notified by a
Lender prior to 1:00 p.m. (Chicago time) on the date a Borrowing is to be made
hereunder that such Lender does not intend to make the proceeds of its Loan
available to the Agent, the Agent may assume that such Lender has made such
proceeds available to the Agent on such date and the Agent may in reliance upon
such assumption make available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
and the Agent has made such amount available to the Company, the Agent shall be
entitled to receive such amount from such Lender forthwith upon the Agent's
demand, together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Company and ending
on but excluding the date the Agent recovers such amount at a rate per annum
equal to the effective rate charged to the Agent for overnight federal funds
transactions with member banks of the federal reserve system for each day as
determined by the Agent (or in the case of a day which is not a Business Day,
then for the preceding day). If such amount is not received from such Lender by
the Agent immediately upon demand, the Company will, on demand, repay to the
Agent the proceeds of such Loan attributable to such Lender with interest
thereon at a rate per annum equal to the interest rate applicable to the
relevant Loan, but without such payment being considered a payment or prepayment
of a LIBOR Portion, so that the Company will have no liability under Section
2.9 hereof with respect to such payment.
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Section 1.4. Extensions of the Revolving Commitments. The Company may
advise the Agent in writing of its desire to extend the Revolving Credit
Termination Date for an additional 364 days; provided (i) such
request is made no earlier than 60 days and not later than 30 days prior to the
date on which such Revolving Credit Termination Date is scheduled to occur,
(ii) not more than one such request for the extension of a Termination
Date may be made in any one calendar year and (iii) in no event shall the
Revolving Credit Termination Date be extended beyond June 30, 2003. The
Agent shall promptly notify the Lenders of each such request. Each Lender shall
notify the Agent in writing within 30 days after such Lender receives
such notice from the Agent, whether such Lender in its sole discretion agrees to
such extension (each such Lender agreeing to such extension being hereinafter
referred to as a "Consenting Lender"). In the event that a Lender shall fail to
so notify the Agent within such 30day period, whether it agrees to such
extension, such Lender shall be deemed to have refused to grant the requested
extension. Upon receipt by the Agent of the consent of all the Lenders within
such 30day period, the Revolving Credit Termination Date or Dates shall be
automatically extended for 364 days. In the event the Company and all the
Lenders do not consent to the requested extension of the Revolving Credit
Termination Date, such Revolving Credit Termination Date shall take place as
scheduled.
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1. Interest Rate Options.
(a) Portions. Subject to the terms and conditions of this Section -
2, portions of the principal indebtedness evidenced by the Notes (all of the
indebtedness evidenced by the Notes bearing interest at the same rate for the
same period of time being hereinafter referred to as a "Portion") may, at the
option of the Company, bear interest with reference to the Domestic Rate
("Domestic Rate Portions") or with reference to the Adjusted LIBOR ("LIBOR
Portions"), and Portions may be converted from time to time from one basis to
another. All of the indebtedness evidenced by a particular Class of Notes which
is not part of a LIBOR Portion shall constitute a single Domestic Rate Portion.
All of the indebtedness evidenced by Notes of the same type which bears interest
with reference to a particular Adjusted LIBOR for a particular Interest Period
shall constitute a single LIBOR Portion. There shall not be more than five
(5) LIBOR Portions applicable to the Notes outstanding at any one time,
and each Lender shall have a ratable interest in each Portion based on its
Percentage. Anything contained herein to the contrary notwithstanding, the
obligation of the Lenders to create, continue or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Default or Event
of Default shall have occurred and be continuing. The Company hereby promises to
pay interest on each Portion at the rates and times specified in this
Section 2.
(b) Domestic Rate Portion. Each Domestic Rate Portion shall bear
interest at the rate per annum determined by adding the Applicable Margin to the
Domestic Rate as in effect from time to time, provided that if a Domestic Rate
Portion or any part thereof is not paid when due (whether by lapse of time,
acceleration or otherwise) such Portion shall bear interest, whether before or
after judgment, until payment in full thereof at the rate per annum determined
by adding 2% to the interest rate which would otherwise be applicable thereto
from time to time. Interest on each Domestic Rate Portion shall be payable
quarterly in arrears on the last day of each March, June, September and December
in each year (commencing September 30, 1998) and at maturity of the
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applicable Notes, and interest after maturity (whether by lapse of time,
acceleration or otherwise) shall be due and payable upon demand. Any change in
the interest rate on the Domestic Rate Portions resulting from a change in the
Domestic Rate shall be effective on the date of the relevant change in the
Domestic Rate.
(c) LIBOR Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding the
Applicable LIBOR Margin to the Adjusted LIBOR for such Interest Period, provided
that if any LIBOR Portion is not paid when due (whether by lapse of time,
acceleration or otherwise) such Portion shall bear interest, whether before or
after judgment, until payment in full thereof through the end of the Interest
Period then applicable thereto at the rate per annum determined by adding 2% to
the interest rate which would otherwise be applicable thereto, and effective at
the end of such Interest Period such LIBOR Portion shall automatically be
converted into and added to the applicable Domestic Rate Portion and shall
thereafter bear interest at the interest rate applicable to such Domestic Rate
Portion after default. Interest on each LIBOR Portion shall be due and payable
on the last day of each Interest Period applicable thereto and, with respect to
any Interest Period applicable to a LIBOR Portion in excess of 3 months, on the
date occurring every 3 months after the date such Interest Period began and at
the end of such Interest Period, and interest after maturity (whether by lapse
of time, acceleration or otherwise) shall be due and payable upon demand. The
Company shall notify the Agent on or before 11:00 a.m. (Chicago time) on the
third Business Day preceding the end of an Interest Period applicable to a LIBOR
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Agent of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Agent, such
LIBOR Portion shall automatically be converted into and added to the applicable
Domestic Rate Portion as of and on the last day of such Interest Period. The
Agent shall promptly notify each Lender of each notice received from the Company
pursuant to the foregoing provision.
Section 2.2. Minimum LIBOR Portion Amounts. Each LIBOR Portion shall be
in an amount equal to $1,000,000 or such greater amount which is an integral
multiple of $500,000.
Section 2.3. Computation of Interest. All interest on the Loans
constituting part of the Domestic Rate Portion shall be computed on the basis of
a year of 365 or 366 days, as the case may be, for the actual number of days
elapsed. All interest on the Loans constituting all or part of a LIBOR Portion
shall be computed on the basis of a year of 360 days for the actual number of
days elapsed.
Section 2.4. Manner of Rate Selection. The Company shall notify
the Agent by 11:00 a.m. (Chicago time) at least 3 Business Days prior to the
date upon which the Company requests that any LIBOR Portion be created or that
any part of the applicable Domestic Rate Portion be converted into a LIBOR
Portion (each such notice to specify in each instance the amount thereof and the
Interest Period selected therefor), and the Agent shall promptly notify each
Lender of each notice received from the Company pursuant to the foregoing
provision. If any request is made to convert a LIBOR Portion into another type
of Portion available hereunder, such conversion shall only be made so as to
become effective as of the last day of the Interest Period applicable thereto.
All requests for the creation, continuance and conversion of Portions under this
Agreement shall be irrevocable. Such requests may be written or oral and the
Agent is hereby authorized to honor
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telephonic requests for creations, continuances and conversions received by it
from any person the Agent in good faith believes to be an Authorized
Representative without the necessity of independent investigation, the Company
hereby indemnifying the Agent and the Lenders from any liability or loss ensuing
from so acting.
Section 2.5. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note, if at any time any Lender shall determine in good
faith that any change in applicable laws, treaties or regulations or in the
interpretation thereof makes it unlawful for such Lender to create or continue
to maintain any LIBOR Portion, it shall promptly so notify the Agent (which
shall in turn promptly notify the Company and the other Lenders) and the
obligation of such Lender to create, continue or maintain any such LIBOR Portion
under this Agreement shall terminate until it is no longer unlawful for such
Lender to create, continue or maintain such LIBOR Portion. The Company, on
demand, shall, if the continued maintenance of any such LIBOR Portion is
unlawful, thereupon prepay the outstanding principal amount of the affected
LIBOR Portion, together with all interest accrued thereon and all other amounts
payable to affected Lender with respect thereto under this Agreement; provided,
however, that the Company may elect to convert the principal amount of the
affected Portion into another type of Portion available hereunder, subject to
the terms and conditions of this Agreement.
Section 2.6. Unavailability of Deposits or Inability to Ascertain
Adjusted LIBOR. Notwithstanding any other provision of this Agreement or any
Note, if prior to the commencement of any Interest Period, the Required Lenders
shall determine in good faith that deposits in the amount of any LIBOR Portion
scheduled to be outstanding during such Interest Period are not readily
available to such Lenders in the relevant market or, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining Adjusted LIBOR Rate, then such Lenders shall promptly give notice
thereof to the Agent (which shall in turn promptly notify the Company and the
other Lenders) and the obligations of the Lenders to create, continue or effect
by conversion any such LIBOR Portion in such amount and for such Interest Period
shall terminate until deposits in such amount and for the Interest Period
selected by the Company shall again be readily available in the relevant market
and adequate and reasonable means exist for ascertaining Adjusted LIBOR Rate, as
the case may be.
Section 2.7. Taxes and Increased Costs. With respect to any LIBOR
Portion, if any Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the LIBOR Portions
contemplated by this Agreement (whether or not having the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in
or for the account of, or loans by, or any other acquisition of funds
or disbursements by, such Lender which is not in any instance already
accounted for in computing the interest rate applicable to such LIBOR
Portion;
(ii) subject such Lender, any LIBOR Portion or a Note to the
extent it evidences
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such a Portion to any tax (including, without limitation, any United
States interest equalization tax or similar tax however named
applicable to the acquisition or holding of debt obligations and any
interest or penalties with respect thereto), duty, charge, stamp tax,
fee, deduction or withholding in respect of this Agreement, any LIBOR
Portion or a Note to the extent it evidences such a Portion, except
such taxes as may be measured by the overall net income or gross
receipts of such Lender or its lending branches and imposed by the
jurisdiction, or any political subdivision or taxing authority thereof,
in which such Lender's principal executive office or its lending branch
is located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to such Lender hereunder or under a Note
to the extent it evidences any LIBOR Portion (other than by a change in
taxation of the overall net income or gross receipts of such Lender or
its lending branches); or
(iv) impose on such Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, any LIBOR
Portion, or its disbursement, or a Note to the extent it evidences any
LIBOR Portion;
and such Lender shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to such Lender of creating or maintaining any LIBOR Portion hereunder or
to reduce the amount of principal or interest received or receivable by such
Lender (without benefit of, or credit for, any prorations, exemption, credits or
other offsets available under any such laws, treaties, regulations, guidelines
or interpretations thereof), then the Company shall pay on demand to the Agent
for the account of such Lender from time to time as specified by such Lender
such additional amounts as such Lender shall reasonably determine are sufficient
to compensate and indemnify it for such increased cost or reduced amount;
provided, however, that the Company shall not be obligated to pay any such
amount or amounts to the extent such additional cost or payment was incurred or
paid by such Lender more than ninety (90) days prior to the date of the
delivery of the certificate referred to in the immediately following sentence
(nothing herein to impair or otherwise affect the Company's liability hereunder
for costs or payments subsequently incurred or paid by such Lender). If a Lender
makes such a claim for compensation, it shall provide to the Company (with a
copy to the Agent) a certificate setting forth the computation of the increased
cost or reduced amount as a result of any event mentioned herein in reasonable
detail and such certificate shall be conclusive if reasonably determined.
Section 2.8. Change in Capital Adequacy Requirements. If any Lender
shall determine that the adoption after the date hereof of any applicable law,
rule or regulation regarding capital adequacy, or any change in any existing
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Lender
(or any of its branches) or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or such
corporation's capital, as the case may be, as a consequence of such Lender's
obligations hereunder or for the credit which is the subject matter hereof to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance
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(taking into consideration such Lender's or such corporation's policies with
respect to liquidity and capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within fifteen (15) days after
demand by such Lender, the Company shall pay to the Agent for the account of
such Lender such additional amount or amounts reasonably determined by such
Lender as will compensate such Lender for such reduction; provided, however,
that the Company shall not be obligated to compensate such Lender to the extent
its rate of return was so reduced more than ninety (90) .days prior to the
date of such demand (nothing herein to impair or otherwise affect the Company's
liability hereunder to compensate for subsequent reductions in such Lender's
rate of return).
Section 2.9. Funding Indemnity. In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
such Lender to fund or maintain its part of any LIBOR Portion or the relending
or reinvesting of such deposits or other funds or amounts paid or prepaid to
such Lender) as a result of:
(i) any payment of a LIBOR Portion on a date other than the
last day of the then applicable Interest Period for any reason, whether
before or after default, and whether or not such payment is required by
any provisions of this Agreement; or
(ii) any failure by the Company to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement;
then, upon the demand of such Lender, the Company shall pay to the Agent for the
account of such Lender such amount as will reimburse such Lender for such loss,
cost or expense. If a Lender requests such a reimbursement, it shall provide to
the Company (with a copy to the Agent) a certificate setting forth the
computation of the loss, cost or expense giving rise to the request for
reimbursement in reasonable detail and such certificate shall be conclusive if
reasonably determined; provided, however, that the Company shall not be
obligated to pay any such amount or amounts to the extent such loss, cost or
expense was incurred by such Lender more than ninety (90) days prior to
the date of the delivery of such certificate (nothing herein to impair or
otherwise affect the Company's liability hereunder to compensate for any
subsequent loss, cost, or expense incurred by such Lender).
Section 2.10. Lending Branch. Each Lender may, at its option, elect to
make, fund or maintain its pro rata share of the Loans hereunder at the
branches, offices, subsidiaries or affiliates specified on the signature pages
hereof or on any Assignment Agreement executed and delivered pursuant to
Section 11.10 hereof or at such of its branches, offices, subsidiaries or
affiliates as such Lender may from time to time elect. All the terms of this
Agreement shall only apply to any such branch, office, subsidiary or affiliates
and the Loans and Notes issued hereunder shall be deemed held by each Lender for
the benefit of any such branch, office, subsidiary or affiliate. To the extent
reasonably possible, a Lender shall designate an alternate branch or funding
office with respect to its pro rata share of the LIBOR Portions to reduce any
liability of the Company to such Lender under Section 2.7 hereof or to
avoid the unavailability of an interest rate option under Section 2.6
hereof, so long as such designation is not otherwise disadvantageous to the
Lender.
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Section 2.11. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Notes in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including, without
limitation, determinations under Sections 2.6, 2.7 and 2.9 hereof) shall
be made as if each Lender had actually funded and maintained each LIBOR Portion
during each Interest Period applicable thereto through the purchase of deposits
in the relevant market in the amount of its pro rata share of such LIBOR
Portion, having a maturity corresponding to such Interest Period, and bearing an
interest rate equal to the LIBOR Rate, as the case may be, for such Interest
Period. SECTION 3. FEES, PREPAYMENTS AND TERMINATIONS.
Section 3.1. Fees.
(a) Facility Fee. For the period from and including the date hereof to
but not including the Revolving Credit Termination Date, the Company shall pay
to the Agent for the account of the Lenders a facility fee at the rate of 1/10
of 1% (0.10%) per annum (computed on the basis of a year of 360 days for the
actual number of days elapsed) on the average daily amount of the Revolving
Credit Commitments (whether or not in use). Such facility fee shall be payable
quarterly in arrears on the last day of each March, June, September and December
in each year (commencing December 31, 1998) and on the Revolving Credit
Termination Date.
(b) Agent's Fee. On July 30, 1999 and on the date occurring on
each anniversary of such date when any credit, or commitment to extend credit,
is outstanding hereunder, the Company shall pay to the Agent, for its own use
and benefit, an Agent's fee as mutually agreed upon by the Company and the
Agent.
