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EXHIBIT 10.10
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December __, 1997
among
SELFIX, INC.,
TAMOR CORPORATION,
SHUTTERS, INC., and
SEYMOUR HOUSEWARES CORPORATION
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
1. AMOUNT AND TERMS OF CREDIT............................................. 2
1.1. Credit Facilities................................................ 2
1.2. Letters of Credit................................................ 6
1.3. Prepayments...................................................... 7
1.4. Use of Proceeds.................................................. 9
1.5. Interest and Applicable Margins.................................. 10
1.6. Eligible Accounts................................................ 13
1.7. Eligible Inventory............................................... 15
1.8. Cash Management Systems.......................................... 16
1.9. Fees............................................................. 16
1.10. Receipt of Payments.............................................. 17
1.11. Application and Allocation of Payments........................... 17
1.12. Loan Account and Accounting...................................... 18
1.13. Indemnity........................................................ 18
1.14. Access........................................................... 19
1.15. Taxes............................................................ 19
1.16. Capital Adequacy; Increased Costs; Illegality.................... 20
1.17. Single Loan...................................................... 22
2. CONDITIONS PRECEDENT................................................... 22
2.1. Conditions to the Initial Loans.................................. 22
2.2. Further Conditions to Each Loan.................................. 23
3. REPRESENTATIONS AND WARRANTIES......................................... 24
3.1. Corporate Existence; Compliance with Law......................... 24
3.2. Executive Offices; FEIN.......................................... 24
3.3. Corporate Power, Authorization, Enforceable Obligations.......... 25
3.4. Financial Statements and Forecasts............................... 25
3.5. Material Adverse Effect.......................................... 26
3.6. Ownership of Property; Liens..................................... 26
3.7. Labor Matters.................................................... 27
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock......... 27
3.9. Government Regulation............................................ 27
3.10. Margin Regulations............................................... 28
3.11. Taxes............................................................ 28
3.12. ERISA............................................................ 28
3.13. No Litigation.................................................... 29
3.14. Brokers.......................................................... 29
3.15. Intellectual Property............................................ 29
3.16. Full Disclosure.................................................. 29
3.17. Environmental Matters............................................ 30
3.18. Insurance........................................................ 30
3.19. Deposit and Disbursement Accounts................................ 30
3.20. Government Contracts............................................. 30
3.21. Customer and Trade Relations..................................... 31
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3.22. Agreements and Other Documents................................... 31
3.23. Solvency......................................................... 31
3.24. Acquisition Agreement............................................ 31
3.25. Subordinated Debt................................................ 32
4. FINANCIAL STATEMENTS AND INFORMATION................................... 32
4.1. Reports and Notices.............................................. 32
4.2. Communication with Accountants................................... 32
5. AFFIRMATIVE COVENANTS.................................................. 32
5.1. Maintenance of Existence and Conduct of Business................. 32
5.2. Payment of Obligations........................................... 33
5.3. Books and Records................................................ 33
5.4. Insurance; Damage to or Destruction of Collateral................ 33
5.5. Compliance with Laws............................................. 35
5.6. Supplemental Disclosure.......................................... 35
5.7. Intellectual Property............................................ 35
5.8. Environmental Matters............................................ 35
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters... 36
5.10. Further Assurances............................................... 36
5.11. Acquisition Agreement............................................ 36
6. NEGATIVE COVENANTS..................................................... 37
6.1. Mergers, Subsidiaries, Etc....................................... 37
6.2. Investments; Loans and Advances.................................. 37
6.3. Indebtedness..................................................... 37
6.4. Employee Loans and Affiliate Transactions........................ 38
6.5. Capital Structure and Business................................... 39
6.6. Guaranteed Indebtedness.......................................... 39
6.7. Liens............................................................ 39
6.8. Sale of Stock and Assets......................................... 39
6.9. ERISA............................................................ 40
6.10. Financial Covenants.............................................. 40
6.11. Hazardous Materials.............................................. 40
6.12. Sale-Leasebacks.................................................. 40
6.13. Cancellation of Indebtedness..................................... 40
6.14. Restricted Payments.............................................. 40
6.15. Change of Corporate Name or Location; Change of Fiscal Year...... 40
6.16. No Impairment of Intercompany Transfers.......................... 41
6.17. No Speculative Transactions...................................... 41
6.18. Leases........................................................... 41
6.19. Changes Relating to Subordinated Debt............................ 41
6.20. Holdings......................................................... 41
7. TERM................................................................... 42
7.1. Termination...................................................... 42
7.2. Survival of Obligations Upon Termination of
Financing Arrangements........................................... 42
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8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES................................ 42
8.1. Events of Default.............................................. 42
8.2. Remedies....................................................... 44
8.3. Waivers by Credit Parties...................................... 44
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT................... 44
9.1. Assignment and Participations.................................. 45
9.2. Appointment of Agent........................................... 46
9.3. Agent's Reliance, Etc.......................................... 47
9.4. GE Capital and Affiliates...................................... 47
9.5. Lender Credit Decision......................................... 48
9.6. Indemnification................................................ 48
9.7. Successor Agent................................................ 48
9.8. Setoff and Sharing of Payments................................. 49
9.9. Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert................................ 49
10. SUCCESSORS AND ASSIGNS................................................ 51
10.1. Successors and Assigns......................................... 51
11. MISCELLANEOUS......................................................... 52
11.1. Complete Agreement; Modification of Agreement.................. 52
11.2. Amendments and Waivers......................................... 52
11.3. Fees and Expenses.............................................. 54
11.4. No Waiver...................................................... 55
11.5. Remedies....................................................... 55
11.6. Severability................................................... 55
11.7. Conflict of Terms.............................................. 55
11.8. Confidentiality................................................ 55
11.9. GOVERNING LAW.................................................. 56
11.10. Notices........................................................ 56
11.11. Section Titles................................................. 57
11.12. Counterparts................................................... 57
11.13. WAIVER OF JURY TRIAL........................................... 57
11.14. Press Releases................................................. 57
11.15. Reinstatement.................................................. 58
11.16. Advice of Counsel.............................................. 58
11.17. No Strict Construction......................................... 58
12. CROSS-GUARANTY........................................................ 58
12.1. Cross-Guaranty................................................. 58
12.2. Waivers by Borrowers........................................... 59
12.3. Benefit of Guaranty............................................ 59
12.4. Subordination of Subrogation, Etc. ............................ 59
12.5. Election of Remedies........................................... 60
12.6. Limitation..................................................... 60
12.7. Contribution with Respect to Guaranty Obligations.............. 60
12.8. Liability Cumulative........................................... 61
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INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.1(b)(v) - Ratable Shares
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Forecasts
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 11.18 - Continuing Loans
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Forecasts -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J - Commitments
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CREDIT AGREEMENT, dated as of December __, 1997, among SELFIX, INC., a
Delaware corporation ("Selfix"), TAMOR CORPORATION., a Massachusetts corporation
("Tamor"), SHUTTERS, INC., an Illinois corporation ("Shutters"), SEYMOUR
HOUSEWARES CORPORATION, a Delaware corporation ("Seymour" and, together with
Selfix, Tamor and Shutters, sometimes collectively referred to herein as the
"Borrowers" and individually as a "Borrower"); the other Credit Parties
signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(in its individual capacity, "GE Capital"), for itself, as Lender, and as Agent
for Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, GE Capital and other Lenders have outstanding loans and letter of
credit obligations to Selfix, Tamor and Shutters on the date hereof in the
aggregate principal amount of the "Continuing Loans" (as summarized on
Disclosure Schedule (11.18) hereto) pursuant to the terms of a Credit Agreement
dated as of February 27, 1997 as amended (the "Prior Credit Agreement") by and
among GE Capital, as Agent and Lender, the other Lenders party thereto, Selfix,
Tamor and Shutters, as borrowers, and Home Products International, Inc., a
Delaware corporation ("Holdings"), as an additional Credit Party (such Prior
Credit Agreement and the loan documents entered into in connection therewith
being hereinafter referred to as the "Prior Loan Documents");
WHEREAS, pursuant to the Agreement and Plan of Merger dated as of November
11, 1997 (as amended, the "Purchase Agreement") by and among Holdings, HPII
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Holdings ("HPII"), Seymour Sales Corporation, a Delaware corporation ("Seymour
Sales"), Seymour, Chase Manhattan Investment Holdings, Inc. and Chase Venture
Capital Associates, L.P., (i) HPII issued a promissory note in favor of
Holdings in exchange for approximately $14.2 million of Holdings stock; (ii)
HPII then merged with and into Seymour Sales, with Seymour Sales as the
surviving corporation, and HPII paid to the "Sellers" (as defined in Annex A
hereto) its Holdings stock plus cash as consideration for the merger; and (iii)
Seymour Sales, in turn, was merged with and into its wholly owned subsidiary,
Seymour, with Seymour as the surviving corporation (such transaction is
referred to herein as the "Acquisition");
WHEREAS, Borrowers desire that Lenders amend and restate the Prior Credit
Agreement so that it provides that Lenders shall extend revolving and term
credit facilities to Borrowers of up to One Hundred Thirty Million Dollars
($130,000,000) in the aggregate (including the Continuing Loans), for the
purpose of funding a portion of the Acquisition and refinancing certain
indebtedness of Seymour and to provide (a) working capital financing for
Borrowers, and (b) funds for other general corporate purposes of Borrowers; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein;
WHEREAS, Borrowers desire to secure all of their obligations under the
"Loan Documents" (as defined in Annex A hereto) by granting to Agent, for the
benefit of Agent and Lenders, a security interest in and lien upon all of their
existing and after-acquired personal and real property, including, without
limitation, the capital stock of all of Borrowers' Subsidiaries; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A. All Annexes, Disclosure Schedules, Exhibits and
other attachments
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(collectively, "Appendices") hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities. (a) Revolving Credit Facility. (i) Subject to the
terms and conditions hereof, each Revolving Lender agrees to make available from
time to time until the Commitment Termination Date its Pro Rata Share of
advances (each, a "Revolving Credit Advance") of the total Revolving Loan
Commitment. The Pro Rata Share of the Revolving Loan of any Revolving Lender
shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several and not joint.
The aggregate amount of Revolving Credit Advances outstanding, taking into
account that portion of the Continuing Loans that are Revolving Credit Advances,
shall not exceed at any time the lesser of (A) the Maximum Amount and (B) the
Aggregate Borrowing Base, in each case less the sum of the Letter of Credit
Obligations and the Swing Line Loan outstanding at such time ("Borrowing
Availability"), except as set forth in Section 1.1 (a)(iii). Moreover, the sum
of the Revolving Loan and Swing Line Loan outstanding to any Borrower shall not
exceed at any time that Borrower's separate Borrowing Base, except as set forth
in Section 1.1(a)(iii). Until the Commitment Termination Date, Borrowers may
from time to time borrow, repay and reborrow under this Section 1.1(a). Each
Revolving Credit Advance shall be made on notice by Borrower Representative on
behalf of the applicable Borrower to the representative of Agent identified on
Schedule 1.1 at the address specified thereon. Those notices must be given no
later than (1) 10:30 a.m. (Chicago time) on the Business Day of the proposed
Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m.
(Chicago time) on the date which is three (3) Business Days prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be given in writing (by
telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
and shall include the information required in such Exhibit and such other
information as may be required by Agent. If any Borrower desires to have the
Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower
Representative must comply with Section 1.5(e).
(ii) The Revolving Loan Commitments of each Revolving Lender shall be
evidenced by a single Promissory Note, dated the Closing Date and substantially
in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively,
the "Revolving Notes") and executed by all of the Borrowers. Each Revolving
Note shall represent the obligation of each Borrower to pay to the applicable
Revolving Lender the amount of such Revolving Lender's Revolving Loan Commitment
to such Borrower or, if less, such Revolving Lender's Pro Rata Share of the
aggregate unpaid principal amount of all Revolving Credit Advances to such
Borrower together with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the aggregate Revolving Loan and all other
non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
(iii) At the request of Borrower Representative, in its discretion Agent
may (but shall have absolutely no obligation to), make Revolving Credit Advances
to Borrowers on behalf of
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Revolving Lenders in amounts which cause the outstanding balance of the
aggregate Revolving Loan to exceed the Aggregate Borrowing Base (less the Swing
Line Loan) or which cause the outstanding balance of the Revolving Loan owing by
any Borrower to exceed that Borrower's separate Borrowing Base (less the Swing
Line Loan advanced to that Borrower) (any such excess Revolving Credit Advances
are herein referred to collectively as "Overadvances"), and no such event or
occurrence shall cause or constitute a waiver by Agent or Lenders of any Default
or Event of Default that may result therefrom or of Agent's, Swing Line Lender's
or Revolving Lenders' right to refuse to make any further Overadvances, Swing
Line Advances or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists or would
result therefrom. In addition, Overadvances may be made even if the conditions
to lending set forth in Section 2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall bear interest at the Default Rate and shall
be payable on demand. Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to
exceed $500,000 at any time, shall not cause the aggregate Revolving Loan to
exceed the Maximum Amount, and may be revoked prospectively by a written notice
to Agent signed by Revolving Lenders holding fifty percent (50%) or more of the
Revolving Loan Commitments.
(b) (1) Term Loan A. Subject to the terms and conditions hereof, each
Lender having a Term Loan A Commitment agrees to make (or continue to the extent
of the Continuing Loans) a term loan on the Closing Date to each Borrower (the
"Term Loan A") in the original principal amount of such Borrower's Ratable Share
of such Lender's Term Loan A Commitment. The obligations of each Term A Lender
hereunder shall be several and not joint. Term Loan A shall be evidenced by
promissory notes substantially in the form of Exhibit 1.1(b) (each a "Term Note
A" and collectively the "Term A Notes"). The Borrowers shall execute and
deliver a single Term Note A to each Term A Lender. Each Term Note A shall
represent the obligation of each Borrower to pay its Ratable Share of the amount
of Term Loan A to the applicable Lender, together with interest thereon as
prescribed in Section 1.5.
(ii) Each Borrower shall pay its Ratable Share of the principal amount
of the Term Loan A in twenty-four (24) consecutive quarterly installments on the
first day of January, April, July and October of each year, commencing April 1,
1998, as follows:
Payment Installment
Date Amount (each)
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1-4 April 1, July 1, and October 1, 1998
January 1, 1999 $1,250,000
5-8 April 1, July 1, and October 1, 1999
January 1, 2000 $1,750,000
9-12 April 1, July 1, and October 1, 2000
January 1, 2001 $2,000,000
13-24 April 1, July 1, and October 1, 2001;
January 1, April 1, July 1, and October 1,
2002; January 1, April 1, July 1, and
October 1, 2003; and January 1, 2004 $2,500,000
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(iii) Notwithstanding the foregoing clause (ii), the aggregate
outstanding principal balance of Term Loan A shall be due and payable in full
in immediately available funds on the Commitment Termination Date, if not
sooner paid in full.
(iv) Each payment of principal with respect to Term Loan A shall be
paid to Agent for the ratable benefit of each Term A Lender, ratably in
proportion to each such Term A Lender's respective Term Loan A Commitment.
(b) (2) Term Loan B. (i) Subject to the terms and conditions hereof,
each Term B Lender agrees to make (or continue to the extent of the Continuing
Loans) a term loan on the Closing Date to each Borrower (the "Term Loan B") in
the principal amount of such Borrower's Ratable Share of such Lender's Term
Loan B Commitment. The obligations of each Term B Lender hereunder shall be
several and not joint. Term Loan B shall be evidenced by promissory notes
substantially in the form of Exhibit 1.1 (b) (each a "Term Note B" and
collectively the "Term B Notes"). The Borrowers shall execute and deliver a
single Term Note B to each Term B Lender. Each Term Note B shall represent the
obligation of each Borrower to pay its Ratable Share of the amount of its Term
Loan B to the applicable Lender, together with interest thereon as prescribed
in Section 1.5.
(ii) Each Borrower shall pay its Ratable Share of the principal amount
of Term Loan B in thirty-two (32) consecutive quarterly installments on the
first day of January, April, July and October of each year, commencing April 1,
1998, as follows:
Payment Installment
Date Amount (each)
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1-24 April 1, July 1, and October 1, 1998
January 1, April 1, July 1, and October 1, 1999
January 1, April 1, July 1, and October 1, 2000
January 1, April 1, July 1, and October 1, 2001
January 1, April 1, July 1, and October 1, 2002,
January 1, April 1, July 1, and October 1, 2003,
and January 1, 2004 $150,000
25-32 April 1, July 1, and October 1, 2004
January 1, April 1, July 1, and October 1, 2005,
and January 1, 2006 $7,050,000
(iii) Notwithstanding the foregoing clause (ii), the aggregate
outstanding principal balance of Term Loan B shall be due and payable in full
in immediately available funds on the Commitment Termination Date, if not
sooner paid in full.
(iv) Each payment of principal with respect to Term Loan B shall be
paid to Agent for the ratable benefit of each Term B Lender, ratably in
proportion to each such Term B Lender's respective Term Loan B Commitment.
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(v) Each Borrower shall pay its Ratable Share of each scheduled
installment of Term Loan A and Term Loan B. The Ratable Share of each Borrower
with respect to Term Loan A and Term Loan B is set forth on Disclosure Schedule
(1.1(b)(v)).
(c) Swing Line Facility. Agent shall notify the Swing Line Lender
upon Agent's receipt of any Notice of Revolving Credit Advance. Subject to the
terms and conditions hereof, the Swing Line Lender may, in its discretion, make
available from time to time until the Commitment Termination Date advances
(each, a "Swing Line Advance") in accordance with any such notice. The
aggregate amount of Swing Line Advances outstanding shall not exceed the lesser
of (A) the Swing Line Commitment and (B) the Aggregate Borrowing Base less the
outstanding balance of the Revolving Loan at such time ("Swing Line
Availability"). Moreover, the Swing Line Loan outstanding to any Borrower shall
not exceed at any time that Borrower's separate Borrowing Base less the
Revolving Loan outstanding to such Borrower. Until the Commitment Termination
Date, Borrowers may from time to time borrow, repay and reborrow under this
Section 1.1(c). Each Swing Line Advance shall be made pursuant to a Notice of
Revolving Credit Advance delivered to Agent by Borrower Representative on
behalf of the applicable Borrower in accordance with Section 1.1(a). Those
notices must be given no later than 11:00 a.m. (Chicago time) on the Business
Day of the proposed Swing Line Advance. Notwithstanding any other provision of
this Agreement or the other Loan Documents, the Swing Line Loan shall
constitute an Index Rate Loan. Borrowers shall repay the aggregate outstanding
principal amount of the Swing Line Loan upon demand therefor by Agent.
(ii) Each Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment. Each note shall be in
the principal amount of the Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(c)(ii)
(each a "Swing Line Note" and, collectively, the "Swing Line Notes"). Each
Swing Line Note shall represent the obligation of each Borrower to pay the
amount of the Swing Line Commitment or, if less, the aggregate unpaid principal
amount of all Swing Line Advances made to such Borrower together with interest
thereon as prescribed in Section 1.5. The entire unpaid balance of the Swing
Line Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at any
time and from time to time in its sole and absolute discretion, but not less
frequently than weekly, shall on behalf of each Borrower (and each Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to such Borrower (which shall be an Index Rate Loan)
in an amount equal to such Revolving Lender's Pro Rata Share of the principal
amount of such Borrower's Swing Line Loan (the "Refunded Swing Line Loan")
outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1 (i) shall have occurred (in which event the
procedures of Section 1.1(c)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall disburse
directly to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf
of the Swing Line Lender, prior to 2:00 p.m. (Chicago time), in immediately
available funds on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Credit Advances shall be immediately paid
to the Swing Line Lender and applied to repay the Refunded Swing Line Loan of
the applicable Borrower.
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(iv) Participation in Swing Line Loans. If, prior to refunding a Swing
Line Loan with a Revolving Credit Advance pursuant to Section 1.1 (c)(iii), one
of the events described in Sections 8.1(h) or 8.1(i) shall have occurred, then,
subject to the provisions of Section 1.1 (c)(v) below, each Revolving Lender
will, on the date such Revolving Credit Advance was to have been made for the
benefit of the applicable Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan to such Borrower in an
amount equal to its Pro Rata Share of such Swing Line Loan. Upon request, each
Revolving Lender will promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation.
(v) Revolving Lenders' Obligations Unconditional. Each Revolving
Lender's obligation to make Revolving Credit Advances in accordance with
Section 1.1 (c)(iii) and to purchase participating interests in accordance with
Section 1.1 (c)(iv) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Lender may have against
the Swing Line Lender, any Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of any Borrower to satisfy the conditions precedent
to borrowing set forth in this Agreement on the date upon which such
participating interest is to be purchased or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Section 1.1 (c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with
interest thereon for each day from the date of non-payment until such amount is
paid in full at the Federal Funds Rate for the first two Business Days and at
the Index Rate thereafter.
(d) Reliance on Notices; Appointment of Borrower Representative. Agent
shall be entitled to rely upon, and shall be fully protected in relying upon,
any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or
similar notice reasonably believed by Agent to be genuine. Agent may assume
that each Person executing and delivering such a notice was duly authorized,
unless the responsible individual acting thereon for Agent has actual knowledge
to the contrary. Each Borrower hereby designates Selfix as its representative
and agent on its behalf for the purposes of issuing Notices of Revolving Credit
Advances, Notices of Swing Line Advances and Notices of
Conversion/Continuation, giving instructions with respect to the disbursement
of the proceeds of the Loans, selecting interest rate options, requesting
Letters of Credit, giving and receiving all other notices and consents
hereunder or under any of the other Loan Documents and taking all other actions
(including in respect of compliance with covenants) on behalf of any Borrower
or Borrowers under the Loan Documents. Borrower Representative hereby accepts
such appointment. Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from Borrower Representative as a
notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to Borrower Representative on behalf of such Borrower or Borrowers.
Each Borrower agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower Representative, on
behalf of the applicable Borrower,
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shall have the right to request, and Revolving Lenders agree to incur,
or purchase participations in, Letter of Credit Obligations in respect of each
Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments. Borrowers may at any time on at least five
(5) days' prior written notice upon a partial prepayment (or at least thirty
(30) days' prior written notice in the case of a prepayment in full) by
Borrower Representative to Agent voluntarily prepay all or part of the Term
Loan A or Term Loan B; provided that any such prepayments or reductions shall
be in a minimum amount of $500,000 and integral multiples of $250,000 in excess
of such amount. In addition, Borrowers may at any time on at least thirty (30)
days' prior written notice by Borrower Representative to Agent terminate the
Revolving Loan Commitment; provided that upon such termination, all Loans and
other Obligations shall be immediately due and payable in full. Any such
voluntary prepayment and any such termination of the Revolving Loan Commitment
must be accompanied by the payment of the fee required by Section 1.9(c), if
any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b). Upon any such prepayment and termination of the Revolving
Loan Commitment, each Borrower's right to request Revolving Credit Advances, or
request that Letter of Credit Obligations be incurred on its behalf, or request
Swing Line Advances shall simultaneously be permanently terminated. Each
notice of partial prepayment shall designate the Loans or other Obligations to
which such prepayment is to be applied, provided that any partial prepayments
of Term Loan A or Term Loan B made by or on behalf of any Borrower shall be
applied to prepay the scheduled installments of such Borrower's Term Loan A or
Term Loan B, respectively, in inverse order of maturity.
(b) Mandatory Prepayments. If at any time the outstanding balance of
the aggregate Revolving Loan (taking into account the Continuing Loans that are
part of the Revolving Loan) exceeds the lesser of (A) the Maximum Amount and
(B) the Aggregate Borrowing Base, less, in each case, the aggregate outstanding
Swing Line Loan at such time, Borrowers shall immediately repay the aggregate
outstanding Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the aggregate
outstanding Revolving Credit Advances, Borrowers shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in Annex B to the
extent required to eliminate such excess. Furthermore, if the outstanding
balance of the Revolving Loan of any Borrower exceeds that Borrower's separate
Borrowing Base at any time less the outstanding balance of the Swing Line Loan
of such Borrower at such time, the applicable Borrower shall immediately repay
its Revolving Credit Advances in the amount of such excess (and, if necessary,
shall provide cash collateral for its Letter of Credit Obligations as described
above). Notwithstanding the foregoing, any Overadvance made pursuant to Section
1.1(a)(iii) shall be repaid on demand.
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(ii) Immediately upon receipt by any Credit Party of proceeds of any
asset disposition (including condemnation proceeds, but excluding proceeds of
asset dispositions permitted by Sections 6.8 (a) and 6.8(b)) or any sale of
Stock of any Subsidiary of any Credit Party, Borrowers shall prepay the Loans
in an amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrowers in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C)
amounts payable to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with clause (c)(1) below.
