<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: OCTOBER 27, 1999
ACORN PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-22717 22-3265462
- ----------------- --------------------- ----------------------
(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
390 Dublin Avenue
Columbus, Ohio 43215
(614) 222-4400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
500 Dublin Avenue
Columbus, Ohio 43215
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS.
On October 28, 1999, UnionTools, Inc. ("UnionTools"), the operating
subsidiary of Acorn Products, Inc. (the "Company"), entered into a Sixth
Amendment (the "Amendment") to the Amended and Restated Credit Agreement dated
as of May 29, 1997 (as amended, the "Credit Agreement"), by and among
UnionTools, the Company, H.B. Sherman Manufacturing Company, UnionTools
Irrigation, Inc., Heller Financial, Inc., in its capacity as Agent and as a
Lender, and the lending institutions from time to time signatory thereto. In
addition to amending certain terms of the Credit Agreement, the Amendment
expands the existing credit facility to include an additional $6 million
subordinated term loan funded by investment funds managed by Oaktree Capital
Management LLC and Trust Company of the West, which collectively constitute the
majority stockholder of the Company.
A copy of the Company's press release announcing the foregoing, as well as
conformed copies of the transaction documents underlying the same, are set forth
as Exhibits 99.1 through 99.4 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
99.1 Press release issued by the Company on October 28, 1999.
99.2 Sixth Amendment to Amended and Restated Credit Agreement
dated as of October 28, 1999, by and among UnionTools, the
Company, H.B. Sherman Manufacturing Company, UnionTools
Irrigation, Inc., Heller Financial, Inc., in its capacity as
Agent and Lender, and the lending institutions signatory
thereto.
99.3 Term Loan Note dated October 28, 1999, issued by UnionTools
in favor of Heller Financial, Inc. pursuant to the Sixth
Amendment to Amended and Restated Credit Agreement.
99.4 Subordinated Participation Agreement dated as of October 28,
1999, by and between Heller Financial, Inc., in its
individual capacity and as Agent, and OCM Principal
Opportunities Fund, L.P. and TCW Special Credits, as general
partner and/or investment manager of the funds and accounts
set forth on Schedule I-A thereto.
</TABLE>
2
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
On October 27, 1999, the Board of Directors of the Company approved a
change in the Company's fiscal year end from the Friday closest to July 31 to
December 31. Pursuant to Rule 13a-10 of the Securities and Exchange Act of
1934, the Company will file with the Commission a transition report on Form 10-Q
covering the transition period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACORN PRODUCTS, INC.
Date: October 27, 1999 By: /s/ John G. Jacob
--------------------------------------
John G. Jacob, Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
99.1 Press release issued by the Company on October 28, 1999.
99.2 Sixth Amendment to Amended and Restated Credit Agreement
dated as of October 28, 1999, by and among UnionTools, the
Company, H.B. Sherman Manufacturing Company, UnionTools
Irrigation, Inc., Heller Financial, Inc., in its capacity as
Agent and Lender, and the lending institutions signatory
thereto.
99.3 Term Loan Note dated October 28, 1999, issued by UnionTools
in favor of Heller Financial, Inc. pursuant to the Sixth
Amendment to Amended and Restated Credit Agreement.
99.4 Subordinated Participation Agreement dated as of October 28,
1999, by and between Heller Financial, Inc., in its
individual capacity and as Agent, and OCM Principal
Opportunities Fund, L.P. and TCW Special Credits, as general
partner and/or investment manager of the funds and accounts
set forth on Schedule I-A thereto.
</TABLE>
<PAGE>
EXHIBIT 99.1
ACORN PRODUCTS ANNOUNCES ELECTION OF NEW CHAIRMAN
Acorn Products, Inc. (NASDAQ: ACRN) announced today that its Board of
Directors has elected W. Wallace Abbott as Chairman of its Board of Directors.
Mr. Abbott, who has been a director of Acorn since January 1997, is a retired
senior executive of Procter & Gamble. Mr. Abbott brings with him extensive
experience in consumer products marketing and general management to the
Chairman's role. Mr. Abbott replaces Conor D. Reilly as Chairman, who resigned
from his position as director and Chairman of the Board of Acorn pursuant to the
policies of the law firm in which he is a partner. Mr. Abbott commented, "I
look forward to contributing to the operational vision and direction of the
Company. With the changes made in the management team and the support of our
majority stockholder, the Company is poised to take advantage of its strong
relationships with its customers, vendors and employees."
Acorn also announced today that investment funds arranged and/or managed by
Oaktree Capital Management LLC and Trust Company of the West (the "Funds"),
which collectively constitute the majority stockholder of Acorn, made a capital
infusion of $6 million into Acorn's operating subsidiary, UnionTools, Inc., in
connection with a simultaneous amendment (the "Amendment") to Acorn's existing
credit facility with a group of lenders led by Heller Financial, Inc.
Cory Meyer, Acorn's President and Chief Executive Officer, stated, "We are
gratified by the confidence that our majority stockholder and other
constituencies have shown in the new management team and are excited about the
opportunities ahead of us. We believe that now we have the resources necessary
to carry out our operating plan that will enable us to continue to drive the
business forward and improve stockholder value."
Acorn Products, Inc., through its operating subsidiary UnionTools, Inc., is
a leading manufacturer and marketer of non-powered lawn and garden tools in the
United States. Acorn's principal products include long handle tools (such as
forks, hoes, rakes and shovels), snow tools, posthole diggers, wheelbarrows,
striking tools, cutting tools and watering products. Acorn sells its products
under a variety of well-known brand names, including Razor-Back-TM-, Union-TM-,
Yard 'n Garden-TM-, Perfect Cut-TM- and, pursuant to a license agreement,
Scotts-TM-. In addition, Acorn manufactures private label products for a
variety of retailers. Acorn's customers include mass merchants, home centers,
buying groups and farm and industrial suppliers.
Razor-Back-TM-, Union-TM-, Yard 'n Garden-TM- and Perfect Cut-TM- are
registered trademarks of Acorn. Scotts-TM- is a registered trademark of The
Scotts Company.
The statements contained herein that are not purely historical are forward
looking statements within the meaning of the Securities Exchange Act of 1934,
including statements regarding Acorn's expectations, beliefs, hopes, intentions
or strategies regarding the future. All forward looking statements contained
herein are based upon information available to Acorn as of the date hereof, and
Acorn assumes no obligation to update any such forward looking statements.
<PAGE>
Actual results could differ materially from Acorn's current expectations.
Factors that could cause or contribute to such differences include, but are not
limited to, the factors and risks discussed in Acorn's Annual Report on Form
10-K for the fiscal year ended July 31, 1998, Acorn's Current Report on Form 8-K
dated September 18, 1997, as amended on October 29, 1998, and as may be amended
from time to time, and the other reports filed from time to time by Acorn with
the Securities and Exchange Commission.
Contact: John G. Jacob, Vice President and Chief Financial Officer of Acorn
Products, Inc. (614) 222-4400.
<PAGE>
EXHIBIT 99.2
SIXTH AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT") is dated as of October 28, 1999 and entered into by and among
UNIONTOOLS, INC., a Delaware corporation ("BORROWER"), ACORN PRODUCTS, INC., a
Delaware corporation ("HOLDINGS"), H.B. SHERMAN MANUFACTURING COMPANY, a
Missouri corporation ("H.B. SHERMAN"), UNIONTOOLS IRRIGATION, INC., a Delaware
corporation formerly known as UnionTools Watering Products, Inc. ("IRRIGATION"
and together with Borrower, Holdings and H.B. Sherman collectively, the "LOAN
PARTIES"), HELLER FINANCIAL, INC., in its individual capacity as a Lender and as
Agent for all Lenders ("AGENT"), and the other Lenders party hereto.