Section 3.2. Voluntary Prepayments. The Company shall have the
privilege of prepaying the Notes in whole or in part (but if in part, then in a
minimum amount of $500,000 or such greater amount which is an integral multiple
of $100,000 as to any particular class of Notes being prepaid) at any time upon
notice to the Agent prior to 11:00 a.m. (Chicago time) on the date fixed
for prepayment (such notice if received subsequent to 11:00 a.m. (Chicago time)
on a given day to be treated as though received at the opening of business on
the next Business Day), of which the Agent shall promptly so notify the Lenders,
by paying to the Agent for the account of the Lenders the principal amount to be
prepaid and (i) if such a prepayment prepays the Notes in full and is
accompanied by the termination in whole of the Revolving Credit Commitments,
accrued interest thereon to the date of prepayment and (ii) any amounts
due to the Lenders under Section 2.9 hereof.
Section 3.3. Terminations. The Company shall have the
right at any time and from time to time, upon 5 Business Days' prior notice to
the Agent (which shall promptly so notify the Lenders), to ratably terminate
without premium or penalty and in whole or in part (but if in part, then in an
aggregate amount not less than $1,000,000 or such greater amount which is an
integral multiple of $500,000) the Revolving Credit Commitments; provided,
however, that the Revolving Credit Commitments may not be reduced to an amount
less than the aggregate principal amount of the Loans then outstanding.
Section 3.4. Place and Application of Payments. All payments of
principal, interest, fees and all other Obligations payable hereunder and under
the other Loan Documents shall be made to the Agent at its office at 111 West
Monroe Street, Chicago, Illinois (or at such other place as the
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Agent may specify) on the date any such payment is due and payable. Payments
received by the Agent after 11:00 a.m. (Chicago time) shall be deemed received
as of the opening of business on the next Business Day. All such payments shall
be made in lawful money of the United States of America, in immediately
available funds at the place of payment, without set-off or counterclaim and
without reduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholdings, restrictions
and conditions of any nature imposed by any government or any political
subdivision or taxing authority thereof (but excluding any taxes imposed on or
measured by the net income of any Lender). Except as herein provided, all
payments shall be received by the Agent for the ratable account of the Lenders
and shall be promptly distributed by the Agent ratably to the Lenders. Principal
payments (including prepayments) on the Notes shall first be applied to the
Domestic Rate Portion of such Notes until payment in full thereof, with any
balance applied to LIBOR Portions of such Notes in the order in which their
Interest Periods expire.
Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Obligations, in each instance, by the
Agent or any of the Lenders after the occurrence of an Event of Default shall be
remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and
expenses incurred by the Agent in protecting, preserving or enforcing
rights under this Agreement or any of the other Loan Documents, and in
any event including all costs and expenses of a character which the
Company has agreed to pay under Section 11.4 hereof (such funds
to be retained by the Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders,
in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or
other fees or amounts due under this Agreement or any of the other Loan
Documents other than for principal, pro rata as among the Agent and the
Lenders in accord with the amount of such interest and other fees or
amounts owing each;
(c) third, to the payment of the principal of the Notes, pro
rata as among the Lenders in accord with the then respective unpaid
principal balances of the Notes;
(d) fourth, to the Agent and the Lenders pro rata in accord
with the amounts of any other indebtedness, obligations or liabilities
of the Company owing to them and secured by the Collateral Documents
unless and until all such indebtedness, obligations and liabilities
have been fully paid and satisfied; and
(e) fifth, to the Company or to whoever the Agent reasonably
determines to be lawfully entitled thereto.
Section 3.5. Notations. Each Loan made against a Note, the status of
all amounts evidenced by a Note as constituting part of the Domestic Rate
Portion or a LIBOR Portion, and, in the case of any LIBOR Portion, the rates of
interest and Interest Periods applicable to such Portion shall be recorded by
the relevant Lender on its books and records or, at its option in any instance,
endorsed on a schedule to the applicable Note of such Lender and the unpaid
principal balance and status, rates and Interest Periods so recorded or endorsed
by such Lender shall be prima facie evidence in any court or other proceeding
brought to enforce such Note of the principal
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amount remaining unpaid thereon, the status of the Loan or Loans evidenced
thereby and the interest rates and Interest Periods applicable thereto; provided
that the failure of a Lender to record any of the foregoing shall not limit or
otherwise affect the obligation of the Company to repay the principal amount of
each Note together with accrued interest thereon.
SECTION 4. GUARANTIES.
Section 4.1. Subsidiary Guaranties. The Loans and other Obligations shall be
guaranteed by each Material Subsidiary pursuant to a written guaranty from such
Material Subsidiary in form and substance reasonably acceptable to the Required
Lenders; provided that no such guaranty shall be required from Anicom Canada so
long as 65% of the capital stock of Anicom Canada is pledged to secure the
obligations under the Pledge Agreement.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall have the
following meanings: "Acquisition" means (i) the acquisition of all or any
substantial part of the assets, property or business of any other person, firm
or corporation, or (ii) any acquisition of a majority of common stock, warrants
or other equity securities of any firm or corporation. "Adjusted LIBOR" means a
rate per annum determined by the Agent in accordance with the following formula:
Adjusted LIBOR = LIBOR
----------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted
LIBOR, the maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental or other special reserves)
imposed by the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D on Eurocurrency liabilities (as such term is
defined in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject to any amendments to such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such Interest Period.
For purposes of this definition, LIBOR Portions shall be deemed to be
Eurocurrency liabilities as defined in Regulation D without benefit of or credit
for prorations, exemptions or offsets under Regulation D. "LIBOR" means, for
each Interest Period, (a) the LIBOR Index Rate for such Interest Period,
if such rate is available, and (b) if the LIBOR Index Rate cannot be
determined, the arithmetic average of the rates of interest per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) at which deposits in U.S.
Dollars in immediately available funds are offered to the Agent at 11:00 a.m.
(London, England time) 2 Business Days before the beginning of such Interest
Period by 3 or more major banks in the interbank eurodollar market selected by
the Agent for a period equal to such Interest Period and in an amount equal or
comparable to the applicable LIBOR Portion scheduled to be outstanding from the
Agent during such Interest Period. "LIBOR Index Rate" means, for any Interest
Period, the rate per annum (rounded upwards, if necessary, to the next higher
one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
period equal to such Interest Period which appears on the Telerate Page 3750 as
of 11:00 a.m. (London, England time) on the date 2 Business Days before the
commencement of such Interest Period. "Telerate Page 3750" means the display
designated as "Page 3750" on the Telerate Service (or such other page as
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may replace Page 3750 on that service or such other service as may be nominated
by the British Bankers' Association as the information vendor for the purpose of
displaying British Banker's Association Interest Settlement Rates for U.S.
Dollar deposits). Each determination of LIBOR made by the Agent shall be
conclusive and binding on the Company and the Lenders absent manifest error.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.
"Agent" means Harris Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Anicom Canada" means Anicom Multimedia Wiring Systems Incorporated, a
corporation organized under the laws of Nova Scotia, Canada.
"Applicable Margin" shall mean with respect to each type of Portion
specified below the rate specified for such Obligation in the chart below,
subject to quarterly adjustment as hereinafter provided:
When Following Applicable Applicable
Status Exists For any Margin Margin For
Margin For Domestic Rate LIBOR
Determination Date Portion Is: Portions Is:
Level I Status (0.50%) .50%
Level II Status (0.50%) .75%
Level III Status (0.50%) .875%
Level IV Status (0.25%) 1.00%
provided, however, that all of the foregoing percentages set forth in the chart
above are subject to the following:
(i) on or before the date that is ten (10) Business
Days after the latest date by which the Company is required to deliver
a Compliance Certificate to the Agent for a given quarterly accounting
period pursuant to Section 8.5(c) hereof (each date that is ten
Business
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Days after the latest date by which the Company is required to deliver
a Compliance Certificate to the Agent being herein referred to as the
"Margin Determination Date"), the Agent shall determine whether Level I
Status, Level II Status, Level III Status or Level IV Status exists as
of the close of the applicable quarterly accounting period (each, a
"quarterly test period") and shall also determine the Interest Coverage
Ratio and Debt to Earnings Ratio as of such close, in each case based
upon such Compliance Certificate and the financial statements delivered
to the Agent under Section 8.5 hereof for such quarterly test
period, and shall promptly notify the Company of such determination and
of any change in the Applicable Margin resulting therefrom;
(ii) the Applicable Margin for the Loans shall be the rate set
forth in the chart above, after giving effect to adjustments pursuant
to clause (iii) of this proviso below, unless the Interest
Coverage Ratio as of the close of such quarterly test period is less
than 2.5 to<-1- 32>1.0. In such event, the Applicable Margin for the
Loans in each case shall be .0625% above the rate otherwise specified
hereunder (after giving effect to adjustments pursuant to such clause
(iii) hereof);
(iii) the Applicable Margin for the Loans shall be the rate set
forth in the chart above, after giving effect to adjustments pursuant
to clause (ii) of this proviso above, unless the Debt to
Earnings Ratio as of the close of the relevant quarterly test period is
greater than 2.75 to 1.0. In such event, the Applicable Margin for the
Loans in each case shall be .25% above the rate otherwise specified
hereunder (after giving effect to adjustments pursuant to such clause
(ii) hereof);
(iv) any change in the Applicable Margin (except for such a
change pursuant to clause (iii) hereof) shall be effective as of
such Margin Determination Date, with such new Applicable Margin to
continue in effect until the next Margin Determination Date. If the
Company has not delivered a Compliance Certificate by the date such
Compliance Certificate is required to be delivered under Section
8.5 hereof, until a Compliance Certificate is delivered before the
next Margin Determination Date, the Applicable Margin shall be the
Applicable Margin for Level IV Status as if the Debt to Earnings Ratio
as calculated for purposes of clause (iii) above were greater
than 2.75 to 1.0. If the Company subsequently delivers a Compliance
Certificate before the next Margin Determination Date, the Applicable
Margin established by such Compliance Certificate shall take effect
from the date ten (10) Business Days after the date of such
delivery and remain effective until the next Margin Determination Date;
and
(v) the initial Applicable Margin in effect through the first
Margin Determination Date shall be the Applicable Margin for Level I
Status. "Assignment Agreements" is defined in Section 11.10
hereof. "Authorized Representative" means those persons shown on the
list of officers provided by
the Company pursuant to Section 7.2(a) hereof or on any update of any
such list provided by the Company to the Agent, or any further or different
officer of the Company so named by any Authorized Representative of the Company
in a written notice to the Agent.
"Borrowing" means the total of Loans of a single type made to the
Company by all the Lenders on a single date, and if such Loans are to be part of
a LIBOR Portion, for a single Interest
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Period. Borrowings of Loans are made and maintained ratably from each of the
Lenders according to their Percentages of the applicable Commitments.
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Chicago, Illinois and, when
used with respect to LIBOR Portions, a day on which banks are also dealing in
United States Dollar deposits in London, England and Nassau, Bahamas.
"Canadian Debt" means the indebtedness of Anicom Canada arising from a
loan made by the Canadian Lender in an aggregate principal amount equal to the
U.S. Dollar equivalent of $35,000,000 to finance a like amount of the purchase
price payable by Anicom Canada for the Texcan Acquisition.
"Canadian Lender" means a commercial bank in Canada.
"Capital Lease" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown
on the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Company" is defined in the introductory paragraph hereof.
"Compliance Certificate" is defined in Section 8.5 hereof.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Company and its Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP, including without limitation
interest income and, without limiting the foregoing, after deduction from gross
income of all expenses and reserves, including reserves for all taxes on or
measured by income, but excluding any extraordinary profits and also excluding
any taxes on such profits.
"Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock issued by the Company on September 21, 1998.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Current Ratio" means, as of any time the same is to be determined, the
ratio of current assets of the Company and its Subsidiaries to current
liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis in accordance with GAAP consistently applied, but, in any
event subject to the following restrictions and limitations:
(a) current liabilities for such purposes shall include all
loans outstanding hereunder or under the Long-Term Credit Agreement
which mature within one year of such date of determination;
(b) current liabilities for such purposes shall exclude all
Special Post-Closing Acquisition Liabilities; and
(c) current assets for such purposes shall include all
prepaid expenses. "Debt to Earnings Ratio" means, as of any time the
same is to be determined, the ratio of
Total Funded Debt at such time to EBITDA for the four fiscal quarters of the
Company then ended.
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"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Domestic Rate" means, for any day, the greater of (i) the rate
of interest announced by the Agent from time to time as its prime commercial
rate, as in effect on such day (it being understood and agreed that such rate
may not be the Agent's best or lowest rate); and (ii) the sum of (x)
the rate determined by the Agent to be the average (rounded upwards, if
necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to the
Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter
as is practicable) on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds brokers
selected by the Agent for the sale to the Agent at face value of Federal funds
in an amount equal or comparable to the principal amount owed to the Agent for
which such rate is being determined, plus (y) 1/2 of 1%.
"Domestic Rate Portions" is defined in Section >2.1(a) hereof.
"EBIT" means, for any period, Consolidated Net Income for such period
plus all amounts deducted in arriving at such Consolidated Net Income amount for
such period for Interest Expense and for foreign, federal, state and local
income tax expense.
"EBITDA" means, for any period, EBIT for such period plus all amounts
deducted in arriving at such EBIT in respect of all (i) amounts properly charged
for depreciation of fixed assets and amortization of Capital Leases and
intangible assets during such period on the books of the Company and its
Subsidiaries and (ii) (to the extent such period includes the third fiscal
quarter of the fiscal year the Company ended on or about December 31,
1998) all the Fiscal 1998 Charges during such period, all as determined in
accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Existing Lenders" means Harris Trust and Savings Bank, The First
National Bank of Chicago and LaSalle National Bank.
"Existing Credit Agreement" means the Short-Term Credit Agreement dated
as of June 30, 1998, among the Company, Harris Trust and Savings Bank, as
Agent and the Existing Lenders, as amended and supplemented.
"Fiscal 1998 Charges" means up to $5,158,000 of the charges taken by
the Company against its earnings in the third fiscal quarter of its fiscal year
ended on or about December 31, 1998 for the Company's costs (including internal
costs) related to the Texcan Acquisition (including the consolidation of
redundant facilities).
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Lenders pursuant to Section 6.5 hereof.
"Guarantor" means each Material Subsidiary (other than, subject to
Section 4.1, Anicom Canada) of the Company that executes and delivers to
the Agent a Guaranty Agreement.
"Guaranty Agreement" means each guaranty issued by a Material
Subsidiary to the Agent guaranteeing all or any Obligations.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any
manner by such Person representing money
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borrowed (including by the issuance of debt securities), (ii) all
indebtedness for the deferred purchase price of property or services (other than
trade accounts payable arising in the ordinary course of business which are not
more than sixty (60) days past due), (iii) all indebtedness
secured by any Lien upon Property of such Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness, (iv) all
Capitalized Lease Obligations of such Person and (v) all obligations of
such Person on or with respect to letters of credit, bankers' acceptances and
other extensions of credit whether or not representing obligations for borrowed
money.
"Intangible Assets" means, as of any time the same is to be determined,
goodwill, patents, trademarks, copyrights and franchises of the Company and its
Subsidiaries (including, without limitation, unamortized debt discount and
expense, organization costs and deferred research and development expense)
determined on a consolidated basis in accordance with GAAP.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Company and its Subsidiaries for such period as computed on a consolidated basis
in accordance with GAAP.
"Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending 1, 2, 3 or 6 months thereafter as
selected by the Company in its notice as provided herein; provided that, all of
the foregoing provisions relating to Interest Periods are subject to the
following:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day, unless in the case of an Interest Period
for a LIBOR Portion the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity
date of the relevant Notes;
(iii) the interest rate to be applicable to each Portion for
each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment
scheduled to be made during such Interest Period without paying part of
a LIBOR Portion on a date other than the last day of the Interest
Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"Lender" means Harris Trust and Savings Bank, the other signatories
hereto (other than the Company) and all other lenders becoming parties hereto
pursuant to Section 11.10 hereof.
"Leverage Ratio" means, as of any time the same is to be determined,
the ratio of Total
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Funded Debt of the Company and its Subsidiaries to Total Capitalization of the
Company and its Subsidiaries, all as determined on a consolidated basis in
accordance with GAAP.
"Level I Status" shall mean, for any Margin Determination Date,
that as of the close of the quarterly test period with reference to which such
Margin Determination Date was set, the Pricing Leverage Ratio is less than or
equal to 10%.
"Level II Status" shall mean, for any Margin Determination Date, that
as of the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Pricing Leverage Ratio is greater than 10% but
less than or equal to 20%.
"Level III Status" shall mean, for any Margin Determination Date, that
as of the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Pricing Leverage Ratio is greater than 20% but
less than or equal to 30%.
"Level IV Status" shall mean, for any Margin Determination Date, that
as of the close of the quarterly test period with reference to which such Margin
Determination Date was set, the Pricing Leverage Ratio is greater than 30%.
"LIBOR Portions" means and includes LIBOR Portions, unless the context
in which such term is used shall otherwise require.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan Documents" means this Agreement, the Notes, the Assignment
Agreements and each other instrument or document to be delivered hereunder or
thereunder or otherwise in connection therewith.
"Loans" is defined is Section 1.2 hereof.
"Long-Term Credit Agreement" means that certain LongTerm Multicurrency
Credit Agreement dated as of even date herewith among the Company, Harris Trust
and Savings Bank, individually and as agent, The First National Bank of Chicago,
LaSalle National Bank, Bank of America National Trust and Savings Association
and the other lenders from time to time party thereto, as amended and
supplemented from time to time.
"Material Subsidiary" means any Subsidiary which has, as of the close
of any completed fiscal year of the Company (commencing with the Company's
fiscal year ending December 31, 1996), EBITDA for any such fiscal year (directly
and together with its subsidiaries) greater than 7% of the EBITDA of the Company
and its Subsidiaries for any such fiscal year on a consolidated basis in
accordance with GAAP.
"Non-Material Subsidiary" means each Subsidiary other than a Material
Subsidiary.
"Notes" is defined in Section 1.2 hereof.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of the Company arising under or in relation to any Loan
Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any
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or all of its functions under ERISA.
"Percentage" means, for each Lender, the percentage of the Revolving
Credit Commitments represented by such Lender's Revolving Credit Commitment or,
if the Revolving Credit Commitments have been terminated, the percentage held by
such Lender of the aggregate principal amount of all outstanding Obligations.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title
IV of ERISA or subject to the minimum funding standards under Section
412 of the Code that either (i) is maintained by a member of the
Controlled Group for employees of a member of the Controlled Group, or (ii)
is maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Pledge Agreement" means that certain Pledge Agreement dated as of even
date herewith between the Company and the Agent.
"Portion" is defined in Section 2.1(a) hereof.
"Pricing Leverage Ratio" means, as of any time the same is to be
determined, the ratio of Total Funded Debt to Total Capitalization of the
Company and its Subsidiaries, all as determined on a consolidated basis in
accordance with GAAP.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Put/Call Agreement" means any contract whereby the Company obligates
itself to purchase the Canadian Debt from the Canadian Lender.
"Required Lenders" means, as of the date of determinations thereof,
those Lenders holding at least 66-2/3% of the Revolving Credit Commitments or,
in the event that no Revolving Credit Commitments are outstanding hereunder,
holding at least 66-2/3% in aggregate principal amount of the Loans.
"Revolving Credit" is defined in Section 1.1 hereof.
"Revolving Credit Commitments" means the commitments of the Lenders to
extend credit under the Revolving Credit in the amounts set forth opposite their
signatures hereto under the heading "Revolving Credit Commitment" and opposite
their signatures on Assignment Agreements delivered pursuant to Section
11.10 hereof under the heading "Revolving Credit Commitment", as such amounts
may be reduced pursuant hereto.
"Revolving Credit Note" is defined in Section 1.2 hereof.
"Revolving Credit Termination Date" means June 30, 1999, or such
earlier date on which the Revolving Credit Commitments are terminated in whole
pursuant to Section 3.3, 9.2 or 9.3 hereof, or in such later date to
which the Revolving Credit Termination Date is extended pursuant to Section 1.4
hereof.
"Shareholders' Equity" means, as of any time the same is to be
determined, the sum (without duplication) of (i) shareholders' equity
(including all capital stock, additional
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paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in subsidiaries) which would appear on the balance
sheet of the Company and its Subsidiaries plus (to the extent not included in
such Shareholders' Equity) (ii) the Convertible Preferred Stock, all as
determined on a consolidated basis in accordance with GAAP.
"SEC" means the Securities and Exchange Commission or any successor
agency thereto.
"Special Post-Closing Acquisition Liabilities" means as of any time,
those liabilities established by the Company after making an Acquisition which
survive such Acquisition associated with the Property or Person so acquired, or
the employees of such Person, to the extent (i) such liabilities are reflected
as a current liability in accordance with GAAP on a consolidated balance sheet
of the Company and its Subsidiaries, (ii) the creation of such liabilities is
offset by a concurrent debit of like amount in accordance with GAAP to the
goodwill of the Company and its Subsidiaries and (iii) such liabilities have
been reasonably described in the most recent Compliance Certificate submitted to
the Agent.
"Subordinated Indebtedness" means, as of any time the same is to be
determined, indebtedness of the Company or any Subsidiary subordinated in right
of payment to the Obligations, pursuant to documentation containing interest
rates, payment terms, maturities, amortization schedules, covenants, defaults,
remedies, subordination provisions and other material terms in form and
substance satisfactory to the Lenders. The Lenders further acknowledge and agree
that subordination provisions in the form or substantially the form annexed
hereto as Exhibit D constitute subordination provisions satisfactory in
form and substance to the Lenders.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Tangible Net Worth" means, as of any time the same is to be
determined, Shareholders' Equity less the sum of (i) all notes receivable
from officers and employees of the Company and its Subsidiaries and (ii)
Intangible Assets.
"Texcan" means, collectively, Texcan Cables, Inc., a Nevada
corporation, Texcan Cables International, Inc., a Nevada corporation and Texcan
Cables Limited, a Canadian corporation.
"Texcan Acquisition" means the acquisition of all or substantially all
of the assets of Texcan by Anicom Canada on September 21, 1998 pursuant
to that certain Asset Purchase Agreement dated as of September 21, 1998
between the Company, Anicom Canada and Texcan.
"Total Capitalization" means the sum of Total Funded Debt and
Shareholders' Equity.
"Total Funded Debt" means, at any time the same is to be determined,
the aggregate of all Indebtedness for Borrowed Money of the Company and its
Subsidiaries at such time, plus all Indebtedness for Borrowed Money of any other
Person which is directly or indirectly guaranteed by the Company or any of its
Subsidiaries or which the Company or any of its Subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which the Company or any of its Subsidiaries has otherwise assured a creditor
against loss.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent
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valuation date for such Plan, but only to the extent that such excess represents
a potential liability of a member of the Controlled Group to the PBGC or the
Plan under Title IV of ERISA.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying shares
as required by law) or other equity interests are owned by the Company and/or
one or more Wholly-Owned Subsidiaries within the meaning of this definition.
"Year 2000 Problem" means any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of the Company or any of the Subsidiaries will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as efficiently and reliably as in the case of times or time periods
occurring before January 1, 2000, including the making of accurate leap
year calculations.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Agent and the Lenders as
follows:
Section 6.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to obtain such
authorization, license or qualification would not result in a material adverse
change in the business, financial condition or Properties of the Company and its
Subsidiaries. Schedule 6.2 hereto identifies each Subsidiary, the
jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Company and the Subsidiaries and, if such
percentage is not 100% (excluding directors' qualifying shares as required by
law), a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding.
All of the outstanding shares of capital stock
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and other equity interests of each Subsidiary are validly issued and outstanding
and fully paid and nonassessable and all such shares and other equity interests
indicated on Schedule 6.2 as owned by the Company or a Subsidiary are
owned, beneficially and of record, by the Company or such Subsidiary free and
clear of all Liens. There are no outstanding commitments or other obligations of
any Subsidiary to issue, and no options, warrants or other rights of any Person
to acquire, any shares of any class of capital stock or other equity interests
of any Subsidiary. Each Subsidiary that is a Material Subsidiary is so noted on
Schedule 6.2 hereto. Each Material Subsidiary is a Guarantor except to
the extent Section 4.1 or Section 8.1(b) hereof does not yet
require such Subsidiary to be a Guarantor.
Section 6.3. Corporate Authority and Validity of Obligations. (a) The Company
has full right and authority to enter into this Agreement and the other Loan
Documents, to make the borrowings herein provided for, to issue its Notes in
evidence thereof, and to perform all of its obligations hereunder and under the
other Loan Documents. The Loan Documents delivered by the Company have been duly
authorized, executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law); and this Agreement and the
other Loan Documents do not, nor does the performance or observance by the
Company of any of the matters and things herein or therein provided for,
contravene or constitute a default under any provision of law or any judgment,
injunction, order or decree binding upon the Company or any provision of the
charter, articles of incorporation or by-laws of the Company or any covenant,
indenture or agreement of or affecting the Company or any of its Properties, or
result in the creation or imposition of any Lien on any Property of the Company.
(b) Guarantors. Each Guarantor has full right and authority to enter
into any Loan Documents it has executed and to perform all of its obligations
thereunder. The Loan Documents delivered by each Guarantor have been duly
authorized, executed and delivered by such Guarantor and constitute valid and
binding obligations of such Guarantor enforceable in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law); and such Loan Documents do
not, nor does the performance or observance by such Guarantor of any of the
matters and things herein or therein provided for, contravene or constitute a
default under any provision of law or any judgment, injunction, order or decree
binding upon the Company or any Guarantor or any provision of the charter,
articles of incorporation or by-laws of the Company or any Guarantor or any
covenant, indenture or agreement of or affecting the Company or any Guarantor or
any of their Properties, or result in the creation or imposition of any Lien on
any Property of the Company or any Guarantor.
Section 6.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Loans and other extensions of credit made available hereunder
solely for its general working capital purposes and for such other legal and
proper purposes as are consistent with all applicable laws. Neither the Company
nor any Subsidiary is engaged in the business of extending credit for the
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\
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any Loan or any other extension of credit made
hereunder will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
Section 6.5. Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as at December 31, 1997, and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
PricewaterhouseCoopers LLP, independent public accountants, and the unaudited
interim consolidated balance sheet of the Company and its Subsidiaries as at
June 30, 1998, and the related consolidated statements of income and cash
flows of the Company and its Subsidiaries for the six (6) months then
ended, heretofore furnished to the Lenders, fairly present the consolidated
financial condition of the Company and its Subsidiaries as at said dates and the
consolidated results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied on a
consistent basis. Neither the Company nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.
Section 6.6. No Material Adverse Change. Since June 30, 1998,
there has been no change in the condition (financial or otherwise) or business
prospects of the Company or any Subsidiary except those occurring in the
ordinary course of business, none of which individually or in the aggregate have
been materially adverse.
Section 6.7. Full Disclosure. The statements and information furnished
to the Lenders in connection with the negotiation of this Agreement and the
other Loan Documents and the commitments by the Lenders to provide all or part
of the financing contemplated hereby do not contain any untrue statements of a
material fact or omit a material fact necessary to make the material statements
contained herein or therein not misleading, the Lenders acknowledging that as to
any projections furnished to Lenders, the Company only represents that the same
were prepared on the basis of information and estimates the Company believed to
be reasonable.
Section 6.8. Good Title. The Company and its Subsidiaries each have
good and defensible title to their assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to the
Lenders (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of business), subject to no Liens other than such thereof as are
permitted by Section 8.12 hereof.
Section 6.9. Litigation and Other Controversies. There is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if adversely
determined would (a) impair the validity or enforceability of, or impair
the ability of the Company to perform its obligations under, this Agreement or
any other Loan Document or (b) result in any material adverse change in
the financial condition, Properties, business or operations of the Company or
any Subsidiary.
Section 6.10. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective Properties, income or
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franchises, which are shown to be due and payable in such returns, have been
paid. The Company does not know of any proposed additional tax assessment
against it or its Subsidiaries for which adequate provision in accordance with
GAAP has not been made on its accounts. Adequate provisions in accordance with
GAAP for taxes on the books of the Company and each Subsidiary have been made
for all open years, and for its current fiscal period.
Section 6.11. Approvals. No authorization, consent, license, or
exemption from, or filing or registration with, any court or governmental
department, agency or instrumentality, nor any approval or consent of the
stockholders of the Company or any other Person, is or will be necessary to the
valid execution, delivery or performance by the Company of this Agreement or any
other Loan Document.
Section 6.12. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than with Wholly-Owned Subsidiaries) on terms and conditions which are
less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts or agreements between Persons not affiliated with
each other; provided that the foregoing shall not be deemed to apply to (i)
the Put/Call Agreement or any other contracts or agreements entered into
pursuant to the Put/Call Agreement and (ii) (if the Canadian Debt is
purchased by an Affiliate of the Company) the contracts and agreements
constituting the Canadian Debt.
Section 6.13. Investment Company; Public Utility Holding Company.
Neither the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.14. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA. Neither the Company nor any Subsidiary has any
contingent liabilities with respect to any post-retirement benefits under a
Welfare Plan, other than liability for continuation coverage described in
article 6 of Title I of ERISA.
Section 6.15. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances),
non-compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of the Company or any Subsidiary.
Neither the Company nor any Subsidiary has received notice to the effect that
its operations are not in compliance with any of the requirements of applicable
federal, state or local environmental, health and safety statutes and
regulations or are the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could have a
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material adverse effect on the financial condition, Properties, business or
operations of the Company or any Subsidiary.
Section 6.16. Other Agreements. Neither the Company nor any Subsidiary
is in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default
if uncured would have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Section 6.17. No Default. No Default or Event of Default has occurred and is
continuing.
Section 6.18. Year 2000 Compliance. The Company and its Subsidiaries have
conducted a comprehensive review and assessment of their computer applications,
and have made such inquiry of their respective material suppliers, service
vendors (including data processors) and customers as the Company or relevant
Subsidiary (as the case may be) deem appropriate, with respect to any defect in
computer software, data bases, hardware, controls and peripherals related to the
occurrence of the year 2000 or the use of any date after December 31, 1999, in
connection therewith. Based on the foregoing review, assessment and inquiry, the
Company believes that no such defect could reasonably be expected to have a
material adverse effect on the financial condition, Properties, business or
operations of the Company and its Subsidiaries taken as a whole.
SECTION 7. CONDITIONS PRECEDENT.
The obligation of the Lenders to make any Loan under this Agreement is
subject to the following conditions precedent:
Section 7.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:
(a) each of the representations and warranties set forth in
Section 6 hereof and in the other Loan Documents shall be true
and correct as of such time, except to the extent the same expressly
relate to an earlier date;
(b) the Company shall be in full compliance with all of the
terms and conditions of this Agreement and of the other Loan Documents,
and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of making such extension of
credit;
(c) after giving effect to such extension of credit the
aggregate principal amount of all Loans under the Revolving Credit
outstanding under this Agreement shall not exceed the Revolving Credit
Commitments;
(d) the Commitments under the Long-Term Credit Agreement are
fully utilized; and
(e) such extension of credit shall not violate any order,
judgment or decree of any court or other authority or any provision of
law or regulation applicable to the Agent or any Lender (including,
without limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.