(iii) Except for the 1,362,700 shares of Holdings Stock to be issued
to the shareholders of Seymour Sales pursuant to Section 2.5(b) of the
Acquisition Agreement, if Holdings or any Borrower issues Stock, no later than
the Business Day following the date of receipt of the proceeds thereof, all
Borrowers (in the case of an issuance by Holdings) or the issuing Borrower
shall prepay the Loans in an amount equal to all or a portion of such proceeds,
in accordance with clause (c)(2) below, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection
therewith.
(iv) Until the Termination Date, Borrowers shall prepay the
Obligations on the earlier of the date which is ten (10) days after (A) the
date on which Borrowers' annual audited Financial Statements for the
immediately preceding Fiscal Year are delivered pursuant to Annex E or (B) the
date on which such annual audited Financial Statements were required to be
delivered pursuant to Annex E, in an amount equal to seventy-five percent (75%)
of Excess Cash Flow for the immediately preceding Fiscal Year. Any prepayments
from Excess Cash Flow paid pursuant to this clause (iv) shall be allocated to
each Borrower's Obligations based upon such Borrower's relative contribution to
Excess Cash Flow and shall be applied in accordance with clause (c)(1) below.
Each such prepayment shall be accompanied by a certificate signed by Borrower
Representative's chief financial officer certifying the manner in which Excess
Cash Flow, the resulting prepayment, and the method of allocation to each
Borrower's Obligations were calculated, which certificate shall be in form and
substance reasonably satisfactory to Agent.
(c) (1) Application of Certain Mandatory Prepayments. Any prepayments
made by any Borrower pursuant to clauses (b)(ii) or (iv) shall be applied as
follows: first, to Fees and reimbursable expenses of Agent and other Lenders
then due and payable pursuant to any of the Loan Documents; second, to interest
then due and payable on such Borrower's Term Loans, pro rata; third, ratably to
prepay the scheduled installments of such Borrower's Term Loans in inverse
order of maturity, until such Loans shall have been prepaid in full; fourth to
interest then due and payable on the Term Loans of each other Borrower, pro
rata; fifth, to prepay the scheduled installments of the Term Loans of such
other Borrowers in inverse order of maturity, until such Loans shall have been
prepaid in full; sixth, to interest then due and payable on Revolving Credit
Advances (including Swing Line Advances) made to such Borrower; seventh, to the
principal balance of Revolving Credit Advances (including Swing Line Advances)
outstanding to such Borrower until the same shall have been paid in full;
eighth, to any Letter of Credit Obligations of such Borrower to provide cash
collateral therefor in the manner set forth in Annex B, until all such Letter
of Credit Obligations have been fully cash collateralized in the manner set
forth in Annex B; ninth, to interest then due and payable on the Revolving
Credit Advances (including Swing Line Advances) outstanding to each other
Borrower, pro rata; tenth, to the principal balance of the Revolving Credit
Advances (including
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Swing Line Advances) made to each other Borrower, pro rata, until the same
shall have been paid in full; and last, to any Letter of Credit Obligations of
each other Borrower, pro rata, to provide cash collateral therefor in the
manner set forth in Annex B, until all such Letter of Credit Obligations have
been fully cash collateralized. Neither the Revolving Loan Commitment nor the
Swing Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(c) (2) Application of Mandatory Prepayments from Stock Sales. All
prepayments made by Holdings or any Borrower pursuant to clause (b)(iii) above
shall be applied as follows: first, 50% of the balance of such prepayments
shall be applied to accrued interest and to the principal of the Subordinated
Notes, and the remaining 50% of the balance of such prepayment shall be
applied, ratably, to accrued interest and to the principal balances of Term
Loan A and Term Loan B; and second, after payment in full of the Subordinated
Notes, 100% of such prepayment shall be applied, ratably, to accrued interest
and to the principal balances of Term Loan A and Term Loan B. All such
prepayments of the Term Loans shall be applied to scheduled installments in
inverse order of maturity.
(d) Application of Prepayments from Insurance Proceeds. Prepayments
from insurance proceeds in accordance with Section 5.4(c) shall be applied as
follows: insurance proceeds from casualties or losses to cash or Inventory
shall be applied, first, to the Swing Line Loans and, second, to the Revolving
Credit Advances of the Borrower that incurred such casualties or losses;
insurance proceeds from casualties or losses to Equipment, Fixtures and Real
Estate shall be applied, pro rata, to scheduled installments of the Term Loans,
if any, of the Borrower that incurred such casualties or losses in inverse
order of maturity. Neither the Revolving Loan Commitment nor the Swing Line
Loan Commitment shall be permanently reduced by the amount of any such
prepayments. If the insurance proceeds received as to a particular Borrower
exceed the outstanding principal balances of the Loans to that Borrower or if
the precise amount of insurance proceeds allocable to Inventory as compared to
Equipment, Fixtures and Real Estate are not otherwise determined, the
allocation and application of those proceeds shall be determined by Agent,
subject to the approval of Requisite Lenders.
(e) Nothing in this Section 1.3 shall be construed to constitute
Agent's or any Lender's consent to any transaction referred to in clauses
(b)(ii) and (b)(iii) above which is not permitted by other provisions of this
Agreement or the other Loan Documents. If the application of any mandatory
prepayment in accordance with this Section 1.3 would result in the payment of
LIBOR funding breakage costs in accordance with Section 1.13(b), the applicable
Credit Party may elect to deposit such mandatory prepayment in a cash
collateral account pledged to Agent on terms reasonably satisfactory to it.
Thereafter, such amounts will be applied to prepay the Loans upon expiration of
the relevant LIBOR Periods then in effect.
(1.4) Use of Proceeds. Borrowers shall utilize the proceeds of the
Term Loans, the Revolving Loan and the Swing Line Advances solely for the
Acquisition and the Refinancing (and to pay any related transaction expenses),
and for the financing of Borrowers' ordinary working capital and general
corporate needs (but excluding in any event the making of any Restricted
Payment not specifically permitted by Section 6.14). Disclosure Schedule (1.4)
contains a description of Borrowers' sources and uses of funds as of the
Closing Date, including Loans and Letter of Credit Obligations to be made or
incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.
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1.5. Interest and Applicable Margins. (a) Borrowers shall pay interest
to Agent, for the ratable benefit of Lenders in accordance with the various
Loans being made by each Lender, in arrears on each applicable Interest Payment
Date, at the following rates: (i) with respect to the Revolving Credit
Advances, the Index Rate plus the Applicable Revolver Index Margin per annum
or, at the election of Borrower Representative, the applicable LIBOR Rate plus
the Applicable Revolver LIBOR Margin per annum, based on the aggregate
Revolving Credit Advances outstanding from time to time; (ii) with respect to
Term Loan A, the Index Rate plus the Applicable Term Loan A Index Margin per
annum or, at the election of Borrower Representative, the applicable LIBOR Rate
plus the Applicable Term Loan A LIBOR Margin per annum; (iii) with respect to
Term Loan B, the Index Rate plus the Applicable Term Loan B Index Margin per
annum or, at the election of Borrower Representative, the applicable LIBOR Rate
plus the Applicable Term Loan B LIBOR Margin per annum and (iv) with respect to
the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin
per annum.
The Applicable Margins will be at Level IV as of the Closing Date. The
Applicable Margins will be adjusted (up or down) prospectively on a quarterly
basis as determined by Borrowers' consolidated financial performance for the
immediately preceding four-quarter period (using actual figures for all
Borrowers for all periods), commencing on the first day of the first calendar
month that occurs more than five (5) days after delivery of Borrowers'
quarterly Financial Statements to Lenders for the Fiscal Quarter ended
December, 1998. Adjustments in Applicable Margins will be determined by
reference to the following grids:
Level of
If Leverage Ratio is: Applicable Margins:
--------------------- -------------------
< 2.5 Level I
<3.5, but > 2.5 Level II
-
<5.0, but > 3.5 Level III
-
<6.00, but > 5.0 Level IV
-
> 6.00 Level V
-
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APPLICABLE MARGINS
-----------------------------------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
------- -------- --------- -------- -------
Applicable Revolver
Index Margin .25% .50% .75% 1.0% 1.25%
Applicable Revolver
LIBOR Margin 1.75% 2.0% 2.25% 2.5% 2.75%
Applicable Term
Loan A Index Margin .25% .50% .75% 1.0% 1.25%
Applicable Term
Loan A LIBOR Margin 1.75% 2.0% 2.25% 2.5% 2.75%
Applicable Term
Loan B Index Margin 1.25% 1.25% 1.25% 1.5% 1.75%
Applicable Term
Loan B LIBOR Margin 2.75% 2.75% 2.75% 3.0% 3.25%
All adjustments in the Applicable Margins after December 31, 1998 will
be implemented quarterly on a prospective basis, for each calendar month
commencing at least five (5) days after the date of delivery to Lenders of the
quarterly unaudited or annual audited (as applicable) Financial Statements of
Borrowers evidencing the need for an adjustment. Concurrently with the
delivery of those Financial Statements, Borrower Representative shall deliver
to Agent and Lenders a certificate, signed by its chief financial officer,
setting forth in reasonable detail the basis for the continuance of, or any
change in, the Applicable Margins. Failure to timely deliver such Financial
Statements shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, until the first day of the first calendar
month following the delivery of those Financial Statements demonstrating that
such an increase is not required. If an Event of Default shall have occurred
or be continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Default or Event of Default is
waived or cured.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable
at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a three hundred and sixty (360)
day year, in each case for the actual number of days occurring in the period
for which such interest and Fees are payable. The Index Rate shall be
determined each day based upon the Index Rate as in effect on that day. Each
determination by Agent of an interest rate hereunder shall be conclusive,
absent manifest error.
(d) So long as any Event of Default shall have occurred and be
continuing, and at
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the election of Agent (or upon the written request of Requisite Lenders)
confirmed by written notice from Agent to Borrower Representative, the interest
rates applicable to the Loans and the Letter of Credit Fees shall be increased
by two percentage points (2%) per annum above the rates of interest or the rate
of such Fees otherwise applicable hereunder ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Default or Event of Default until that
Default or Event of Default is cured or waived and shall be payable upon
demand.
(e) So long as no Default or Event of Default shall have occurred and
be continuing, and subject to the additional conditions precedent set forth in
Section 2.2, Borrower Representative shall have the option to (i) request that
any Revolving Credit Advances be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Loans (other than the Swing Line Loan) from
Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate
Loan, subject to payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any Loan (other than
the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable
LIBOR Period and the succeeding LIBOR Period of that continued Loan shall
commence on the last day of the LIBOR Period of the Loan to be continued. Any
Loan to be made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $1,000,000 or in integral multiples of $100,000 in excess of
such amount, and a separate LIBOR Loan must be obtained for each of the
Revolving Credit Loan, Term Loan A and Term Loan B. Any such election must be
made by 11:00 a.m. (Chicago time) on the third (3rd) Business Day prior to (1)
the date of any proposed Advance which is to bear interest at the LIBOR Rate,
(2) the end of each LIBOR Period with respect to any LIBOR Loans to be
continued as such, or (3) the date on which Borrower Representative wishes to
convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by
Borrower Representative in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (Chicago time) on the third (3rd)
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default shall have occurred and be continuing or if the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower Representative must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).
Notwithstanding anything set forth herein to the contrary, (a) from the Closing
Date through February 1, 1998, Borrowers may not request or convert to LIBOR
Loans with LIBOR Periods in excess of one month and (b) from February 2, 1998
through March 2, 1998, no LIBOR Loans may be outstanding hereunder. Any LIBOR
Loans outstanding during the period from February 2, 1998 through March 2, 1998
shall be immediately converted to Index Rate Loans and Borrowers shall bear any
and all breakage costs as set forth herein.
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the
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interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.5(a) through (e)
above, unless and until the rate of interest again exceeds the Maximum Lawful
Rate, and at that time this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof exceed the
amount which such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
If the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made.
If, notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
Certificate delivered by each Borrower to Agent and on other information
available to Agent, Agent shall in its reasonable credit judgment determine
which Accounts of each Borrower shall be "Eligible Accounts" for purposes of
this Agreement. In determining whether a particular Account of any Borrower
constitutes an Eligible Account, Agent shall not include any such Account to
which any of the exclusionary criteria set forth below applies. Agent reserves
the right, at any time and from time to time after the Closing Date, upon prior
written notice to Borrower Representative to adjust any such criteria, to
establish new criteria and to establish Reserves with respect to Eligible
Accounts, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria
which have the effect of making more credit available. Eligible Accounts shall
not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of its business,
(b) upon which (i) such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process;
(c) to the extent any defense, counterclaim, setoff or dispute is
asserted as to such Account or if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered pursuant
to a contract under which the Account Debtor's obligation to pay that invoice
is subject to such Borrower's completion of further performance under such
contract;
(d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form and
substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to any
right, claim,
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security interest or other interest of any other Person, other than
Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party, or to any entity which has any common officer
or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and such Borrower,
if necessary or desirable, has complied with the Federal Assignment of Claims
Act of 1940, and any amendments thereto, or any applicable state statute or
municipal ordinance of similar purpose and effect, with respect to such
obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Quebec, Newfoundland,
Nova Scotia and Prince Edward Island) unless payment thereof is assured by a
letter of credit, satisfactory to Agent as to form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is liable
for goods sold or services rendered by the applicable Account Debtor to such
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods which are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may
be conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) it is not paid within the earlier of: sixty (60) days following
its due date or ninety (90) days following its original invoice date;
(ii) if any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or
fails to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor if fifty percent
(50%) or more of the dollar amount of all Accounts owing by that Account Debtor
are ineligible under the other criteria set forth in this Section 1.6;
(n) as to which Agent's interest, on behalf of itself and Lenders,
therein is not a first priority perfected security interest;
(o) as to which any of the representations or warranties pertaining to
Accounts set forth in this Agreement or the Security Agreement is untrue;
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(p) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
(q) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable discretion;
(r) which is payable in any currency other than Dollars;
(s) to the extent covered by reserves against Accounts for cash
discounts, defective items, debit memos and accrued advertising expense on the
applicable Borrower's general ledger; or
(t) which is unacceptable to Agent in its reasonable credit judgment.
1.7 Eligible Inventory. Based on the most recent Borrowing Base
Certificate delivered by each Borrower to Agent and on other information
available to Agent, Agent shall in its reasonable credit judgment determine
which Inventory of each Borrower shall be "Eligible Inventory" for purposes of
this Agreement. In determining whether any particular Inventory of any Borrower
constitutes Eligible Inventory, Agent shall not include any such Inventory to
which any of the exclusionary criteria set forth below applies. Agent reserves
the right, at any time and from time to time after the Closing Date, upon prior
written notice to Borrower Representative to adjust any such criteria, to
establish new criteria and to establish Reserves with respect to Eligible
Inventory, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria
which have the effect of making more credit available. Eligible Inventory
shall not include any Inventory of any Borrower:
(a) that is not owned by such Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower's performance with respect to that Inventory), except Permitted
Encumbrances;
(b) that is (i) not located on premises owned, leased or operated by
such Borrower or (ii) is stored with a bailee, warehouseman or similar Person,
unless Agent has given its prior consent thereto and unless (x) a satisfactory
bailee letter or landlord waiver has been delivered to Agent, or (y) Reserves
satisfactory to Agent have been established with respect thereto, or (iii)
located at any site if the aggregate book value of Inventory at any such
location is less than $100,000;
(c) that is placed on consignment, is in transit or is otherwise not
located on premises owned or leased by such Borrower;
(d) that is covered by a negotiable document of title, unless such
document has been delivered to Agent;
(e) that in Agent's reasonable determination, is excess, obsolete,
unsalable, shopworn, seconds, damaged or unfit for sale;
(f) that consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;
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(g) that consists of goods which have been returned by the buyer;
(h) that is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) that is located in Mexico or as to which Agent's Lien, on behalf of
itself and Lenders, therein is otherwise not a first priority perfected Lien,
subject to Permitted Encumbrances;
(j) as to which any of the representations or warranties pertaining to
Inventory set forth in this Agreement or the Security Agreement is untrue;
(k) consists of any costs associated with "freight-in" charges;
(l) consists of chemicals, Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable to
Agent; or
(n) is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.8 Cash Management Systems. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described on Annex C (the "Cash Management Systems").
1.9 Fees. (a) Borrowers shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of December 11, 1997 among
Borrowers and GE Capital (the "GE Capital Fee Letter"), at the times specified
for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrowers
agree to pay to Agent, for the ratable benefit of such Lenders, in arrears, on
the first Business Day of each month prior to the Commitment Termination Date
and on the Commitment Termination Date, a fee for Borrowers' non-use of
available funds in an amount equal to one-half percent (0.5%) per annum
(calculated on the basis of a 360 day year for actual days elapsed) of the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan and the Swing Line Loan outstanding during the period
for which such fee is due.
(c) If Borrowers prepay all or any portion of the Term Loan A or Term
Loan B or prepay the Revolving Loan and terminate the Revolving Loan
Commitment, whether voluntarily or involuntarily and whether before or after
acceleration of the Obligations, Borrowers shall pay to Agent, for the benefit
of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount determined by multiplying
the Applicable Percentage (as defined below) by (i) the principal amount of the
Term Loans prepaid, and (ii) the Revolving Loan Commitment. As used herein, the
term "Applicable Percentage" shall mean (x) two percent (2.0%), in the case of
a prepayment on or prior to the first anniversary of the Closing Date, and (y)
one percent (1.0%), in the case of a prepayment after the first anniversary of
the Closing Date but on or prior to the second anniversary. No prepayment fee
shall be payable upon any prepayment after the second anniversary of the
Closing Date. Notwithstanding the foregoing, no prepayment fee shall be
payable by Borrowers upon a mandatory prepayment made pursuant to Sections
1.3(b),
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1.3(d) or 1.16(c); provided that Borrowers do not permanently reduce
the Revolving Loan Commitment upon any such prepayment and, in the case of
prepayments made pursuant to Section 1.3(b)(ii) or (b)(iii), the transaction
giving rise to the applicable prepayment is expressly permitted under Section
6. Within one hundred eighty (180) days following the Closing Date any
Borrower may voluntarily prepay all or a portion of its Ratable Share of Term
Loan A and/or Term Loan B in accordance with Section 1.3(a), without premium or
penalty (other than LIBOR breakage costs, if any); provided that (i) such
prepayments are funded solely with proceeds of investment accounts held by the
applicable Borrower(s); (ii) after giving effect to any such prepayment the
applicable Borrower(s) have no Revolving Loan balance outstanding; and (iii)
the aggregate of such prepayments shall not exceed $3,000,000.
1.10 Receipt of Payments. Borrowers shall make each payment under
this Agreement not later than 1:00 p.m. (Chicago time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability or Net
Borrowing Availability as of any date, all payments shall be deemed received on
the day of receipt of immediately available funds therefor in the Collection
Account prior to 1 :00 p m. Chicago time. Payments received after 1:00 p m.
Chicago time on any Business Day shall be deemed to have been received on the
following Business Day.
1.11 Application and Allocation of Payments. (a) So long as no Event of
Default shall have occurred and be continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be
applied to the Swing Line Loan and the Revolving Loan; (ii) payments matching
specific scheduled payments then due shall be applied to those scheduled
payments; (iii) voluntary prepayments shall be applied as determined by
Borrower Representative, subject to the provisions of Section 1.3(a); and (iv)
mandatory prepayments shall be applied as set forth in Section 1.3. As to each
other payment, and as to all payments made when an Event of Default shall have
occurred and be continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations of Borrowers as
Agent may deem advisable notwithstanding any previous entry by Agent in the
Loan Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
and the Lenders' expenses reimbursable hereunder; (2) to interest on the Swing
Line Loan; (3) to principal payments on the Swing Line Loan; (4) to interest on
the other Loans, ratably in proportion to the interest accrued as to each Loan;
(5) to principal payments on the other Loans and to provide cash collateral for
Letter of Credit Obligations in the manner described in Annex B, ratably to the
aggregate, combined principal balance of the other Loans and outstanding Letter
of Credit Obligations; and (6) to all other Obligations including expenses of
Lenders to the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of each Borrower and cause to be paid all
Fees, expenses, Charges, costs (including insurance premiums in accordance with
Section 5 4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrowers under this Agreement or any of the other
Loan Documents if and to the extent Borrowers fail to promptly pay any such
amounts as and when due, even if such charges would cause the balance of the
aggregate Revolving Loan and the Swing Line Loan to exceed Borrowing
Availability or would cause the balance of the Revolving Loan and
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the Swing Line Loan of any Borrower to exceed such Borrower's separate
Borrowing Base. At Agent's option and to the extent permitted by law, any
charges so made shall constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: (a) all Advances and the Term
Loans, (b) all payments made by Borrowers, and (c) all other debits and credits
as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by each Borrower; provided that any failure to so
record or any error in so recording shall not limit or otherwise affect any
Borrower's duty to pay the Obligations. Agent shall render to Borrower
Representative and each Lender a monthly accounting of transactions with
respect to the Loans setting forth the balance of the Loan Account as to each
Borrower. Unless Borrower Representative notifies Agent in writing of any
objection to any such accounting (specifically describing the basis for such
objection), within thirty (30) days after the date thereof, each and every such
accounting shall (absent manifest error) be deemed final, binding and
conclusive upon Borrowers in all respects as to all matters reflected therein.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrowers.
1.13 Indemnity. (a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the
other Loan Documents and the administration of such credit, and in connection
with or arising out of the transactions contemplated hereunder and thereunder
and any actions or failures to act in connection therewith, including any and
all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no
such Credit Party shall be liable for any indemnification to an Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense results from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any
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other Loan Document or is the result of acceleration, by operation of
law or otherwise); (ii) any Borrower shall default in payment when due of the
principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall
default in making any borrowing of, conversion into or continuation of LIBOR
Loans after Borrower Representative has given notice requesting the same in
accordance herewith; or (iv) any Borrower shall fail to make any prepayment of
a LIBOR Loan after Borrower Representative has given a notice thereof in
accordance herewith, Borrowers shall jointly and severally indemnify and hold
harmless each Lender from and against all losses, costs and expenses resulting
from or arising from any of the foregoing. Such indemnification shall include
any loss (including loss of margin) or expense arising from the reemployment of
funds obtained by it or from fees payable to terminate deposits from which such
funds were obtained. For the purpose of calculating amounts payable to a
Lender under this subsection, each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan
and having a maturity comparable to the relevant LIBOR Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b),
and such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.14 Access. Each Credit Party which is a party hereto shall, during
normal business hours, from time to time upon three (3) Business Day's prior
notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party's books and records, and (c) permit Agent, and its officers, employees
and agents, to inspect, review, evaluate and make test verifications and counts
of the Accounts, Inventory and other Collateral of any Credit Party. If an
Event of Default shall have occurred and be continuing, each such Credit Party
shall provide such access to Agent and to each Lender at all times and without
advance notice. Furthermore, so long as any Event of Default shall have
occurred and be continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make
available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which Agent may
request. Each Credit Party shall deliver any document or instrument necessary
for Agent, as it may from time to time reasonably request, to obtain records
from any service bureau or other Person which maintains records for such Credit
Party, and shall maintain duplicate records or supporting documentation on
media, including computer tapes and discs owned by such Credit Party. Agent
will give Lenders at least ten (10) days' prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany Agent's
representatives on regularly scheduled audits at no charge to Borrowers.
1.15 Taxes. Any and all payments by each Borrower hereunder
(including any payments made pursuant to Section 12) or under the Notes shall
be made, in accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the
Notes, (i) the sum
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payable shall be increased as much as shall be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.15) Agent or Lenders, as applicable, receive
an amount equal to the sum they would have received had no such deductions been
made, (ii) such Borrower shall make such deductions, and (iii) such Borrower
shall pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Within thirty (30) days after the date of any
payment of Taxes, Borrower Representative shall furnish to Agent the original
or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within ten (10) days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower
Representative and Agent a properly completed and executed IRS Form 4224 or
Form 1001 or other applicable form, certificate or document prescribed by the
IRS or the United States certifying as to such Foreign Lender's entitlement to
such exemption (a "Certificate of Exemption"). Any foreign Person that seeks
to become a Lender under this Agreement shall provide a Certificate of
Exemption to Borrower Representative and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person is
unable to deliver hereunder a Certificate of Exemption.