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders have entered into an Amended and
Restated Credit Agreement dated as of May 20, 1997, as amended by that certain
Amendment No. 1 to Credit Agreement dated November 24, 1997, Second Amendment to
Credit Agreement dated as of May 22, 1998, Third Amendment to Amended and
Restated Credit Agreement dated as of October 29, 1998, Fourth Amendment to
Amended and Restated Credit Agreement dated as of February 26, 1999 and Fifth
Amendment to Amended and Restated Credit Agreement dated as of June 10, 1999 (as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the "LOAN AGREEMENT"), pursuant to which, among other things,
Lenders have agreed, subject to the terms and conditions set forth in the Loan
Agreement, to make loans and financial accommodations to Borrower; and
WHEREAS, the Loan Parties have requested that the Agent and Lenders agree
to modify the Loan Agreement pursuant to the terms and conditions of this
Amendment;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Loan Parties, Lenders and Agent
agree as follows:
ARTICLE I. AMENDMENTS TO LOAN AGREEMENT.
This Amendment No. 6 to Loan Agreement shall be deemed to be an amendment
to the Loan Agreement, and shall not be construed in any way as a replacement
therefor. All of the terms and provisions of this Amendment No. 6, including,
without limitation, the representations and warranties set forth herein, are
hereby incorporated by reference into the Loan Agreement as if such terms and
provisions were set forth in full therein. The Loan
<PAGE>
Agreement is hereby amended, effective upon the satisfaction of the conditions
precedent set forth in Article III hereof, in the following respects:
1.1 The Index of Defined Terms is amended by inserting the following
term(s) in proper alphabetical order:
<TABLE>
<CAPTION>
Defined Term Defined in Section
------------ ------------------
<S> <C>
Lock Box Account Section 1.5(F)
Term Loan Section 1.5(E)
Term Note Section 1.1(D)
Subordinated Participation Agreement Section 6.1(U)
</TABLE>
1.2 Section 1.1(A)(1), "REVOLVING LOANS", is amended to replace the
four sentences of such subsection, in their entirety, with the following:
(A) REVOLVING LOANS. (1) Subject to the satisfaction of the
terms and conditions set forth herein and in reliance upon the
representations and warranties set forth herein, each Lender
agrees, severally and not jointly, to lend to Borrower from the
Closing Date to the Expiry Date its Pro Rata Share of the loans
requested by Borrower to be made by Lenders under this subsection
1.1(A), up to an aggregate maximum for all Lenders of (i) during
the period from (x) the Amendment No. 6 Date through and including
December 31, 1999, and (y) November 1 through and including
December 31 of each year after 1999, $35,000,000, (ii) during the
period from January 1 through and including July 30 of each year,
$40,000,000, and (iii) during the period from July 31 through and
including October 31 of each year, $30,000,000 (as the same may be
reduced from time to time hereunder, the "Revolving Loan
Commitment"). Advances or amounts outstanding under the Revolving
Loan Commitment will be called "Revolving Loans". Revolving Loans
may be repaid and reborrowed. The "Maximum Revolving Loan Balance"
will be the lesser of (a) the difference (such difference referred
to herein as the "Borrowing Base") between (x) the borrowing base
(as calculated on Exhibit 4.10(F), the "Borrowing Base
Certificate") minus (y) the Borrowing Base Reserve Amount or (b)
the Revolving Loan Commitment less outstanding Risk Participation
Liability.
1.3 Section 1.1(C), "ACQUISITION LOANS", is amended (a) to replace the
first three sentences of such subsection, in their entirety, with the following:
(C) ACQUISITION LOANS. Subject to the satisfaction of the
terms and conditions set forth herein and in reliance upon the
representations and warranties set forth herein, each Lender
agrees, severally and not jointly, to lend to Borrower from the
Closing Date to the Amendment No. 6 Date its Pro Rata Share of the
loans requested by Borrower (upon not less than thirty (30) days
prior written notice to Agent) to be made by Lenders under this
subsection
2
<PAGE>
1.1(C) (the "Acquisition Loans"), up to an aggregate maximum
amount for all Lenders of $16,009,287 (the "Acquisition Loan
Commitment"). No new Acquisition Loans shall be permitted after
the Amendment No. 6 Date. Amounts borrowed under this subsection
1.1(C) and repaid may not be reborrowed.
and (b) to restate subsection (10) thereof to read, in its entirety, as follows:
(10) No event shall have occurred and be continuing or would
result from the acquisition of the subject Target or the
Acquisition Loan that would constitute an Event of Default or a
Default.
On the dates indicated below, Borrower shall repay the
Acquisition Loans through periodic installments in the amounts
equal to the applicable percentage of the Acquisition Loans
outstanding as of the Amendment No. 6 Date ("Scheduled Acquisition
Loan Installments").
<TABLE>
<CAPTION>
DATE PAYMENT
---- -------
<S> <C>
September 30, 2000 2.083%
December 31, 2000 2.083%
March 31, 2001 2.083%
April 30, 2001 93.751%
</TABLE>
On April 30, 2001, the entire remaining principal balance
of the Acquisition Loans, together with all accrued but unpaid
interest thereon, shall be due and payable in full.
1.4 Section 1.1, "LOANS", is amended (a) to restate subsection (D)
thereof to read, in its entirety, as follows:
(D) NOTES. Borrower shall execute and deliver to each
Lender (i) a Note to evidence the Revolving Loans, such Note to be
in the principal amount of such Lender's Pro Rata Share of the
Revolving Loan Commitment, (ii) a Note to evidence the Acquisition
Loans, such Note to be in the principal amount of such Lender's
Pro Rata Share of the Acquisition Loan Commitment, and (iii) a
Note to evidence the Term Loan, such Note to be in the principal
amount of such of the Term Loan and in the form of Exhibit A to
Amendment No. 6 (together with the other Term Notes issued with
respect to interest on the Term Loan, a "Term Note"). In the
event of an assignment under subsection 8.1, Borrower shall, upon
surrender of the assigning Lender's Notes, issue new Notes to
reflect the interests of the assigning Lender and the Person to
which interests are to be assigned.
3
<PAGE>
and (b) to insert a new subsection (E) thereof to read, in its entirety, as
follows:
(E) TERM LOAN. (i) Subject to the terms and conditions
of this Agreement and in reliance upon the representations and
warranties set forth herein and in the other Loan Documents,
Heller agrees to lend to Borrower on the Amendment No. 6 Date, a
term loan (the "Term Loan") in the aggregate original principal
amount of $6,000,000 as evidenced by the Term Notes, PROVIDED,
that Heller shall not be obligated to fund the Term Loan until it
receives payment in full from the participants pursuant to the
terms of the Subordinated Participation Agreement;
(ii) Borrower shall make principal payments in
respect of the Term Loan in the amount of the Scheduled
Installments (or such lesser principal amount as shall then be
outstanding) on the dates and in the amounts set forth below.
"SCHEDULED INSTALLMENT" means, for each date set forth below, the
amount set forth opposite such date.