The Company's request for any Loan shall constitute its warranty as to the facts
specified in subsections (a) through (d), both inclusive, above.
Section 7.2. Initial Advance. At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:
(a) the Agent shall have received the following for the
account of the Lenders
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(each to be properly executed and completed) and the same shall have
been approved as to form and substance by the Agent:
(i) the Notes;
(ii) the Guaranty Agreements;
(iii) copies (executed or certified, as may be
appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Agreement
and the other Loan Documents to the extent the Agent or its
counsel may reasonably request; and
(iv) an incumbency certificate containing the name,
title and genuine signatures of each of the Company's
Authorized Representatives.
(b) the Agent shall have received the initial fees (if any)
called for hereby; (c) each Lender shall have received such
certifications as it may require in order
to satisfy itself as to the financial condition of the Company and its
Subsidiaries, and the lack of material contingent liabilities of the
Company and its Subsidiaries;
(d) legal matters incident to the execution and delivery of
this Agreement and the other Loan Documents and to the transactions
contemplated hereby shall be satisfactory to each Lender and its
counsel; and the Agent shall have received for the account of the
Lenders the written opinion of counsel for the Company in form and
substance satisfactory to the Lender and its counsel; and
(e) the Agent shall have received for the account of the
Lenders such other agreements, instruments, documents, certificates and
opinions as the Agent or the Lenders may reasonably request.
Section 7.3. Termination of Existing Credit Agreement. Each of the
Company and the Existing Lenders consent to the termination of the "Revolving
Credit Commitments" under the Existing Credit Agreement effective on the date
the conditions set forth in Section 7.2 hereof are satisfied,
notwithstanding the notice requirements for such termination set forth in
Section 3.3 of the Existing Credit Agreement. The Existing Credit
Agreement shall terminate and all amounts payable thereunder, including accrued
and unpaid facility fees payable under Section 3.1 thereof, shall be
payable, and the facility fee payable under Section 3.1 hereof shall
begin to accrue, on the date that this Agreement has been executed by all the
parties hereto and the conditions set forth in Section 7.2 hereof have
been satisfied.
Section 7.4. November 19 as Earliest Effective Date. Notwithstanding
anything herein to the contrary, this Agreement shall not in any event take
effect any earlier than November 19, 1998.
SECTION 8. COVENANTS.
The Company agrees that, so long as any credit is available to or in
use by the Company hereunder, except to the extent compliance in any case or
cases is waived in writing by the Required Lenders:
Section 8.1. Corporate Existence; Subsidiaries. (a) The Company shall,
and shall cause each Subsidiary to, preserve and maintain its corporate
existence. The Company will preserve and keep in force and effect, and cause
each Subsidiary to preserve and keep in force and effect, all licenses, permits
and franchises necessary to the proper conduct of its business. Notwithstanding
anything contained herein to the contrary, so long as no Default or Event of
Default has occurred
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and is continuing, the Company may dissolve any Non-Material Subsidiary so long
as such dissolution would not result in a material adverse change in the
business, financial condition or Properties of the Company and its Subsidiaries
or impair the rights or benefits of the Lenders under the Loan Documents.
(b) The Company shall cause each Material Subsidiary (other than,
subject to Section 4.1, Anicom Canada), whether now or hereafter
existing, to furnish the Agent (i) a Guaranty Agreement from such
Material Subsidiary in the form or substantially in the form attached hereto as
Exhibit E hereto or in such other form as is reasonably satisfactory to the
Agent and the Required Lenders as to form and substance, and (ii)
documentation acceptable to the Agent similar to in form and scope to that
described in Sections 7.2(a)(ii), 7.2(a)(iii), 7.2(a)(iv), 7.2(c), 7.2(d)
and 7.2(e) but relating to such Guarantor and its Guaranty Agreement.
Section 8.2. Maintenance of Properties. The Company will maintain,
preserve and keep its Properties in good repair, working order and condition
(ordinary wear and tear excepted) and will from time to time make all needful
and proper repairs, renewals, replacements, additions and betterments thereto so
that at all times the efficiency thereof shall be fully preserved and
maintained, and will cause each Subsidiary to do so in respect of Property owned
or used by it.
Section 8.3. Taxes and Assessments. The Company will duly pay and
discharge, and will cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Company will insure and keep insured, and
will cause each Subsidiary to insure and keep insured, with good and responsible
insurance companies, all insurable Property owned by it which is of a character
usually insured by Persons similarly situated and operating like Properties
against loss or damage from such hazards and risks, and in such amounts, as are
insured by Persons similarly situated and operating like Properties; and the
Company will insure, and cause each Subsidiary to insure, such other hazards and
risks (including employers' and public liability risks) with good and
responsible insurance companies as and to the extent usually insured by Persons
similarly situated and conducting similar businesses. The Company will upon
request of the Agent and any Lender furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
Section 8.5. Financial Reports. (a) The Company will, and will cause
each Subsidiary to, maintain a standard system of accounting in accordance with
GAAP and will furnish to the Agent, each Lender and each of their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as the Agent or such
Lender may reasonably request; and without any request, will furnish to the
Lenders:
(i) within 50 days after the end of each of the first three
quarterly fiscal periods of the Company, a copy of the Company's Form
10-Q Report filed with the SEC;
(ii) within 120 days after the end of each fiscal year of the
Company, a copy of the Company's Form 10-K Report filed with the SEC,
including a copy of the annual audit report of the Company and the
Subsidiaries for such year with accompanying financial
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statements, prepared by the Company and certified by
PricewaterhouseCoopers LLP or any other independent public accountants
of recognized national standing selected by the Company and
satisfactory to the Required Lenders, in accordance with GAAP;
(iii) not later than 10 days after the receipt thereof, a copy
of any final management letters on internal accounting controls for the
Company or any Subsidiary prepared by its independent public
accountants;
(iv) promptly after sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Company
sends to its shareholders, and copies of all other regular, periodic
and special reports and all registration statements which the Company
files with the SEC or any successor thereto, or with any national
securities exchange;
(v) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Company, written notice of
any threatened or pending litigation or governmental proceeding or
labor controversy against the Company or any Subsidiary which, if
adversely determined, would materially and adversely effect the
financial condition, Properties, business or operations of the Company
or any Subsidiary or of the occurrence of any Default or Event of
Default hereunder; and
(vi) as soon as possible and in any event within 10 days after
the date on which (X) a Non-Material Subsidiary becomes a
Material Subsidiary, (Y) the Company or any Subsidiary
establishes or acquires any Subsidiary or (Z) any Subsidiary is
dissolved or otherwise merged out of existence, the Company shall
furnish the Lenders an updated Schedule 6.2 reflecting such event. (b)
In the event the Company is no longer required to file Form 10-Q and
10-K Reports
with the SEC, the Company need not furnish such Reports to the Lenders, but
shall nonetheless provide the Lenders the financial statements previously
contained in such Reports by the times required by subsections (a)(i) and (ii)
above.
(c) Each of the financial statements furnished to the Lenders pursuant
to clauses (a) or (b) of this Section shall be accompanied by a written
certificate in the form attached hereto as Exhibit B (the "Compliance
Certificate") signed by the chief financial officer of the Company to the effect
that to the best of the chief financial officer's knowledge and belief no
Default or Event of Default has occurred during the period covered by such
statements or, if any such Default or Event of Default has occurred during such
period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Company to remedy the same. Such
certificate shall also set forth the calculations supporting such statements in
respect of Sections 8.6, 8.7, 8.8, 8.9 and 8.10 of this Agreement and
identify the Special Post-Closing Acquisition Liabilities then reflected in
computing compliance with such Section 8.6.
(d) Solely for purposes of determining the Company's compliance with
the Existing Credit Agreement at the end of the third fiscal quarter of the
Company ended September 30, 1998, the Company's compliance with the
Existing Credit Agreement during such period shall be determined as if all
references in the Existing Credit Agreement to the Fiscal 1997 Charges (as
identified and defined therein) included not only such Fiscal 1997 Charges but
also the Fiscal 1998 Charges identified and defined in this Agreement.
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Section 8.6. Current Ratio. The Company will at all times maintain a Current
Ratio of not less than 1.40 to 1.00.
Section 8.7. Interest Coverage Ratio. The Company will, as of the last
day of each fiscal quarter of the Company, maintain the ratio (the "Interest
Coverage Ratio") of EBIT for the four fiscal quarters of the Company then ended
to Interest Expense for the same four fiscal quarters then ended of not less
than 2.0 to 1.0; provided, however, that if an Acquisition permitted by
Section 8.14 hereof occurs at any time during such period, the Interest
Coverage Ratio shall be calculated on a pro forma basis to include the EBIT and
Interest Expense of the Person or assets so acquired for the entire period as if
such Acquisition had taken place on the first day of such period, all as
reasonably calculated by the Company (any expected cost savings relating to the
EBIT of the Person or assets so acquired may be incorporated in these
calculations to the extent they are readily quantifiable and verifiable, in a
manner consistent with the Company's prior pro forma calculations included with
SEC filings in connection with its prior acquisitions).
Section 8.8. Tangible Net Worth. The Company will, as of the last day
of each fiscal quarter of the Company, maintain Tangible Net Worth at not less
than the Minimum Required Amount. For purposes of this Section 8.8, the
term "Minimum Required Amount" shall mean, as of any time, the sum of: (i)
32>$25,000,000; plus (ii)fifty percent (50%) of Consolidated Net Income
for each fiscal quarter of the Company (if Consolidated Net Income for such
fiscal quarter is positive) completed on or after April 1, 1997.
Section 8.9. Debt to Earnings Ratio. The Company will, as of the last
day of each fiscal quarter of the Company, maintain the Debt to Earnings Ratio
at not greater than 3.5 to 1.0; provided, however, that if an Acquisition
permitted by Section 8.14 hereof occurs at any time during the four
fiscal quarter period over which EBITDA is measured to determine the Debt to
Earnings Ratio, such Debt to Earnings Ratio shall be calculated on a pro forma
basis to include the EBITDA of the Person or assets so required for the entire
period as if such Acquisition had taken place on the first day of such period,
all as reasonably calculated by the Company (the expected cost savings relating
to the EBITDA of the Person or assets so acquired may be incorporated in these
calculations to the extent they are readily quantifiable and verifiable and
based on reasonable assumptions.
Section 8.10. Leverage Ratio. The Company will, as of the last day of each
fiscal quarter of the Company, maintain the Leverage Ratio at not more than 0.40
to 1.00.
Section 8.11. Indebtedness for Borrowed Money. The Company will not, nor
will it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing provisions shall not restrict nor operate to prevent:
(a) the indebtedness of the Company on the Notes and other
Obligations;
(b) Capitalized Lease Obligations in an aggregate amount not
to exceed $1,500,000 at any one time outstanding;
(c) Capitalized Lease Obligations of any Subsidiary which has
become a Subsidiary as a result of an Acquisition permitted by
Section 8.14 hereof if such Capitalized Lease Obligation was
entered into prior to the Acquisition of such Subsidiary and was not
created in contemplation of such Acquisition;
(d) purchase money indebtedness secured by Liens permitted by
Section 8.12(d) hereof in an aggregate amount not to exceed
$2,000,000 at any one time outstanding;
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(e) purchase money indebtedness (other than purchase money
indebtedness permitted by Section 8.11(d) hereof) of any Subsidiary
which has become a Subsidiary as a result of an Acquisition permitted
by Section 8.14 hereof if such indebtedness was created prior to
the Acquisition of such Subsidiary and was not created in contemplation
of such Acquisition;
(f) the currently outstanding indebtedness described on
Exhibit C hereof if and so long as such indebtedness is
Subordinated Indebtedness;
(g) unsecured Subordinated Indebtedness incurred to finance
Acquisitions permitted by Section 8.14 hereof;
(h) the Canadian Debt;
(i) indebtedness under the Long-Term Credit Agreement; and
(j) indebtedness not otherwise permitted by this Section
aggregating not more than $500,000 at any one time outstanding.
Section 8.12. Liens. The Company will not, nor will it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that this
Section shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts
or leases to which the Company or any Subsidiary is a party or other
cash deposits required to be made in the ordinary course of business,
provided in each case that the obligation is not for borrowed money and
that the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor;
(b) mechanics', workmen's, materialmen's, landlords',
carriers', or other similar Liens arising in the ordinary course of
business with respect to obligations which are not due or which are
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an
appeal, stay or discharge in the course of any legal proceeding,
provided that the aggregate amount of liabilities of the Company and
its Subsidiaries secured by a pledge of assets permitted under this
clause, including interest and penalties thereon, if any, shall not be
in excess of $1,000,000 at any one time outstanding; and
(d) purchase money Liens securing indebtedness permitted by
Section 8.11(d) hereof in respect of equipment now owned or
hereafter acquired by the Company or any Subsidiary (not extending to
any other Property), or Liens on equipment so acquired (not extending
to any other Property) existing at the time of acquisition thereof, or
renewals, extensions and refundings of any such Liens (not extending to
any other Property), provided that the principal amount of indebtedness
secured by any such Lien shall not exceed 80% of the cost or fair
market value, whichever is less, of the Property covered by such Lien
at the time of the creation thereof or the acquisition of such
Property.
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Doc #:CH02 (01300-03934) 939284v1;3/25/1999/Time:21:56
Section 8.13. Investments, Loans, Advances and Guaranties. The Company
will not, nor will it permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances (other than for travel
advances and other similar cash advances made to employees in the ordinary
course of business) to, any other Person, or be or become liable as endorser,
guarantor, surety or otherwise for any debt, obligation or undertaking of any
other Person, or otherwise agree to provide funds for payment of the obligations
of another, or supply funds thereto or invest therein or otherwise assure a
creditor of another against loss or apply for or become liable to the issuer of
a letter of credit which supports an obligation of another, or subordinate any
claim or demand it may have to the claim or demand of any other Person;
provided, however, that the foregoing provisions shall not apply to nor operate
to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one
year of the date of issuance thereof;
(b) investments in commercial paper (including as such,
investments in short-term corporate borrowings against tax-advantaged
preferred stock) rated at least P1 by Moody's Investors Services, Inc.
and at least A1 by Standard & Poor's Corporation maturing within
270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any
United States commercial Agent having capital and surplus of not less
than $100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of
commercial paper received in the ordinary course of business;
(e) Acquisitions of Subsidiaries permitted by Section
8.14 hereof; (f) investments in obligations of a state, a
territory, or a possession of the United
States, or any political subdivision of any of the foregoing or of the
District of Columbia as described in Section 103(a) of the Code
if these investments are graded in the highest major grade as
determined by at least one national rating service or are credit
enhanced by credit enhancers whose credit is rated not less than A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors Services,
Inc.;
(g) the Company's guaranty of indebtedness of Wholly-Owned
Subsidiaries incurred to finance Acquisitions permitted by Section
8.14 hereof if and so long as such guaranty is Subordinated
Indebtedness;
(h) guaranties by Subsidiaries of the Obligations;
(i) the Put/Call Agreement if and so long as the Canadian
Debt is not held by an Affiliate of the Company; and
(j) investments, loans, advances and guarantees not otherwise
permitted by this Section aggregating not more than $2,000,000 at any
one time outstanding.
In determining the amount of investments, loans, advances and guarantees
permitted under this Section, investments shall always be taken at the original
cost thereof (regardless of any subsequent appreciation or depreciation
therein), loans and advances shall be taken at the principal amount
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thereof then remaining unpaid and guarantees shall be taken at the amount of
obligations guaranteed thereby.