1.16. Capital Adequacy; Increased Costs; Illegality. (a) If any Lender
shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law) from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender and thereby
reducing the rate of return on such Lender's capital as a consequence of its
obligations hereunder, then Borrowers shall from time to time upon demand by
such Lender (with a copy of such demand to Agent) pay to Agent, for the account
of such Lender, additional amounts sufficient to compensate such Lender for
such reduction. A certificate as to the amount of that reduction and showing
the basis of the computation thereof submitted by such Lender to Borrower
Representative and to Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding
or maintaining any Loan, then Borrowers shall from time to time, upon demand by
such Lender (with a copy of such demand to Agent), pay to Agent for the account
of such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such
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increased cost, submitted to Borrower Representative and to Agent by
such Lender, shall be conclusive and binding on Borrowers for all purposes,
absent manifest error. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would
result in any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender's internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to
agree to make or to make or to continue to fund or maintain any LIBOR Loan,
then, unless that Lender is able to make or to continue to fund or to maintain
such LIBOR Loan at another branch or office of that Lender without, in that
Lender's opinion, adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to Borrower
Representative through Agent, (i) the obligation of such Lender to agree to
make or to make or to continue to fund or maintain LIBOR Loans shall terminate
and (ii) each Borrower shall forthwith prepay in full all outstanding LIBOR
Loans owing by such Borrower to such Lender, together with interest accrued
thereon, unless Borrower Representative on behalf of such Borrower, within five
(5) Business Days after the delivery of such notice and demand, converts all
such Loans into a Loan bearing interest based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within
fifteen (15) days after receipt by Borrower Representative of written notice
and demand from any Lender (an "Affected Lender") for payment of additional
amounts or increased costs as provided in Section 1.15(a) 1.16(a) or 1.16(b),
Borrower Representative may, at its option, notify Agent and such Affected
Lender of its intention to replace the Affected Lender. So long as no Default
or Event of Default shall have occurred and be continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be satisfactory to Agent. If Borrowers obtain a
Replacement Lender within ninety (90) days following notice of their intention
to do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with
respect thereto through the date of such sale, provided that Borrowers shall
have reimbursed such Affected Lender for the additional amounts or increased
costs that it is entitled to receive under this Agreement through the date of
such sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrowers' notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights under
this Section 1.16(d) shall terminate and Borrowers shall promptly pay all
increased costs or additional amounts demanded by such Affected Lender pursuant
to Sections 1.15(a), 1.16(a) and 1.16(b).
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1.17 Single Loan. All Loans to each Borrower and all of the other
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of its Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans.
No Lender shall be obligated to make any Loan or incur any Letter of
Credit Obligations on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner reasonably satisfactory to Agent, or waived in writing
by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrowers, Agent and
Lenders; and Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all
those listed in the Closing Checklist attached hereto as Annex D, each in form
and substance satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding
L/Cs. (i) Agent shall have received a fully executed original or copy of
pay-off letters satisfactory to Agent confirming that all of the Indebtedness
owed by any Credit Party to the Prior Lender will be repaid in full from the
proceeds of the Term Loans and the initial Revolving Credit Advance and all
Liens upon any of the property of Borrowers or any of their Subsidiaries in
favor of Prior Lenders shall be terminated by Prior Lenders immediately upon
such payment; and (ii) all letters of credit issued or guaranteed by any Prior
Lender shall have been cash collateralized, supported by a guaranty of Agent or
supported by a Letter of Credit issued pursuant to Annex B, as mutually agreed
upon by Agent, Borrowers and Prior Lender.
(c) Approvals. Agent shall have received (i) satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions, including, without limitation,
termination of the Hart-Scott-Rodino waiting period with respect to the
Acquisition of Seymour, or (ii) an officer's certificate in form and substance
satisfactory to Agent affirming that no such consents or approvals are
required.
(d) Opening Availability. The Eligible Accounts and Eligible Inventory
of each Borrower supporting the initial Revolving Credit Advance and the
initial Letter of Credit Obligations incurred and the amount of the Reserves to
be established on the Closing Date shall be sufficient in value, as determined
by Agent, to provide Borrowers, collectively, with Net Borrowing Availability,
after giving effect to the initial Revolving Credit Advance made to each
Borrower, the incurrence of any initial Letter of Credit Obligations, the
outstanding balances of the Continuing Loans as of the Closing Date and the
consummation of the Related Transactions (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least
$11,900,000.
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(e) Payment of Fees. Borrowers shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of
the Closing Date.
(f) Equity and Indebtedness. As of the Closing Date and after giving
effect to the Related Transactions, Holdings shall have stockholders equity of
approximately $55,200,000 and Holdings and its Subsidiaries shall not have
Indebtedness outstanding in excess of $128,000,000.
(g) Consummation of Related Transactions. Agent and Lenders shall have
received fully executed copies of the Acquisition Agreement, the Subordinated
Notes, and each of the other Related Transactions Documents, each of which
shall be in form and substance satisfactory to Agent and its counsel. The
Acquisition and the other Related Transactions shall have been consummated in
accordance with the terms of the Acquisition Agreement and the other Related
Transactions Documents but for the payment of the cash purchase price payable
on the Closing Date pursuant to the Acquisition Agreement.
(h) (i) Holdings shall pay at least $14,200,000 of the consideration
for the Acquisition by the issuance of its common stock; (ii) the cash portion
of the consideration paid for the Acquisition shall not exceed $87,800,000 and
(iii) aggregate fees and closing costs for the Related Transactions will not
exceed $4,000,000.
(i) Agent and Lenders shall be reasonably satisfied that Holdings and
its Subsidiaries, including Seymour on a pro forma basis, will have
consolidated EBITDA of at least $32,000,000 for the Fiscal Year ending December
31, 1997 (excluding one-time expenses of $1.0 million for plant consolidation
costs and approximately $500,000 for writing off pension plan assets), based on
year-to-date financial statements and Forecasts provided to them by Borrowers.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Loan, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) Any representation or warranty by any Credit Party contained herein
or in any of the other Loan Documents shall be untrue or incorrect as of such
date in any material respect, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b) As reasonably determined by Requisite Revolving Lenders, any event
or circumstance having a Material Adverse Effect shall have occurred since the
date hereof; or
(c) (i) Any Event of Default shall have occurred and be continuing or
would result after giving effect to any Loan (or the incurrence of any Letter
of Credit Obligations), or (ii) a Default shall have occurred and be continuing
or would result after giving effect to any Loan, and Agent or Requisite
Revolving Lenders shall have determined not to make any Loan or incur any
Letter of Credit Obligation so long as that Default is continuing; or
(d) After giving effect to any Advance (or the incurrence of any Letter
of Credit
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Obligations), (i) the outstanding principal amount of the aggregate
Revolving Loan would exceed the lesser of the Aggregate Borrowing Base and the
Maximum Amount, less, in each case, the outstanding principal amount of the
Swing Line Loan, or (ii) the outstanding principal amount of the Revolving Loan
of the applicable Borrower would exceed such Borrower's separate Borrowing Base
less the outstanding principal amount of the Swing Line Loan to that Borrower;
or
(e) After giving effect to any Swing Line Advance, (i) the outstanding
principal amount of the Swing Line Loan would exceed Swing Line Availability,
or (ii) the outstanding principal amount of the Swing Line Loan of the
applicable Borrower would exceed such Borrower's separate Borrowing Base less
the outstanding principal amount of the Revolving Loan to that Borrower.
The request and acceptance by any Borrower of the proceeds of any Loan, the
incurrence of any Letter of Credit Obligations or the conversion or
continuation of any Loan into, or as, a LIBOR Loan, as the case may be, shall
be deemed to constitute, as of the date of such request or acceptance, (i) a
representation and warranty by Borrowers that the conditions in this Section
2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the
cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's Liens on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and each
Lender with respect to all Credit Parties, each and all of which shall survive
the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a)
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect; (c) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease and to conduct
its business as now, heretofore and proposed to be conducted; (d) has all
material licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and by-laws; and (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except
where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
have changed within the twelve (12) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.
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3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate in any
material respect any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Agent, on behalf of itself and Lenders, pursuant
to the Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1 (c), all of which will have been duly obtained, made or complied with prior
to the Closing Date. On or prior to the Closing Date, each of the Loan
Documents shall have been duly executed and delivered by each Credit Party
thereto and each such Loan Document shall then constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms.
3.4 Financial Statements and Forecasts. Except for the forecasts
referred to below, all Financial Statements concerning Holdings and its
Subsidiaries which are referenced below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present fairly
in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for
the periods then ended.
(a) The following Financial Statements attached hereto as Disclosure
Schedule (3.4(A)) have been delivered on or prior to the date hereof:
(i) The audited combined balance sheets of Tamor and Housewares at
December 31, 1995 and 1996 and the related combined statements of
income, stockholders' equity and cash flows for each of the three Fiscal Years
for the period ended December 31, 1996, certified by BDO Seidman.
(ii) The audited consolidated balance sheet at December 28, 1996 and
the related consolidated statement(s) of income and cash flows of Selfix and
Shutters for the Fiscal Year then ended, certified by Arthur Andersen & Co.
(iii) The audited balance sheets of Seymour and the related statements
of income, stockholders' equity and cash flows at June 30, 1996 and June 30,
1997 and for the respective fiscal years then ended.
(iv) The unaudited balance sheets and the related statements of income,
stockholders equity and cash flow of Holdings and its Subsidiaries (other than
Seymour) on a consolidated and consolidating basis at November 29, 1997 and for
the 11 months then ending.
(v) The unaudited balance sheet and related statements of income, stock
holders equity and cash flow of Seymour at November 23, 1997 and for the 5
months then ended.
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(b) Pro Forma. The unaudited consolidated and consolidating balance
sheet of Borrowers and their Subsidiaries as of the Closing Date delivered on
or prior to the date hereof and attached hereto as Disclosure Schedule (3.4(B))
(the "Pro Forma") was prepared by Borrowers giving pro forma effect to the
Related Transactions, was based on the unaudited consolidated and consolidating
balance sheets of Borrowers and their Subsidiaries dated as of November 29,
1997, was prepared in accordance with GAAP, with only such adjustments thereto
as would be required in accordance with GAAP and reflects stockholders equity
of at least $55.2 million.
(c) Forecasts. The forecasts delivered on or prior to the date hereof
and attached hereto as Disclosure Schedule (3.4(C)) have been prepared by
Borrowers in light of the past operations of their businesses and reflect
Forecasts for the Fiscal Year beginning on December 28, 1997 on a quarter by
quarter basis. Within thirty (30) days after the Closing Date Borrowers will
deliver another set of forecasts for the Fiscal Year beginning on December 28,
1997 on a month by month basis. The forecasts are based upon estimates and
assumptions stated therein, all of which Borrowers believe to be reasonable and
fair in light of current conditions and current facts known to Borrowers and,
as of the Closing Date, reflect Borrowers' good faith and reasonable estimates
of the fixture financial performance of Borrowers and of the other information
projected therein for the period set forth therein.
(d) Post-Closing Balance Sheet. Within ninety (90) days after the
Closing Date, Borrowers shall deliver to the Agent and Lenders a balance sheet
for Seymour as of the Closing Date certified by the Chief Financial Officer of
Holdings.
3.5 Material Adverse Effect. Between December 31, 1996 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the Pro
Forma and which, alone or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted which has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to the best
of Borrowers' knowledge no third party is in default under any material
contract, lease or other agreement or instrument, which alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Between December 31, 1996 and the Closing Date no event has occurred, which
alone or together with other events, could reasonably be expected to have a
Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal properties and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens
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(including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Disclosure Schedule (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any
Real Estate. As of the Closing Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss which
has not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Closing Date, all material
permits required to have been issued or appropriate to enable the Real Estate
to be lawfully occupied and used for all of the purposes for which they are
currently occupied and used have been lawfully issued and are in full force and
effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and
each other federal, state, local or foreign law applicable to such matter; (c)
all payments due from any Credit Party for employee health and welfare
insurance have been paid or accrued as a liability on the books of such Credit
Party; (d) except as set forth in Disclosure Schedule (3.7), no Credit Party is
a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement or any employment agreement (and true and
complete copies of any agreements described on Disclosure Schedule (3.7) have
been delivered to Agent); (e) there is no organizing activity involving any
Credit Party pending or, to any Credit Panty's knowledge, threatened by any
labor union or group of employees; (f) there are no representation proceedings
pending or, to any Credit Party's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit
Party has made a pending demand for recognition; and (g) except as set forth in
Disclosure Schedule (3.7), there are no complaints or charges against any
Credit Party pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except
as set forth in Disclosure Schedule (3.8), no Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the stockholders and
in the amounts set forth on Disclosure Schedule (3.8). There are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock
or other equity securities of its Subsidiaries. All outstanding Indebtedness of
each Credit Party as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)). Holdings owns no material assets, except for the
outstanding Stock of Borrowers. Holdings is not engaged in any trade or
business.
3.9 Government Regulation. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940 as amended. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other
federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans
by Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on
behalf of Borrowers, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate any
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material provision of any such statute or any rule, regulation or order issued
by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U or G of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as "Margin Stock"). No Credit Party owns any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing
or carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any Margin
Stock or for any other purpose which might cause any of the Loans or other
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulation G, T, U or X of the Federal Reserve Board. No
Credit Party will take or permit to be taken any action which might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and
all Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any
such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by each Credit Party from its
respective employees for all periods in full and complete compliance with all
applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities. Disclosure
Schedule (3.11) sets forth as of the Closing Date those taxable years for which
any Credit Party's tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described on Disclosure Schedule (3.11), no Credit Party has executed
or filed with the IRS or any other Governmental Authority any agreement or
other document extending, or having the effect of extending, the period
for assessment or collection of any Charges. None of the Credit Parties and
their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481 (a), by reason
of a change in accounting method or otherwise, which would have a Material
Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule (3.l2) lists and separately
identifies all Title IV Plans, Multiemployer Plans, ESOPs and Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest form 5500 for each such Plan, have been delivered to Agent. Each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the filing of reports required under the IRC or ERISA. No Credit
Party or ERISA Affiliate has failed to make any contribution or pay any amount
due as required by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by
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Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or
is reasonably expected to occur; (iii) there are no pending, or to the
knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Credit Party,
threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
which challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which has a reasonable risk of being determined adversely to any Credit
Party and which, if so determined, could have a Material Adverse Effect. Except
as set forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $250,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
brought about the obtaining, making or closing of the Loans or the Related
Transactions, and no Credit Party has any obligation to any Person in respect
of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now conducted by it or proposed to be conducted by it,
and each material Patent, Trademark and License is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule
(3.15) hereto. To its knowledge, each Credit Party conducts its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Forecasts, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
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3.17 Environmental Matters. (a) Except as set forth in Disclosure
Schedule (3.17), as of the Closing Date: (i) the Real Estate is free of
contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $250,000; (ii) no Credit Party has caused or suffered to
occur any Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be
expected to exceed $250,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities which
could reasonably be expected to exceed $250,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $250,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material which seeks damages, penalties,
fines, costs or expenses in excess of $25,000 or injunctive relief, or which
alleges criminal misconduct by any Credit Party; (vii) no notice has been
received by any Credit Party identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state statutes, and
to the knowledge of the Credit Parties, there are no facts, circumstances or
conditions that may result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each
such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposits and/or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or any similar state or local law.
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3.21 Customer and Trade Relations. As of the Closing Date, there
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: (a) the business relationship of any Credit Party with any customer or
group of customers whose purchases during the preceding twelve (12) months
caused them to be ranked among the ten largest customers of such Credit Party;
or (b) the business relationship of any Credit Party with any supplier material
to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which any it is subject and each of which are listed on
Disclosure Schedule (3.22): (a) supply agreements and purchase agreements not
terminable by such Credit Party within sixty (60) days following written notice
issued by such Credit Party and involving transactions in excess of $1,000,000
per annum; (b) any lease of Equipment having a remaining term of one year or
longer and requiring aggregate rental and other payments in excess of $500,000
per annum; (c) licenses and permits held by the Credit Parties, the absence of
which could be reasonably likely to have a Material Adverse Effect; (d)
instruments or documents evidencing Indebtedness of such Credit Party and any
security interest granted by such Credit Party with respect thereto; and (e)
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans
and Letter of Credit Obligations to be made or extended on the Closing Date or
such other date as Loans and Letter of Credit Obligations requested hereunder
are made or extended, (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower Representative, (c) the Acquisition,
the Refinancing and the consummation of the other Related Transactions and (d)
the payment and accrual of all transaction costs in connection with the
foregoing, each Credit Party is Solvent.
3.24 Acquisition Agreement. As of the Closing Date, Borrowers have
delivered to Agent a complete and correct copy of the Purchase Agreement
(including all schedules, exhibits, amendments, supplements, modifications, and
assignments delivered pursuant thereto or in connection therewith). No Credit
Party and, to the Credit Parties' knowledge, no other Person party thereto, is
in default in the performance or compliance with any provisions thereof. The
Acquisition Agreement complies with, and the Acquisition has been consummated
in accordance in all material respects with, all applicable laws. The
Acquisition Agreement is in full force and effect as of the Closing Date, has
not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities having jurisdiction over any Credit Party with respect
to the transactions contemplated by the Acquisition Agreement have been
obtained, and no such approvals impose any conditions to the consummation of
the transactions contemplated by the Acquisition Agreement or to the conduct by
any Credit Party of its business thereafter. To the best of each Credit
Party's knowledge, all requisite approvals by Governmental Authorities having
jurisdiction over all Persons referenced in the Acquisition Agreement other
than the Credit Parties, with respect to the transactions contemplated by the
Acquisition Agreement, have been obtained, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the
Acquisition Agreement or to the conduct by any Credit Party of its business
thereafter. To the best of each Credit Party's knowledge, none of the Seller's
representations or warranties in the Acquisition Agreement contain any untrue
statement of a material fact or omit any fact necessary to make the statements
therein not misleading. Each of the representations and warranties given by
each applicable Credit Party in the Acquisition Agreement is true and correct
in all material respects. Notwithstanding
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anything contained in the Acquisition Agreement to the contrary, such
representations and warranties of the Credit Parties are incorporated into this
Agreement by this Section 3.24 and shall, solely for purposes of this Agreement
and the benefit of Agent and Lenders, survive the consummation of the
Acquisition.
3.25 Subordinated Debt. As of the Closing Date, Borrowers have
delivered to Lenders a complete and correct copy of the Subordinated Notes and
the Note Purchase Agreement (including all schedules, exhibits amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). Borrowers have the corporate
power and authority to incur the Indebtedness evidenced by the Subordinated
Notes. The subordination provisions of the Subordinated Notes are enforceable
against the holder of the Subordinated Notes by Lenders. All Obligations,
including the Obligations to pay principal of and interest on the Loans and the
Letter of Credit Obligations, constitute senior Indebtedness entitled to the
benefits of the subordination provisions contained in the Subordinated Notes.
The principal of and interest on the Notes, all Letter of Credit Obligations
and all other Obligations will constitute "senior debt" as that or any similar
term is or may be used in any other instrument evidencing or applicable to any
other Subordinated Debt. Borrowers acknowledge that each Lender is entering
into this Agreement and is extending the Commitments in reliance upon the
subordination provisions of the Subordinated Notes and this Section 3.25.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices. Each Credit Party executing this Agreement
hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver to Agent and/or Lenders, as required, the Financial
Statements, notices, Forecasts and other information at the times to the
Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees that from
and after the Closing Date and until the Termination Date, it shall deliver to
Agent and/or Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1 (b)) at the times, to
the Persons and in the manner set forth in Annex F.
4.2. Communication with Accountants. Each Credit Party executing this
Agreement authorizes Agent and, so long as an Event of Default shall have
occurred and be continuing, each Lender, to communicate directly with its
independent certified public accountants including Arthur Andersen & Company,
and authorizes and shall instruct those accountants and advisors to disclose
and make available to Agent and each Lender any and all Financial Statements
and other supporting financial documents, schedules and information relating to
any Credit Party (including copies of any issued management letters) with
respect to the business, financial condition and other affairs of any Credit
Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1. Maintenance of Existence and Conduct of Business. Each Credit
Party shall: (a) do or cause to be done all things reasonably necessary to
preserve and keep in full force and
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effect its corporate existence and its rights and franchises; (b) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; (c) at all times maintain, preserve and protect all of its assets
and properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and (d) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2. Payment of Obligations. (a) Subject to Section 5.2(b), each Credit
Party shall pay and discharge or cause to be paid and discharged promptly all
Charges payable by it, including (A) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to
its employees, and (B) lawful claims for labor, materials, supplies and
services or otherwise, before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a); provided, that (i) at the time of commencement of any such
contest no Event of Default shall have occurred and be continuing, (ii)
adequate reserves with respect to such contest are maintained on the books of
such Credit Party, in accordance with GAAP, (iii) such contest is maintained
and prosecuted continuously and with diligence and operates to suspend
collection or enforcement of such Charges or claims or any Lien in respect
thereof, (iv) none of the Collateral becomes subject to forfeiture or loss as a
result of such contest, (v) no Lien shall be imposed to secure payment of such
Charges or claims other than Permitted Encumbrances, (vi) such Credit Party
shall promptly pay or discharge such contested Charges or claims and all
additional charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met, and (vii) Agent has not advised Borrowers in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.
5.3. Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on
a basis consistent with the Financial Statements attached as Disclosure
Schedule (3.4(A)).
5.4. Insurance; Damage to or Destruction of Collateral. (a) The Credit
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and with insurers reasonably acceptable to Agent.
If any Credit Party at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay all premiums
relating thereto, Agent may at any time or times thereafter obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which Agent reasonably deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be
payable on
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demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit
Party) upon reasonable prior notice to Borrower Representative to require
additional forms and limits of insurance to, in Agent's reasonable opinion,
adequately protect both Agent's and Lender's interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance
in amounts and with coverage customary for its industry. If requested by Agent,
each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its
insurance policies
(c) Each Borrower shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Borrower irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent), so long as any Event of Default shall
have occurred and be continuing or the anticipated insurance proceeds exceed
$1,500,000 as such Borrower's true and lawful agent and attorney-in-fact for
the purpose of making, settling and adjusting claims under such "All Risk"
policies of insurance, endorsing the name of such Borrower on any check or
other item of payment for the proceeds of such "All Risk" policies of insurance
and for making all determinations and decisions with respect to such "All Risk"
policies of insurance. Agent shall have no duty to exercise any rights or
powers granted to it pursuant to the foregoing power-of-attorney. Borrower
Representative shall promptly notify Agent of any loss, damage, or destruction
to the Collateral in the amount of $250,000 or more, whether or not covered by
insurance. After deducting from such proceeds the expenses, if any, incurred
by Agent in the collection or handling thereof, Agent may, at its option, apply
such proceeds to the reduction of the Obligations in accordance with Section
1.3(d), or permit or require the applicable Borrower to use such money, or any
part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, so long as no Default or Event of Default shall
have occurred and be continuing and if such insurance proceeds do not exceed
$1,500,000 in the aggregate, Agent shall permit the applicable Borrower to
replace, restore, repair or rebuild the property; provided that if such
Borrower shall not have completed or entered into binding agreements to
complete such replacement, restoration, repair or rebuilding within 180 days of
such casualty, Agent may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(d). All insurance proceeds which are to be made
available to any Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan of such Borrower (which application shall not result in a
permanent reduction of the Revolving Loan Commitment) and upon such
application, Agent shall establish a Reserve against the separate Borrowing
Base of the affected Borrower in an amount equal to the amount of such proceeds
so applied. Thereafter, such funds shall be made available to that Borrower to
provide funds to replace, repair, restore or rebuild the Collateral as follows:
(i) Borrower Representative shall request a Revolving Credit Advance be made to
such Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance, and (iii) the Reserve established with respect
to such insurance proceeds shall be reduced by the amount of such Revolving
Credit Advance. To the extent not used to replace repair, restore or rebuild the
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Collateral, such insurance proceeds shall be applied in accordance with
Section 1.3(d).
5.5. Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to licensing, ERISA and labor matters and
Environmental Laws and Environmental Permits, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6. Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of an Event of Default), the
Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter
hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or
be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite
Lenders in writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Closing Date.
5.7. Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of any Intellectual Property of any
other Person.