<TABLE>
<CAPTION>
AMOUNT OF
PRINCIPAL
INSTALLMENT OF
DATE TERM LOAN
---- ---------
<S> <C>
Ninety-one days after the date Entire principal
specified in clause (c) of the amount of the
definition of "Expiry Date" Term Loan
</TABLE>
(iii) The Term Loan shall be funded in one drawing
on the Amendment No. 6 Date. Amounts of the Term Loan repaid may
not be reborrowed.
(iv) In no event may Borrower repay all or any
portion of the Term Loan by using any of Borrower's or any other
Loan Party's own cash or other assets (except out of proceeds of
equity contributions or Subordinated Indebtedness but only upon
the terms and conditions set forth in SUBSECTION 1.5(A) hereof) or
proceeds of any Loan hereunder; provided that if any or all of the
Obligations shall have been accelerated the provisions of this
sentence shall not apply.
(v) Proceeds of the Term Loan shall be used by
Borrower to bring its accounts payable more current and for other
working capital purposes.
(vi) The Lenders and Agent agree that if the
Acquisition Loans or Revolving Loans are accelerated, the Term Loan
will also be accelerated.
4
<PAGE>
1.5 Section 1.2(A), "INTEREST", is amended to (a) add a new subclause
(3) to such subsection to read as follows:
(3) If a Term Loan, than at a rate per annum equal to 12%.
and (b) to restate the Pricing Grid appearing therein to read, in its entirety,
as follows:
PRICING TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Adjusted Total Indebtedness Base Rate LIBOR Margin
to Operating Cash Margin on and on and after
Flow Ratio after Amendment Amendment
No. 6 Date No. 6 Date
- ------------------------------------------------------------
<S> <C> <C>
Greater than 3.75:1 1.50% 3.50%
- ------------------------------------------------------------
Equal to or greater than 1.50% 3.50%
3.00:1 but equal to or less
than 3.75:1
- ------------------------------------------------------------
Less than 3:00:1 1.50% 3.50%
- ------------------------------------------------------------
</TABLE>
1.6 Section 1.2(D), "COMPUTATION OF INTEREST AND RELATED FEES", is
amended to add a new sentence at the conclusion of subsection 1.2(D) to read as
follows:
Notwithstanding anything contained in this Agreement to the
contrary, the Borrower shall not pay interest in cash on the Term
Loan, but rather the Term Loan shall accrue interest at the rate
otherwise applicable to the Term Loan and such interest shall be
payable by the issuance of additional Term Notes. No cash may be
paid with respect to interest on the Term Loans until the date on
which all of the Obligations (including, without limitation, fees,
costs and expenses in respect of the Loans and Risk Participation
Liabilities) in which the "Purchasers" under the Subordinated
Participation Agreement shall not have participated in or
purchased (i.e., excluding principal of and interest on the Term
Loan) shall have been paid indefeasibly (which term "indefeasibly"
shall mean the ninety-first day following the final payment to
Lenders and Agent) in full and the Revolving Loan Commitments
shall have been terminated. Notwithstanding the foregoing, to the
extent of a refinancing in full of all of the Revolving Loans and
Acquisition Loans, the Term Loan may be refinanced or repaid
contemporaneously with such refinancing.
1.7 Section 1.3, is amended to insert a new subsection (D) thereof to
read, in its entirety, as follows:
(D) Upon the repayment of the Revolving Loans and
Acquisition Loans
5
<PAGE>
in full (including via a refinancing of the facilities provided by
this Agreement) or any extension of this Agreement, Borrower shall
pay Agent, for the benefit of all Lenders (based upon their
respective Pro Rata Shares), a success fee equal to the product of
(i) the sum of (a) the outstanding amount of Acquisition Loans on
the date immediately prior to the date of such repayment or
extension plus (b) the average daily amount of the Revolving Loan
Commitment (whether used or unused) from the Amendment No.6 Date
through the date of such repayment or extension, multiplied by
(ii) the applicable percentage set forth in the grid below
(provided that no such success fee shall be payable to Heller in
its individual capacity to the extent Heller is the lead agent
bank on any such refinancing, in which case the success fee
payable by Borrower shall be reduced by the amount which would
otherwise be payable to Heller in such individual capacity):
<TABLE>
<CAPTION>
IF THE REPAYMENT OCCURS
DURING THE BELOW PERIOD: THE SUCCESS FEE IS:
----------------------- -------------------
<S> <C>
On or prior to 4/30/2000 0.5%
After 4/30/2000 but on or prior to 7/31/2000 1.0%
After 7/31/2000 but on or prior to 10/31/2000 1.5%
After 10/31/2000 but on or prior to 1/31/2001 2.0%
After 1/31/2001 3.0%
</TABLE>
In the event of an Event of Default under subclauses 6.1(F) and
(G), then notwithstanding anything contained in this Agreement or
the Loan Documents to the contrary, the success fee contemplated
by this subclause 1.3(D) shall rank pari passu with the rights of
the participants to receive payments of the Term Notes pursuant to
the terms of the Subordinated Participation Agreement. The
success fee, when expensed, shall be treated by Borrower as an
interest expense for purposes of calculating EBIDAT.
1.8 Section 1.5(A), "VOLUNTARY PREPAYMENT OF TERM LOAN AND ACQUISITION
LOAN", is amended to restate such subsection to read, in its entirety, as
follows:
(A) PREPAYMENTS. Borrower may, at any time upon not less
than five (5) Business Days' prior notice to Agent, prepay the
Acquisition Loan, terminate the Revolving Commitment or prepay the
Term Loan; provided, however, the Revolving Loan Commitment may
not be terminated by Borrower until the Acquisition Loan is paid
in full, and no portion of the Term Loan may be prepaid until the
Acquisition Loan and the Revolving Loans are paid in full and the
Revolving Loan Commitment has been terminated, except that
notwithstanding the foregoing, the Term Loan may be prepaid in
full at any time exclusively and solely out of proceeds of an
equity contribution (any terms of which relating to the redemption
or other repayment of such contribution or any dividend or other
return on such contribution must meet with the approval of the
6
<PAGE>
Requisite Lenders, which approval shall not be unreasonably
withheld or delayed) or Subordinated Indebtedness, in either case
earmarked for payment of the Term Loan (such earmarking to be upon
terms and conditions acceptable to the Lenders of the Term Loan in
their sole discretion), it being agreed that in no event may
Borrower prepay all or any portion of the Term Loan by using any
of Borrower's or any other Loan Party's own cash or other assets
or proceeds of any Loan hereunder (except for the proceeds of the
above-described equity contribution or Subordinated Indebtedness
subject to the terms of the preceding parenthetical regarding
earmarking). Any such prepayment shall be accompanied by any
applicable LIBOR Breakage Fees, if applicable.