Section 8.14. Acquisitions. The Company will not, and will not permit
any Subsidiary to, make or commit to make any Acquisitions; provided however,
that the Company and any Wholly-Owned Subsidiary each may make Acquisitions if:
(i)the Company or such Subsidiary acquires by reason of such Acquisition
either (x) assets used or useful in a business which is the same or
similar to that currently conducted by the Company or (y) the capital
stock of a corporation or any other equity interest of any partnership or other
firm engaged in such a same or similar business and after giving effect to such
Acquisition, the corporation, partnership or other such firm so acquired becomes
a Wholly-Owned Subsidiary; (ii) no Default or Event of Default exists or
would exist at the time of or after giving effect to such Acquisition; (iii)
the Company provides the Lenders a statement, certified as true and correct
by its chief financial officer, which represents and warrants that, after giving
effect to such Acquisition, the Company will, on a pro forma basis, continue to
comply through the Termination Date with Sections 8.6, 8.7, 8.8, 8.9,
8.10 and 8.11 hereof, such certificate to be accompanied by supporting financial
projections based on reasonable assumptions; (iv) the Board of Directors
or other governing body of such Person whose property or voting stock is being
so acquired has approved the terms of such Acquisition; and (v) the
Company has provided the Lenders such financial and other information regarding
the Person whose property or voting stock is being so acquired, including
historical financial statements, and a description of such Person, as the Agent
or any Lender may reasonably request.
Section 8.15. Sales and Leasebacks. The Company will not, nor will it
permit any Subsidiary to, enter into any arrangement with any bank, insurance
company or any other lender or investor providing for the leasing by the Company
or any Subsidiary of any Property theretofore owned by it and which has been or
is to be sold or transferred by such owner to such lender or investor.
Section 8.16. Dividends and Certain Other Restricted Payments. (a)
Restricted Payments. The Company will not during any fiscal year (i)
declare or pay any dividends on or make any other distributions in respect of
any class or series of its capital stock (other than dividends payable solely in
its capital stock) (each such non-excepted declaration or payment of dividends,
being herein collectively called a "Restricted Payment") if at the time of such
Restricted Payment or immediately after giving effect thereto, any Event of
Default or Default shall occur or be continuing.
(b) Restricted Repayments. The Company will not during any fiscal year
directly or indirectly purchase, redeem or otherwise acquire or retire any of
its capital stock (except out of the proceeds of, or in exchange for, a
substantially concurrent issue and sale of its capital stock) (each such
non-exempted purchase, redemption, retirement and distribution in respect to
capital stock being herein collectively called a "Restricted Redemption") if at
the time of such Restricted Redemption or immediately after giving effect
thereto, any Event of Default or Default shall occur or be continuing; provided
that the Company shall not directly or indirectly purchase, redeem or otherwise
acquire or retire any of its capital stock (except out of the proceeds of, or in
exchange for, a substantially concurrent issue and sale of its capital stock) in
excess of 5% of its capital stock during any fiscal year.
Section 8.17. Mergers, Consolidations and Sales. The Company will not, nor
will it permit
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any Subsidiary to, be a party to any merger or consolidation, or sell, transfer,
lease or otherwise dispose of all or any substantial part of its Property
(except for sales of inventory in the ordinary course of business), or in any
event sell or discount (with or without recourse) any of its notes or accounts
receivable; provided, however, that this Section shall not apply to nor operate
to prohibit (i) the merger of any Subsidiary acquired as a result of an
Acquisition permitted by Section 8.14 hereof with and into the Company or
any Wholly-Owned Subsidiary or (ii) the sale of assets which are no
longer used or useful in the ordinary course of the Company's business. A sale
or disposition of assets of the Company shall be deemed substantial for the
foregoing purposes (i) if such assets are sold below the book value of
such assets, and such assets constituted 10% or more of the total assets of the
Company or (ii) such assets constituted 20% or more of the total assets
of the Company.
Section 8.18. ERISA. The Company will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company will, and will
cause each Subsidiary to, promptly notify the Agent of (i) the occurrence
of any reportable event (as defined in ERISA) with respect to a Plan, (ii)
32>receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (iii) its intention to
terminate or withdraw from any Plan, and (iv) >the occurrence of any event
with respect to any Plan which would result in the incurrence by the Company or
any Subsidiary of any material liability, fine or penalty, or any material
increase in the contingent liability of the Company or any Subsidiary with
respect to any post-retirement Welfare Plan benefit.
Section 8.19. Compliance with Laws. The Company will, and will cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to the Properties or business operations of the Company or any
Subsidiary, non-compliance with which could have a material adverse effect on
the financial condition, Properties, business or operations of the Company or
any Subsidiary or could result in a Lien upon any of their Property.
Section 8.20. Burdensome Contracts With Affiliates. The Company will
not, nor will it permit any Subsidiary to, enter into any contract, agreement or
business arrangement with any of its Affiliates on terms and conditions which
are less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other, other than any contract, agreement or
business arrangement with any Person which becomes a Subsidiary as a result of
an Acquisition permitted by Section 8.14 hereof after the date hereof if such
contract, agreement or arrangement was entered into prior to the acquisition of
such Subsidiary and such contract, agreement or arrangement was not created in
contemplation of such Acquisition (i) the Put/Call Agreement and (ii)
(if the Canadian Debt is purchased by an Affiliate of the Company) the
contracts and agreements constituting the Canadian Debt.
Section 8.21. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary will change its fiscal year from its present basis without the prior
written consent of the Agent.
Section 8.22. Inspection and Field Audit. The Company will, and will cause
each Subsidiary to, permit the Agent and its duly authorized representatives and
agents to visit and inspect any of
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the Properties, corporate books and financial records of the Company and each
Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Company and each Subsidiary, and to discuss the
affairs, finances and accounts of the Company and each Subsidiary with, and to
be advised as to the same by, its officers and independent public accountants
(and by this provision the Company authorizes such accountants to discuss with
the Agent the finances and affairs of the Company and of each Subsidiary) with
reasonable notice to the Company and at such reasonable times and reasonable
intervals as the Agent may designate. After the occurrence of an Event of
Default, the Company shall pay for all costs and expenses incurred by the Agent
in connection with any such visitation or inspection.
Section 8.23. Formation of Subsidiaries. Except for existing
Subsidiaries designated on Schedule 6.2 hereto and Subsidiaries acquired
in Acquisitions or formed to effect Acquisitions in each case permitted by
Section 8.14 hereof, the Company will not, and will not permit any
Subsidiary to, form or acquire any Subsidiary without the prior written consent
of the Agent.
Section 8.24. Subordinated Indebtedness. The Company shall not, and shall
not permit any Subsidiary to:
(a) amend or modify any of the terms or conditions
relating to any Subordinat Indebtedness;
(b) make any voluntary prepayment on, or effect any voluntary
redemption of, any Subordinated Indebtedness (other than the prepayment
by Anicom Canada of certain indebtedness pursuant to the Put/Call
Agreement) if any Loans are outstanding at the time of or after giving
effect to such prepayment or redemption; or
(c) make any other payment on account of any Subordinated
Indebtedness which is prohibited under the terms of any instrument or
agreement subordinating such indebtedness to the Obligations.
Section 8.25. Use of Proceeds. The proceeds of the initial advance hereunder
shall be used to pay the Company's indebtedness under the Existing Credit
Agreement.
Section 8.26. Year 2000 Compliance. The Company shall take all
actions necessary and commit adequate resources to assure that its computerbased
and other systems (and those of all Subsidiaries) are able to effectively
process dates, including dates before, on and after January 1, 2000,
without experiencing any Year 2000 Problem that could cause a material
adverse effect on the business or financial affairs of the Company (or of the
Company and its Subsidiaries taken on a consolidated basis). At the request of
the Agent, the Company will provide the Agent with written assurances and
substantiations (including, but not limited to, the results of internal or
external audit reports prepared in the ordinary course of business) reasonably
acceptable to the Agent as to the capability of the Company and its Subsidiaries
to conduct its and their businesses and operations before, on and after
January 1, 2000, without experiencing a Year 2000 Problem causing
a material adverse effect on the business or financial affairs of the Company
(or of the Company and its Subsidiaries taken on a consolidated basis).
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment when due of all or any part of
the principal of or
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interest on any Note (whether at the stated maturity thereof or at any
other time provided for in this Agreement) or of any fee or other
Obligation payable by the Company hereunder or under any other Loan
Document; or
(b) default in the observance or performance of any covenant
set forth in Sections 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.13,
8.14, 8.15, 8.16, 8.17, 8.24 or 8.25 hereof; or
(c) default in the observance or performance of any other
provision hereof or of any other Loan Document which is not remedied
within ten (10) days after the earlier of (i) the date on
which such failure shall first become known to any officer of the
Company or (ii) written notice thereof is given to the Company
by the Agent or any Lender; or
(d) any representation or warranty made by the Company herein
or in any other Loan Document, or in any statement or certificate
furnished by it pursuant hereto or thereto, or in connection with any
extension of credit made hereunder, proves untrue in any material
respect as of the date of the issuance or making thereof; or
(e) any event occurs or condition exists (other than those
described in subsections (a) through (d) above) which is
specified as an event of default under any of the other Loan Documents,
or any of the Loan Documents shall for any reason not be or shall cease
to be in full force and effect, or any of the Loan Documents is
declared to be null and void; or
(f) default shall occur under any Indebtedness for Borrowed
Money issued, assumed or guaranteed by the Company or any Subsidiary,
or under any indenture, agreement or other instrument under which the
same may be issued, and such default shall continue for a period of
time sufficient to permit the acceleration of the maturity of any such
Indebtedness for Borrowed Money (whether or not such maturity is in
fact accelerated), or any such Indebtedness for Borrowed Money shall
not be paid when due (whether by lapse of time, acceleration or
otherwise); or
(g) any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $1,000,000 in excess of amounts covered
by insurance from an insurer which has acknowledged its liability
thereon shall be entered or filed against the Company or any Subsidiary
or against any of their Property and which remains unvacated, unbonded,
unstayed or unsatisfied for a period of sixty (60) days; or
(h) the Company or any member of its Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess
$500,000 which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Vested Liabilities in excess of
$500,000 (collectively, a "Material Plan") shall be filed under
Title IV of ERISA by the Company or any other member of its
Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title
IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall
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not have been dismissed within 30 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or
(i) dissolution or termination of the existence of the
Company or any Subsidiary; or
(j) the Company or any Subsidiary shall (i) have
entered involuntarily against it an order for relief under the United
States Bankruptcy Code, as amended, (ii) not pay, or admit in
writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv)
32>apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official
for it or any substantial part of its Property, (v) institute
any proceeding seeking to have entered against it an order for relief
under the United States Bankruptcy Code, as amended, to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any
matter described in parts (i) through (v) above, or (vii)
32>fail to contest in good faith any appointment or proceeding
described in Sectio 9.1(k) hereof; or
(k) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Company or any Subsidiary
or any substantial part of any of their Property, or a proceeding
described in Section 9.1(j)(v) shall be instituted against the
Company or any Subsidiary, and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of 60
days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default described in
subsection (a) through (i), both inclusive, of Section 9.1 has occurred and is
continuing, the Agent shall, upon the request of the Required Lenders, by notice
to the Company, take one or more of the following actions:
(a) terminate the obligations of the Lenders to extend any
further credit hereunder on the date (which may be the date thereof)
stated in such notice;
(b) declare the principal of and the accrued interest on the
Notes to be forthwith due and payable and thereupon the Notes,
including both principal and interest and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
be and become immediately due and payable without further demand,
presentment, protest or notice of any kind; and
(c) enforce any and all rights and remedies available to it
under the Loan Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described
in subsection (j) or (k) of Section 9.1 has occurred and is
continuing, then the Notes, including both principal and interest, and all fees,
charges and other Obligations payable hereunder and under the other Loan
Documents, shall immediately become due and payable without presentment, demand,
protest or notice of any kind, and the obligations of the Lenders to extend
further credit pursuant to any of the
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terms hereof shall immediately terminate. In addition, the Agent may exercise
any and all remedies available to it under the Loan Documents or applicable law.
SECTION 10. THE AGENT.
Section 10.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Company or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the Lenders except as expressly set forth herein. The Agent may resign at any
time by sending 20 days prior written notice to the Company and the Lenders. In
the event of any such resignation, the Required Lenders may appoint a new agent
after consultation with the Company, which shall succeed to all the rights,
powers and duties of the Agent hereunder and under the other Loan Documents. Any
resigning Agent shall be entitled to the benefit of all the protective
provisions hereof with respect to its acts as an agent hereunder, but no
successor Agent shall in any event be liable or responsible for any actions of
its predecessor. If the Agent resigns and no successor is appointed, the rights
and obligations of such Agent shall be automatically assumed by the Required
Lenders and the Company shall be directed to make all payments due each Lender
hereunder directly to such Lender.
Section 10.2. Rights as a Lender. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it were not the Agent and
the terms "Lender" or "Lenders" as used herein and in all of such documents
shall, unless the context otherwise expressly indicates, include the Agent in
its individual capacity as a Lender.
Section 10.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no representations
or warranties of any kind or character to the Lenders with respect to the
validity, enforceability, genuineness, perfection, value, worth or
collectibility hereof or of the Notes or any of the other Obligations or of any
of the other Loan Documents. Neither the Agent nor any director, officer,
employee, agent or representative thereof (including any security trustee
therefor) shall in any event be liable for any clerical errors or errors in
judgment, inadvertence or oversight, or for action taken or omitted to be taken
by it or them hereunder or under the other Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct. The Agent shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, certificate,
warranty, instruction or statement (oral or written) of anyone (including anyone
in good faith believed by it to be authorized to act on behalf of the Company),
unless it has actual knowledge of the untruthfulness of same. The Agent may
execute any of its duties hereunder by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders for the default or
misconduct of any such agents or attorneys-in-fact selected with reasonable
care. The Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agencies hereby created and its duties hereunder, and shall
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incur no liability to anyone and be fully protected in acting upon the advice of
such counsel. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Lender. The Agent shall in
all events be fully protected in acting or failing to act in accord with the
instructions of the Required Lenders. The Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by the Agent by reason of taking or continuing to take any
such action. The Agent may treat the owner of any Note as the holder thereof
until written notice of transfer shall have been filed with the Agent signed by
such owner in form satisfactory to the Agent. Each Lender acknowledges that it
has independently and without reliance on the Agent or any other Lender and
based upon such information, investigations and inquiries as it deems
appropriate made its own credit analysis and decision to extend credit to the
Company. It shall be the responsibility of each Lender to keep itself informed
as to the creditworthiness of the Company and the Agent shall have no liability
to any Lender with respect thereto.
Section 10.4. Costs and Expenses. Each Lender agrees to reimburse the
Agent for all costs and expenses suffered or incurred by the Agent or any
security trustee in performing its duties hereunder and under the other Loan
Documents, or in the exercise of any right or power imposed or conferred upon
the Agent hereby or thereby, to the extent that the Agent is not promptly
reimbursed for same by the Company, all such costs and expenses to be borne by
the Lenders ratably in accordance with the amounts of their respective Revolving
Credit Commitments.
Section 10.5. Indemnity. The Lenders shall ratably indemnify and hold
the Agent, and its directors, officers, employees, agents and representatives
(including as such any security trustee therefor) harmless from and against any
liabilities, losses, costs and expenses suffered or incurred by them hereunder
or under the other Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Company and
except to the extent that any event giving rise to a claim was caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
SECTION 11. MISCELLANEOUS.
Section 11.1. Withholding Taxes. (a) Payments Free of Withholding.