5.8. Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are appropriate
or necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining
to the presence, generation, treatment, storage, use, disposal, transportation
or Release of any Hazardous Material on, at, in, under, above, to, from or
about any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits
or any Release on, at, in, under, above, to, from or about any Real Estate
which is reasonably likely to result in Environmental Liabilities in excess of
$25,000; and (d) promptly forward to Agent a copy of any order, notice, request
for information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $500,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, which, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit
Party shall, upon Agent's written request (i) cause the performance of such
environmental
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audits including subsurface sampling of soil and groundwater, and
preparation of such environmental reports, at Borrowers' expense, as Agent may
from time to time request, which shall be conducted by reputable environmental
consulting firms acceptable to Agent and shall be in form and substance
acceptable to Agent, and (ii) permit Agent or its representatives to have
access to all Real Estate for the purpose of conducting such environmental
audits and testing as Agent deems appropriate, including subsurface sampling of
soil and groundwater Borrowers shall reimburse Agent for the costs of such
audits and tests and the same will constitute a part of the Obligations secured
hereunder.
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
Each Credit Party shall use its best efforts to obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property or mortgagee of owned property or with respect to any
warehouse, processor or converter facility or other location where Collateral
is located, which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may assert
against the Inventory or Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date, if Agent
has not received a landlord or mortgagee agreement or bailee letter as of the
Closing Date, any Borrower's Eligible Inventory at that location shall, in
Agent's discretion, be excluded from the Borrowing Base or be subject to such
Reserves as may be established by Agent in its reasonable credit judgment.
After the Closing Date, no real property or warehouse space shall be leased or
acquired by any Credit Party and no Inventory shall be shipped to a processor
or converter under arrangements established after the Closing Date, unless and
until a reasonably satisfactory landlord or mortgagee agreement or
bailee letter, as appropriate, shall first have been obtained with respect to
such location; provided that Borrowers may hold Inventory with a book value not
to exceed $250,000 in the aggregate at newly established locations with Agent's
prior approval and subject to a Reserve equal to the book value of such
Inventory established at Agent's discretion. Each Credit Party shall timely and
fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral
is or may be located.
5.10. Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause
to be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be reasonably necessary or proper in
the opinion of Agent to carry out more effectually the provisions and purposes
of this Agreement or any other Loan Document.
5.11. Acquisition Agreement. Within two (2) days following the
Closing Date, Borrowers shall have delivered to Agent a complete and correct
copy of the Acquisition Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments, and all other documents
delivered pursuant thereto or in connection therewith). The Credit Parties
shall not waive any material representation, warranty, covenant or indemnity of
Sellers contained in the Acquisition Agreement and shall diligently enforce the
same.
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6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that, without the prior written consent of Agent and
the Requisite Lenders, from and after the date hereof until the Termination
Date:
6.1. Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire,
any Person, except that any Borrower may merge with another Borrower, provided
that Borrower Representative shall be the survivor of any such merger to which
it is a party.
6.2. Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money
to, any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of
business; (b) each Credit Party may maintain its existing investments in its
subsidiaries as of the Closing Date; (c) other investments set forth on
Schedule 6.2 hereto; (d) Investments, loans or advances by Seymour in or to its
Mexican Subsidiary at such times and in such amounts as are necessary to fund
the working capital requirements of that Subsidiary in the ordinary course of
business and maintenance level Capital Expenditure requirements of that
Subsidiary, provided that Seymour shall not permit cash or cash equivalents in
excess of such immediate requirements to be accumulated or held by such
Subsidiary; and (e) so long as no Event of Default shall have occurred and be
continuing and no Revolving Loan is outstanding, Borrowers may make
investments, subject to Control Letters in favor of Agent for the benefit of
Lenders or otherwise subject to a perfected security interest in favor of Agent
for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or Moody's Investors Service, Inc., (iii) certificates of
deposit, maturing no more than one year from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided profits of not
less than $300,000,000 and having a senior secured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), and (iv) time
deposits, maturing no more than 30 days from the date of creation thereof with
A Rated Banks. No Credit Party shall maintain funds on deposit in its
disbursement accounts in excess of funds reasonably necessary to cover checks
issued against such account.
6.3. Indebtedness. (a) No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (without duplication) (i) Indebtedness
secured by purchase money security interests permitted in clause (d) of Section
6.7, (ii) the Loans and the other Obligations, (iii) deferred taxes, (iv)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under
applicable law, (v) existing Indebtedness described in Disclosure Schedule
(6.3) and refinancings thereof or amendments or modifications thereto which do
not have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and which are otherwise on
terms and
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conditions no less favorable to any Credit Party, Agent or any Lender,
as determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (vi) the Subordinated Debt outstanding under the
Subordinated Notes, (vii) Indebtedness consisting of intercompany loans and
advances made by any Borrower to any other Credit Party, provided that (A) each
Borrower shall have executed and delivered to each other Borrower, on the
Closing Date, a demand note (collectively, the "Intercompany Notes") to
evidence any such intercompany Indebtedness owing at any time by such Borrower
to such other Borrowers which Intercompany Notes shall be in form and substance
satisfactory to Agent and shall be pledged and delivered to Agent pursuant to
the applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each Borrower shall record all intercompany
transactions on its books and records in a manner satisfactory to Agent; (C)
the obligations of each Borrower under any such Intercompany Notes shall be
subordinated to the Obligations of such Borrower hereunder in a manner
satisfactory to Agent; (D) at the time any such intercompany loan or advance is
made by any Borrower to any other Borrower and after giving effect thereto,
each such Borrower shall be Solvent; (E) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan; and (F) in the case of any intercompany Indebtedness, the Borrower
advancing such funds shall have Net Borrowing Availability under its separate
Borrowing Base of not less than the following respective amounts after giving
effect to such intercompany loan: $500,000 in the case of Selfix, $1,000,000 in
the case of Tamor $250,000 in the case of Shutters, and $1,000,000 in the case
of Seymour, and (viii) Indebtedness secured by Liens on the real property and
fixtures located at 3016 West George Street, Louisiana, Missouri in an
aggregate principal amount of not more than $5,000,000 (provided, however, that
Agent receives a mortgagee's waiver executed by the lender in form and
substance satisfactory to Agent).
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness prior to the maturity
thereof, other than (i) the Obligations, (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Sections 6.8(b) or (c), (iii) other
Indebtedness (excluding Subordinated Debt) not in excess of $250,000, or (iv)
the Subordinated Debt outstanding under the Subordinated Notes to the extent of
voluntary or mandatory prepayments thereof permitted or required under Sections
1.3 and 6.14.
6.4. Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6 with
respect to Affiliates, no Credit Party shall enter into any transaction with
any other Credit Party or any Affiliate thereof except in the ordinary course
of and pursuant to the reasonable requirements of such Credit Party's business
and upon fair and reasonable terms that are no less favorable to such Credit
Party than would be obtained in a comparable arm's length transaction with a
Person not an Affiliate of such Credit Party. In addition, if any such
transaction or series of related transactions involves payments in excess of
$250,000 in the aggregate, the terms of these transactions must be disclosed in
advance to Agent and Lenders. All such transactions existing as of the date
hereof are described on Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of
business consistent with past practices for travel expenses, relocation
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costs and similar purposes and stock option financing up to a maximum
of $100,000 to any employee and up to a maximum of $250,000 in the aggregate at
any one time outstanding.
6.5. Capital Structure and Business. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations which
could have or result in a Material Adverse Effect, (b) make any change in its
capital structure as described on Disclosure Schedule (3.8), including the
issuance of any shares of Stock, warrants or other securities convertible into
Stock or any revision of the terms of its outstanding Stock, except that
Holdings may make one or more Qualified Public Offerings of its common Stock so
long as (i) the proceeds thereof are applied in prepayment of the Obligations
as required by Section 1.3(b)(iii), and (ii) no Change of Control occurs after
giving effect thereto, or (c) amend its charter or bylaws in a manner which
would adversely affect Agent or Lenders or such Credit Party's duty or ability
to repay the Obligations. No Credit Party shall engage in any business other
than the businesses currently engaged in by it or businesses reasonably related
thereto.
6.6. Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement; provided, however that only Holdings may incur Guaranteed
Obligations with respect to the Indebtedness permitted under Subsection
6.3(viii) and such Guaranteed Obligations shall be unsecured and subordinate to
the Obligations pursuant to a subordination agreement in form and substance
satisfactory to Agent.
6.7. Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or other properties or assets
(whether new owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7); (c) Liens on the real property and fixtures located
at 3016 West Georgia Street, Louisiana, Missouri, involving the incurrence of
an aggregate principal amount of Indebtedness of not more than $5,000,000
outstanding at any one time (provided that such Lien attaches only to such real
property and fixtures and provided, further, that Agent receives a mortgagee's
waiver executed by the applicable lender in form and substance satisfactory to
Agent); and (d) Liens created after the date hereof by conditional sale or
other title retention agreements (including Capital Leases) or in connection
with purchase money Indebtedness with respect to Equipment and Fixtures
acquired by any Credit Party in the ordinary course of business, involving the
incurrence of an aggregate amount of purchase money Indebtedness and Capital
Lease Obligations of not more than $7,500,000 outstanding at any one time for
all such Liens (provided that such Liens attach only to the assets subject to
such purchase money debt and such Indebtedness is incurred within twenty (20)
days following such purchase and does not exceed 100% of the purchase price of
the subject assets).
6.8. Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including its Stock or the Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise but subject, in the case of Holdings,
to the provisions of Section 6.5(b)) or any of their Accounts, other than (a)
the sale of Inventory in the ordinary course of business, and (b) the sale,
transfer, conveyance or other disposition by a Credit Party of Equipment or
Fixtures that are obsolete or no longer used or useful in such Credit Party's
business and having a value not exceeding $500,000 in the aggregate in any
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Fiscal Year and (c) so long as no Event of Default shall have occurred
and be continuing other Equipment and Fixtures having a value not exceeding
$500,000 in the aggregate in any Fiscal Year. With respect to any disposition
of assets or other properties permitted pursuant to clause (b) and clause (c)
above, Agent agrees on reasonable prior written notice to release its Lien on
such assets or other properties in order to permit the applicable Credit Party
to effect such disposition and shall execute and deliver to Borrowers, at
Borrowers' expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrowers.
6.9. ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA.
6.10. Financial Covenants. Borrowers shall not breach or fail to
comply with any of the Financial Covenants (the "Financial Covenants") set
forth in Annex G.
6.11. Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or impacts which could not reasonably be expected to have a
Material Adverse Effect.
6.12. Sale-Leasebacks. Except as set forth in Disclosure Schedule
(3.6), no Credit Party shall engage in any sale-leaseback, synthetic lease or
similar transaction involving any of its assets.
6.13. Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14. Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrowers to the
extent permitted by Section 6.3 above, (b) dividends and distributions by
Subsidiaries of any Borrower paid to such Borrower, (c) employee loans
permitted under Section 6.4(b) above, (d) Restricted Payments by Borrowers to
Holdings in such amounts and at such times as are necessary to permit Holdings
to pay the consolidated federal income taxes of Holdings and Borrowers, (e)
scheduled payments of interest with respect to the Subordinated Debt, (f) the
principal amount of the Subordinated Notes with the proceeds of public
offerings of Stock by Holdings in an amount not to exceed 50% of the net
proceeds thereof so long as Term Loan A or Term Loan B is outstanding; (g) the
principal amount of the Subordinated Notes in an amount not to exceed 25% of
the Borrowers' consolidated Excess Cash Flow for each Fiscal Year, payable
concurrently with mandatory prepayments of the Loans from Excess Cash Flow in
accordance with Section 1.3(b)(iv); provided that (i) no Event of Default shall
have occurred and be continuing or would result after giving effect to any
payment pursuant to clauses (e), (f) and (g) above, and (ii) the timing of the
payments referred to in clauses (e), (f) and (g) above shall be set at dates
which permit the delivery of Financial Statements necessary to determine
current financial covenant compliance prior to each payment.
6.15. Change of Corporate Name or Location; Change of Fiscal Year. No
Credit
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Party shall (a) change its corporate name, or (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, in any case without at least thirty (30) days prior
written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken, and provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of Section 9-402(7) of the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and after Agent's
written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in
favor of Agent, on behalf of Lenders, in any Collateral, has been completed or
taken. No Credit Party shall change its Fiscal Year.
6.16. No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) which could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any
Borrower to any Borrower or between Borrowers.
6.17. No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18. Leases. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Holdings and its Subsidiaries on a consolidated basis
would exceed $3,000,000.
6.19. Changes Relating to Subordinated Debt. No Credit Party shall
change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) if the effect of such amendment is to: (a)
increase the interest rate on such Subordinated Debt; (b) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of default other
than to delete or make less restrictive any default provision therein, or add
any covenant with respect to such Subordinated Debt; (d) change the redemption
or prepayment provisions of such Subordinated Debt other than to extend the
dates therefor or to reduce the premiums payable in connection therewith; or
(e) change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights to
the holder of such Subordinated Debt in a manner adverse to any Credit Party or
Lenders.
6.20. Holdings. Holdings shall not own any material assets other than
the outstanding Stock of Borrowers. Holdings shall not engage in any trade or
business.
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7. TERM
7.1. Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of the Credit Parties or the rights of
Agent and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided however,
that in all events the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) within ten (10) days following
Agent's demand for such reimbursement or payment of expenses, fails to pay or
reimburse Agent or Lenders for any expense reimbursable hereunder or under any
other Loan Document.
(b) Any Credit Party shall fail or neglect to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 5.4 or 6, or any of the provisions
set forth in Annexes C or G, respectively.
(c) Any Borrower shall fail or neglect to perform, keep or observe any
of the provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for five (5) Business Days
or more.
(d) Any Credit Party shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents
(other than any provision embodied in or covered by any other clause of this
Section 8.1) and the same shall remain unremedied for twenty (20) days or more.
(e) A default or breach shall occur under any other agreement, document
or instrument to which any Credit Party is a party which is not cured within
any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect
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of any Indebtedness (other than the Obligations) of any Credit Party in
excess of $1,000,000 in the aggregate, or (ii) causes, or permits any holder of
such Indebtedness or a trustee to cause, Indebtedness or a portion thereof in
excess of $1,000,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any material respect or any representation or warranty
herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or
delivered to Agent or any Lender by any Credit Party is untrue or incorrect in
any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000 or
more shall be attached, seized, levied upon or subjected to a writ or distress
warrant or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any Credit
Party seeking a decree or order in respect of any Credit Party (i) under Title
11 of the United States Code, as now constituted or hereafter amended or any
other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Credit Party or of any substantial
part of any such Person's assets, or (iii) ordering the winding-up or
liquidation of the affairs of any Credit Party, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or such court
shall enter a decree or order granting the relief sought in such case or
proceeding.
(i) Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
of any Credit Party or of any substantial part of any such Person's assets,
(iii) shall make an assignment for the benefit of creditors, (iv) shall take
any corporate action in furtherance of any of the foregoing; or (v) shall admit
in writing its inability to, or shall be generally unable to, pay its debts as
such debts become due.
(j) A final judgment or judgments for the payment of money in excess of
$1,000,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within thirty (30) days after the
entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of
any such stay.
(k) Any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority
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security interest or Lien (except as otherwise permitted herein or
therein) in any of the Collateral purported to be covered thereby.
(l) Any "Change of Control" shall occur.
(m) Any event shall occur, whether or not insured or insurable, as a
result of which revenue-producing activities cease or are substantially
curtailed at any facility of Borrowers generating more than 10% of Borrowers'
consolidated revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than 30 days.
8.2. Remedies. (a) If any Event of Default shall have occurred and be
continuing or if a Default shall have occurred and be continuing and Agent or
Requisite Revolving Lenders shall have determined not to make any Advances or
incur any Letter of Credit Obligations so long as that specific Default is
continuing, Agent may (and at the written request of the Requisite Revolving
Lenders shall), without notice, suspend this facility with respect to further
Advances and/or the incurrence of further Letter of Credit Obligations
whereupon any further Advances and Letter of Credit Obligations shall be made
or extended in Agent's sole discretion (or in the sole discretion of the
Requisite Revolving Lenders, if such suspension occurred at their direction) so
long as such Default or Event of Default is continuing. If any Event of Default
shall have occurred and be continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly provided
herein, increase the rate of interest applicable to the Loans and the Letter of
Credit Fees to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), (i)
terminate this facility with respect to further Advances or the incurrence of
further Letter of Credit Obligations; (ii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by Borrowers
and each other Credit Party; and (iii) exercise any rights and remedies
provided to Agent under the Loan Documents and/or at law or equity, including
all remedies provided under the Code; provided, however, that upon the
occurrence of an Event of Default specified in Sections 8.1 (g), (h) or (i),
all of the Obligations, including the aggregate Revolving Loan, shall become
immediately due and payable without declaration, notice or demand by any
Person.
8.3. Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for
purposes of Section 12): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's
replevy, attachment or levy upon, the Collateral or any bond or security which
might be required by any court prior to allowing Agent to exercise any of its
remedies, and (c) the benefit of all valuation, appraisal, marshalling and
exemption laws.
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations. (a) The Credit Parties signatory
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder
whether evidenced by a writing or not. Any assignment by a Lender shall (i)
require the consent of Agent (which shall not be unreasonably withheld or
delayed, provided that no consent by Borrower Representative shall be required
so long as any Event of Default shall have occurred and be continuing) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the from attached hereto as Exhibit 9.1 (a) and otherwise in form and
substance satisfactory to, and acknowledged by, Agent; (ii) be conditioned on
such assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) if a
partial assignment be in an amount at least equal to $2,500,000 and, after
giving effect to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $2,500,000; and (iv)
include a payment to Agent of an assignment fee of $3,500. In the case of an
assignment by a Lender under this Section 9.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as it
would if it were a Lender hereunder. The assigning Lender shall be relieved of
its obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Each Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of a Note, Agent or any
such Lender shall so notify Borrowers and Borrowers shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes being
assigned. Notwithstanding the foregoing provisions of this Section 9.1 (a), any
Lender may at any time pledge or assign all or any portion of such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank; provided, however, that no such pledge or assignment shall release such
Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its Commitments
shall be in an amount at least equal to $2,500,000, and with the understanding
that all amounts payable by Borrowers hereunder shall be determined as if that
Lender had not sold such participation, and that the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except actions directly affecting (i) any reduction
in the principal amount of, or interest rate or Fees payable with respect to,
any Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder
participates or the final maturity date thereof, and (iii) any release of all
or substantially all of the Collateral (other than in accordance with the terms
of this Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrowers to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence no
Borrower or Credit Party shall have any obligation or duty to any participant.
Neither Agent nor any Lender (other than the Lender selling a participation)
shall have any duty to any participant and may continue to deal solely with the
Lender selling a participation as if no such sale had occurred.
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(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrowers and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any
such assignment or participation, including the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and, if requested by Agent, the preparation of informational
materials for, and the participation of management in meetings with, potential
assignees or participants. Each Credit Party executing this Agreement shall
certify the correctness, completeness and accuracy of all descriptions of the
Credit Parties and their affairs contained in any selling materials provided by
them and all other information provided by them and included in such materials,
except that any Forecasts delivered by Borrowers shall only be certified by
Borrowers as having been prepared by Borrowers in compliance with the
representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Borrowers in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants confidentiality covenants substantially
equivalent to those contained in Section 11.8.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date
of the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.16(d).
9.2. Appointment of Agent. (a) GE Capital is hereby appointed to act
on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship
of agency or trust with or for any Credit Party or any other Person. Agent
shall have no duties or responsibilities except for those expressly set forth
in this Agreement and the other Loan Documents. The duties of Agent shall be
mechanical and administrative in nature and Agent shall not have, or be deemed
to have, by reason of this Agreement, any other Loan Document or otherwise a
fiduciary relationship in respect of any Lender. Neither Agent nor any of its
Affiliates nor any of their respective officers, directors, employees, agents
or representatives shall be liable to any Lender for any action taken or
omitted to be taken by it hereunder or under any other Loan Document, or in
connection herewith or therewith, except for damages caused by its or their own
gross negligence or willful misconduct.
(b) If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent
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shall be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders, as the case may be, and Agent shall not incur liability to any Person
by reason of so refraining. Notwithstanding any provision of any Loan Document
to the contrary, Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Loan Document (a) if such action would,
in the opinion of Agent, be contrary to law or the terms of this Agreement or
any other Loan Document, (b) if such action would, in the opinion of Agent,
expose Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable.
9.3. Agent's Reliance, Etc. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, Agent: (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Agent; (b) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
9.4. GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their
Affiliates and any Person who may do business with or own securities of any
Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates
may accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges that GE Capital holds
disproportionate interests in the Loans, a Subordinated Note and a warrant for
Holdings Stock.
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9.5. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as
a result of Lenders holding disproportionate interests in the Loans, and
expressly consents to, and waives any claim based upon, such conflict of
interest.
9.6. Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers and without limiting the obligations of Borrowers
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Borrowers.
9.7. Successor Agent. Agent may resign at any time by giving not less
than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower Representative, such approval not
to be unreasonably withheld or delayed; provided that such approval shall not
be required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its
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duties and obligations under this Agreement and the other Loan Documents,
except that any indemnity rights or other rights in favor of such resigning
Agent shall continue. After any resigning Agent's resignation hereunder, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents. Agent may be removed at the written direction of the
holders (other than Agent) of two-thirds or more of the Commitments (excluding
Agent's Commitment); provided that in so doing, such Lenders shall be deemed to
have waived and released any and all claims they may have against Agent. In
addition to the foregoing, Requisite Lenders may remove Agent upon not less
than ten (10) days' prior written notice to Agent for cause, consisting of one
or more instances of gross negligence or willful misconduct, as specified in
such notice.
9.8. Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or
from time to time, without notice to any Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all balances held by it at any of its offices for the account of
any Borrower (regardless of whether such balances are then due to such
Borrower) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrowers
against and on account of any of the Obligations which are not paid when due.
Any Lender or holder of any Note exercising a right to set off or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share
the amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation
under this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata
Share of the Swing Line Loans under Section 1.1. Each Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
9.9. Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments. (i) Revolving Lenders shall refund or
participate in the Swing Line Loan in accordance with clauses (iii) and (iv) of
Section 1.1(c). If the Swing Line Lender declines to make a Swing Line Loan or
if Swing Line Availability is zero, Agent shall notify Revolving Lenders,
promptly after receipt of a Notice of Revolving Credit Advance and in any event
prior to 12:30 p.m. (Chicago time) on the date such Notice of Revolving Advance
is received, by telecopy, telephone or other similar form of transmission. Each
Revolving Lender shall make the amount of such Lender's Pro Rata Share of each
Revolving Credit Advance available to Agent in
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same day funds by wire transfer to Agent's account as set forth in Annex H not
later than 2:00 p.m. (Chicago time) on the requested funding date, in the case
of an Index Rate Loan and not later than 11 :00 a.m. (Chicago time) on the
requested funding date in the case of a LIBOR Loan. After receipt of such wire
transfers (or, in the Agent's sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to the Borrower designated by Borrower Representative
in the Notice of Revolving Credit Advance. All payments by each Revolving
Lender shall be made without setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $1,000,000 are
received with respect to the Loans (other than the Swing Line Loan) (each, a
"Settlement Date"), Agent will advise each Lender by telephone and telecopy of
the amount of such Lender's Pro Rata Share of principal, interest and Fees paid
for the benefit of Lenders with respect to each applicable Loan. Provided that
such Lender has made all payments required to be made by it and has purchased
all participations required to be purchased by it under this Agreement and the
other Loan Documents as of such Settlement Date, Agent will pay to each Lender
such Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers
since the previous Settlement Date for the benefit of that Lender on the Loans
held by it. Such payments shall be made by wire transfer to such Lender's
account (as specified by such Lender in Annex H or the applicable Assignment
Agreement) not later than 1:00 p.m. (Chicago time) on the next Business Day
following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in
fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower Representative and Borrowers shall immediately repay
such amount to Agent. Nothing in this Section 9.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Revolving Lender or to relieve any Revolving
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrowers may have against any Revolving Lender as a result of
any default by such Revolving Lender hereunder. To the extent that Agent
advances funds to any Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such
Advance until reimbursed by the applicable Revolving Lender.
(c) Return of Payments. (i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrowers and such related payment is not
received by Agent, then Agent will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to any Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has
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distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to any Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Revolving Lender (such
Revolving Lender, a "Non-Funding Lender") to make any Revolving Credit Advance
or to purchase any participation in any Swing Line Loan to be made or purchased
by it on the date specified therefor shall not relieve any other Revolving
Lender (each such other Revolving Lender, an "Other Lender") of its obligations
to make such Advance or purchase such participation on such date, but neither
any Other Lender nor Agent shall be responsible for the failure of any
Non-Funding Lender to make an Advance to be made, or to purchase a
participation to be purchased, by such Non-Funding Lender, and no Non-Funding
Lender shall have any obligation to Agent or any Other Lender for the failure
by such Non-Funding Lender. Notwithstanding anything set forth herein to the
contrary, a Non-Funding Lender (so long as it shall remain a Non-Funding
Lender) shall not have any voting or consent rights under or with respect to
any Loan Document or constitute a "Lender" or a "Revolving Lender" (or be
included in the calculation of "Requisite Lenders", "Requisite Revolving
Lenders" or "Supermajority Revolving Lenders" hereunder) for any voting or
consent rights under or with respect to any Loan Document.