1.9 Section 1.5(C), "PREPAYMENTS FROM ASSET DISPOSITIONS", is amended
to restate such subsection to read, in its entirety, as follows:
PREPAYMENTS FROM ASSET DISPOSITIONS. Borrower shall immediately
use the proceeds from sales of inventory in the ordinary course of
business and any payments received with respect to accounts
receivable to immediately repay Revolving Loans. Immediately upon
receipt of any Net Proceeds, Borrower shall repay the outstanding
principal balance of the Revolving Loans by the amount of any
reduction in the Borrowing Base attributable to the Asset
Disposition giving rise to such Net Proceeds. To the extent not
required to so prepay Revolving Loans as provided above, Borrower
may, upon prior written notice to Agent, reinvest any remaining
Net Proceeds of Asset Dispositions, within ninety (90) days, in
productive replacement assets of a kind then used or usable in the
business of Borrower; provided, that, if Borrower does not intend
to so reinvest any such remaining Net Proceeds, or if the
applicable ninety (90) day period expires without Borrower having
reinvested any such remaining Net Proceeds, Borrower shall prepay
the Loans in the amount thereof, such prepayments to be applied as
provided in subsection 1.5(E); provided, that, notwithstanding the
foregoing or any provision of subsection 1.5(E) to the contrary,
from and after the Amendment No. 6 Date, the first $10,000,000 of
such prepayments shall in any event be applied (1) with respect to
the first $2,000,000 of such prepayments, to prepay the Revolving
Loans or Acquisitions Loans (as determined by the Borrower) and
(2) with respect to the next $8,000,000 in such prepayments, up
to fifty percent (50%) (as determined by the Borrower) to prepay
the Revolving Loans (and, at the option of Borrower, the Revolving
Loan Commitment may be reduced by the amount of any such
prepayment) and the remainder to prepay the Acquisition Loans.
1.10 Section 1.5(E), "APPLICATION OF PROCEEDS", is amended to restate
such subsection to read, in its entirety, as follows:
APPLICATION OF PROCEEDS. With respect to the mandatory
prepayments described in subsections 1.5(B), 1.5(C) and 1.5(D),
such prepayments shall first be
7
<PAGE>
applied in payment of the Acquisition Loans (i) in the case of
prepayments with respect to the remaining Net Proceeds as
described in subsection 1.5(B), as the Borrower may determine in a
written notice delivered to the Agent prior to such prepayment
against remaining Scheduled Acquisition Loan Installments, and if
the Borrower fails to deliver such a notice such prepayments shall
be applied in the order of maturity of the remaining Scheduled
Acquisition Loan Installments, and (ii) in the case of prepayments
described in subsection 1.5(C) and 1.5(D), pro rata against all
remaining Scheduled Acquisition Loan Installments and, with
respect to prepayments under subsections 1.5(B), 1.5(C) and
1.5(D), at any time after the Acquisition Loans shall have been
prepaid in full, such prepayments shall be applied to reduce the
outstanding principal balance of the Revolving Loans and, subject
to Section 1.5(C), as a permanent reduction of the Revolving Loan
Commitment.
1.11 Section 1.5 is amended to insert a new subsection (F), "LOCK BOX
PROCEEDS", to read, in its entirety, as follows:
LOCK BOX PROCEEDS. At least daily on each Business Day,
commencing as soon as possible but no later than thirty (30) days
from the Amendment No. 6 Date, the Borrower shall cause, and
hereby directs the Lender with whom the Borrower's operating
account(s) (the "Lock Box Account") is located to cause, subject
to the terms of the Lock Box Agreement, all funds in the Lock Box
Account to be transferred to the Agent for immediate payment, such
payments to be applied to reduce the outstanding principal balance
of the Revolving Loans, and if no Revolving Loans are outstanding
after giving effect to all or any portion of such repayment, pro
rata against all remaining Scheduled Acquisition Loan
Installments.
1.12 Section 3.1, "INDEBTEDNESS", is amended to change the period at
the end of subsection (C) to "; and", and to add new a subsection (D) thereto to
read, in its entirety, as follows:
(D) Subordinated Indebtedness.
1.13 Section 3.8, "TRANSACTION WITH AFFILIATES", is amended to add the
following sentence thereto to read, in its entirety, as follows:
Borrower will not, and will not permit any Subsidiary to, make any
payments of expenses or liabilities on behalf of their Affiliates in
excess of $250,000 in the aggregate from and after the Amendment No. 6
Date.
1.14 Section 4.1, "CAPITAL EXPENDITURE LIMITS", is amended to delete
the amount "$4,000,000" appearing in such subclause and replacing it with the
amount "$3,500,000".
1.15 Section 4.2, 4.4, 4.5,and 4.6, are amended in their entirety to
read
8
<PAGE>
"[Intentionally Omitted]".
1.16 Section 4.3, "EBIDAT", is amended to restate such subsection to
read, in its entirety, as follows:
Borrower shall not permit EBIDAT for any of the periods set forth below
to be less than the amount set forth for such period:
<TABLE>
<CAPTION>
Period Amount
---------------------------------------
<S> <C>
10/1/1999 - 12/31/99 ($1,990,000)
---------------------------------------
11/1/1999 - 1/30/2000 ($1,179,000)
---------------------------------------
12/1/1999 - 2/28/2000 $923,000
---------------------------------------
1/1/2000 - 3/31/2000 $2,610,000
---------------------------------------
1/1/2000 - 4/30/2000 $4,067,000
---------------------------------------
1/1/2000 - 5/31/2000 $5,237,000
---------------------------------------
1/1/2000 - 6/30/2000 $5,034,000
---------------------------------------
1/1/2000 - 7/31/2000 $5,083,000
---------------------------------------
1/1/2000 - 8/31/2000 $5,190,000
---------------------------------------
1/1/2000 - 9/30/2000 $5,512,000
---------------------------------------
1/1/2000 - 10/31/2000 $5,761,000
---------------------------------------
1/1/2000 - 11/30/2000 $5,729,000
---------------------------------------
1/1/2000 - 12/31/2000 $5,753,000
---------------------------------------
2/1/2000 - 1/31/2001 $6,129,000
---------------------------------------
3/1/2000 - 2/28/2001 $6,653,000
---------------------------------------
4/1/2000 - 3/31/2001 $7,062,000
---------------------------------------
5/1/2000 - 4/30/2001 $7,062,000
---------------------------------------
</TABLE>
"EBIDAT" will be calculated as illustrated on Exhibit 4.10(C). Notwithstanding
anything else in subclause 6.1 or elsewhere in the Loan Documents to the
contrary, the Borrower shall not be deemed to have breached this covenant, and
no Default or Event of Default with respect to this covenant shall be deemed to
exist, to the extent that: (1) within five (5) Business Days of the delivery of
financial statements demonstrating that the Borrower has not generated
9
<PAGE>
sufficient EBIDAT for the applicable period, the Borrower delivers a commitment
from a credit worthy Person acceptable to Requisite Lenders to infuse new equity
or Subordinated Indebtedness, in either case in the form of cash into the
Borrower in an amount at least equal to the difference (the "EBIDAT Shortfall
Amount") between the amount of EBIDAT which the Borrower was required to
generate pursuant to this subsection for the applicable period and the amount of
EBIDAT actually generated by the Borrower in such period and (2) within fifteen
(15) Business Days of its delivery of such commitment the Borrower receives an
equity infusion or the proceeds of Subordinated Indebtedness, in either case in
the form of cash from the issuer of such commitment (or an affiliate of such
issuer) in an amount at least equal to the EBIDAT Shortfall Amount.
Notwithstanding subclause 1.5(E), equity or Subordinated Indebtedness infused
into the Borrower pursuant to this subclause shall be applied as payments of the
Revolving Loans and/or the Acquisition Loans, as the Borrower may determine in a
written notice delivered to Agent prior to such prepayment (and if the Borrower
fails to deliver such a notice such prepayments shall be applied first in the
order of maturity of the remaining Scheduled Acquisition Loan Installments and
next as payment of the Revolving Loans). Any equity or Subordinated
Indebtedness infused into the Borrower pursuant to this subclause shall
thereafter be deemed to be additional EBIDAT of the Borrower generated in the
period covered by the financial stateents referred to above.