Except as otherwise required by law and subject to Section 11.1(b)
hereof, each payment by the Company under this Agreement and under any other
Loan Document shall be made without withholding for or on account of any present
or future taxes (other than overall net income taxes on the recipient) imposed
by or within the jurisdiction in which the Company is domiciled, any
jurisdiction from which the Company makes any payment, or (in each case) any
political subdivision or taxing authority thereof or therein. If any such
withholding is so required, the Company shall make the withholding, pay the
amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
each Lender and the Agent free and clear of such taxes (including such taxes on
such additional amount) is equal to the amount which that Lender or the Agent
(as the case may be) would have received had such withholding not been made. If
the Agent or any Lender pays any amount in respect of any such taxes, penalties
or interest, the Company shall
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reimburse the Agent or such Lender for that payment on demand in the currency in
which such payment was made. If the Company pays any such taxes, penalties or
interest, it shall deliver official tax receipts evidencing that payment or
certified copies thereof to the Lender or Agent on whose account such
withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Company and the Agent on or before the earlier of the
date the initial Borrowing is made hereunder and 30 days after the date hereof,
two duly completed and signed copies of either Form 1001 (relating to such
Lender and entitling it to a complete exemption from withholding under the Code
on all amounts to be received by such Lender, including fees, pursuant to the
Loan Documents and the Loans) or Form 4224 (relating to all amounts to be
received by such Lender, including fees, pursuant to the Loan Documents and the
Loans) of the United States Internal Revenue Service. Thereafter and from time
to time, each Lender shall submit to the Company and the Agent such additional
duly completed and signed copies of one or the other of such Forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may be (i) requested by the Company in a
written notice, directly or through the Agent, to such Lender and (ii)
required under then-current United States law or regulations to avoid or
reduce United States withholding taxes on payments in respect of all amounts to
be received by such Lender, including fees, pursuant to the Loan Documents or
the Loans.
(c) Inability of Lenders to Submit Forms. If any Lender determines, as
a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Company or the Agent any form or certificate that such Lender is obligated
to submit pursuant to subsection (b) of this Section 11.1 or that
such Lender is required to withdraw or cancel any such form or certificate
previously submitted or any such form or certificate otherwise becomes
ineffective or inaccurate, such Lender shall promptly notify the Company and
Agent of such fact and the Lender shall to that extent not be obligated to
provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable.
Section 11.2. Non-Business Days. If any payment hereunder becomes due
and payable on a day which is not a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day on which date such payment
shall be due and payable. In the case of any payment of principal falling due on
a day which is not a Business Day, interest on such principal amount shall
continue to accrue during such extension at the rate per annum then in effect,
which accrued amount shall be due and payable on the next scheduled date for the
payment of interest.
Section 11.3. No Waiver, Cumulative Remedies. No delay or failure on the
part of any Lender or on the part of any holder of any of the Obligations in the
exercise of any power or right shall operate as a waiver thereof or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise of
any other power or right. The rights and remedies hereunder of the Lenders and
any of the holders of the Obligations are cumulative to, and not exclusive of,
any rights or remedies which any of them would otherwise have.
-41-
Section 11.4. Waivers, Modifications and Amendments. Any provision
hereof or of any of the other Loan Documents may be amended, modified, waived or
released and any Default or Event of Default and its consequences may be
rescinded and annulled upon the written consent of the Required Lenders;
provided, however, that without the consent of all Lenders no such amendment,
modification or waiver shall increase the amount or extend the term of any
Lender's Revolving Credit Commitment or reduce the amount of any principal of or
interest rate applicable to, or extend the maturity of, any Obligation owed to
it or reduce the amount of the fees to which it is entitled hereunder or change
this Section or change the definition of "Required Lenders" or change the number
of Lenders required to take any action hereunder or under any of the other Loan
Documents or permit the Company to assign any of its rights hereunder or release
any Guarantor from its obligations under its Guaranty. No amendment,
modification or waiver of the Agent's protective provisions shall be effective
without the prior written consent of the Agent.
Section 11.5. Costs and Expenses. The Company agrees to pay on demand
the costs and expenses of the Agent in connection with the negotiation,
preparation, execution and delivery of this Agreement, the other Loan Documents
and the other instruments and documents to be delivered hereunder or thereunder,
and in connection with the transactions contemplated hereby or thereby, and in
connection with any consents hereunder or waivers or amendments hereto or
thereto, including the fees and expenses of Messrs. Chapman and Cutler, counsel
for the Agent, with respect to all of the foregoing (whether or not the
transactions contemplated hereby are consummated; provided, however, in no event
shall the Company's obligation to reimburse the Agent for such fees (exclusive
of such counsel's expenses and disbursements) in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
Loan Documents to be delivered as a condition precedent to initial funding of
the credit contemplated hereby exceed $20,000. The Company further agrees to pay
to Agent and the Lenders and any other holders of the Obligations all costs and
expenses (including court costs, the allocated costs of inhouse counsel and
outside attorneys' fees), if any, incurred or paid by the Agent, the Lenders or
any other holders of the Obligations in connection with any Default or Event of
Default or in connection with the enforcement of this Agreement or any of the
other Loan Documents or any other instrument or document delivered hereunder or
thereunder. The Company further agrees to indemnify and save the Lenders, the
Agent and any security trustee for the Lenders harmless from any and all
liabilities, losses, costs and expenses incurred by the Lenders or the Agent in
connection with any action, suit or proceeding brought against the Agent, or any
security trustee or any Lender by any Person (but excluding attorneys' fees for
litigation solely between the Lenders to which the Company is not a party) which
arises out of the transactions contemplated or financed hereby or out of any
action or inaction by the Agent, any security trustee or any Lender hereunder or
thereunder, except for such thereof as is caused by the gross negligence or
willful misconduct of the party seeking to be indemnified. The provisions of
this Section and the protective provisions of Section 2 hereof shall
survive payment of the Obligations.
Section 11.6. Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
-42-
Section 11.7. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 11.8. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Agent and the Lenders of amounts
sufficient to protect the yield of the Agent and the Lenders with respect to the
Loans, including, but not limited to, Sections 2.7, and 2.9 hereof, shall
survive the termination of this Agreement and the payment of the Obligations.
Section 11.9. Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending institution
(a "Participant"), provided that (i) no Participant shall thereby acquire
any direct rights under this Agreement, (ii) no Lender shall agree with a
Participant not to exercise any of such Lender's rights hereunder without the
consent of such Participant except for rights which under the terms hereof may
only be exercised by all Lenders and (iii) no sale of a participation in
extensions of credit shall in any manner relieve the selling Lender of its
obligations hereunder. Section 11.10. Assignment Agreements. Each Lender
may, from time to time upon at least 5 Business Days' prior written notice to
the Agent, assign to other commercial lenders part of its rights and obligations
under this Agreement (including without limitation the indebtedness evidenced by
the Notes then owned by such assigning Lender, together with an equivalent
proportion of its Revolving Credit Commitments to make Loans hereunder) pursuant
to written agreements executed by such assigning Lender, such assignee lender or
lenders, the Company and the Agent, which agreements shall specify in each
instance the portion of the indebtedness evidenced by the Notes which is to be
assigned to each such assignee lender and the portion of the Revolving Credit
Commitments of the assigning Lender to be assumed by it (the "Assignment
Agreements"); provided, however, that (i) each such assignment shall be
of a constant, and not a varying, percentage of the assigning Lender's rights
and obligations under this Agreement and the assignment shall cover the same
percentage of such Lender's Revolving Credit Commitments, Loans and Notes;
(ii) each such assignment shall be made by a Lender which is a lender
under the Short-Term Credit Agreement and shall be made contemporaneously with
an assignment of the same percentage of such Lender's rights and obligations
with respect to the Short-Term Credit Agreement; (iii) unless the Agent
otherwise consents, the aggregate amount of the Revolving Credit Commitments,
Loans and Notes of the assigning Lender being assigned pursuant to each such
assignment (determined as of the effective date of the relevant Assignment
Agreement) shall in no event be less than $5,000,000 and shall be an integral
multiple of $1,000,000; (iv) the Agent and the Company must each consent,
which consent shall not be unreasonably withheld, to each such assignment to a
party which was not an original signatory of this Agreement; and (v) the
assigning Lender must pay to the Agent a processing and recordation fee of
$3,000 and any out-of-pocket attorneys' fees and expenses incurred by the Agent
in connection with such Assignment Agreement. Upon the execution of each
Assignment Agreement by the assigning Lender thereunder, the assignee lender
thereunder, the Company and the Agent and payment to such assigning Lender by
such assignee lender of the purchase price for the portion of the indebtedness
of the Company being
-43-
acquired by it, (i) such assignee lender shall thereupon become a
"Lender" for all purposes of this Agreement with Revolving Credit Commitments in
the amounts set forth in such Assignment Agreement and with all the rights,
powers and obligations afforded a Lender hereunder, (ii) such assigning
Lender shall have no further liability for funding the portion of its Revolving
Credit Commitments assumed by such other Lender and (iii) the address for
notices to such assignee Lender shall be as specified in the Assignment
Agreement executed by it. Concurrently with the execution and delivery of such
Assignment Agreement, the Company shall execute and deliver Notes to the
assignee Lender in the respective amounts of its Revolving Credit Commitments
under the Revolving Credit and new Notes to the assigning Lender in the
respective amounts of its Revolving Credit Commitments under the Revolving
Credit after giving effect to the reduction occasioned by such assignment, all
such Notes to constitute "Notes" for all purposes of this Agreement and of the
other Loan Documents. Section 11.11. Notices. Except as otherwise
specified herein, all notices hereunder shall be in writing (including, without
limitation, notice by telecopy) and shall be given to the relevant party at its
address or telecopier number set forth below, in the case of the Company, or on
the appropriate signature page hereof, in the case of the Lenders and the Agent,
or such other address or telecopier number as such party may hereafter specify
by notice to the Agent and the Company given by United States certified or
registered mail, by telecopy or by other telecommunication device capable of
creating a written record of such notice and its receipt. Notices hereunder to
the Company shall be addressed to:
to the Company at:
6133 North River Road, Suite 1000
Rosemont, Illinois 60018-5171
Attention: Donald C. Welchko
Telephone: (847) 518-8700
Telecopy: (847) 518-8777
with a copy (in case of notices of default) to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: Steven A. Shapiro
Telephone: (312) 902-5200
Telecopy: (312) 902-1061
to the Agent at:
Harris Trust and Savings Bank
P.O. Box 755
111 West Monroe Street
Chicago, Illinois 60690
Attention: James H. Colley
Telephone: (312) 461-6876
Telecopy: (312) 293-5041
-44-
Each such notice, request or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in this Section and a confirmation of such telecopy has been
received by the sender, (ii) if given by mail, five (5) days after
such communication is deposited in the mail, certified or registered with return
receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section; provided that
any notice given pursuant to Section 1 or Section 2 hereof shall
be effective only upon receipt. Section 11.12. Construction. The parties
hereto acknowledge and agree that this Agreement and the other Loan Documents
shall not be construed more favorably in favor of one than the other based upon
which party drafted the same, it being acknowledged that all parties hereto
contributed substantially to the negotiation of this Agreement and the other
Loan Documents. NOTHING CONTAINED HEREIN SHALL BE DEEMED OR CONSTRUED TO PERMIT
ANY ACT OR OMISSION WHICH IS PROHIBITED BY THE TERMS OF ANY OF THE OTHER LOAN
DOCUMENTS, THE COVENANTS AND AGREEMENTS CONTAINED HEREIN BEING IN ADDITION TO
AND NOT IN SUBSTITUTION FOR THE COVENANTS AND AGREEMENTS CONTAINED IN THE OTHER
LOAN DOCUMENTS. Section 11.13. Headings. Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose. Section 11.14. Severability of
Provisions. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. All rights, remedies and powers provided in this
Agreement and the other Loan Documents may be exercised only to the extent that
the exercise thereof does not violate any applicable mandatory provisions of
law, and all the provisions of this Agreement and the other Loan Documents are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement or the other Loan Documents invalid or unenforceable.
Section 11.15 Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument. Section 11.16. Entire
Understanding. This Agreement together with the other Loan Documents constitute
the entire understanding of the parties with respect to the subject matter
hereof and any prior agreements, whether written or oral, with respect thereto
are superseded hereby except for prior understandings related to fees payable to
the Agent upon the initial closing of the transactions contemplated hereby.
Section 11.17. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Company and its successors and assigns, and shall inure to
the benefit of the Agent and the Lenders and the benefit of their successors and
assigns, including any subsequent holder of an interest in the Obligations. The
Company may not assign its rights hereunder without the written
-45-
consent of the Lenders. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 11.18. Submission to Jurisdiction; Waiver of Jury Trial. The
Company hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. THE COMPANY, THE AGENT, AND EACH LENDER HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
-46-
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 4th day of November, 1998.
ANICOM, INC.
By
Name:
Title:
-47-
Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.
Each of the Lenders hereby agrees with each other Lender that if it
should receive or obtain any payment (whether by voluntary payment, by
realization upon collateral, by the exercise of rights of set-off or banker's
lien, by counterclaim or cross action, or by the enforcement of any rights under
this Agreement, any of the other Loan Documents or otherwise) in respect of the
Obligations in a greater amount than such Lender would have received had such
payment been made to the Agent and been distributed among the Lenders as
contemplated by Section 3.4 hereof then in that event the Lender receiving such
disproportionate payment shall purchase for cash without recourse from the other
Lenders an interest in the Obligations of the Company to such Lenders in such
amount as shall result in a distribution of such payment as contemplated by
Section 3.4 hereof. In the event any payment made to a Lender and shared with
the other Lenders pursuant to the provisions hereof is ever recovered from such
Lender, the Lenders receiving a portion of such payment hereunder shall restore
the same to the payor Lender, but without interest. Amount and Percentage of
Commitments:
Revolving Credit
Commitment:
$17,500,000
HARRIS TRUST AND SAVINGS BANK
By
Its Vice President
111 West Monroe Street
Chicago, Illinois 60603
Attention: James H. Colley
Telephone: (312) 461-6876
Telecopy: (312) 293-5041
-48-
Revolving Credit
Commitment:
$16,250,000
THE FIRST NATIONAL BANK OF CHICAGO
By
Its
One First National Plaza
Chicago, Illinois 60670
Attention: Julia A. Bristow
Telephone: (312) 732-7790
Telecopy: (312) 732-1117
-49-
Revolving Credit
Commitment:
$16,250,000
LASALLE NATIONAL BANK
By
Its
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Marguerite A. Laughlin
Telephone: (312) 904-6150
Telecopy: (312) 904-6742
-50-
Revolving Credit
Commitment:
$10,000,000
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Paul R. Frey
Telephone: (312) 828-8230
Telecopy: (312) 765-2193
-51-
EXHIBIT A
ANICOM, INC.
SHORT-TERM REVOLVING CREDIT NOTE
Chicago, Illinois
$------------------------------------
__________, 199___
On the Revolving Credit Termination Date, for value received, the
undersigned, ANICOM, INC., a Delaware corporation (the "Company"), hereby
promises to pay to the order of ____________________ (the "Lender"), at the
principal office of Harris Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) ________________________________ and no/100 Dollars
($_________________), or (ii) such lesser amount as may at the time of the
maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid
principal amount of all Loans owing from the Company to the Lender under the
Revolving Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain
Short-Term Credit Agreement dated as of November 4, 1998, between the
Company, Harris Trust and Savings Bank, individually and as Agent thereunder,
and the other Lenders which are now or may from time to time hereafter become
parties thereto (said Credit Agreement, as the same may be amended, modified or
restated from time to time, being referred to herein as the "Credit Agreement")
made and to be made to the Company by the Lender under the Revolving Credit
provided for under the Credit Agreement, and the Company hereby promises to pay
interest at the office described above on each loan evidenced hereby at the
rates and at the times and in the manner specified therefor in the Credit
Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall be prima facie evidence of the
unpaid principal balance of this Note, the status of each such loan from time to
time as part of the Domestic Rate Portion or a LIBOR Portion, and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of
the Credit Agreement, and this Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms are defined in the Credit
-52-
Agreement.