(e) Dissemination of Information. Agent will provide Lenders with any
notice of Event of Default received by Agent from, or delivered by Agent to,
any Credit Party. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no
Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Loan Documents (including exercising any rights of
set-off) without first obtaining the prior written consent of Agent or
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including,
in the case of any Credit Party, a debtor-in-possession on behalf of such
Credit Party), except as otherwise provided herein or therein. No Credit Party
may assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents
without the prior express written consent of Agent and Lenders. Any such
purported assignment, transfer, hypothecation or other conveyance by any Credit
Party without the prior express written consent of Agent and Lenders shall be
void. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of each Credit Party, Agent and
Lenders with respect to the transactions contemplated hereby and no Person
shall be a third party beneficiary of any of the terms and provisions of this
Agreement or any of the other Loan Documents.
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11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except
as set forth in Section 11.2 below. Any letter of interest, commitment letter,
and/or fee letter (other than the GE Capital Fee Letter) and/or confidentiality
agreement between any Credit Party and Agent or any Lender or any of their
respective affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2. Amendments and Waivers. (a) Except for actions expressly
permitted to be taken by Agent, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the Notes, or any consent
to any departure by any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Agent and Borrowers, and by
Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving Lenders
or all affected Lenders, as applicable. Except as set forth in clauses (b) and
(c) below, all such amendments, modifications, termination's or waivers
requiring the consent of any Lenders shall require the written consent of
Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of the Borrowing Base, or which makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be
effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrowers. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed
by Agent, Requisite Revolving Lenders and Borrowers. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default (if in connection therewith Agent or Requisite Revolving
Lenders, as the case may be, have exercised its or their right to suspend the
making or incurrence of further Advances or Letter of Credit Obligations
pursuant to Section 8.2(a)) or any Event of Default shall be effective for
purposes of the conditions precedent to the making of Loans or the incurrence
of Letter of Credit Obligations set forth in Section 2.2 unless the same shall
be in writing and signed by Agent, Requisite Revolving Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby, do any
of the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) change any scheduled
payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release any Guaranty or, except
as otherwise permitted herein or in the other Loan Documents, permit any Credit
Party to sell or otherwise dispose of any Collateral with a value exceeding
$5,000,000 in the aggregate (which action shall be deemed to directly affect
all Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section
11.2
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or the definitions of the terms "Requisite Lenders", "Requisite
Revolving Lenders" or "Supermajority Revolving, Lenders" insofar as such
definitions affect the substance of this Section 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties
of Agent under this Agreement or any other Loan Document shall be effective
unless in writing and signed by Agent, in addition to Lenders required
hereinabove to take such action. Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification, termination or
waiver shall be required for Agent to take additional Collateral pursuant to
any Loan Document. No amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
holder of that Note. No notice to or demand on any Credit Party in any case
shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification, waiver
or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent
is required is not obtained (any such Lender whose consent is not obtained as
described this clause (i) and in clauses (ii), (iii) and (iv) below being
referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority Revolving Lenders, the
consent of Requisite Revolving Lenders is obtained, but the consent of
Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving Lenders, the consent
of Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving Lenders is not
obtained, or
(iv) requiring the consent of Requisite Lenders, the consent of Lenders
holding 51% or more of the aggregate Commitments is obtained, but the consent
of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person acceptable to Agent shall have the
right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations under Section 1.13),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that
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are Indemnified Liabilities, Agent shall deliver to Borrowers termination
statements, mortgage releases and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.
11.3. Fees and Expenses. Borrowers shall reimburse Agent for all
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special
loan counsel, advisors, consultants and auditors retained in connection with
the Loan Documents and the Related Transactions and advice in connection
therewith). Borrowers shall reimburse Agent (and, with respect to clauses (c)
and (d) below, all Lenders) for all fees, costs and expenses, including the
fees, costs and expenses of counsel or other advisors (including environmental
and management consultants and appraisers) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrowers or any other Person on behalf of
Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or Related Transactions Documents or advice in
connection with the administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other Person) in
any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to Agent by virtue of the Loan
Documents; including any such litigation, contest, dispute, suit, proceeding or
action arising in connection with any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided that in the case
of reimbursement of counsel for Lenders other than Agent, such reimbursement
shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent against any or all of
the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents; including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the pendency of
one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral; including all
attorneys' and other professional and service providers' fees arising from such
services, including those in connection with any appellate proceedings; and all
expenses, costs, charges and other fees incurred by such counsel and others in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section 11.3 shall be payable, on demand, by
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Borrowers to Agent. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals, court costs and expenses; photocopying
and duplication expenses; court reporter fees, costs and expenses; long
distance telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4. No Waiver. Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default
or Event of Default by any Credit Party shall be deemed to have been suspended
or waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5. Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise Recourse to the
Collateral shall not be required.
11.6. Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11.7. Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the other Loan Documents, the provision contained in this Agreement shall
govern and control.
11.8. Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and any Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or potential assignee
or participant or to any direct or indirect contractual counterparties in swap
agreements or professional advisors of such swap counterparties that has agreed
to comply with the covenant contained in this Section 11.8 (and any such bona
fide assignee or participant or potential assignee or participant or
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direct or indirect contractual counterparties in swap agreements or
professional advisors of such swap counterparties may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c)
as required or requested by any Governmental Authority or reasonably believed
by Agent or such Lender to be compelled by any court decree, subpoena or legal
or administrative order or process; (d) as, in the opinion of Agent's or such
Lender's counsel, required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation
to which Agent or such Lender is a party; or (f) which ceases to be
confidential through no fault of Agent or such Lender.
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY,
CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF COOK COUNTY, CITY OF CHICAGO, ILLINOIS AND, PROVIDED, FURTHER
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION
WHICH SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may
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be given to or served upon any of the parties by any other parties, or
whenever any of the parties desires to give or serve upon any other parties any
communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be deemed to have been validly served, given or delivered (a)
upon the earlier of actual receipt and three (3) Business Days after deposit in
the United States Mail, registered or certified mail, return receipt requested,
with proper postage prepaid, (b) upon transmission, when sent by telecopy or
other similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as
otherwise provided in this Section 11.10), (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
on Annex I or to such other address (or facsimile number) as may be substituted
by notice given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such
notice. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to any Person (other than
Borrower Representative or Agent) designated on Annex I to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
11.11. Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14. Press Releases. Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will
consult with GE Capital before issuing such press release or other public
disclosure
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Each Credit Party consents to the publication by Agent or any Lender of
a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement. Agent may provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
11.15. Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of
any Borrower's assets, and shall continue to be effective or to be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16. Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel
11.17. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.18. Effect on Prior Credit Agreement; Continuing Loans. This
Agreement amends and restates the Prior Credit Agreement in its entirety and
supersedes the terms and provisions thereof. Nevertheless, the Credit Parties
acknowledge that the Continuing Loans in the respective amounts set forth on
Disclosure Schedule (11.18) remain outstanding, and the parties agree that (i)
such Loans are continuing Obligations hereunder governed by the terms and
provisions hereof; (ii) the Liens securing payment thereof are continuing in
all respects, and (iii) this Agreement shall not be deemed to evidence a
novation, or repayment and refunding, of the Continuing Loans. All references
in the Loan Documents (entered into pursuant to the Prior Credit Agreement) to
the "Credit Agreement" or the "Agreement" shall be deemed to refer to this
Agreement, without further amendment of those Loan Documents.
12. CROSS-GUARANTY
12.1. Cross-Guaranty. Each Borrower hereby agrees that such Borrower
is jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns,
the full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and
not of collection, and that its obligations under this Section 12 shall be
absolute and unconditional, irrespective of, and unaffected by,
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(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any
other agreement, document or instrument to which any Borrower is or may become
a party;
(b) the absence of any action to enforce this Agreement (including this
Section 12) or any other Loan Document or the waiver or consent by Agent and
Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent and Lenders in respect thereof (including the release of
any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each Borrower that its obligations under this Section 12
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded and shall be in the
same position, as principal debtor with respect to the Obligations guaranteed
hereunder
12.2. Waivers by Borrowers. Each Borrower expressly waives all rights
it may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Agent or Lenders to marshall assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3. Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4. Subordination of Subrogation, Etc. Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash. Each Borrower acknowledges and agrees that this
subordination is intended to benefit Agent and Lenders and shall not limit or
otherwise affect such Borrower's liability hereunder or the enforceability of
this Section 12 and that Agent, Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements
set forth in this Section 12.4.
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12.5. Election of Remedies. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
nonjudicial sale or enforcement, Agent or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any
of its rights and remedies under this Section 12. If, in the exercise of any
of its rights and remedies, Agent or any Lender shall forfeit any of its rights
or remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, each Borrower hereby consents to such
action by Agent or such Lender and waives any claim based upon such action,
even if such action by Agent or such Lender shall result in a full or partial
loss of any rights of subrogation which each Borrower might otherwise have had
but for such action by Agent or such Lender. Any election of remedies which
results in the denial or impairment of the right of Agent or any Lender to seek
a deficiency judgment against any Borrower shall not impair any other
Borrower's obligation to pay the full amount of the Obligations. In the event
Agent or any Lender shall bid at any foreclosure or trustee's sale or at any
private sale permitted by law or the Loan Documents, Agent or such Lender may
bid all or less than the amount of the Obligations and the amount of such bid
need not be paid by Agent or such Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Agent,
Lender or any other party is the successful bidder, shall be conclusively
deemed to be the fair market value of the Collateral and the difference between
such bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under this
Section 12, notwithstanding that any present or future law or court decision or
ruling may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.
12.6. Limitation. Notwithstanding any provision herein contained to
the contrary each Borrower's liability under this Section 12 (which liability
is in any event in addition to amounts for which such Borrower is primarily
liable under Section 1) shall be limited to an amount not to exceed as of any
date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount which could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12 7.
12.7. Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") which,
taking into account all other Guarantor Payments then previously or
concurrently made by any other Borrower, exceeds the amount which such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined
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below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly
or indirectly to that Borrower and accrued interest, Fees and expenses with
respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8. Liability Cumulative. The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
SELFIX, INC.
By: ____________________________________
Title: _________________________________
TAMOR CORPORATION
By: ____________________________________
Title: _________________________________
SHUTTERS, INC.
By: ____________________________________
Title: _________________________________
SEYMOUR HOUSEWARES CORPORATION
By: ____________________________________
Title: _________________________________
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GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By:_________________________________
Title:______________________________
KEY CORPORATE CAPITAL INC., as Lender
By:_________________________________
Title:______________________________
LASALLE NATIONAL BANK, as Lender
By:_________________________________
Title:______________________________
BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A.
GROUP, NEW YORK BRANCH, as Lender
By:_________________________________
Title:______________________________
KZH-ING-2 CORPORATION, as Lender
By:_________________________________
Title:______________________________
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THE ING CAPITAL SENIOR SECURED HIGH INCOME
FUND, L.P., as Lender,
By:
ING Capital Advisors, Inc.,
as Investment Advisor
By:_________________________________
Title:______________________________
ING HIGH INCOME PRINCIPAL PRESERVATION FUND
HOLDINGS, LDC, as Lender,
By:
ING Capital Advisors, Inc.,
as Investment Advisor
By:_________________________________
Title:______________________________
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The following Person is a signatory to this Agreement in its capacity as a
Credit Party and not as a Borrower.
HOME PRODUCTS INTERNATIONAL, INC.
By:_________________________________
Title:______________________________
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ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all section references in the following definitions shall refer to Sections of
the Agreement:
"Account Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party and, in any event,
including (a) all accounts receivable, other receivables, book debts and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under
the Code), (b) all of each Credit Party's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Credit Party's rights to any goods represented by any of the
foregoing (including all unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to any Credit Party,
under all purchase orders and contracts for the sale of goods or the
performance of services or both by such Credit Party or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Credit Party) now or hereafter in existence, including the right to receive the
proceeds of said purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Acquisition" shall have the meaning assigned to it in the recitals to the
Agreement, and shall include the issuance of common stock of Holdings with a
value of at least $14.2 million as part of the consideration therefor.
"Acquisition Agreement" shall mean collectively (i) the Purchase Agreement
and (ii) all other documents, agreements and instruments entered into in
connection with the Acquisition.
"Advance" shall mean any Revolving Credit Advance or Swing Line Advance,
as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Persons, (b)
each Person that controls, is controlled by or is under common control with
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such Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrowers, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of any
Borrower. For the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise; provided; however, that the term
"Affiliate" shall specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Aggregate Borrowing Base" shall mean, as of any date of determination, an
amount equal to the sum of the Selfix Borrowing Base, the Tamor Borrowing Base,
the Shutters Borrowing Base and the Seymour Borrowing Base.
"Agreement" shall mean the Amended and Restated Credit Agreement by and
among Borrowers, the other Credit Parties named therein, GE Capital, as Agent
and Lender and the other Lenders signatory from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the recitals to the
Agreement.
"Applicable Margins" means collectively the Applicable Revolver Index
Margin, the Applicable Term Loan A Index Margin, the Applicable Term Loan B
Index Margin, the Applicable Revolver LIBOR Margin and the Applicable Term Loan
A LIBOR Margin and the Applicable Term Loan B LIBOR Marin.
"Applicable Revolver Index Margin" shall mean the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a)
of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a)
of the Agreement.
"Applicable Term Loan A Index Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to Term Loan A, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan A LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to Term Loan A, as determined by reference to Section 1.5(a) of the
Agreement.
"Applicable Term Loan B Index Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to Term Loan B, as determined by reference to Section 1.5(a) of the
Agreement.
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"Applicable Term Loan B LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to Term Loan B, as determined by reference to Section 1.5(a) of the
Agreement.
"Assignment Agreement" shall have the meaning assigned to it in Section
9.1(a).
"Borrower Accounts" shall have the meaning assigned to it in Annex C.
"Borrower Representative" shall mean Selfix in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1 (c).
"Borrowers" and "Borrower" shall have the respective meanings assigned
thereto in the recitals to the Agreement.
"Borrowing Availability" shall have the meaning assigned to it in Section
1.1(a)(i).
"Borrowing Base" shall mean, as to each Borrower, as of any date of
determination by Agent, from time to time, an amount equal to the sum at such
time of:
(a) eighty-five percent (85%) of the book value of such Borrower's
Eligible Accounts, less any Reserves established by Agent at such time; and
(b) fifty percent (50%) of the book value of such Borrower's
Eligible Inventory valued on a first-in, first-out basis (at the lower of
cost or market), less any Reserves established by Agent at such time.
"Borrowing Base Certificate" shall mean a certificate to be executed and
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of
Illinois and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the issuance of securities, the expenditure of cash or the
incurrence of Indebtedness) by such Person during any measuring period for any
fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
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"Capital Lease Obligation" shall mean, with respect to any Capital Lease
of any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to it in Section
1.8.
"Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities and Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended) of 20% or more of the issued and
outstanding shares of capital Stock of Holdings having the right to vote for
the election of directors of Holdings under ordinary circumstances other than
the Ragir Family Trusts; (b) during any period of twelve consecutive calendar
months, individuals who at the beginning of such period constituted the board
of directors of Holdings (together with any new directors whose election by the
board of directors of Holdings or whose nomination for election by the
stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose elections or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office, (c) Holdings shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of the Borrowers.
"Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (b) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever
located.
"Closing Checklist" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
"Closing Date" shall mean December 29, 1997.
"Code" shall mean the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of Illinois provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's security interest
in any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of Illinois, the term "Code"
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or
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priority and for purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Security Agreement,
the Mortgages and the other Collateral Documents and any other property, real
or personal, tangible or intangible, now existing or hereafter acquired, that
may at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" shall mean that certain account of Agent, account
number 502-328-54 in the name of Agent at Bankers Trust Company in New York,
New York.
"Commitment Termination Date" shall mean the earliest of (a) December __,
2002, (b) the date of termination of Lenders' obligations to make Advances
and/or incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return
(or stand-by guarantee) of all Letters of Credit or the cash collateralization
of all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to
zero dollars ($0).
"Commitments" shall mean (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing
Line Lender's Swing Line Commitment) and Term Loan Commitment as set forth on
Annex J to the Agreement or in the most recent Assignment Agreement executed by
such Lender and (b) as to all Lenders, the aggregate of all Lenders' Revolving
Loan Commitments (including without duplication the Swing Line Lender's Swing
Line Commitment) and Term Loan Commitments, which aggregate commitment shall be
One Hundred Thirty Million Dollars ($130,000,000) on the Closing Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Compliance Certificate" shall have the meaning assigned to it in Annex E.
"Concentration Accounts" shall have the meaning assigned to it in Annex C.
"Continuing Loans" shall mean the Loans and Letter of Credit Obligations
under the Prior Credit Agreement existing on the Closing Date and listed on
Disclosure Schedule (11.8) to the Agreement.
"Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or
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Instruments) in or under which any Credit Party may now or hereafter have any
right, title or interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the issuer
of uncertificated securities with respect to uncertificated securities in the
name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders
of Agent without further consent by the affected Credit Party.
"Credit Parties" shall mean Holdings and each Borrower.
"Default" shall mean any event which, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned to it on Annex C.
"Disclosure Schedules" shall mean the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 1.4 through 6.7 in the Index to the
Agreement.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"EBITA" shall mean, with respect to any Person for any fiscal period,
EBITDA excluding the add-back of depreciation.
"EBITDA" shall mean, with respect to any Person for any fiscal period, an
amount equal to (a) consolidated net income of such Person for such period,
minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain
from extraordinary items for such period, (iv) any aggregate net gain (but not
any aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each
case to the extent included in the calculation of consolidated net income of
such Person for such period in accordance with GAAP, but without duplication,
plus (c) the sum of (i) any provision for income taxes, (ii) Interest Expense,
(iii) loss from extraordinary items for such period, (iv) the amount of noncash
charges (including depreciation and amortization) for such period, (v)
amortized debt discount for such period, and (vi) the
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amount of any deduction to consolidated net income as the result of any grant
to any members of the management of such Person of any Stock, in each case to
the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication. For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries,
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (9)
any deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary
"Eligible Accounts" shall have the meaning assigned to it in Section 1.6
of the Agreement .
"Eligible Inventory" shall have the meaning assigned to it in Section 1.7
of the Agreement.
"Environmental Laws" shall mean all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Section 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Section 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. Section 2601 et seq.); the Clean Air Act (42 U.S.C.
Section 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Section
300(f) et seq.), each as from time to time amended, and any and all
regulations promulgated thereunder, and all analogous state, local and foreign
counterparts or equivalents and any transfer of ownership
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notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law, including any
arising under or related to any Environmental Laws, Environmental Permits, or
in connection with any Release or threatened Release or presence of a Hazardous
Material whether on, at, in, under, from or about or in the vicinity of any
real or personal property.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals, registrations or other written documents required by
any Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling, stock and
other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, all whether now owned or hereafter acquired,
and wherever situated, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade
or business (whether or not incorporated) which, together with such Credit
Party, are treated as a "controlled group of corporation," a group of trades or
businesses under "common control," or an "affiliated service group" within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA
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Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30
days; (g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 8.1.
"Excess Cash Flow" shall mean, without duplication, with respect to any
Fiscal Year of Borrowers and their Subsidiaries, consolidated net income plus
(a) depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income, minus (b) Capital Expenditures during such
Fiscal Year (excluding the portion thereof financed from sources other than the
Credit Agreement) minus (c) Interest Expense paid or accrued (excluding any
original issue discount, interest paid in kind or amortized debt discount, to
the extent included in determining Interest Expense) and scheduled principal
payments paid or payable in respect of Funded Debt, plus or minus (as the case
may be), (d) extraordinary gains or losses which are cash items not included in
the calculation of net income, minus (e) mandatory prepayments paid in cash
pursuant to Section 1.3 other than mandatory prepayments made pursuant to
Sections 1.3(b)(i), 1.3(b)(iv) or 1.3(d), plus (f) taxes deducted in
determining consolidated net income to the extent not paid for in cash.
"Federal Funds Rate" shall mean, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and consolidating
income statements, statements of cash flows and balance sheets of Holdings and
Borrowers delivered in accordance with Section 3.4 of the Agreement and Annex E
to the Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
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"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers, ending generally on the Saturday closest to the last day of March,
June, September and December of each year.
"Fiscal Year" shall mean any of the annual accounting periods of Borrowers
ending in December of each year.
"Fixed Charges" shall mean, with respect to any Person for any fiscal
period, the aggregate of all Interest Expense paid or accrued during such
period (other than Interest Expense with respect to the Subordinated Notes not
paid in cash), plus scheduled payments of principal with respect to
Indebtedness during such period or within seven (7) days thereafter.
"Fixed Charge Coverage Ratio" shall mean, with respect to any Person for
any fiscal period, the ratio of (i) EBITDA less the sum of Capital Expenditures
and income taxes paid in cash during such period to (ii) Fixed Charges.
"Fixtures" shall mean any "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Forecasts" means Borrowers' budgeted consolidated and consolidating: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared on a Subsidiary by Subsidiary or
division by division basis, if applicable, and otherwise consistent with the
historical Financial Statements of the Borrowers, together with appropriate
supporting details and a statement of underlying assumptions.
"Funded Debt" shall mean, with respect to any Person, all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of more than one year from the date of creation
thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect on the Closing Date, consistently applied as
such term is further defined in Annex G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated as of
December 11, 1997, between GE Capital and the Borrowers with respect to certain
Fees to be paid from time to time by Borrowers to GE Capital.
"General Intangibles" shall mean any "general intangibles," as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
and, in any event, including all right, title and interest which such Credit
Party may now or hereafter have in or under any Contract, all customer lists,
Licenses, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals
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thereof, rights in Intellectual Property, interests in partnerships, joint
ventures and other business associations, licenses, permits, trade secrets,
proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, data, skill, expertise, experience, processes, models,
drawings, materials and records, goodwill (including the goodwill associated
with any Trademark or Trademark License), all rights and claims in or under
insurance policies (including insurance for fire, damage, loss and casualty,
whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in
the possession or under the control of such Credit Party or any computer bureau
or service company from time to time acting for such Credit Party.
"Goods" shall mean any "goods" as such term is defined in the Code, now or
hereafter acquired by any Credit Party.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such Person (a) to purchase
or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable
amount of the primary obligation in respect of which such Guaranteed
Indebtedness is made and (y) the maximum amount for which such Person may be
liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Holdings Guaranty, and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" shall mean Holdings, and each other Person, if any, which
executes a guarantee or other similar agreement in favor of Agent in connection
with the transactions
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contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" shall mean Home Products International, Inc., a Delaware
corporation.
"Holdings Guaranty" shall mean the guaranty of payment of the Obligations
dated as of the Closing Date, executed and delivered by Holdings.
"Holdings Pledge Agreement" shall mean the Pledge Agreement dated as of
the Closing Date executed by Holdings in favor of Agent on behalf of itself and
Lenders, pledging all of the Stock of its Subsidiaries and all Intercompany
Notes owing to or held by it.
"Housewares" shall mean Houseware Sales, Inc., a Massachusetts
corporation.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being
contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations, (f) all
obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates, in each
case whether contingent or matured, (h) all indebtedness referred to above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property or
other assets (including accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
1.13.
"Index Rate" shall mean, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The
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Wall Street Journal as the "base rate on corporate loans at large U.S. money
center commercial banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis points per
annum. Each change in any interest rate provided for in the Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing interest by
reference so the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all notes and other, without limitation, evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Trademarks, trade secrets and customer lists.
"Intercompany Notes" shall have the meaning assigned to it in Section 6.3.
"Interest Coverage Ratio" shall mean, with respect to any Person for any
period, the ratio of (i) EBITDA less Capital Expenditures to (ii) Interest
Expense.