1.17 Section 4.10 is amended to change the requirement that the
Borrower deliver the financial statements and schedules set forth therein within
thirty (30) days after the end of each fiscal quarter to a requirement that from
and after the Amendment No. 6 Date the Borrower deliver such financial
statements and schedules on a monthly basis within twenty-eight (28) days after
the end of each calendar month.
1.18 Section 4.10(F) is amended to restate such subsection to read, in
its entirety, as follows:
BORROWING BASE CERTIFICATE; WEEK CASH FLOW FORECAST. As soon as
available and in any event on Tuesday of each week (or if Tuesday
is not a Business Day on the immediately succeeding Business Day),
or more frequently as the Borrower may desire, and from time to
time upon the request of Agent, Borrower will deliver (1) a
Borrowing Base Certificate (in substantially the same form as
Exhibit 4.10(F)) as at the last Business Day of the prior week and
(2) a cash flow forecast in form acceptable to Requisite Lenders
covering the week in which such forecast is delivered and the
immediately following 13 calendar weeks on a week by week basis.
1.19 Section 4.10(H) is amended to restate such subsection to read, in
its entirety, as follows:
COLLATERAL VALUE REPORT. Promptly after the Amendment No. 6 Date,
and thereafter from time to time upon the reasonable request of
Requisite Lenders, Borrower will cooperate with (including
granting of access to its Property) and
10
<PAGE>
assist Agent in obtaining, at the expense of Borrower, a report of
an independent collateral auditor satisfactory to Requisite
Lenders (which may be, or be affiliated with, a Lender) with
respect to the accounts and inventory components included in the
Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Certificate most
recently delivered is accurate and complete in all material
respects based upon a review by such auditors of the accounts
(including verification with respect to the amount, aging,
identity and credit of the respective account debtors and the
billing practices of Borrower) and inventory (including
verification as to the value, location and respective types).
1.20 Section 4.10, is amended to insert a new subsection (P) thereof to
read, in its entirety, as follows:
(P) ASSET DISPOSITION SCHEDULE. Prior to any Asset
Disposition, the Borrower shall deliver a report setting forth the
EBIDAT producing assets subject to such Asset Disposition versus
the non-EBIDAT producing assets.
1.21 Section 6.1, "EVENT OF DEFAULT", is amended to change the period
at the end of subsection (T) to "; or", and to add new subsections (U) and (V)
thereto to read, in their entirety, as follows:
(U) SUBORDINATED PARTICIPATION AGREEMENT: (1) Any Purchaser
(as defined in the Subordinated Participation Agreement referred to
below) shall breach or be in violation of (a) any of its payment
obligations at any time under the Subordinated Participation Agreement
dated on or about the date of Amendment No. 6 by and among Agent, a
certain "Seller" thereunder and the participants named therein (or
certain constituents thereof) (as such Agreement may from time to time be
amended, modified, supplemented or restated from time to time, and herein
referred to as the "SUBORDINATED PARTICIPATION AGREEMENT"), or any
Purchaser (as such terms are defined in the Subordinated Participation
Agreement) shall breach or be in violation of any of its obligations,
liabilities, representations, warranties or covenants under the
Subordinated Participation Agreement (excluding the payment obligations
covered under the preceding subsection (U)(1)) which breach or violation
is not remedied or waived to the reasonable satisfaction of Agent within
three (3) days after receipt by Borrower of notice from Agent of such
breach or violation; or
(V) CERTAIN SECURITY DOCUMENTS: Failure by Borrower or any of
the applicable Loan Parties to have executed and delivered to Agent with
reasonable promptness (but no later than thirty (30) days from the
Amendment No. 6 Date unless an extension to such 30 day period is
consented to in writing by Agent) such agreements, instruments and
documents as the Agent may reasonably require in order to (1) modify any
documents relating to real estate to reflect the terms of Amendment No. 6
and (2) transfer Borrower's accounts to a Lender who has executed the
Lock Box
11
<PAGE>
Agreement in form and substance satisfactory to Agent.
1.22 Section 9.1, "ASSIGNMENTS AND PARTICIPATIONS IN LOANS", is amended
to add a new paragraph at the end of such subsection to read, in its entirety,
as follows:
Notwithstanding any other provision set forth in this Agreement,
Heller may at its election on or about the Amendment No. 6 Date,
enter into a participation agreement with the participants party
to the Subordinated Participation Agreement (or any one or more of
the constituents thereof) or any other affiliate thereof, which
agreement shall provide for the purchase by the purchasers
thereunder of a 100% interest in the Term Loan, provided that
without the consent of all Lenders Heller shall not amend (i) the
terms of Section 2.1 of the Subordinated Participation Agreement,
or (ii) other terms of subordination under the Subordinated
Participation Agreement in such a manner as to allow the
Purchasers to receive payment earlier than is set forth in the
Subordinated Participation Agreement as in effect on the date of
execution and delivery of Amendment No. 6.
1.23 The section of Exhibit 4.10(C), "COMPLIANCE CERTIFICATE"
pertaining to "Covenant 4.3 EBIDAT", is amended by (a) deleting the fourth item
under the heading "Plus" in its entirety, and inserting a new fourth item as
follows:
Losses (or less gains) from Asset Dispositions (including sales of
non-strategic assets) or other non-cash items included in the
determination of net income (excluding sales, expenses or losses
related to current assets) and the sale of obsolete inventory
and (b) adding at the end of the first paragraph of the definition of EBIDAT
immediately following the words ""or consolidated with the Borrower" the
following language:
and (c) an aggregate amount of expenses not to exceed Three
Million Three Hundred Sixty-Two Thousand Dollars ($3,362,000)
incurred, or to be incurred, by the Borrower during the period
commencing August 1, 1999 and ending November 30, 1999, as
reflected in the financial statement forecasts provided by the
Borrower to the Lenders on October 15, 1999, which expenses
pertain to (i) the consolidation of the operations of the Columbus
manufacturing facility into the Frankfort, New York manufacturing
facility, (ii) management restructuring costs (including severance
payments and recruiting/relocation expenses) and (iii) expenses
associated with Amendment No. 6
1.24 Section 10, "DEFINITIONS", is amended to add the following new
definitions in appropriate alphabetical order, each to read, in its respective
entirety, as follows:
12
<PAGE>
"AMENDMENT NO. 6" means Sixth Amendment to Amended and Restated
Credit Agreement dated as of October 28, 1999, by and among
Borrower, Lenders signatory thereto and Agent.
"AMENDMENT NO. 6 DATE" means the date on which Amendment No. 6
shall have become effective as provided therein.
"BORROWING BASE RESERVE AMOUNT" means $500,000 or such lesser
amount as Agent, acting at the direction of Lenders having greater
than fifty-percent (50%) or more of the sum of the Revolving Loan
Commitment and the Acquisition Loan Commitment, may specify in
writing to the Borrower.
"SUBORDINATED INDEBTEDNESS" means unsecured Indebtedness fully
subordinated to the Obligations on terms, and pursuant to
documentation, which meets with the approval of Agent and the
Requisite Lenders (including, if required by Agent and the
Requisite Lenders, a requirement that interest on any such
Subordinated Indebtedness be paid only through the issuance of PIK
notes), which approval will not be unreasonably withheld or
delayed.