The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
ANICOM, INC.
By:
Name:
Title:
-53-
EXHIBIT B
COMPLIANCE CERTIFICATE
To: Harris Trust and Savings Bank, as Agent
under, and the Lenders party to, the
Credit Agreement described below
This Compliance Certificate is furnished to the Agent and the Lenders
pursuant to that certain Short-Term Credit Agreement dated as of November 4,
1998, by and among Anicom, Inc. (the "Company") and you (the "Credit
Agreement"). Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________________________ of the
Company; 2. I have reviewed the terms of the Credit Agreement and I
have made, or have caused
to be made under my supervision, a detailed review of the transactions and
conditions of the Company and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at the end
of the accounting period covered by the attached financial statements or as of
the date of this Certificate, except as set forth below;
4. The financial statements required by Section 8.5 of the
Credit Agreement and being furnished to you concurrently with this Certificate
are true, correct and complete as of the date and for the periods covered
thereby; and
5. The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Company has taken, is taking, or
proposes to take with respect to each such condition or event:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
...................................,
...................................
(Print or Type Name)
(Title)
-54-
ATTACHMENT TO COMPLIANCE CERTIFICATE
ANICOM, INC.
Compliance Calculations for Credit Agreement
Dated as of November 4, 1998
Calculations as of _____________, 19___
- ---------------------------------------------------------------------------
A. CURRENT RATIO (SECTION 8.6)
1. Total current assets (including ............
prepaid expenses)
2. Total current liabilities ............
3. Special Post-Closing Acquisition ............
Liabilities
4. Line 2 minus Line 3 ............
5. Ratio of Line 1 to Line 4
("Current Ratio")
6. As listed in Section 8.6, the Current Ratio
shall not be less than 1:40 : 1
--------------
7. Company is in Compliance?
(Circle Yes or No) Yes/No
B. INTEREST COVERAGE RATIO (SECTION 8.7)
1. Consolidated Net Income as defined .............
2. Amounts deducted in arriving at
Consolidated Net Income in respect of
(a) Interest Expense .............
(b) Federal, state and local
income taxes .............
3. Sum of Lines 1, 2(a) and 2(b)
("EBIT")
4. Interest Expense
5. Ratio of EBIT (Line 3)
to Interest Expense (Line 4) ("Interest
Coverage Ratio") : 1
==============
6. As listed in Section 8.7, for
the date of this Certificate,
the Interest Coverage
Ratio shall not be less than
2.0 : 1
7. Company is in compliance?
(Circle yes or no)
Yes/No
-55-
C. TANGIBLE NET WORTH (SECTION 8.8) 1. Shareholders' Equity
-----------
2. Less
(a) Notes receivable
from officers and
employees
(b) Intangible Assets ...........
3. Line 1 minus Lines 2(a) and 2(b)
("Tangible Net Worth")
-----------
4. As required by Section 8.8,
Tangible Net Worth must not be less than
Minimum Required Amount
(a) Consolidated Net Income .............
(b) .50 X Line 4(a) .............
(c) Line 4(b) plus the $________ _______
Minimum Required
Amount for the immediately
preceding fiscal quarter
("Minimum Required Amount")
5. Company is in compliance? (Circle yes or no) Yes/No
D. DEBT TO EARNINGS RATIO (SECTION 8.9)
1. Total Funded Debt ...........
2. EBITDA (Line B3 plus amounts charged
for depreciation, amortization and
Fiscal 1998 Charges) ...........
3. Ratio of Line 1 to Line 2
("Debt to Earnings Ratio")
: 1
============
4. As listed in Section8.9,
Debt to Earnings Ratio
must not be greater than
3.5 : 1
============
5. Company is in compliance? (Circle yes or no)
Yes/No
E. LEVERAGE RATIO (SECTION 8.10)
1. Total Funded Debt .............
2. Shareholders' Equity
3. Line 1 plus Line
4. Total Capitalization
(from Line E3 above) .............
5. Ratio of Line 1 to Line 4
("Leverage Ratio") :1
7. As listed in Section 8.10, for
the date of this Certificate,
the Leverage Ratio shall not
be greater than
0.40 :1
8. Company is in compliance?
(Circle yes or no) Yes/No
-56-
F. SPECIAL POST-CLOSING ACQUISITION LIABILITIES.
The following summarizes the Special Post-Closing Acquisition Liabilities
used in computing compliance with the current ratio (Section 8.6):______________
________________________________________________________________________________
________________________________________________________________________________
NATURE OF RESERVE DATE CREATED AMOUNT
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EXHIBIT C
SUBORDINATED INDEBTEDNESS
INTEREST BALANCE AS
INSTRUMENT RATE OF 6/30/98 MATURITY
Note payable to Robert Brzustewicz 8.55% $1,000,00 In an installment on
March >12, 1999
Note payable to James Hinshaw prime $440,213 In monthly installments
through July 1, 2002
Notes payable to Kenneth Burgess 8.00% $166,667 In an installment on
October 27, 1998
Note payable to Bruce Stanley 6.77% to $300,000 On demand
8.00%
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EXHIBIT D
SUBORDINATION PROVISIONS APPLICABLE TO
SUBORDINATED DEBT
(a) The indebtedness evidenced by the subordinated notes1/* and any
renewals or extensions thereof (hereinafter called "Subordinated Indebtedness"),
shall at all times be wholly subordinate and junior in right of payment to any
and all credit and other indebtedness, obligations and liabilities of the
Company to the lenders (collectively the "Lenders") and their agent (each, an
"Agent") under or in connection with (i) that certain Long-Term Credit
Agreement dated as of November 4, 1998 by and among the Company, Harris
Trust and Savings Bank, individually ("Harris") and as Agent for the Lenders
thereunder and other Lenders from time to time party thereto and (ii)
that certain Short-Term Credit Agreement dated as of November 4, 1998
by and among the Company, Harris Trust and Savings Bank, individually and as
Agent for the Lenders thereunder and other Lenders from time to time party
thereto, in each case howsoever evidenced, whether now existing or hereafter
created or arising, whether direct or indirect, absolute or contingent, or joint
or several, as any of the same may be modified, supplemented or amended from
time to time (hereinafter called "Superior Indebtedness"), in the manner and
with the force and effect hereafter set forth:
(1) In the event of any liquidation, dissolution or winding
up of the Company of in the event of any execution sale, receivership,
insolvency, bankruptcy, liquidation, readjustment, reorganization or
other similar proceeding relative to the Company or its properties,
then in any such event the holders of any and all Superior Indebtedness
shall be preferred in the payment of their claims over the holder or
holders of the Subordinated Indebtedness, and such Superior
Indebtedness shall be first paid and satisfied in full before any
payment or distribution of any kind or character, whether in cash,
property or securities shall be made upon the Subordinated
Indebtedness; and in any such event any dividend or distribution of any
kind or character, whether in cash, property or securities which shall
be made upon or in respect of the Subordinated Indebtedness, or any
renewals or extensions hereof, shall be paid over to the holders of
such Superior Indebtedness, pro rata, for application in payment
thereof unless and until such Superior Indebtedness shall have been
paid and satisfied in full;
(2) Without limiting any of the other provisions hereof, in
the event that the Subordinated Indebtedness is declared or becomes due
and payable because of the occurrence of any event of default hereunder
(or under the agreement or indenture, as appropriate) or for any other
reason other than at the option of the Company, under circumstances
when the foregoing clause (1) shall not be applicable, the
holders of the Subordinated Indebtedness shall be entitled to payments
only after there shall first have been paid in full all Superior
Indebtedness outstanding at the time the Subordinated Indebtedness
- --------
1
* Or debentures or other designation as may be appropriate.
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so becomes due and payable because of any such event, or payment shall
have been provided for in a manner satisfactory to the holders of such
Superior Indebtedness;
(3) No payment on account of principal of, premium, if any,
or interest on the Subordinated Indebtedness shall be made, nor shall
any assets be applied to the purchase or other acquisition or
retirement of the Subordinated Indebtedness, unless full payment of
amounts then due on all Superior Indebtedness has been made or duly
provided for, and no payment on account of principal of, premium, if
any, or interest on the Subordinated Indebtedness shall be made, nor
shall any assets be applied to the purchase or other acquisition or
retirement of the Subordinated Indebtedness, if at the time of such
payment or application or immediately after giving effect thereto,
there shall exist a default in the payment of any amount due on any
Superior Indebtedness;
(4) If there shall have occurred a default (other than a
default in the payment of any amount due) with respect to any issue of
Superior Indebtedness, as defined therein or in the instrument under
which the same has been issued, permitting the holders thereof, after
notice or lapse of time, or both, to accelerate the maturity thereof,
and any such holders as constitute a sufficient number or hold a
sufficient amount of such Superior Indebtedness as to have the right to
so accelerate the maturity thereof (the "Notifying Debtholders") shall
give written notice of the default to the Company (a "Default Notice"),
then, unless and until such default shall have been cured or waived, no
payment on account of principal of, premium, if any, or interest on the
Subordinated Indebtedness shall be made, nor shall any assets be
applied to the purchase or other acquisition or retirement of the
Subordinated Indebtedness, at any time during the 180 days immediately
following the delivery of the Default Notice to the Company (the
"Blockage Period"); provided that if, during the Blockage Period the
Notifying Debtholders shall have accelerated the maturity of the
Superior Indebtedness held by such Notifying Debtholders, or shall have
taken such action as is necessary under the governing agreement or
instrument to accelerate the maturity of such Superior Indebtedness
(subject only to the expiration of a grace period not exceeding 30
days), then the Blockage Period shall be extended for any such grace
period and thereafter for so long as such acceleration shall continue
to be in effect and judicial proceedings shall be pending with respect
thereto, the Notifying Debtholders shall be in the process of
foreclosing or otherwise collecting or realizing on collateral for such
Superior Indebtedness or the Notifying Debtholders shall otherwise be
pursuing collection procedures in good faith. At the expiration of such
Blockage Period, (i) the Company shall, absent the occurrence
prior to payment thereof by the Company of any event set forth in
Section 1 or 3 hereof, pay to the holders of the Subordinated
Indebtedness all amounts which would have been payable other than by
reason of acceleration during the Blockage Period and (ii) if
the default referred to in the Default Notice shall continue to exist
and shall not have been waived, then the Notifying Debtholders shall be
permitted to submit a new Default Notice respecting such event of
default. If, during any Blockage Period, a subsequent Default Notice is
served respecting an event or events of default which were in existence
and known to such Notifying Debtholder on the first day of the
pre-existing Blockage Period, then the Blockage period triggered by the
subsequent Default Notice shall terminate at the same time
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as the pre-existing Blockage Period;
(5) Any holders of Subordinated Indebtedness shall not
without the prior written consent of the holders of the Superior
Indebtedness take any collateral for any Subordinated Indebtedness,
whether from the Company or any other party, nor take any guaranties
for any Subordinated Indebtedness, from any party, in each case if and
so long as the terms of any of the Superior Indebtedness prohibit such
liens or guaranties. Without limiting the effect of any of the other
provisions of this Agreement, any interest in or lien on any assets or
properties of the Company or any other party which may (notwithstanding
the foregoing agreement) be held or hereafter acquired by or on behalf
of any holder of Subordinated Indebtedness as security for any
Subordinated Indebtedness is and shall be absolutely and
unconditionally subject and subordinate in all respects to any security
interest or lien which may be held or hereafter acquired by or on
behalf of the holders of Superior Indebtedness in the same such assets
or properties as security for any Superior Indebtedness notwithstanding
the time of attachment of any interest therein or lien thereon or the
filing of any financing statement or any other priority provided by law
or by agreement; and
(6) The holders of Subordinated Indebtedness shall not take
any action to enforce collection of the Subordinated Indebtedness or to
foreclose or otherwise realize upon any security or guaranty given to
secure or guaranty the Subordinated Indebtedness and the Company and
any such guarantor shall not make any payment in respect of the
Subordinated Indebtedness, in each case during any Blockage Period, or
otherwise unless the Company shall, 180 days prior to the taking of any
such action, have provided the holders of Superior Indebtedness with
notice of the occurrence of the default giving rise to such action. Any
provisions of this Section 6 to the contrary notwithstanding, the
restriction contained in this Section shall no longer apply upon the
first to occur of the following: (i) the institution of
bankruptcy proceedings by or against the Company; (ii) the
acceleration of the Superior Indebtedness; or (iii) the payment
or other satisfaction of all of the Superior Indebtedness. The holders
of the Subordinated Indebtedness agree to accept a cure from the
Lenders of any default with respect to any Subordinated Indebtedness
(with the same force and effect as if such cure were timely provided by
the Company or the appropriate obligor) at any time during the period
during which the holders of the Subordinated Indebtedness agree not to
act pursuant to this Section and if any such default is cured during
any such period shall be rescinded and annulled all with the same
effect as though such default had not occurred and the rate of interest
on such Subordinated Indebtedness shall accrue during such period at
the applicable predefault rate.
(7) The holders of Subordinated Indebtedness undertake and
agree for the benefit of each holder of Superior Indebtedness to
execute, verify, deliver and file any proofs of claim, consents,
assignments or other instruments which any holder of Superior
Indebtedness may at any time require in order to prove and realize upon
any rights or claims pertaining to the subordinated notes and to
effectuate the full benefit of the subordination contained herein; and
upon failure of the holder of any subordinated note so to do, any such
holder of Superior Indebtedness shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of the holder of such note to
execute, verify, deliver and file any such proofs
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of claim, consents, assignments or other instrument.
(8) No right of any holder of any Superior Indebtedness to
enforce subordination as herein provided shall at any time or in any
way be affected or impaired by any failure to act on the part of the
Company or the holders of Superior Indebtedness, or by any
noncompliance by the Company with any of the terms, provisions and
covenants of the subordinated notes or the agreement under which they
are issued, regardless of any knowledge thereof that any such holder of
Superior Indebtedness may have or be otherwise charged with.
(9) The Company agrees, for the benefit of the holders of
Superior Indebtedness, that in the event that any subordinated note is
declared due and payable before its expressed maturity because of the
occurrence of a default hereunder, (i) the Company will provide
prompt notice in writing of such happening to the holders of Superior
Indebtedness and (ii) a holder of any Superior Indebtedness may
declare the same to be immediately due and payable, regardless of the
expressed maturity thereof.
(10) To the extent that the Company makes any payment on the
Superior Indebtedness which is subsequently invalidated, declared to be
fraudulent or preferential, set aside or is required to be repaid to a
trustee, receiver or any other party under any bankruptcy act, state or
Federal law, common law or equitable cause (such payment being
hereinafter referred to as a "Voided Payment"), then to the extent of
such Voided Payment that portion of the Superior Indebtedness which had
been previously satisfied by such Voided Payment shall be revived and
continue in full force and effect as if such Voided Payment has never
been made. In the event that a Voided Payment is recovered from the
holders of the Superior Indebtedness, a default in the payment of
Superior Indebtedness specified in paragraph (a)(3) of these
subordination provisions shall be deemed to have existed and to be
continuing from the date of the initial receipt by the holders of the
Superior Indebtedness of such Voided Payment until the full amount of
such Voided Payment is fully and finally restored to the holder of the
Superior Indebtedness and until such time these subordination
provisions shall be in full force and effect.
(11) In the event that any payment or distribution of assets
is made to any holder of subordinated notes in contravention of these
subordination provisions, such payment or distribution shall be
received and held by such holder in trust for the benefit of the
holders of the then outstanding Superior Indebtedness and shall,
forthwith upon receipt thereof, be paid or distributed to the holders
of the Superior Indebtedness, pro rata, for application in payment
thereof.