"Interest Expense" shall mean, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash, excluding interest on the
Subordinated Notes paid by the issuance of Subordinated Notes) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person; provided, however, that "Interest Expense" shall not include (a)
any fees and expenses incurred on or prior to the Closing Date in connection
with the Related Transactions that are amortized and included in interest
expense under GAAP or (b) any success fee described on Schedule 3.2 to Note
Purchase Agreement dated as of the date hereof among Credit Parties, GE
Capital, individually and as agent for itself and the other note purchasers
that are signatories thereto, and the note purchasers that are signatory
thereto, that is accrued or paid and included in interest expense under GAAP.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period, provided that, in
addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment
Date" with respect to any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party, wherever located,
and, in any event, including inventory, merchandise, goods and
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other personal property which are held by or on behalf of any Credit Party for
sale or lease or are furnished or are to be furnished under a contract of
service, or which constitute raw materials, work in process or materials used
or consumed or to be used or consumed in such Credit Party's business or in the
processing, production, packaging, promotion, delivery or shipping of the same,
including other supplies.
"Investment Property" shall have the meaning ascribed thereto in Section
9-115 of the Code in those jurisdictions in which such definition has been
adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto
"L/C Issuer" shall have the meaning assigned to such term in Annex B.
"Lenders" shall mean GE Capital, the other Lenders named on the signature
page of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include such assignee
"Letter of Credit Fee" has the meaning ascribed thereto in Annex B.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Agent and Lenders at the request of Borrower Representative,
whether direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance of a reimbursement agreement or guaranty by Agent
with respect to any Letter of Credit. The amount of such Letter of Credit
Obligations shall equal the maximum amount which may be payable by Agent or
Lenders thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters of credit
issued for the account of any Borrower by any L/C Issuer, and bankers'
acceptances issued by any Borrower, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"Leverage Ratio" shall mean, with respect to any Person as of any date of
determination the ratio of (a) Funded Debt, to (b) EBITA.
"LIBOR Business Day" shall mean a Business Day on which banks in the city
of London are generally open for interbank or foreign exchange transactions.
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"LIBOR Loan" shall mean a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two or three months thereafter, as set forth
in Borrower Representative's irrevocable notice to Agent as set forth in
Section 1.5(e); provided that the foregoing provision relating to LIBOR Periods
is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry
such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there
shall be no more than five (5) separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11 :00
a.m., London time, on the second full LIBOR Business Day next preceding
the first day of each LIBOR Period (unless such date is not a Business Day,
in which event the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements in
effect on the day which is two (2) LIBOR Business Days prior to the beginning
of such LIBOR Period (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve system or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation D
of such Board which are required to be maintained by a member bank of the
Federal Reserve System (such rate to be adjusted to the nearest
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one sixteenth of one percent (1/16th of 1%) or, if there is not a nearest
one sixteenth of one percent (1/16th of 1%), to the next highest one
sixteenth of one percent (1/16th of 1%).
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower Representative.
"License" shall mean any Patent License, Trademark License or other
license of rights or interests now held or hereafter acquired by any Credit
Party.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent and/or Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated hereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative. Notwithstanding the foregoing, the term "Loan Document"
shall exclude documents that evidence or govern the Subordinated Debt.
"Loans" shall mean the Revolving Loan, the Swing Line Loan and the Term
Loans.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of the
Credit Parties considered as a whole, (b) the Borrowers' ability to pay any of
the Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or any
Lender's material rights and remedies under the Agreement and the other Loan
Documents Without limiting the foregoing, any event or occurrence which results
or could reasonably be expected to result in losses, costs or liabilities
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in excess of (i) $3,500,000 prior to payment in full of the Subordinated Debt or
(ii) $7,500,000 thereafter shall be deemed to have had Material Adverse Effect.
"Maximum Amount" shall mean, at any particular time, an amount equal to
the Revolving Loan Commitment of all Lenders, which shall equal $20,000,000 as
of the Closing Date.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
1.5(f).
"Mexican Subsidiary" shall mean Seymour S.A. de C.V., a wholly owned
Subsidiary of Seymour.
"Mortgaged Properties" shall have the meaning assigned to it in Annex D.
"Mortgages" shall mean each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent with
respect to the Mortgaged Properties, all in form and substance satisfactory to
Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a(3) of ERISA, to which any Credit Party or ERISA Affiliate is
making, is obligated to make, or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of
them.
"Net Borrowing Availability" shall mean as of any date of determination
(a) as to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the
Aggregate Borrowing Base, in each case less the sum of the aggregate Revolving
Loan and Swing Line Loan then outstanding, or (b) as to an individual Borrower,
the lesser of (i) the Maximum Amount less the sum of the Revolving Loan and
Swing Line Loan outstanding to all other Borrowers and (ii) that Borrower's
separate Borrowing Base, less the sum of the Revolving Loan and Swing Line Loan
outstanding to that Borrower.
"Net Worth" shall mean, with respect to any Person as of any date of
determination, the book value of the assets (including, but not limited to all
general intangibles and goodwill) of such Person, minus (a) reserves applicable
thereto, and minus (b) all of such Person's liabilities on a consolidated basis
(including accrued and deferred income taxes), will be determined in accordance
with GAAP.
"Notes" shall mean the Revolving Notes, the Swing Line Notes and the Term
Notes, collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned to it
in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
in Section 1.1(a).
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"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment
of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents. Notwithstanding the foregoing,
the term "Obligations" shall exclude any portion of the Subordinated Debt.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Patent License" shall mean rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right with respect to
any invention on which a Patent is in existence.
"Patent Security Agreements" shall mean the Patent Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"Patents" shall mean all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State or Territory thereof, or any other country, and (b) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
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"Permitted Encumbrances" shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable;
(b) pledges or deposits of money securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits of money securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which any Credit Party is a party as lessee made in the ordinary course of
business; (d) deposits of money securing statutory obligations of any Credit
Party; (e) inchoate and unperfected workers', mechanics' or similar liens
arising in the ordinary course of business, so long as such Liens attach only
to Equipment, Fixtures and/or Real Estate; (f) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business and not past due, so long as such Liens attach only to Inventory; (g)
deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (h) any attachment or
judgment lien not constituting an Event of Default under Section 8.1 (j); (i)
Zoning restrictions, easements, licenses, or other similar restrictions on the
use of any Real Estate or other minor irregularities in title (including
leaseholding title) thereto, so long as the same do not materially impair the
use, value, or marketability of such Real Estate; (j) presently existing or
hereinafter created Liens in favor of Agent, on behalf of Lenders; (k) "silent"
second Liens securing payment of the Subordinated Debt, (l) the Lien of the
Jackson County Bank on the 5.33 acres located at South Airport Road, Seymour,
Indiana pursuant to a Mortgage dated October 8, 1997 between A&R Leasing, Inc.
and Jackson County Bank securing payment of $1,880,000 of Indebtedness; and (m)
Liens expressly permitted under clauses (b), (c) and (d) of Section 6.7 of the
Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other
entity or government (whether federal, state, county, city, municipal, local,
foreign, or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which any Credit Party maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreements" shall mean the Pledge Agreement executed and delivered
by Holdings as of the Closing Date, the Pledge Agreement executed and delivered
by Seymour as of the Closing Date and any pledge agreements entered into after
the Closing Date by any Credit Party (as required by the Agreement or any other
Loan Document).
"Prior Credit Agreement" shall have the meaning assigned to it in the
recitals to the Agreement.
"Prior Lender" shall mean Jackson National Life Insurance Company.
"Prior Loan Documents" shall have the meaning assigned to it in the
recitals to the Agreement.
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"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Trademark or Trademark License, or for
injury to the goodwill associated with any Trademark or Trademark License, (d)
any recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, and (e) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral, upon disposition or otherwise.
"Pro Forma" shall have the meaning assigned to it in Section 3.4(b).
"Pro Rata Share" shall mean with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan or the Swing Line Loan, the
percentage obtained by dividing (i) the Revolving Loan Commitment, including
the Swing Line Commitment of that Lender by (ii) the aggregate Revolving Loan
Commitments, including the Swing Line Commitment of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9 1;
(b) with respect to the Term Loans, the percentage obtained by dividing (i) the
Term Loan Commitment of that Lender by (ii) the aggregate Term Loan Commitments
of all Lenders, as any such percentages may be adjusted by assignments
permitted pursuant to Section 9 1; (c) with respect to all Loans, the
percentage obtained by dividing (i) the aggregate Commitments of that Lender by
(ii) the aggregate Commitments of all Lenders, as any such percentages may be
adjusted by assignments permitted pursuant to Section 9 1, and (d) with respect
to all Loans after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender by the outstanding principal balance of all Loans held by all
Lenders.
"Purchase Agreement" shall have the meaning assigned to it in the recitals
to the Agreement.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified
under Section 401(a) of the IRC.
"Qualified Public Offering" shall mean a firm underwritten public offering
of common stock registered on form S-1, S-2 or S-3 under the Securities Act of
1933, as amended, by a nationally recognized investment banking firm, resulting
in net proceeds to the issuer of at least $10,000,000, and after giving effect
to which the issuer shall be qualified for listing on the NASDAQ National
Market, the American Stock Exchange or the New York Stock Exchange.
"Ratable Share" means as to each Borrower that percentage of the principal
of each Term Loan for which that Borrower is primarily liable as set forth on
Disclosure Schedule
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(1.1(b)(v)) to the Agreement.
"Real Estate" shall have the meaning assigned to it in Section 3 6.
"Refinancing" shall mean the repayment in full by Borrowers of the Prior
Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" shall have the meaning assigned to it in
Section 1.1(c)(iii).
"Related Transactions" means each borrowing under the Revolving Loan and
the Term Loans on the Closing Date, the Acquisition, the Refinancing, the
issuance of the Subordinated Notes, the payment of all fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Related Transactions Documents.
"Related Transactions Documents" shall mean the Loan Documents, the
Acquisition Agreement, and the Subordinated Notes.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite Lenders" shall mean (a) Lenders having more than sixty-six and
two-thirds percent (66 2/3%) of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than sixty-six and two-thirds percent
(66 2/3%) of the aggregate outstanding amount of all Loans (with the Swing Line
Loan being attributed to the Lender making such Loan) and Letter of Credit
Obligations; provided that so long as all of the Commitments are held by GE
Capital and LaSalle National Bank, "Requisite Lenders" shall mean both of such
Lenders.
"Requisite Revolving Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan Commitments of
all Lenders, or (b) if the Revolving Loan Commitments have been terminated,
more than sixty-six and two-thirds percent (66 2/3%) of the aggregate
outstanding amount of the Revolving Loan (with the Swing Line Loan being
attributed to the Lender making such Loan) and Letter of Credit Obligations.
"Reserves" shall mean, with respect to the Borrowing Base of any Borrower
(a) reserves established by Agent from time to time against Eligible Inventory
pursuant to Section 5.9, (b) reserves established pursuant to Section 5.4(c),
and (c) such other reserves against Eligible Accounts or Eligible Inventory of
any Borrower which Agent may, in its reasonable credit judgment, establish from
time to time. Without limiting the generality of the foregoing, Reserves
established to ensure the payment of accrued Interest Expenses, Environmental
Liabilities or Indebtedness shall be deemed to be a reasonable exercise of
Agent's credit judgment.
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"Restricted Payment" shall mean (a) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's
Stock, (b) any payment on account of the purchase, redemption, defeasance,
sinking fund or other retirement of a Person's Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Person now or hereafter
outstanding (other than by means of cancellation of Subordinated Debt); (e) any
payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to
any Stockholder of such Person; and (g) any payment of management fees (or
other fees of a similar nature) by such Person to any Stockholder of such
Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
plan" as defined in Section 3(1) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of determination, Lenders
having a Revolving Loan Commitment.
"Revolving Loan" shall mean as the context may require, at any time, the
sum of (i) the aggregate amount of Revolving Credit Advances outstanding to any
Borrower or to all Borrowers plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of any Borrower or all Borrowers.
"Revolving Loan Commitment" shall mean (a) as to any Lender, the aggregate
commitment of such Lender to make Revolving Credit Advances (including without
duplication Swing Line Advances) and/or incur Letter of Credit Obligations as
set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Revolving Credit Advances (including without
duplication Swing Line Advances) and/or incur Letter of Credit Obligations,
which aggregate commitment shall be Twenty Million ($20,000,000) on the Closing
Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Agreement.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
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"Security Agreement" shall mean the Security Agreement of even date
herewith entered into among Agent, on behalf of itself and Lenders, and each
Credit Party that is a signatory thereto.
"Selfix" means Selfix, Inc., a Delaware corporation.
"Sellers" shall mean the shareholders of Seymour Sales on the Closing
Date.
"Seymour" shall mean Seymour Housewares Corporation, a Delaware
corporation.
"Seymour Sales" shall have the meaning assigned to it in the recitals to
the Agreement.
"Shutters" means Shutters, Inc., an Illinois corporation.
"Seymour Pledge Agreement" shall mean the Pledge Agreement dated as of the
Closing Date executed by Seymour in favor of Agent on behalf of itself and
Lenders, pledging all of the Stock of the Mexican Subsidiary.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including continent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probably liability of
such Person on its debts as the become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guarantees and pension plan
liabilities) at any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the amount which
can be reasonably be expected to become an actual or matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3all-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subordinated Debt" shall mean the Indebtedness of Borrowers evidenced by
the Subordinated Notes and any other Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subordinated Notes" shall mean those certain Senior Subordinated Notes
due on the ninth anniversary of the date hereof issued by Borrowers, jointly
and severally, in the original
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principal amount of $10,000,000, and all payment-in-kind notes issued to pay
interest with respect thereto.
"Subsidiary" shall mean, with respect to any Person, (a) any corporation
of which an aggregate of more than fifty percent (50%) of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such
Stock whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or
more Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
"Supermajority Revolving Lenders" shall mean (a) Lenders having eighty
percent (80%) or more of the Revolving Loan Commitments of all Lenders, or (b)
if the Revolving Loan Commitments have been terminated, eighty percent (80%) or
more of the aggregate outstanding amount of the Revolving Loan (with the Swing
Line Loan being attributed to the Lender making such Loan) and Letter of Credit
Obligations.
"Swing Line Advance" has the meaning assigned to it in Section 1.1 (c)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(c).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean as the context may require, at any time, the
aggregate amount of Swing Line Advances outstanding to any Borrower or to all
Borrowers.
"Swing Line Loan Participation Certificate" shall mean a certificate
delivered pursuant to Section 1.1(c)(iv).
"Swing Line Note" has the meaning assigned to it in Section 1.1(c)(ii).
"Tamor" means Tamor Corporation, a Massachusetts corporation.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions
under the laws of which Agent and Lenders are
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organized or any political subdivision thereof.
"Term A Lenders" shall mean those Lenders having Term Loan A Commitments.
"Term B Lenders" shall mean those Lenders having Term Loan B Commitments.
"Term Lenders" shall mean those Lenders having Term Loan Commitments.
"Term Loan A" shall have the meaning assigned to it in Section 1.1(b).
"Term Loan A Commitment" shall mean (a) as to any Lender with a Term Loan
A Commitment, the commitment of such Lender to make its Pro Rata Share of Term
Loan A as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan A Commitment, the aggregate commitment of all Lenders to make the
Term Loan A, which aggregate commitment shall be Fifty Million Dollars
($50,000,000) on the Closing Date.
"Term Loan B Commitment" shall mean (a) as to any Lender with a Term Loan
B Commitment, the commitment of such Lender to make its Pro Rata Share of Term
Loan B as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan B Commitment, the aggregate commitment of all Lenders to make Term
Loan B, which aggregate commitment shall be Sixty Million Dollars ($60,000,000)
on the Closing Date.
"Term Loan B" shall have the meaning assigned to it in Section 1.1(b)(2).
"Term Loan Commitment" shall mean, collectively, the Term Loan A
Commitment and the Term Loan B Commitment.
"Term Loans" shall mean all Term A Loans and all Term B Loans.
"Term Note A" shall have the meaning assigned to it in Section 1.1(b)(1).
"Term Note B" shall have the meaning assigned to it in Section 1.1(b)(2).
"Term Notes" shall mean all Term A Notes and all Term B Notes.
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged and Letter of Credit
Obligations have been cash collateralized, cancelled or backed by stand-by
letters of credit in accordance with Annex B, and none of Borrowers shall have
any further right to borrow any monies under the Agreement.
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, which any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to, or has maintained,
contributed to or had an obligation to contribute to, on behalf
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of participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals
thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with
Title IV of ERISA, all determined as of the most recent valuation date for each
such Title IV Plan using the actuarial assumptions for funding purposes in
effect under such Title IV Plan, and (b) for a period of five (5) years
following a transaction which might reasonably be expected to be covered by
Section 4069 of ERISA, the liabilities (whether or not accrued) that could be
avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of Illinois to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or any
of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to the
Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to
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statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
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ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement, Agent
and Revolving Lenders agree to incur, from time to time prior to the Commitment
Termination Date, upon the request of Borrower Representative on behalf of the
applicable Borrower and for such Borrower's account, Letter of Credit
Obligations by causing Letters of Credit to be issued (by a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion (each, an "L/C Issuer")) for such Borrower's account and guaranteed
by Agent, provided, however, that if the L/C Issuer is a Revolving Lender, then
such Letters of Credit shall not be guaranteed by Agent but rather each
Revolving Lender shall, subject to the terms and conditions hereinafter set
forth, purchase (or be deemed to have purchased) risk participations in all
such Letters of Credit issued with the written consent of Agent, as more fully
described in paragraph (b)(ii) below. The aggregate amount of all such Letter
of Credit Obligations shall not at any time exceed the least of (i) Fifteen
Million ($15,000,000) (the "L/C Sublimit"), and (ii) the Maximum Amount less
the aggregate outstanding principal balance of the Revolving Credit Advances
and the Swing Line Loan, and (iii) the Aggregate Borrowing Base less the
aggregate outstanding principal balance of the Revolving Credit Advances and
the Swing Line Loan. Furthermore, the aggregate amount of any Letter of Credit
Obligations incurred on behalf of any Borrower shall not at any time exceed
such Borrower's separate Borrowing Base less the aggregate principal balance of
the Revolving Credit Advances and the Swing Line Loan to such Borrower. Except
for two IRB Letters of Credit outstanding on the Closing Date that have an
Expiry Date of April 1, 1998, no such Letter of Credit shall have an expiry
date which is more than one year following the date of issuance thereof, and
neither Agent nor Revolving Lenders shall be under any obligation to incur
Letter of Credit Obligations in respect of, or purchase risk participations in,
any Letter of Credit having an expiry date which is later than the Commitment
Termination Date.
(b) (i) Advances Automatic; Participations. In the event that Agent or
any Revolving Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to the applicable Borrower under Section
1.1(a) of the Agreement regardless of whether a Default or Event of Default
shall have occurred and be continuing and notwithstanding any Borrower's
failure to satisfy the conditions precedent set forth in Section 2, and each
Revolving Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement. The failure of any Revolving Lender to make
available to Agent for Agent's own account its Pro Rata Share of any such
Revolving Credit Advance or payment by Agent under or in respect of a Letter of
Credit shall not relieve any other Revolving Lender of its obligation hereunder
to make available to Agent its Pro Rata Share thereof, but no Revolving Lender
shall be responsible for the failure of any other Revolving Lender to make
available such other Revolving Lender's Pro Rata Share of any such payment.
99
(ii) If it shall be illegal or unlawful for any Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Section 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (i) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as
the case may be) an undivided interest and participation equal to such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments) of
the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be)
an undivided interest and participation in such Revolving Lender's Pro Rata
Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance.
Each Revolving Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided
in the Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral. If Borrowers are required to provide cash collateral
for any Letter of Credit Obligations pursuant to the Agreement prior to the
Commitment Termination Date, each Borrower will pay to Agent for the benefit of
Revolving Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available
to be drawn under each applicable Letter of Credit outstanding for the benefit
of such Borrower. Such funds or Cash Equivalents shall be held by Agent in a
cash collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of the applicable Borrower and shall be pledged to, and subject to
the control of, Agent, for the benefit of Agent and Lenders, in a manner
satisfactory to Agent. Each Borrower hereby pledges and grants to Agent, on
behalf of Lenders, a security interest in all such funds and Cash Equivalents
held in the Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all amounts due in respect of the Letter of
Credit Obligations and other Obligations, whether or not then due. The
Agreement, including this Annex B, shall constitute a security agreement under
applicable law.
If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties
thereof to be canceled and returned, or (iii) deliver a stand-by letter (or
letters) of credit in guaranty of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration as,
and in an amount equal to 105% of the aggregate maximum amount then available
to be drawn under, the Letters of Credit to which such outstanding Letter of
Credit Obligations relate and shall be issued by a Person, and shall be subject
to such terms and conditions as are be satisfactory to Agent in its sole
discretion.
From time to time after funds are deposited in the Cash Collateral Account
by any Borrower, whether before or after the Commitment Termination Date, Agent
may apply such
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funds or Cash Equivalents then held in the Cash Collateral Account to the
payment of any amounts, in such order as Agent may elect, as shall be or shall
become due and payable by such Borrower to Lenders with respect to such Letter
of Credit Obligations of such Borrower and, upon the satisfaction in full of
all Letter of Credit Obligations of such Borrower, to any other Obligations of
any Borrower then due and payable.
No Borrower nor any Person claiming on behalf of or through any Borrower
shall have any right to withdraw any of the funds or Cash Equivalents held in
the Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to
Lenders in respect thereof, any funds remaining in the Cash Collateral Account
shall be applied to other Obligations when due and owing and upon payment in
full of such Obligations, an remaining, amount shall be paid to Borrowers or as
otherwise required by law.
(d) Fees and Expenses. Borrowers agree to pay to Agent for the benefit of
Revolving, Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (x) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (y) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "Letter of Credit Fee") in an amount equal to two percent (2.0%) per
annum multiplied by the maximum amount available from time to time to be drawn
under the applicable Letter of Credit. Such fee shall be paid to Agent for the
benefit of the Revolving Lenders in arrears, on the first day of each month.
In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance. negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two (2) Business Days prior written
notice requesting the incurrence of any Letter of Credit Obligation, specifying
the date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary and the Borrower to which such Letter of Credit Obligation relates
and describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the Letter of Credit (which
shall be acceptable to the L/C Issuer) to be guarantied. Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower Representative and approvals by Agent may be made and transmitted
pursuant to electronic codes and security measures mutually agreed upon and
established by and among Borrower Representative, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrowers to reimburse Agent
and Revolving Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Revolving Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrowers
and Revolving Lenders shall be paid strictly in accordance with the terms
hereof under all circumstances including the following circumstances:
B-3
101
(i) any lack of validity or enforceability of any Letter of Credit or the
Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, set-off, defense or other right which any
Borrower or any of their respective Affiliates or any Lender may at any time
have against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom, any such transferee may be acting), Agent, any
Lender, or any other Person, whether in connection with the Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between any
Borrower or any of their respective Affiliates and the beneficiary for which
the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of Credit
or such guaranty;
(v) any other circumstance or happening whatsoever, which is similar to
any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have occurred
and be continuing.
(g) Indemnification; Nature of Lenders' Duties. In addition to amounts
payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay
and to protect, indemnify, and save harmless Agent and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including attorneys' fees and allocated costs of internal
counsel) which Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit or guaranty
thereof, or (ii) the failure of Agent or any Lender seeking indemnification or
of any L/C Issuer to honor a demand for payment under any Letter of Credit or
guaranty thereof as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a
result of the gross negligence or willful misconduct of Agent or such Lender
(as finally determined by a court of competent jurisdiction).
As between Agent and any Lender and Borrowers, Borrowers assume all risks
of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or
B-4
102
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) for failure of the beneficiary of any Letter
of Credit to comply fully with conditions required in order to demand payment
under such Letter of Credit, provided that, in the case of any payment by Agent
under any Letter of Credit or guaranty thereof, Agent shall be liable to the
extent such payment was made solely as a result of its gross negligence or
willful misconduct (as finally determined by a court of competent jurisdiction)
in determining that the demand for payment under such Letter of Credit or
guaranty thereof complies on its face with any applicable requirements for a
demand for payment under such Letter of Credit or guaranty thereof; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in
order to make a payment under any Letter of Credit or guaranty thereof or of
the proceeds thereof; (vii) for the credit of the proceeds of any drawing under
any Letter of Credit or guaranty thereof; and (viii) for any consequences
arising from causes beyond the control of Agent or any Lender. None of the
above shall affect, impair, or prevent the vesting of any of Agent's or any
Lender's rights or powers hereunder or under the Agreement.
Nothing contained herein shall be deemed to limit or to expand any
waivers, covenant or indemnities made by Borrowers in favor of any L/C Issuer
in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer.