1.25 The following definitions are hereby amended and restated in their
respective entirety as follows:
"EXPIRY DATE" means the earlier of (a) the suspension (subject to
reinstatement) of the Lenders' obligations to make Revolving Loans
and Acquisition Loans pursuant to subsection 6.2, (b) the
acceleration of the Obligations pursuant to subsection 6.3 or (c)
April 30, 2001.
"LOAN" or "LOANS" means an advance or advances under the Revolving
Loan Commitment or the Acquisition Loans or the Term Loans.
"LOCK BOX AGREEMENT" means that certain Lock Box Agreement entered
into among the Borrower, the Agent and a Lender subsequent to the
Amendment No. 6 Date relating to the Lock Box Account.
"NOTE" or "NOTES" means one or more of the notes of Borrower
substantially in the form of Exhibit 10.1(A), one or more of the
Term Notes, or any combination thereof.
"SECURITY DOCUMENTS" means all instruments, documents and
agreements executed by or on behalf of any Loan Party to guaranty
or provide collateral security with respect to the Obligations
including, without limitation, any security agreement, lock box
agreement or pledge agreement, any guaranty of the Obligations,
any mortgage, any subordination and intercreditor agreements,
13
<PAGE>
and all instruments, documents and agreements executed pursuant to
the terms of the foregoing.
ARTICLE II. REPRESENTATION AND WARRANTIES.
Borrower represents and warrants as follows:
2.1 Borrower and each Loan Party is duly organized and validly
existing under the laws of its jurisdiction of organization and has the power to
own its assets and to transact the business in which it is presently engaged and
in which it proposes to be engaged.
2.2 Borrower and each Loan Party is in good standing in its state or
jurisdiction of incorporation and in each state or jurisdiction in which it is
qualified to do business. There are no jurisdictions in which the character of
the properties owned by Borrower or any other Loan Party or in which the
transaction of the business of Borrower or any other Loan Party as now conducted
requires or will require Borrower or any other Loan Party to qualify to do
business, except jurisdictions in which the failure to so qualify would not have
a material adverse effect on the Collateral in the Borrowing Base or on the
business, operations, financial condition, or properties of Borrower or any
other Loan Party.
2.3 Borrower and each Loan Party has the power to execute and deliver
this Amendment No. 6 and to perform the Loan Agreement, as amended hereby, and
to make and deliver the Term Notes and to perform its obligations under the Term
Notes and the Loan Agreement as amended hereby, and Borrower and each Loan Party
has taken all necessary action, corporate or otherwise, to authorize the
execution and delivery of this Amendment No. 6, the making and delivery of the
Term Notes, and the performance of the Loan Agreement, as amended hereby. No
consent or approval of any Person (including, without limitation, any
stockholder of Borrower or any other Loan Party), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, approval, authorization or declaration of
any governmental authority, bureau or agency, is or will be required in
connection with the execution or delivery by Borrower or any other Loan Party of
this Amendment No. 6 or the making and delivery of the Term Notes or the
performance by Borrower, or the validity, enforcement or priority, of the Loan
Agreement as amended hereby and the Term Notes.
2.4 The execution and delivery by Borrower and each other Loan Party
of this Amendment No. 6 and the making and delivery of the Term Notes and
performance by it hereunder and under the Term Notes, does not and will not
violate any provision of law (including, without limitation, the Williams Act,
Sections 13 and 14 of the Securities and Exchange Act of 1934, and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Regulations U and X of
the Board of Governors of the Federal Reserve System and the rules and
regulations promulgated thereunder) and does not and will not conflict with or
result in a breach of any order, writ, injunction, ordinance, resolution,
decree, or other similar document or instrument of any court or governmental
authority, bureau or agency, domestic or foreign,
14
<PAGE>
or any certificate of incorporation or by-laws or comparable document of
Borrower or any other Loan Party or create (with or without the giving of notice
or lapse of time, or both) a default under or breach of any agreement,
instrument, documents, bond, note or indenture to which Borrower or any other
Loan Party is a party, or by which it is bound or any of its properties or
assets is affected, or result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in connection
with the business of Borrower or any other Loan Party, except for the Liens
created and granted pursuant to the Security Documents or otherwise permitted
under the Loan Agreement.
2.5 This Amendment No. 6, the Term Notes, and the Loan Agreement as
amended hereby have been duly executed and delivered by Borrower and each other
Loan Party and each constitutes the valid and legally binding obligation of
Borrower and each other Loan Party, enforceable in accordance with its terms,
except that the remedy of specific performance and other equitable remedies are
subject to judicial discretion and except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or. other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally.
2.6 The Liens granted pursuant to the Security Documents secure,
without limitation, the obligations under the Loan Agreement as amended by this
Amendment No. 6, including, without limitation, the Term Loan(s) and Note(s),
whether or not so stated in the Security Documents. The term "OBLIGATIONS" as
used in the Security Documents (or any other term used therein to refer to the
Indebtedness, liabilities and obligations of Borrower to Lenders) include,
without limitation, Indebtedness, liabilities and obligations to Lenders and
Agent under the Loan Agreement as amended by this Amendment No. 6 and to Heller
under the Term Note(s) made and delivered in connection with this Amendment No.
6. Each of the matters set forth in Article IV hereof is true and correct.
2.7 The letter executed by Borrower prior to the date hereof relating
to payment to Agent of an agency fee in connection with the Loan Agreement
remains in full force and effect in accordance with its terms and shall not be
impaired in any way as a result of execution and delivery of this Amendment No.
6.
ARTICLE III. CONDITIONS PRECEDENT.
The effectiveness of this Amendment No. 6 shall be subject to the
fulfillment by Borrower, in a manner satisfactory to Agent and Lenders, of all
of the conditions precedent set forth in this Article III, and the date on which
all such conditions shall have been fulfilled to the satisfaction of Agent and
Lenders, and this Amendment No. 6 shall have become effective, shall be herein
called the "AMENDMENT NO. 6 DATE":
3.1 Borrower shall have:
(a) executed and delivered to Agent this Amendment No. 6 and
Lenders and
15
<PAGE>
the other Loan Parties shall have executed and delivered this Amendment No. 6;
(b) executed and delivered to Heller the Term Note;
(c) delivered to Agent a certificate confirming that its
charter and by-laws remain in full force and effect without change since the
Closing Date, each certified as being true and complete as of the Amendment No.
6 Date;
(d) paid all fees and expenses of counsel to Agent incurred in
connection herewith; and
(e) otherwise complied in all respects with the terms hereof
and of any other agreement, document, instrument or other writing to be
delivered by Borrower in connection herewith.
3.2 Agent shall have received the following, each in form and
substance satisfactory to Agent:
(a) copies of the resolutions adopted by Borrower's and each
other Loan Parties' respective Board of Directors, certified as of the Amendment
No. 6 Date by an authorized officer thereof, authorizing the execution, delivery
and performance by Borrower and the other Loan Parties of this Amendment No. 6
and the Term Notes;
(b) a certificate of an authorized officer of Borrower,
certifying as of the Amendment No. 6 Date the names and true signatures of the
officer authorized to sign this Amendment No. 6 and the Term Notes, together
with evidence of the incumbency of such authorized officer; and
(c) favorable written opinions of Gibson, Dunn & Crutcher, LLP
and in house counsel to the participants part to the Subordinated Participation
Agreement, as to such matters relating to the transactions contemplated by this
Amendment No. 6 as Lenders may reasonably request.