(12) The foregoing provisions are solely for the purpose of
defining the relative rights of the holders of Superior Indebtedness on
the one hand, and the holders of the Subordinated Indebtedness on the
other hand, and nothing herein shall impair, as between the Company and
the holders of the Subordinated Indebtedness, the obligation of the
Company, which is unconditional and absolute, to pay the principal of
and premium, if any, and interest on the Subordinated Indebtedness in
accordance with their terms, nor shall anything herein prevent the
holders of the Subordinated Indebtedness from exercising all remedies
otherwise permitted by applicable law or hereunder upon default
hereunder, subject to the rights of the holders of Superior
Indebtedness as herein provided for.
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EXHIBIT E
GUARANTY
This Guaranty Agreement, dated as of ____________, ____, made by
____________ _________________________________, a _________________ organized
under the laws of _________________ (the "Guarantor");
WITNESSETH:
WHEREAS, Anicom, Inc., a Delaware corporation (the "Borrower"), Harris
Trust and Savings Bank ("Harris"), individually and as Agent (Harris acting as
such agent and any successor or successors to Harris in such capacity being
hereinafter referred to as the "Agent"), and the lenders from time to time party
thereto (Harris and such other lenders being hereinafter referred to
collectively as the "Lenders" and individually as a "Lender") have entered into
a ShortTerm Credit Agreement dated as of November 4, 1998 (such Credit
Agreement as the same may from time to time hereafter be modified or amended
being hereinafter referred to as the "Credit Agreement") pursuant to which the
Lenders have extended various credit facilities to the Borrower (the Agent and
the Lenders being hereinafter referred to collectively as the "Guaranteed
Creditors" and individually as a "Guaranteed Creditor"); and
WHEREAS, the Borrower owns and holds all or substantially all of the
issued and outstanding common capital stock of the Guarantor; and
WHEREAS, it is a condition to the extension of credit by the Lenders
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty; and
WHEREAS, the Borrower has provided and will continue to provide the
Guarantor with business, technical and financial support beneficial to the
proper conduct of the Guarantor's business and the Guarantor will obtain
benefits as a result of the extensions of credit to the Borrower under the
Credit Agreement; and, accordingly, the Guarantor desires to enter into this
Guaranty in order to satisfy the condition described in the preceding paragraph;
and
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby makes the following representations and
warranties to the Guaranteed Creditors and hereby covenants and agrees with the
Guaranteed Creditors as follows:
1. The Guarantor hereby unconditionally and irrevocably guarantees to
the Guaranteed Creditors, the due and punctual payment of all present and future
indebtedness of the Borrower evidenced by or arising out of the Credit Documents
(as hereinafter defined), including, but not limited to, (a) the due and
punctual payment of principal of and interest on all notes issued by the
Borrower under the Credit Agreement and any and all notes issued in extension or
renewal thereof or in substitution or replacement therefor (collectively the
"Notes") as and when the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise, and (b) the full and prompt performance
and payment when due of any and all other indebtedness, obligations and
liabilities, whether now existing or hereafter arising, of the Borrower to the
Guaranteed Creditors under or arising out of the Credit Agreement (the Notes,
Credit Agreement and each guaranty executed by another subsidiary of the
Borrower in connection with the Credit Agreement being hereinafter collectively
referred to as the "Credit Documents"). The indebtedness, obligations and
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liabilities described in the immediately preceding clauses (a) and (b)
are hereinafter referred to as the "Guaranteed Obligations". In case of failure
by Borrower punctually to pay any indebtedness guaranteed hereby, the Guarantor
hereby unconditionally agrees to make such payment or to cause such payment to
be made punctually as and when the same shall become due and payable, whether at
stated maturity, by acceleration or otherwise, and as if such payment were made
by the Borrower.
2. The obligations of the Guarantor under this Guaranty shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or of any other
guarantor under the Credit Agreement or any other Credit Document or by
operation of law or otherwise;
(b) any modification or amendment of or supplement to the
Credit Agreement or any other Credit Document;
(c) any change in the corporate existence, structure or
ownership of (including any of the foregoing arising from any merger,
consolidation, amalgamation or similar transaction), or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting, the
Borrower, any other guarantor, or any of their respective assets, or
any resulting release or discharge of any obligation of the Borrower or
of any other guarantor contained in any Credit Document (it being
understood and agreed that the term "Borrower" as used herein shall
mean and include any corporation, partnership, association or any other
entity or organization resulting from a merger, consolidation,
amalgamation or similar transaction involving the Borrower);
(d) the existence of any claim, set-off or other rights which
the Guarantor may have at any time against any Guaranteed Creditor or
any other person, whether or not arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or
demand or any exercise of, or failure to exercise, any rights or
remedies against the Borrower, any other guarantor, any other person or
any of their respective properties;
(f) any application of any sums by whomsoever paid or
howsoever realized to any obligation of the Borrower regardless of what
obligations of the Borrower remain unpaid;
(g) any invalidity or unenforceability relating to or against
the Borrower or any other guarantor for any reason of the Credit
Agreement or of any other Credit Document or any provision of
applicable law or regulation purporting to prohibit the payment by the
Borrower or any other guarantor of the principal of or interest on any
Note or any other amount payable by it under the Credit Documents; or
(h) any other act or omission to act or delay of any kind by
any Guaranteed Creditor or any other person or any other circumstance
whatsoever that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the obligations of the
Guarantor hereunder.
In order to hold the Guarantor liable hereunder, there shall be no obligation on
the part of the Guaranteed Creditors, at any time, to resort for payment to the
Borrower or any other guarantor, or
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resort to any collateral, security, property, liens or other rights or remedies
whatsoever, and the Guaranteed Creditors shall have the right to enforce this
Guaranty irrespective of whether or not other proceedings or steps seeking
resort or realization upon or from any of the foregoing are pending.
3. The Guarantor's obligations hereunder shall remain in full force
and effect until all commitments by the Guaranteed Creditors to extend credit to
the Borrower are terminated and the principal of and interest on the Notes and
all other amounts payable by the Borrower under the Credit Agreement and all
other Credit Documents shall have been paid in full. If at any time any payment
of the principal of or interest on any Note or any other amount payable by the
Borrower under the Credit Documents is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Borrower or
of any other guarantor, or otherwise, the Guarantor's obligations hereunder with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
4. (a)
The Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and any notice not provided for herein, as well as any requirement that at any
time any action be taken by the Agent, any Lender or any other person against
the Borrower, another guarantor or any other person.
(b) The Guarantor hereby agrees not to exercise or enforce any right of
exoneration, contribution, reimbursement, recourse or subrogation available to
the Guarantor against the Borrower or any other guarantor, or as to any security
therefor, unless and until all commitments by the Guaranteed Creditors to extend
credit to the Borrower are terminated and the principal of and interest on the
Notes and all other amounts payable by the Borrower under the Credit Agreement
and all other Credit Documents shall have been paid in full; and the payment by
the Guarantor of any of its obligations hereunder shall not in any way entitle
the Guarantor to any right, title or interest (whether by way of subrogation or
otherwise) in and to any of the Guaranteed Obligations or any proceeds thereof
or any security therefor unless and until all commitments by the Guaranteed
Creditors to extend credit to the Borrower are terminated and the principal of
and interest on the Notes and all other amounts payable by the Borrower under
the Credit Agreement and all other Credit Documents shall have been paid in
full.
5. Notwithstanding any other provision hereof, the right of recovery
of the Guaranteed Creditors against the Guarantor hereunder shall not exceed
$1.00 less than the amount which would render the Guarantor's obligations
hereunder void or voidable under applicable law, including without limitation
fraudulent conveyance law.
6. If acceleration of the time for payment of any amount payable by
the Borrower under the Credit Agreement or any other Credit Document is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, all such
amounts otherwise subject to acceleration under the terms of the Credit
Agreement or the other Credit Documents shall nonetheless be payable by the
Guarantor forthwith on demand by the Agent made at the request of the Guaranteed
Creditors.
7. Any payment of a Guaranteed Obligation required to be made pursuant
to this Guaranty shall be made in the currency which such Guaranteed Obligation
is required to be made in pursuant to the Credit Agreement or such other Credit
Document giving rise to such Guaranteed Obligation.
8. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and
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shall inure to the benefit of the Guaranteed Creditors and their successors and
assigns. Any Guaranteed Creditor may, to the extent permitted by the Credit
Agreement, sell, transfer or assign its rights in the Guaranteed Obligations
held by it, or any part thereof, or grant participations therein; and in that
event, each and every immediate and successive assignee or transferee of, or
holder or participant in, all or any part of the Guaranteed Obligations, shall
have the right to enforce this Guaranty, by suit or otherwise, for the benefit
of such assignee, transferee, holder or participant as fully as if such assignee
or transferee, holder or participant were herein by name specifically given such
rights, powers and benefits; but each Guaranteed Creditor shall have an
unimpaired right to enforce this Guaranty for its own benefit or for the benefit
of any such participant as to so much of the Guaranteed Obligations that it has
not sold, assigned or transferred.
9. The Guarantor acknowledges that executed (or conformed) copies of
the Credit Agreement and the other Credit Documents have been made available to
its principal executive officers and such officers are familiar with the
contents thereof.
10. Any acknowledgment or new promise, whether by payment of principal
or interest or otherwise and whether by the Borrower, or others (including the
Guarantor), with respect to any of the Guaranteed Obligations shall, if the
statute of limitations in favor of the Guarantor against the Guaranteed
Creditors shall have commenced to run, toll the running of such statute of
limitations, and if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.
11. The records of the Agent and each Lender as to the unpaid balance
of the Guaranteed Obligations at any time and from time to time shall be prima
facie evidence thereof without further or other proof for all purposes,
including the enforcement of this Guaranty and any collateral therefor.
12. Except as otherwise required by law, each payment by the Guarantor
hereunder shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient) imposed by
or within the jurisdiction in which the Guarantor is domiciled, any jurisdiction
from which the Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein. If any such withholding is
so required, the Guarantor shall make the withholding, pay the amount withheld
to the appropriate governmental authority before penalties attach thereto or
interest accrues thereon and forthwith pay such additional amount as may be
necessary to ensure that the net amount actually received by each Guaranteed
Creditor free and clear of such taxes (including such taxes on such additional
amount) is equal to the amount which that Guaranteed Creditor would have
received had such withholding not been made. If any Guaranteed Creditor pays any
amount in respect of any such taxes, penalties or interest the Guarantor shall
reimburse the Guaranteed Creditor for that payment on demand in the currency in
which such payment was made. If the Guarantor pays any such taxes, penalties or
interest, it shall deliver official tax receipts evidencing that payment or
certified copies thereof to the Guaranteed Creditor on whose account such
withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment. If any Guaranteed
Creditor determines it has received or been granted a credit against or relief
or remission for, or repayment of, any taxes paid or payable by it because of
any taxes, penalties or interest paid by the Guarantor and evidenced by such a
tax receipt, such Guaranteed Creditor shall, to the extent it can do so without
prejudice
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to the retention of the amount of such credit, relief, remission or repayment,
pay to the Guarantor as applicable, such amount as such Guaranteed Creditor
determines is attributable to such deduction or withholding and which will leave
such Guaranteed Creditor (after such payment) in no better or worse position
than it would have been in if the Guarantor had not been required to make such
deduction or withholding. Nothing herein shall interfere with the right of each
Guaranteed Creditor to arrange its tax affairs in whatever manner it thinks fit
nor oblige any Guaranteed Creditor to disclose any information relating to its
tax affairs or any computations in connection with such taxes.
13. Each reference in the Credit Agreement or any other Credit Document
to U.S. Dollars or to an alternative currency (the "relevant currency") is of
the essence. To the fullest extent permitted by law, the obligation of the
Guarantor in respect of any amount due in the relevant currency under the Credit
Agreement shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the relevant currency that the Guaranteed Creditor entitled to receive
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other currency (after any premium and costs of exchange) on
the business day immediately following the day on which such Guaranteed Creditor
receives such payment. If the amount of the relevant currency so purchased is
less than the sum originally due to such Guaranteed Creditor in the relevant
currency, the Guarantor agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Guaranteed Creditor against such loss, and if
the amount of the specified currency so purchased exceeds the sum of (a) the
amount originally due to the relevant Guaranteed Creditor in the specified
currency plus (b) any amounts shared with other Guaranteed Creditors as a result
of allocations of such excess as a disproportionate payment to such Guaranteed
Creditor under Section 3.4 of the Credit Agreement, such Guaranteed
Creditor agrees to remit such excess to the Guarantor.
14. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF ILLINOIS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS), in which
State it shall be performed by the Guarantor.
15. The obligation of the Guarantor hereunder shall be absolute and
unconditional under all circumstances and irrespective of the validity or the
enforceability of the Guaranteed Obligations and irrespective of any present or
future law of any government or of any agency thereof purporting to reduce,
amend or otherwise affect any of the Guaranteed Obligations. To the extent that
the Guarantor or any of its properties or revenues has or hereafter may acquire
any right of immunity from suit, judgment or execution, the Guarantor hereby
irrevocably waives such right of immunity in respect of its obligations
hereunder and in respect of any action or proceeding, wherever brought, to
enforce any judgment against the Guarantor for breach of any of such
obligations.
16. The Guarantor hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Northern District of Illinois and of
any Illinois State court sitting in the City of Chicago for purposes of all
legal proceedings arising out of or relating to this Guaranty, the Credit
Agreement, the other Credit Documents or the transactions contemplated hereby or
thereby, and consents to the service of process by registered or certified mail
out of any such court or by service of process on the Borrower (now at
_________________________________) which the
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Guarantor hereby irrevocably appoints as its agent to receive, for it and on its
behalf, service of process in any action or proceeding in Illinois. Such service
shall be deemed completed on delivery to such process agent (whether or not it
is forwarded to and received by the Guarantor) provided that notice of such
service of process is given by the Guaranteed Creditors to the Guarantor. If,
for any reason, such process agent ceases to be able to act as such, the
Guarantor irrevocably agrees to appoint a substitute process agent acceptable to
the Agent and to deliver to the Agent a copy of the new agent's acceptance of
that appointment within thirty days. Nothing contained herein shall affect the
right of the Guaranteed Creditors to serve legal process in any other manner or
to bring any proceeding hereunder in any jurisdiction where the Guarantor may be
amenable to suit. The Guarantor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Final judgment (a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of any indebtedness of the
Guarantor to the Guaranteed Creditors therein described) against the Guarantor
in any such legal action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment. The Guarantor, the Agent, and
each Lender hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to the Guaranty, any Credit Document
or the transactions contemplated hereby or thereby.
17. The Guarantor shall at all times and from time to time do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all and singular every such further act, deed, transfer, assignment,
assurance, document and instrument as the Agent or any Lender may reasonably
require for the better accomplishing and effectuating of this Guaranty and the
provisions contained herein, and every officer of the Agent and the Lenders and
each of them are irrevocably appointed attorneys or attorney to execute in the
name and on behalf of the Guarantor any document or instrument for the said
purpose.
18. Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement shall be used herein as so defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be executed and delivered as of the date first above written.
----------------------------------
By
Its
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SCHEDULE 6.2
MATERIAL SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
Anicom Multimedia Wiring Canada 100%
Systems, Incorporated
NON-MATERIAL SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
Morgan Hill Supply Company, New York 100%
Inc.2/(
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Anicom-Carolina, Inc.* Delaware 100%
Anicom-Norfolk, Inc.* Delaware 100%
Anicom-Security, Inc.* Delaware 100%
Northern Wire & Cable, Inc.* Delaware 100%
Northern Connectivity Corp.* Michigan 100%
3022504 Nova Scotia Limited Canada 100%
- --------
2
The Company is in the process of liquidating these Subsidiaries.
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