B-5
103
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Each Borrower shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date, each
Borrower shall (i) establish lock boxes ("Lock Boxes") at one or more of the
banks set forth on Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Lock Box) into bank accounts in such Borrower's name or any such
Subsidiary's name (collectively, the "Borrower Accounts") at banks set forth on
Disclosure Schedule (3.19) (each, a "Relationship Bank"). On or before the
Closing Date, each Borrower shall have established a concentration account in
its name (each a "Concentration Account" and collectively, the "Concentration
Accounts") at the bank or banks which shall be designated as the Concentration
Account bank for each such Borrower on Disclosure Schedule (3.19) (each a
"Concentration Account Bank" and collectively, the "Concentration Account
Banks"), which banks shall be satisfactory to Agent.
(b) On or before the Closing Date (or such later date as Agent shall
consent to in writing), each Concentration Account Bank, each bank where a
Disbursement Account is located and all other Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit
of itself and Lenders, and the applicable Borrower and Subsidiaries thereof, as
applicable, in form and substance acceptable to Agent, which shall become
operative on or prior to the Closing Date. Each such blocked account agreement
shall provide, among other things, that (i) all items of payment deposited in
such account and proceeds thereof deposited in the applicable Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of Lenders, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account, as the case may
be, other than for payment of its service fees and other charges directly
related to the administration of such account and for returned checks or other
items of payment, and (iii) from and after the Closing Date (A) with respect to
banks at which a Borrower Account is located, such bank agrees to forward
immediately all amounts in each Borrower Account to such Borrower's
Concentration Account Bank and to commence the process of daily sweeps from
such Borrower Account into the applicable Concentration Account and (B) with
respect to each Concentration Account Bank, such bank agrees to immediately
forward all amounts received in the applicable Concentration Account to the
Collection Account through daily sweeps from such Concentration Account into
the Collection Account. No Borrower shall, or shall cause or permit any
Subsidiary thereof to, accumulate or maintain cash in disbursement or payroll
accounts as of any date of determination
104
in excess of checks outstanding against such accounts as of that date and
amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Borrower Account or to replace any Concentration
Account or any Disbursement Account, provided, however, that (i) Agent shall
have consented in writing in advance to the opening of such account or Lock Box
with the relevant bank and (ii) prior to the time of the opening of such
account or Lock Box, the applicable Borrower and/or the Subsidiaries thereof,
as applicable, and such bank shall have executed and delivered to Agent a
tri-party blocked account agreement, in form and substance satisfactory to
Agent. Borrowers shall close any of their accounts (and establish replacement
accounts in accordance with the foregoing sentence) promptly and in any event
within thirty (30) days of notice from Agent that the creditworthiness of any
bank holding an account is no loner acceptable in Agent's reasonable judgment,
or as promptly as practicable and in any event within sixty (60) days of notice
from Agent that the operating performance, funds transfer and/or availability
procedures or performance with respect to accounts or lockboxes of the bank
holding such accounts or Agent's liability under any tri-party blocked account
agreement with such bank is no loner acceptable in Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which each Borrower and each Subsidiary
thereof shall have ranted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(e) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 of the Agreement and shall be
applied (and allocated) by Agent in accordance with Section 1.11 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the
Collection Account.
(f) Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to such Borrower
pursuant to Section 1.1 for use by such Borrower solely in accordance with the
provisions of Section 1.4.
(g) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
such Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by such Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by such Borrower or any such Related Person of any
checks, cash or other items or payment, deposit the same into a Borrower
Account of such Borrower. Each Borrower and each Related Person thereof
acknowledges and agrees that all cash, checks or items of payment constituting
proceeds of Collateral are the property of Agent and Lenders. All
C-2
105
proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into the applicable Borrower Accounts.
C-3
106
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
107
ANNEX D
================================================================================
SCHEDULE OF CLOSING DOCUMENTS
$130,000,000 AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December __, 1997
among
SELFIX, INC.,
TAMOR CORPORATION,
SHUTTERS, INC., and
SEYMOUR HOUSEWARES CORPORATION,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
================================================================================
2
108
RELEVANT PARTIES
A. Selfix, Inc. ("Selfix")
B. Tamor Corporation ("Tamor")
C. Shutters, Inc. ("Shutters")
D. Seymour Housewares Corporation ("Seymour")
E. Home Products International, Inc. ("Holdings")
F. General Electric Capital Corporation, as Agent ("GECC")
G. Seymour Sales ("Seymour Sales")
H. Key Corporate Capital, Inc. ("Key Corp..")
I. KZH-ING-2 Corporation ("KZH")
J. The ING Capital Senior Secured High Income Fund, L.P. ("ING - Senior")
K. The ING Capital High Income Principal Preservation Fund Holdings, LDC
("ING - Principal")
L. Archimedes Funding, L.L.C. ("Archimedes")
M. LaSalle National Bank ("LaSalle")
N. Bank Polska Kasa Opieki S.A. - Pekao S.A. Group ("PKO")
O. HP II Acquisition ("HPII")
2
109
LAW FIRMS
A. Latham & Watkins ("L&W")
B. Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C. ("MS")
C. Simpson & Thatcher ("S&T")
110
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
1. CREDIT DOCUMENTS - SENIOR SECURED FACILITY
- --------------------------------------------------------------------------------
1.1 Credit Agreement by and among the
Credit Parties and GECC L&W
- --------------------------------------------------------------------------------
1.2 Annexes to Credit Agreement
- --------------------------------------------------------------------------------
Annex A -- Definitions L&W
- --------------------------------------------------------------------------------
Annex B -- Letters of Credit L&W
- --------------------------------------------------------------------------------
Annex C -- Cash Management Systems L&W
- --------------------------------------------------------------------------------
Annex D -- Schedule of Additional
Closing Documents L&W
- --------------------------------------------------------------------------------
Annex E -- Financial Statements and
Projections - Reporting L&W
- --------------------------------------------------------------------------------
Annex F -- Collateral Reports L&W
- --------------------------------------------------------------------------------
Annex G -- Financial Covenants GECC
- --------------------------------------------------------------------------------
Annex H -- Lender's Wire Transfer GECC
Information
- --------------------------------------------------------------------------------
Annex I -- Notice Addresses L&W
- --------------------------------------------------------------------------------
Annex J -- Commitments as of Closing Date L&W
- --------------------------------------------------------------------------------
1.3 Exhibits to Credit Agreement
- --------------------------------------------------------------------------------
Exhibit 1.1(a)(i) Form of Notice of
Revolving Credit Advance L&W
- --------------------------------------------------------------------------------
Exhibit 1.1(a)(ii) Form of Revolving Note L&W
- --------------------------------------------------------------------------------
Exhibit 1.1(b)(i) Form of Term Note L&W
================================================================================
D-2
111
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
Exhibit 1.1(c)(ii) Form of Swing Line L&W
Note
- --------------------------------------------------------------------------------
Exhibit 1.5(e) Form of Notice of
Conversion/Continuation L&W
- --------------------------------------------------------------------------------
Exhibit 4.1(b) Form of Borrowing Base L&W
Certificate
- --------------------------------------------------------------------------------
Exhibit 9.1(a) Form of Assignment L&W
Agreement
- --------------------------------------------------------------------------------
1.4 Schedules to Credit Agreement
- --------------------------------------------------------------------------------
Schedule 1.1 - Responsible Individual L&W
- --------------------------------------------------------------------------------
Schedule 1.1(b)(v) - Ratable Shares GECC
- --------------------------------------------------------------------------------
Schedule 1.4 - Sources and Uses; Funds Flow
Memorandum MS
- --------------------------------------------------------------------------------
Schedule 3.2 - Executive Offices; FEIN MS
- --------------------------------------------------------------------------------
Schedule 3.4(A) - Financial Statements Borrowers
- --------------------------------------------------------------------------------
Schedule 3.4(B) - Pro Forma Borrowers
- --------------------------------------------------------------------------------
Schedule 3.4(C) - Forecasts Borrowers
- --------------------------------------------------------------------------------
Schedule 3.6 - Real Estate and Leases MS
- --------------------------------------------------------------------------------
Schedule 3.7 - Labor Matters MS
- --------------------------------------------------------------------------------
Schedule 3.8 - Ventures, Subsidiaries and
Affiliates; Outstanding Stock MS
- --------------------------------------------------------------------------------
Schedule 3.11 - Tax Matters MS
- --------------------------------------------------------------------------------
Schedule 3.12 - ERISA Plans MS
- --------------------------------------------------------------------------------
Schedule 3.13 - Litigation MS
- --------------------------------------------------------------------------------
Schedule 3.15 - Intellectual Property MS
================================================================================
D-3
112
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
Schedule 3.17 - Hazardous Materials MS
- --------------------------------------------------------------------------------
Schedule 3.18 - Insurance - Seymour MS
- --------------------------------------------------------------------------------
Schedule 3.19 - Deposit and Disbursement MS
Accounts
- --------------------------------------------------------------------------------
Schedule 3.20 - Government Contracts MS
- --------------------------------------------------------------------------------
Schedule 3.22 - Material Agreements MS
- --------------------------------------------------------------------------------
Schedule 5.1 - Trade Names MS
- --------------------------------------------------------------------------------
Schedule 6.2 - Investments MS
- --------------------------------------------------------------------------------
Schedule 6.3 - Indebtedness MS
- --------------------------------------------------------------------------------
Schedule 6.4(a) - Transactions with Affiliates MS
- --------------------------------------------------------------------------------
Schedule 6.7 - Existing Liens MS
- --------------------------------------------------------------------------------
Schedule 11.18 - Continuing Loans MS
- --------------------------------------------------------------------------------
1.5 Notes of Borrowers (as defined in the
Credit Agreement)
- --------------------------------------------------------------------------------
(a) Revolving Notes in favor of
- --------------------------------------------------------------------------------
(i) GECC L&W
- --------------------------------------------------------------------------------
(ii) PKO L&W
- --------------------------------------------------------------------------------
(iii) Key Corp. L&W
- --------------------------------------------------------------------------------
(iv) LaSalle L&W
- --------------------------------------------------------------------------------
(b) Term A Notes in favor of
- --------------------------------------------------------------------------------
(i) GECC L&W
- --------------------------------------------------------------------------------
(ii) PKO L&W
================================================================================
D-4
113
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(iii) KZH L&W
- --------------------------------------------------------------------------------
(iv) LaSalle L&W
- --------------------------------------------------------------------------------
(v) ING - Senior L&W
- --------------------------------------------------------------------------------
(vi) ING - Principal L&W
- --------------------------------------------------------------------------------
(vii) Key Corp. L&W
- --------------------------------------------------------------------------------
(c) Term B Notes in favor of
- --------------------------------------------------------------------------------
(i) ING - Senior L&W
- --------------------------------------------------------------------------------
(ii) ING - Principal L&W
- --------------------------------------------------------------------------------
(iii) KZH L&W
- --------------------------------------------------------------------------------
(iv) Key Corp. L&W
- --------------------------------------------------------------------------------
(v) GECC L&W
- --------------------------------------------------------------------------------
(d) Swing Line Note in favor of GECC L&W
- --------------------------------------------------------------------------------
1.6 Security Agreement of Credit Parties L&W
- --------------------------------------------------------------------------------
Schedule I - Filing Jurisdictions MS
- --------------------------------------------------------------------------------
Schedule II - Instruments MS
- --------------------------------------------------------------------------------
Schedule III-A - Office Locations of MS
Collateral and Records concerning Selfix's
Collateral
- --------------------------------------------------------------------------------
Schedule III - B - Office Locations of MS
Collateral and Records concerning Tamor's
collateral
- --------------------------------------------------------------------------------
Schedule III - C - Office Locations of MS
Collateral and Records concerning
Shutter's collateral
================================================================================
D-5
114
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
Schedule III - D - Office Locations of
Collateral and Records concerning
Seymour's collateral MS
- --------------------------------------------------------------------------------
Schedule IV - Patents and Trademarks MS
- --------------------------------------------------------------------------------
Exhibit A - Power of Attorney L&W
- --------------------------------------------------------------------------------
(a) Selfix L&W
- --------------------------------------------------------------------------------
(b) Tamor L&W
- --------------------------------------------------------------------------------
(c) Shutters L&W
- --------------------------------------------------------------------------------
(d) Seymour L&W
- --------------------------------------------------------------------------------
1.7 UCC-1s in favor of GECC as listed on L&W
Schedule A hereto
- --------------------------------------------------------------------------------
(a) Search Results for Seymour L&W
- --------------------------------------------------------------------------------
1.8 UCC-3s in Termination Statements from
Jackson National Life MS
- --------------------------------------------------------------------------------
1.9 Payoff letter in favor of GECC MS
- --------------------------------------------------------------------------------
1.10 Trademark Security Agreement from Seymour L&W
- --------------------------------------------------------------------------------
1.11 Patent Security Agreement from Seymour L&W
- --------------------------------------------------------------------------------
1.12 Reaffirmation of Holdings Guaranty L&W
- --------------------------------------------------------------------------------
1.13 Acquisition Agreement MS
- --------------------------------------------------------------------------------
1.14 Initial Borrowing Base Certificate for
Tamor, Selfix, Shutters and Seymour
- --------------------------------------------------------------------------------
1.15 Initial Notice of Revolving Credit Advance MS
- --------------------------------------------------------------------------------
1.16 Letter of Direction from Selfix to GECC MS
================================================================================
D-6
115
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
1.17 Lockbox Account Agreements with MS
Northern Trust
- --------------------------------------------------------------------------------
1.18 Control Agreement MS
- --------------------------------------------------------------------------------
2. CORPORATE AND ORGANIZATION
DOCUMENTS
- --------------------------------------------------------------------------------
2.1 Seymour
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states:
- --------------------------------------------------------------------------------
(i) Indiana MS
- --------------------------------------------------------------------------------
(ii) North Carolina MS
- --------------------------------------------------------------------------------
(b) Secretary's Certificate, certifying: MS
- --------------------------------------------------------------------------------
(i) Copy of Resolutions (broad MS
form) authorizing
execution and performance
of Loan Documents
- --------------------------------------------------------------------------------
(ii) Incumbency Certificate MS
- --------------------------------------------------------------------------------
(iii)Certificate of Incorporation and MS
amendments thereto
- --------------------------------------------------------------------------------
(iv) By-laws MS
- --------------------------------------------------------------------------------
(c) Certificate of Merger: Seymour MS
Sales into Seymour
- --------------------------------------------------------------------------------
(d) Officer's Certificate re: (a) no MS
required consents or approvals, (b)
no Material Adverse Effect, (c) no
material adverse change, (d) no
material Litigation, (e) no
Restricted payments and (f) no
material liabilities or decrease in
assets
================================================================================
D-7
116
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
2.2 Tamor
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states
- --------------------------------------------------------------------------------
(i) Georgia MS
- --------------------------------------------------------------------------------
(b) Secretary's Certificate, certifying:
- --------------------------------------------------------------------------------
(i) Copy of Resolutions (broad MS
form) authorizing
execution and performance
of Loan Documents
- --------------------------------------------------------------------------------
(ii) Incumbency Certificate MS
- --------------------------------------------------------------------------------
(iii)No amendments to Articles or MS
By-laws since
February 27, 1997
- --------------------------------------------------------------------------------
(c) Officer's Certificate re: (a) no MS
required consents or approvals, (b)
no Material Adverse Effect, (c) no
material adverse change, (d) no
material Litigation, (e) no
Restricted payments and (f) no
material liabilities or decrease in
assets
- --------------------------------------------------------------------------------
2.3 Selfix
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states
- --------------------------------------------------------------------------------
(i) Illinois MS
- --------------------------------------------------------------------------------
(b) Secretary's Certificate, to include
================================================================================
D-8
117
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(i) Copy of Resolutions (broad MS
form) authorizing
execution and performance
of Loan Documents
- --------------------------------------------------------------------------------
(ii) Incumbency Certificate MS
- --------------------------------------------------------------------------------
(iii)No amendments to Articles MS
or By-laws since
February 27, 1997
- --------------------------------------------------------------------------------
(c) Officer's Certificate re: (a) no MS
required consents or approvals, (b)
no Material Adverse Effect, (c) no
material adverse change, (d) no
material Litigation, (e) no
Restricted payments and (f) no
material liabilities or decrease in
assets
- --------------------------------------------------------------------------------
2.4 Shutters
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states
- --------------------------------------------------------------------------------
(i) Illinois MS
- --------------------------------------------------------------------------------
(b) Secretary's Certificate, to include
- --------------------------------------------------------------------------------
(i) Copy of Resolutions (broad MS
form) authorizing
execution and performance
of Loan Documents
- --------------------------------------------------------------------------------
(ii) Incumbency Certificate MS
- --------------------------------------------------------------------------------
(iii)No amendments to Articles MS
or By-laws since
February 27, 1997
================================================================================
D-9
118
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(c) Officer's Certificate re: (a) no MS
required consents or approvals, (b)
no Material Adverse Effect, (c) no
material adverse change, (d) no
material Litigation, (e) no
Restricted payments and (f) no
material liabilities or decrease in
assets
- --------------------------------------------------------------------------------
2.5 Holdings
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states
- --------------------------------------------------------------------------------
(b) Secretary's Certificate, to include
- --------------------------------------------------------------------------------
(i) Copy of Resolutions (broad MS
form) authorizing
execution and performance
of Loan Documents
- --------------------------------------------------------------------------------
(ii) Incumbency Certificate MS
- --------------------------------------------------------------------------------
(iii)No amendments to Articles MS
or By-laws since
February 27, 1997
- --------------------------------------------------------------------------------
(c) Officer's Certificate re: (a) no MS
required consents or approvals, (b)
no Material Adverse Effect, (c) no
material adverse change, (d) no
material Litigation, (e) no
Restricted payments and (f) no
material liabilities or decrease in
assets
- --------------------------------------------------------------------------------
(d) Solvency Certificate MS
- --------------------------------------------------------------------------------
2.6 HP II Acquisition Corp.
================================================================================
D-10
119
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(a) Certificate of Good Standing (with MS
verification of tax status) in the
following states
- --------------------------------------------------------------------------------
3.0 Opinion of MS MS
- --------------------------------------------------------------------------------
4.0 Subordinated Notes in favor of L&W
- --------------------------------------------------------------------------------
(i) GECC in the amount L&W
of $5,000,000
- --------------------------------------------------------------------------------
(ii)Archimedes in the amount L&W
of $5,000,000
- --------------------------------------------------------------------------------
(a) Note Purchase Agreement L&W
- --------------------------------------------------------------------------------
Schedule 3.2 - Success Fee L&W
- --------------------------------------------------------------------------------
Schedule 5.3 - Defaults MS
- --------------------------------------------------------------------------------
Schedule 5.4(B) - MS
Capitalization
- --------------------------------------------------------------------------------
Schedule 5.7 - Audits and MS
Investigations
- --------------------------------------------------------------------------------
Schedule 5.8 - Employee MS
Matters
- --------------------------------------------------------------------------------
Schedule 5.11 - Pending MS
and Threatened Litigation
- --------------------------------------------------------------------------------
Schedule 8.6 - Transactions MS
with Affiliates
- --------------------------------------------------------------------------------
Exhibit 1.1 - Form of MS
Senior Subordinated Note
- --------------------------------------------------------------------------------
Exhibit 7.1 - Officers' MS
Certificate
- --------------------------------------------------------------------------------
(b) Subordinated Note Security MS
Agreement
================================================================================
D-11
120
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
Schedule I - Filing Jurisdictions MS
- --------------------------------------------------------------------------------
Schedule IIA - Location of MS
Records and Certain Collateral
of Selfix
- --------------------------------------------------------------------------------
Schedule IIB - Location of Records MS
and Certain Collateral of Tamor
- --------------------------------------------------------------------------------
Schedule IIC - Location of Records MS
and Certain Collateral of Shutters
- --------------------------------------------------------------------------------
Schedule IID - Location of MS
Records and Certain Collateral of
Seymour
- --------------------------------------------------------------------------------
(c) UCC-1 Financing Statement in MS
favor of GE Capital as Agent for
Subordinated Lenders in each
jurisdiction listed on Schedule B
hereto
- --------------------------------------------------------------------------------
(d) Holdings Subordinated Guaranty L&W
- --------------------------------------------------------------------------------
5.0 Amendment to existing Pledge Agreement L&W
- --------------------------------------------------------------------------------
(a) Share certificates for stock of Borrowers
Seymour
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
5.1 Seymour Pledge Agreement in favor of L&W
GECC, as Agent
- --------------------------------------------------------------------------------
(a) Share Certificates for Common Borrowers
Stock of Seymour S.A. de C.V.
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(b) Share Certificates for Common Borrowers
Stock of Rose's Holdings, Inc.
- --------------------------------------------------------------------------------
(i) Stock Powers MS
================================================================================
D-12
121
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(c) Share Certificates for Common of Borrowers
Stock Ames Department Stores,
Inc.
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(d) Share Certificates for Common Borrowers
Stock of Hills Stores Company
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(e) Share Certificates for Preferred Borrrowers
Stock of Hills Stores Company
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(f) Share Certificates for Common Borrowers
Stock of Federated Department
Stores, Inc. (141 Shares)
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(g) Share Certificates for Common Borrowers
Stock of Federated Department
Stores, Inc. (39 Shares)
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(h) Share Certificates for Common Borrowers
Stock of Federated Department
Stores, Inc. (66 Shares)
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
(i) Stock Certificates for Common Borrowers
Stock of Best Products Co., Inc.