3.3 Heller shall have received a fully executed copy of a
participation agreement entered into by and among Heller and OCM Principal
Opportunities Fund, L.P. and TCW Special Credits, as general partner and/or
investment manager of the funds and accounts set forth on Schedule I thereto,
which agreement shall be in form and substance satisfactory to Heller and
Requisite Lenders (the "SUBORDINATED PARTICIPATION AGREEMENT"), together with
such other instruments and documents relating' thereto as Heller may require.
3.4 Borrower and the other Loan Parties shall have executed and
delivered to Agent all agreements, instruments and documents required by Agent
in order to confirm the existing and continuing liens in favor of Agent under
the Security Documents.
3.5 The representations and warranties contained herein and each other
agreement,
16
<PAGE>
instrument, certificate or other writing delivered to Agent or any Lender
pursuant hereto or to the Loan Agreement shall be correct on and as of the
date hereof after giving effect to this Amendment No. 6 as though made on and
as of such date except to the extent modified hereby and (b) no Default or
Event of Default shall have occurred and be continuing on the Amendment No. 6
Date or would result from the taking effect of this Amendment No. 6; and the
Agent shall have received a Compliance Certificate dated the Amendment No. 6
Date certifying that the conditions set forth in this Article III shall have
been satisfied.
3.6 All legal matters incident to this Amendment No. 6 and the Loan
Agreement shall be reasonably satisfactory to Agent and counsel to Agent.
ARTICLE IV. ACKNOWLEDGMENTS AND CONFIRMATIONS.
4.1 Borrower acknowledges and confirms to Lenders and Agent that (a)
the liens and security interests granted pursuant to the Loan Agreement and
pursuant to the Security Documents executed by Borrower pursuant to the Loan
Agreement secure, without limitation, the Obligations of Borrower to Lenders and
Agent under the Loan Agreement, as amended hereby, and under the Revolving
Notes, the Acquisition Loan Notes and the Term Note(s), whether or not so stated
in such Security Documents, and (b) the term "OBLIGATIONS" as used in such
Security Documents (or any other term used therein to describe or refer to the
indebtedness, liabilities and obligations of Borrower to Lenders and Agent)
includes, without limitation, the indebtedness, liabilities and obligations of
Borrower under the Term Notes.
4.2 Holdings hereby acknowledges and confirms to Lenders and Agent
that: (a) its Guaranty executed in favor of Agent, guarantying, without
limitation, the full payment and performance of all of the Obligations of
Borrower under the Loan Agreement, as amended hereby and under the Notes,
including, without limitation, the Term Notes, (b) the term "OBLIGATIONS" as
used in its guaranty (or any other term used therein to describe or refer to the
indebtedness, liabilities and obligations of Borrower to the Lenders or Agent)
includes, without limitation, all of the Obligations of Borrower to Lenders or
Agent under the Loan Agreement, as amended hereby and under the Notes,
including, without limitation, the Term Notes, (c) the liens and security
interests granted pursuant to the Security Documents executed by it pursuant to
the Loan Agreement or other Loan Documents secure, without limitation, the
obligations of Holdings to the Lenders and Agent under its Guaranty, as
confirmed hereby and the obligations of Borrower to Lenders and Agent under the
Loan Agreement, as amended hereby, and the Notes, including without limitation,
the Term Notes, whether or not so stated in such security documents, and (d) the
term "OBLIGATIONS" as used in each security document (or any other term used
therein to describe or refer to the indebtedness, liabilities and obligations of
Borrower or the Holdings(s) to Lenders and Agent includes, without limitation,
the obligations of Holdings to Lenders and Agent under its Guaranty, as
confirmed hereby and the indebtedness, liabilities and obligations of Borrower
under the Notes, including, without limitation, the Term Notes and under the
Loan Agreement, as amended hereby.
4.3 Each of the Loan Parties hereby ratifies and affirms the validity
and
17
<PAGE>
enforceability of all of the Agreements to which the it is a party (all of which
shall remain in full force and effect except to the extent they are inconsistent
with this letter agreement), hereby waives any defenses to the enforcement of
the Loan Documents and hereby releases the Agent and the Lenders and all of the
Agent and the Lenders' predecessors, successors, assigns, officers, directors,
attorneys, agents and employees from liability for any and all claims or causes
of action of any nature whatsoever, in law or in equity, arising out of
agreement or imposed by law or otherwise, from the beginning of time to the date
on which this letter agreement is signed, whether or not known now, anticipated
or unanticipated, suspected or claimed, fixed or contingent, and whether or not
yet accrued and whether damage has yet resulted from such or not, including but
not limited to any claims based on or arising out of or relating in any manner
to (a) the administration of the Loan Documents or the Obligations prior to the
date hereof, (b) the negotiation and execution of the Loan Documents or this
Amendment, or (c) any other matter pertaining to the Loan Documents or the
Obligations. In entering into this letter agreement, neither the Agent nor any
Lender admits of any such liability of any sort to any Loan Party. Each of the
Loan Parties further agrees that the provisions of this Amendment represent a
fair and reasonable approach to the Loan Party's current financial and business
circumstances.
ARTICLE V. MISCELLANEOUS.
5.1 The Loan Agreement and the other Loan Documents to which Borrower
is a party delivered in connection herewith or with the Loan Agreement are, and
shall continue to be, in full force and effect, and are hereby ratified and
confirmed in all respects, except that on and after the Amendment No. 6 Date (a)
all references in the Loan Agreement to "this Agreement", "hereto", "hereof",
"hereunder" or words of like import referring to the Loan Agreement shall mean
the Loan Agreement as amended hereby, (b) all references in the Loan Agreement,
the Security Documents or any other agreement, instrument or document executed
and delivered in connection therewith to (i) the "Loan Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended hereby, and (ii) the "Notes" shall be
deemed to include the Term Notes, and (iii) the "Loans" (or any other term or
terms used in any of such documents to describe or refer to Loans made by
Lenders to the Borrower under the Loan Agreement) shall be deemed to refer to
Loans made by Lenders to the Borrower pursuant to the Loan Agreement as amended
hereby.
5.2 The Loan Agreement, the Security Documents and all agreements,
instruments and documents executed and delivered in connection with any of the
foregoing shall each be deemed amended hereby to the extent necessary, if any,
to give effect to the provisions of this Amendment No. 6. Except as so amended
hereby, the Loan Agreement and the other Loan Documents shall remain in full
force and effect in accordance with their respective terms. The execution and
delivery of this Amendment No. 6 by Borrower, Lenders and Agent shall not waive
or be deemed to waive any default which has occurred or which may be occurring
in respect of the Loan Agreement. All of the terms and provisions of this
Amendment No. 6 are hereby incorporated by reference into the Loan Agreement as
if such terms and provisions
18
<PAGE>
were set forth in full therein.
5.3 This Amendment No. 6 may be executed in counterparts by the
parties hereto, and each such counterpart shall be considered an original, and
all such counterparts shall constitute one and the same instrument. Facsimile
copies of any signature will be treated as original signatures.
5.4 THIS AMENDMENT NO. 6 SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
19
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
No. 6 to the Loan Agreement to be duly executed as of the date first above
written.
UNIONTOOLS, INC.
By: /s/ John Jacob
--------------------------
Title: Vice President, Chief Financial Officer
-------------------------------------------
ACORN PRODUCTS, INC.