- --------------------------------------------------------------------------------
(i) Stock Powers MS
- --------------------------------------------------------------------------------
5.2 Intercompany Notes in favor of Seymour L&W
- --------------------------------------------------------------------------------
(a) Tamor L&W
================================================================================
D-13
122
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(b) Shutters L&W
- --------------------------------------------------------------------------------
(c) Selfix L&W
- --------------------------------------------------------------------------------
6.0 Accountants Letter L&W
- --------------------------------------------------------------------------------
7.0 Appointment of Agent for Service L&W
- --------------------------------------------------------------------------------
8.0 Fee Letter - Senior Debt L&W
- --------------------------------------------------------------------------------
8.1 Fee Letter - Subordinated Debt L&W
- --------------------------------------------------------------------------------
10.0 REAL ESTATE DOCUMENTS
- --------------------------------------------------------------------------------
10.1 Amendments to Landlord Waiver L&W
and Consent with respect to following
leaseholds
- --------------------------------------------------------------------------------
(a) West 47th Street L&W
Chicago, Illinois - Selfix
- --------------------------------------------------------------------------------
(b) 5555 South Archer Avenue L&W
Chicago, Illinois - Selfix
- --------------------------------------------------------------------------------
(c) 3016 West Georgia Street L&W
Louisiana, Missouri - Tamor
- --------------------------------------------------------------------------------
(i) Estoppel Certificate MS
- --------------------------------------------------------------------------------
(ii) Second Amendment to Lease MS
- --------------------------------------------------------------------------------
(d) 634 Crawford Street L&W
Fitchburg, Massachusetts - Tamor
- --------------------------------------------------------------------------------
(e) 12130 Route 173 L&W
Hebron, Illinois - Shutters
- --------------------------------------------------------------------------------
10.2 Landlord Waivers and Consents with respect L&W
to the following leaseholds
- --------------------------------------------------------------------------------
(a) South Airport Road L&W
Seymour, Indiana - Seymour
================================================================================
D-14
123
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(i) Landlord Certification L&W
- --------------------------------------------------------------------------------
(ii) Memorandum of Lease MS
- --------------------------------------------------------------------------------
(iii) Non-Disturbance and MS
Attornment Agreement
- --------------------------------------------------------------------------------
(b) Leominster Lease - Tamor L&W
- --------------------------------------------------------------------------------
(i) Landlord Certification L&W
- --------------------------------------------------------------------------------
10.3 Illinois Property L&W
- --------------------------------------------------------------------------------
(a) Amendment to First Leasehold L&W
Mortgage, Assignment of Rents
and Security Agreement - 47th
Street - Selfix
- --------------------------------------------------------------------------------
(i) Title Policy for First L&W
Leasehold Mortgage
- --------------------------------------------------------------------------------
(b) Amendment to First Mortgage, L&W
Assignment of Rents and Security
Agreement -Hebron - Shutters
- --------------------------------------------------------------------------------
(i) Title Policy for First Mortgage L&W
- --------------------------------------------------------------------------------
(c) Second Leasehold Mortgage, L&W
Assignment of Rents and Security
Agreement - 47th Street - Selfix
- --------------------------------------------------------------------------------
(i) Title Policy for Second L&W
Leasehold Mortgage
- --------------------------------------------------------------------------------
(ii) Release of Prior Second L&W
Mortgage
- --------------------------------------------------------------------------------
(d) Second Mortgage, Assignment of L&W
Rents and Security Agreement -
Hebron - Shutters
================================================================================
D-15
124
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(i) Title Policy for Second L&W
Mortgage
- --------------------------------------------------------------------------------
(ii) Release of Prior Second L&W
Mortgage
- --------------------------------------------------------------------------------
10.4 Missouri Property L&W
- --------------------------------------------------------------------------------
(a) Amendment to First Leasehold L&W
Deed of Trust, Assignment of
Rents and Leases and Security
Agreement -Louisiana, Missouri -
Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for First Deed L&W
of Trust
- --------------------------------------------------------------------------------
(b) Second Leasehold Deed of Trust, L&W
Assignment of Rents and Leases
and Security Agreement -
Louisiana, Missouri - Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for Second L&W
Deed of Trust
- --------------------------------------------------------------------------------
(ii) Release of Prior Second L&W
Deed of Trust
- --------------------------------------------------------------------------------
10.5 Massachusetts Property L&W
- --------------------------------------------------------------------------------
(a) Amendment to First Mortgage, L&W
Assignment of Rents and Leases,
Security Agreement and Fixture
Filing-Leominster, Massachusetts -
Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for First L&W
Mortgage
================================================================================
D-16
125
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(b) Second Mortgage, Assignment of L&W
Rents and Leases, Security
Agreement and Fixture Filing -
Leominster, Massachusetts -
Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for Second L&W
Mortgage
- --------------------------------------------------------------------------------
(ii) Release of Prior Second L&W
Mortgage
- --------------------------------------------------------------------------------
10.6 Georgia Property L&W
- --------------------------------------------------------------------------------
(a) Amendment to First Deed to L&W
Secure Debt, Assignment of Rents
and Leases and Security
Agreement - Thomasville, Georgia
- Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for First L&W
Mortgage
- --------------------------------------------------------------------------------
(b) Second Deed to Secure Debt, L&W
Assignment of Rents and Leases
and Security Agreement -
Thomasville, Georgia - Tamor
- --------------------------------------------------------------------------------
(i) Title Policy for Second L&W
Mortgage
- --------------------------------------------------------------------------------
(ii) Release of Prior Second L&W
Deed
- --------------------------------------------------------------------------------
10.7 Indiana Property L&W
- --------------------------------------------------------------------------------
(a) Mortgage, Assignment of Rents L&W
and Security Agreement and
Financing Statement (Fixture
Filing) - Seymour
================================================================================
D-17
126
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(b) Signed, marked-up commitment MS
for lender's policy of title
insurance covering first priority
mortgage (including appropriate
endorsements) (final policies to be
delivered post-closing)
- --------------------------------------------------------------------------------
(c) Survey (new or recertified and Borrowers
sufficient to remove exceptions
from title commitment)
- --------------------------------------------------------------------------------
(d) Second Mortgage, Assignment of L&W
Rents and Security Agreement and
Financing Statement (Fixture
Filing) - Seymour
- --------------------------------------------------------------------------------
(e) Signed, marked-up commitment MS
for lender's policy of title
insurance covering second priority
mortgage (including appropriate
endorsements) (final policies to be
delivered post-closing)
- --------------------------------------------------------------------------------
(f) Corrective Corporate Limited MS
Warranty Deed re: South Leased
Property
- --------------------------------------------------------------------------------
10.8 North Carolina Property
- --------------------------------------------------------------------------------
(a) Deed of Trust, Assignment of L&W
Rents and Security Agreement -
Seymour
- --------------------------------------------------------------------------------
(b) Signed, marked-up commitment MS
for lender's policy of title
insurance covering first priority
mortgage (including appropriate
endorsements) in favor of GECC
as agent (final policies to be
delivered post-closing)
================================================================================
D-18
127
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
(c) Survey (new or recertified and Borrowers
sufficient to remove exceptions
from title commitment)
- --------------------------------------------------------------------------------
(d) Second Deed of Trust Assignment L&W
of Rents and Security Agreement -
Seymour
- --------------------------------------------------------------------------------
(e) Signed, marked-up commitment MS
for lender's policy of title
insurance covering second priority
mortgage (including appropriate
endorsements) in favor of GECC
as agent (final policies to be
delivered post-closing)
- --------------------------------------------------------------------------------
(f) Request for Notice L&W
- --------------------------------------------------------------------------------
10.9 Environmental Reports - Phase I
- --------------------------------------------------------------------------------
(a) Seymour Borrowers
- --------------------------------------------------------------------------------
10.10 General Title Insurance Documents
- --------------------------------------------------------------------------------
(a) GAP Affidavits MS
- --------------------------------------------------------------------------------
(b) Owner's Affidavits MS
- --------------------------------------------------------------------------------
(c) Affidavits of No New MS
Improvements to Survey
- --------------------------------------------------------------------------------
11.FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
11.1 Certificate of Chief Executive Officer or L&W
Chief Financial Officer of Home Products
International, Inc.
- --------------------------------------------------------------------------------
12.OTHER DOCUMENTS
- --------------------------------------------------------------------------------
12.1 Certificates or Policies of Insurance re
Seymour MS
================================================================================
D-19
128
================================================================================
Responsible
Party
- --------------------------------------------------------------------------------
12.2 Loss Payee Endorsement re Seymour's
casualty insurance L&W/Borrowers
- --------------------------------------------------------------------------------
12.3 Government Approvals
H-S-R early termination Borrowers
- --------------------------------------------------------------------------------
12.4 Evidence of $14.2 million stock issuance
in connection with the Acquisition Borrowers
- --------------------------------------------------------------------------------
12.5 Solvency opinion of Valuation Research
- --------------------------------------------------------------------------------
12.6 Bailee Letters for the following locations: MS
- --------------------------------------------------------------------------------
(a) North Carolina
- --------------------------------------------------------------------------------
(b) Virginia
- --------------------------------------------------------------------------------
12.7 Post-Closing Matters Agreement L&W
================================================================================
D-20
129
SCHEDULE A
UCC FINANCING STATEMENTS FILED AGAINST SEYMOUR HOUSEWARES
CORPORATION UNDER THE AMENDED AND RESTATED CREDIT AGREEMENT
DEBTOR JURISDICTION
------ ------------
Seymour Housewares Corporation, a Delaware Secretary of State, Texas
corporation
885 North Chestnut Street State Corporations Commission, Virginia
Seymour, Indiana 47274
City of Richmond, Virginia
Secretary of State, North Carolina
Anson County, North Carolina
Iredell County, North Carolina
Iredell County, North Carolina (Fixtur Filing)
Lincoln County, North Carolina
Secretary of State, Indiana
Jackson County, Indiana
Jackson County, Indiana (Fixture Filing)
Secretary of State, Illinois
Secretary of State, South Carolina
Fayette County, Kentucky
Jefferson County, Kentucky
Aken County, South Carolina
Lancaster County, South Carolina
Forsythe County, North Carolina
Tamor Corporation Secretary of State, Illinois
106 Carter Street
Leominster, Massachusetts 01453
D-21
130
SCHEDULE B
UCC FINANCING STATEMENTS FILED AGAINST SEYMOUR HOUSEWARES
CORPORATION, SHUTTERS, INC., SELFIX, INC., AND TAMOR CORPORATION
UNDER THE NOTE PURCHASE AGREEMENT
DEBTOR JURISDICTION
------ ------------
Seymour Housewares Corporation, a Delaware Secretary of State, Texas
corporation
State Corporations Commission, Virginia
City of Richmond, Virginia
Secretary of State, North Carolina
Iredell County, North Carolina
Iredell County, North Carolina (Fixture Filing)
Anson County, North Carolina
Lincoln County, North Carolina
Secretary of State, Indiana
Jackson County, Indiana
Jackson County, Indiana (Fixture Filing)
Secretary of State, Illinois
Secretary of State, South Carolina
Fayette County, Kentucky
Jefferson County, Kentucky
Aken County, South Carolina
Lancaster County, South Carolina
Forsythe County, North Carolina
D-22
131
DEBTOR JURISDICTION
------ ------------
Tamor Corporation Secretary of State, Illinois
106 Carter Street
Leominster, Massachusetts 01452 Secretary of State, Missouri
Pike County, Missouri
Pike County, Missouri (Fixture Filing)
Secretary of the Commonwealth,
Massachusetts
Selfix, Inc. Secretary of State, Illinois
4501 West 47th Street
Chicago, Illinois 60632 Cook County, Illinois (Fixture Filing)
Shutters, Inc. Secretary of State, Illinois
12213 Route 173
Hebron, Illinois McHenry County, Illinois (Fixture Filing)
D-23
132
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND FORECASTS REPORTING
Borrowers shall deliver or cause to be delivered to Agent or to Agent and
Lenders as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30) days
after the end of each Fiscal Month, financial information regarding Holdings
and its Subsidiaries, certified by the Chief Financial Officer of Borrower
Representative, consisting of consolidated and consolidating (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Month; (ii) unaudited statements of income and cash flows
for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Forecasts for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Borrower Representative that (i) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position and results of operations of Borrowers and
their Subsidiaries, on a consolidated and consolidating basis, in each case as
at the end of such month and for the period then ended and (ii) any other
information presented is true, correct and complete in all material respects
and that there was no Default or Event of Default in existence as of such time
or, if a Default or Event of Default shall have occurred and be continuing
describing the nature thereof and all efforts undertaken to cure such Default
or Event of Default;
(b) Quarterly Financials. To Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, consolidated and consolidating
financial information regarding Holdings and its Subsidiaries, certified by the
Chief Financial Officer of Borrower Representative, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited statements of income
and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Forecasts for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments). Such financial
information shall be accompanied by (A) a statement in reasonable detail (each,
a "Compliance Certificate" showing the calculations used in determining
compliance with each of the financial covenants set forth on Annex G which is
tested on a quarterly basis and (B) the certification of the Chief Financial
Officer of Borrower Representative that (i) such financial information presents
fairly in accordance with GAAP (subject to normal yearend adjustments) the
financial position, results of operations and statements of cash flows of
Holdings and its Subsidiaries, on both a consolidated and consolidating basis,
as at the end of such Fiscal Quarter and for the
133
period then ended, (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default shall
have occurred and be continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default In addition Borrowers shall
deliver to Agent and Lenders, within forty-five (45) days after the end of each
Fiscal Quarter, a management discussion and analysis which includes a
comparison to budget for that Fiscal Quarter and a comparison of performance
for that Fiscal Quarter to the corresponding period in the prior year;
(c) Operating Plan. To Agent and Lenders, as soon as available, but not
later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for each Borrower, approved by the Board of Directors of such
Borrower, for the following year, which will include a statement of all of the
material assumptions on which such plan is based, will include monthly balance
sheets and a monthly budget for the following year and will integrate sales,
gross profits, operating expenses, operating profit, cash flow Forecasts and
Borrowing Availability Forecasts all prepared on the same basis and in similar
detail as that on which operating results are reported (and in the case of cash
flow Forecasts, representing management's good faith estimates of future
financial performance based on historical performance), and including plans for
personnel, Capital Expenditures and facilities;
(d) Annual Audited Financials. To Agent and Lenders, within ninety (90)
days after the end of each Fiscal Year, audited Financial Statements for
Holdings and its Subsidiaries on a consolidated and consolidating basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year and the figures contained in the Forecasts for such Fiscal
Year, which Financial Statements shall be prepared in accordance with GAAP,
certified without qualification, by an independent certified public accounting
firm of national standing or otherwise acceptable to Agent. Such Financial
Statements shall be accompanied by (i) a statement prepared in reasonable
detail showing the calculations used in determining compliance with each of the
financial covenants set forth on Annex G, (ii) a report from such accounting
firm to the effect that, in connection with their audit examination, nothing
has come to their attention to cause them to believe that a Default or Event of
Default has occurred (or specifying those Defaults and Events of Default that
they became aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was made with
respect to the existence of Defaults or Events of Default, (iii) a letter
addressed to Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Agent and subject to standard qualifications taken
by nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm's certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters, and (v) the
certification of the Chief Executive Officer or Chief Financial Officer of
Holdings that all such Financial Statements present fairly in accordance with
GAAP the financial position, results of operations and statements of cash flows
of Borrowers and their Subsidiaries on a consolidated and consolidating basis,
as at the end of such year and for the period then ended, and that there was no
Default or Event of Default in existence as of such time
E-2
134
or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default
or Event of Default;
(e) Management Letters. To Agent and Lenders, within five (5) Business
Days after receipt thereof by any Credit Party, copies of all management
letters, exception reports or similar letters or reports received by such
Credit Party from its independent certified public accountants;
(f) Default Notices. To Agent and Lenders, as soon as practicable, and in
any event within five (5) Business Days after an executive officer of any
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event which has had a Material Adverse Effect telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event
including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business
Day;
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon
their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by an Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material adverse changes or developments in the business of any such Person;
(h) Subordinated Debt and Equity Notices. To Agent and Lenders, as soon
as practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and
within two (2) Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt
notice of such event of default;
(i) Supplemental Schedules. To Agent and Lenders, supplemental
disclosures, if any, required by Section 5.6 of the Agreement;
(j) Litigation. To Agent and Lenders in writing, promptly upon learning
thereof, notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $100,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or
its assets or against any Credit Party or ERISA Affiliate in connection with
any Plan, (iv) alleges criminal misconduct by any Credit Party, or (v) alleges
the violation of any law regarding, or seeks remedies in connection with any
Environmental Liabilities,
(k) Insurance Notices. To Agent and Lenders, disclosure of losses or
casualties required by Section 5 4 of the Agreement;
(l) To Agent and Lenders, copies of (i) any and all default notices
received under or with respect to any leased location or public warehouse where
Collateral is located, and (ii) such other notices or documents as Agent may
request in its reasonable discretion; and
E-3
135
(m) Other Documents. To Agent and Lenders, such other financial and other
information respecting any Credit Party's business or financial condition as
Agent or any Lender shall from time to time, request.
E-4
136
ANNEX F (Section 4.1 (b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent and any Lender that has requested copies thereof in writing,
on the first Business Day of each Fiscal Month as of the last day of the prior
Fiscal Month, a Borrowing Base Certificate with respect to each Borrower, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; provided, however, if Agent or
Requisite Lenders request in writing that each Borrower deliver a weekly
Borrowing Base Certificate, Borrowers shall deliver to Agent and any Lender
that has requested copies thereof in writing, the Borrowing Base Certificate
and supporting detail and documentation described above on the first Business
Day of each week as of the last day of the prior week;
(b) To Agent, upon its request, and in no event less frequently than five
(5) Business Days after the end of each Fiscal Month (together with a copy of
all or any part of such delivery requested by any Lender in writing after the
Closing Date), each of the following:
(i) with respect to each Borrower, a summary of Inventory by location
and type with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be requested
by Agent in its reasonable discretion; and
(ii) with respect to each Borrower, a monthly trial balance showing
Accounts outstanding aged from invoice due date as follows: 1 to 30 days, 31
to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(c) To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex E, a reconciliation of the Accounts
trial balance and month-end Inventory reports of each Borrower to such
Borrower's general ledger and monthly Financial Statements delivered pursuant
to such Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the annual Financial
Statement delivered pursuant to Annex E, (i) a listing of government contracts
of each Borrower subject to the Federal Assignment of Claims Act of 1940; and
(ii) a list of any applications for the registration of any Patent, or
Trademark with the United States Patent and Trademark Office or any similar
office or agency which any Credit Party thereof has filed in the prior Fiscal
Quarter;
(e) Each Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, which such Borrower or any of its
Subsidiaries may in their
137
discretion have made, or caused any other Person to have made on their behalf,
of all or any portion of their Inventory (and, if a Default or an Event of
Default shall have occurred and be continuing, each Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(f) Each Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request at any time after the occurrence
and during the continuance of a Default or an Event of Default, such appraisals
to be conducted by an appraiser, and in form and substance, satisfactory to
Agent; and
(g) Such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral of any or all Credit Parties as Agent shall from
time to time request in its reasonable discretion.
F-2
138
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Holdings and its Subsidiaries on a
consolidated basis (a) shall not make Capital Expenditures in excess of
$12,000,000 during the Fiscal Year ending in December of 1998, (b) shall not
make Capital Expenditures in excess of $13,000,000 during the Fiscal Year
ending in December of 1999, and (c) shall not make Capital Expenditures in
excess of $13,500,000 during any Fiscal Year thereafter.
(b) Minimum Fixed Charge Coverage Ratio. Holdings and its Subsidiaries
shall have on a consolidated basis at the end of each Fiscal Quarter set forth
below, a Fixed Charge Coverage Ratio for the 12-month period then ended (or
with respect to the Fiscal Quarters ending on or before September 30,1998, the
period commencing on December 28, 1997 and ending on the last day of such
Fiscal Quarter) of not less than the following:
1.15 to 1.0 for each Fiscal Quarter ending in June, 1998; September, 1998;
December, 1998; and March 1999;
1.14 to 1.0 for each Fiscal Quarter ending in June, 1999; September, 1999; and
December, 1999;
1.13 to 1.0 for each Fiscal Quarter ending in March, 2000; June, 2000;
September, 2000; December, 2000; March, 2001; June 30, 2001;
September, 2001; and December, 2001;
1.17 to 1.0 for Fiscal Quarter ending in March, 2002;
1.20 to 1.0 for each Fiscal Quarter ending in June, 2002; September, 2002;
December, 2002; March, 2003; June, 2003; September, 2003;
December, 2003; and March, 2004;
1.0 to 1.0 for each Fiscal Quarter ending in June, 2004; September, 2004;
December 2004; March, 2005; June, 2005; September, 2005; December,
2005; and March, 2006;
1.10 to 1.0 for the Fiscal Quarter ending in June, 2006; and
each Fiscal Quarter ending thereafter.
(c) Minimum EBITA. Holdings and its Subsidiaries on a consolidated basis
shall have, at the end of each Fiscal Quarter set forth below, EBITA for the
twelve month period then ending (or with respect to the Fiscal Quarters ending
on or before September 30, 1998, the period commencing on December 28, 1997 and
ending on the last day of such Fiscal Quarter) of not less than the following:
139
Period EBITA
------ -----
March of 1998 $ 5,600,000
June of 1998 $13,900,000
September of 1998 $20,800,000
December of 1998 $27,800,000
March of 1999 $28,700,000
June of 1999 $29,500,000
September of 1999 $30,300,000
December of 1999 $31,100,000
March of 2000 $32,200,000
June of 2000 $33,300,000
September of 2000 $34,400,000
December of 2000 $35,500,000
March of 2001 $35,900,000
June of 2001 $36,300,000
September of 2001 $36,800,000
December of 2001 $37,200,000
March of 2002 $37,700,000
June of 2002 $38,200,000
September of 2002 $38,600,000
December of 2002 $39,100,000
March of 2003 $39,600,000
June of 2003 $40,100,000
September of 2003 $40,600,000
G-2
140
December of 2003 $41,100,000
March of 2004 $41,600,000
June of 2004 $42,100,000
September of 2004 $42,600,000
December of 2004 $43,100,000
March of 2005 $43,600,000
June of 2005 $44,200,000
September of 2005 $44,700,000
December of 2005 $45,300,000
March of 2006 $45,800,000
June of 2006 $46,400,000
September of 2006 $47,000,000
December of 2006 $47,500,000
and each Fiscal Quarter thereafter $47,500,000
(d) Minimum Net Worth. Holdings and its Subsidiaries on a consolidated
basis shall maintain at all times Net Worth equal to or greater than
$55,200,000 measured as of the last day of each Fiscal Quarter and increased by
an amount equal to fifty percent (50%) of the cumulative positive net income of
Holdings and its Subsidiaries on a consolidated basis from the Closing Date
through the last day of that Fiscal Quarter.
(e) Minimum Interest Coverage Ratio. Holdings and its Subsidiaries on a
consolidated basis shall have at the end of each Fiscal Quarter set forth
below, an Interest Coverage Ratio for the 12-month period then ended (or with
respect to the Fiscal Quarters ending on or before September 30, 1997, the
period commencing on December 28, 1997 and ending on the last day of such
Fiscal Quarter) of not less than the following:
G-3
141
2.0 to 1.0 for each Fiscal Quarter ending in March of 1998; June
of 1998; September of 1998; and December of 1998
2.3 to 1.0 for the Fiscal Quarter ending in March of 1999
2.5 to 1.0 for the Fiscal Quarter ending in June of 1999
2.6 to 1.0 for the Fiscal Quarter ending in September of 1999
2.7 to 1.0 for the Fiscal Quarter ending in December of 1999
2.9 to 1.0 for the Fiscal Quarter ending in March of 2000
3.1 to 1.0 for the Fiscal Quarter ending in June of 2000
3.3 to 1.0 for the Fiscal Quarter ending in September 2000
3.5 to 1.0 for the Fiscal Quarter ending in December of 2000
3.7 to 1.0 for the Fiscal Quarter ending in March of 2001
3.9 to 1.0 for the Fiscal Quarter ending in June of 2001
4.0 to 1.0 for the Fiscal Quarter ending in September of 2001
4.4 to 1.0 for the Fiscal Quarter ending in December of 2001
4.7 to 1.0 for the Fiscal Quarter ending in March of 2002
5.0 to 1.0 for the Fiscal Quarter ending in June of 2002
5.3 to 1.0 for the Fiscal Quarter ending in September of 2002
5.8 to 1.0 for the Fiscal Quarter ending in December of 2002
6.2 to 1.0 for the Fiscal Quarter ending in March of 2003
6.6 to 1.0 for the Fiscal Quarter ending in June of 2003
7.1 to 1.0 for the Fiscal Quarter ending in September of 2003
7.7 to 1.0 for the Fiscal Quarter ending in December of 2003
9.0 to 1.0 for the Fiscal Quarter ending in March of 2004
10.0 to 1.0 for the Fiscal Quarter ending in June of 2004 and
each Fiscal Quarter end thereafter.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided however that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by any Borrower's certified
public accountants; (c) purchase accounting adjustments under A.P.B.16 and/or
17 and EITF 88-16, and the application of the accounting principles set forth
in FASB 109, including the establishment of reserves pursuant thereto and
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142
any subsequent reversal (in whole or in part) of such reserves; and (d) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made subsequent
to the Closing Date (including capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting. Change If
Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.
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143
ANNEX H (SECTION 9.9(a))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA No 021001033
Account No: 50232854
Account Name: GECC/CF Depositor
Reference: Selfix Inc.
Reference Number: CFC 4075
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144
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
Merchant Banking Group
10 South LaSalle Street, Suite 2700
Chicago, Illinois 60603
Attention: Selfix Account Manager
Telecopier No: (312) 419-5992
Telephone No: (312) 419-0985
with copies to:
Latham & Watkins
5800 Sears Tower
Chicago, Illinois 60603
Attention: David G. Crumbaugh
Telecopier No (312) 993-9767
Telephone No: (312) 876-7660
and
General Electric Capital Corporation
201 High Ride Road
Stamford, Connecticut 06927-5100
Attention: Corporate Counsel
Telecopier No: (203) 316-7889
Telephone No: (203) 316-7552
(B) If to any Borrower, to Borrower Representative, at
Selfix, Inc.
4501 West 47th Street
Chicago, Illinois 60632
Attention: James Tennant
Telecopier No: (773) 890-8901
Telephone No: (773) 890-8916
145
with copies to:
Much, Shelist, Freed, Denenberg,
Ament, Bell & Rubenstein
200 N. LaSalle Street
Suite 2100
Chicago, Illinois 60601
Attention: Jefrey C. Rubenstein
Telecopier No: (312) 621-1750
Telephone No: (312) 346-3100
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146
ANNEX J
to
CREDIT AGREEMENT
COMMITMENTS
LENDER REVOLVING LOAN TERM LOAN A TERM LOAN B
- ------ -------------- ----------- -----------
General Electric Capital Corporation 4,500,000* 12,000,000 28,500,000
Key Corporate Capital, Inc. 7,000,000 14,000,000 9,000,000
KZH-ING-2 Corporation 2,500,000 7,500,000
The ING Capital Senior Secured High
Income Fund, L.P. 2,500,000 7,500,000
ING High Income Principal
Preservation Fund Holdings, LDC 2,500,000 7,500,000
LaSalle National Bank 7,000,000 13,000,000
Bank Polska Kasa Opieki S.A. -
Pekao S.A. Group, New York Branch 1,500,000 3,500,000
---------- ---------- ----------
20,000,000 50,000,000 60,000,000
*Including a Swing Line Commitment of $2,000,000
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