By: /s/ John Jacob
--------------------------
Title: Vice President, Chief Financial Officer
-------------------------------------------
H.B. SHERMAN MANUFACTURING COMPANY
By: /s/ John Jacob
--------------------------
Title: Vice President, Chief Financial Officer
-------------------------------------------
UNIONTOOLS IRRIGATION, INC.
By: /s/ John Jacob
--------------------------
Title: Vice President, Chief Financial Officer
-------------------------------------------
HELLER FINANCIAL, INC., as Agent and a Lender
By: /s/ William Vukovich
--------------------------
Title: Assistant Vice President
--------------------------
FLEET BUSINESS CREDIT CORP., formerly known as
Sanwa Business Credit Corporation
By: /s/ Matthew R. Van Steenhuyse
--------------------------
Title: Senior Vice President
-----------------------
FLEET CAPITAL CORPORATION
By: /s/ Matthew R. Van Steenhuyse
--------------------------
Title: Senior Vice President
-----------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ William Miles
--------------------------
Title: Vice President
-----------------------
20
<PAGE>
BANKBOSTON, N.A., formerly known as The
First National Bank Of Boston
By: Robert Allen
--------------------------
Title: Managing Director
----------------------
FIRSTAR BANK, N.A.
By: /s/ Douglas Worden
--------------------------
Title: Assistant Vice President
----------------------------
21
<PAGE>
EXHIBIT A TO AMENDMENT
NO. 6
TERM LOAN NOTE
$6,000,000 Chicago, Illinois
October 28, 1999
FOR VALUE RECEIVED, UNIONTOOLS, Inc., a Delaware corporation (the
"BORROWER"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("HELLER"), the principal sum of Six Million Dollars ($6,000,000;
the "PRINCIPAL AMOUNT") and to pay interest on the outstanding principal amount
of this Term Loan Note (this "NOTE"), in accordance with Section 2 hereof. This
Note is the Term Loan Note defined in, and is delivered in connection with the
execution and delivery of, that certain Sixth Amendment (the "AMENDMENT";
capitalized terms used and not defined herein shall have the meanings ascribed
thereto in the Amendment) to the Amended and Restated Credit Agreement dated as
of May 20, 1997 (as amended, the "CREDIT AGREEMENT") by and among the Borrower,
Heller and each of the Lenders under the Credit Agreement.
1. MATURITY. If the Note has not previously been exchanged for
common stock of Acorn Holdings, Inc., a Delaware corporation ("ACORN"), in
accordance with Section 5 hereof, the Borrower shall repay the unpaid Principal
Amount outstanding hereunder on the later of (i) August 1, 2001 and (ii) the
date which is ninety-one (91) days after the Expiry Date, as defined in the
Credit Agreement (such date, the "MATURITY DATE").
2. INTEREST. The Borrower further agrees to pay interest
("INTEREST") on the unpaid Principal Amount hereunder until such amount shall be
paid in full at the rate of twelve percent (12%) per annum (the "INTEREST
RATE"). Interest shall be payable quarterly in arrears on each February 1, May
1, August 1 and November 1 (each such date, an "INTEREST PAYMENT DATE"), and on
the Maturity Date. Interest shall be paid by the Borrower by issuing to Heller,
on each Interest Payment Date, a term loan note evidencing principal
indebtedness in an amount equal to the Interest owing on such date, on terms and
conditions commensurate with those set forth in this Note. If any payment of
Interest hereunder becomes due and payable on a day other than a Business Day,
such Interest Payment Date shall be extended to the next succeeding Business Day
and Interest thereon shall be payable at the Interest Rate during such
extension.
3. PREPAYMENT. The unpaid Principal Amount, all accrued Interest and
any and all other sums payable to Heller hereunder may be prepaid by the
Borrower in full or in part at any time prior to the Maturity Date without
prepayment penalty, upon five (5) days prior written notice to Heller in
accordance with the terms of Section 1.5(a) of the Credit Agreement. All
prepayments shall be applied in accordance with the terms of the Credit
Agreement.
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<PAGE>
4. DEFAULT / ACCELERATION. Upon the occurrence of an Event of
Default, Heller shall have the right to declare the unpaid Principal Amount and
all accrued Interest immediately due and payable.
5. EXCHANGE. Heller shall have the right, at any time during which
any unpaid Principal Amount remains outstanding hereunder, upon two (2) days
prior notice to the Borrower, to exchange the Note for a number of shares of
common stock of Acorn (the "SHARES") to be issued to Heller, or, at the election
of Heller, directly to the Persons named in the Exchange Direction (as defined
in the Subordinated Participation Agreement dated as of the date hereof by and
between Heller and the participants named therein) equal to (i) the sum of the
unpaid Principal Amount hereunder plus accrued and unpaid Interest through the
date of exchange, divided by (ii) Three Dollars and Fifty Cents ($3.50). No
fractional shares shall be issued thereupon and the recipient(s) of the Shares
shall receive a cash payment equal to the value of any fractional shares that
would be called for by the foregoing formula. The aforementioned formula will
be adjusted in the event of a stock split, stock dividend or similar event by
Acorn so that the exchange rights set forth herein are, after the occurrence of
such event, as possible to such rights prior to such event. As a condition to
the issuance of the Shares, the recipient(s) thereof, shall, at the time of
exchange, make such representations and warranties to Acorn and the Borrower as
they shall reasonably require so as to permit the issuance of the Shares without
registration thereof under the Securities Act of 1933, as amended, including,
without limitation, acknowledgement that the Shares will not be registered under
the Securities Act of 1933, as amended, will not be freely tradable on the
public markets, will be subject to certain restrictions imposed by that Act and
will have a legend on the certificates for such Shares so indicating. The
Borrower covenants to Heller to have available for exchange the number of Shares
necessary to satisfy its obligations hereunder. Upon exchange of the Note for
the Shares pursuant to this Section 5, the rights and obligations of the
Borrower and Heller hereunder shall be fully and forever satisfied.
6. SECURED OBLIGATIONS; PRIORITY. The obligations of the Borrower
under this Note are secured by the Collateral in accordance with the terms of
the Amendment. The Borrower covenants to Heller that its obligations under this
Note will, at all times, rank senior to all of the Borrower's obligations for
indebtedness for borrowed money (other than pursuant to the Credit Agreement and
any refinancings thereof, as to which its obligations hereunder will rank
junior), and will rank pari passu with all trade indebtedness of the Borrower.
7. MISCELLANEOUS.
(a) The Borrower hereby waives presentment, demand, protest,
notice of diligence and all other notices of any kind.
(b) This Note shall be governed by and construed in accordance
with the laws of the State of Illinois applicable to contracts wholly made and
performed in the State of Illinois.
(c) All amounts owing to Heller hereunder shall be paid to
Heller in accordance with the terms of the Credit Agreement.
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<PAGE>
(d) Heller shall have the right to assign its benefits
hereunder, or to grant participations therein, at its discretion, upon written
notice to the Borrower.
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IN WITNESS WHEREOF, The Borrower has executed this Term Loan Note as of the
day and date first above written.
UNIONTOOLS, INC.
By: /s/ John Jacob
-------------------------------------
Name: John Jacob
Title: Vice President, Chief
Financial Officer
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<PAGE>
EXHIBIT 99.3
TERM LOAN NOTE
$6,000,000 Chicago, Illinois
October 28, 1999
FOR VALUE RECEIVED, UNIONTOOLS, Inc., a Delaware corporation (the
"BORROWER"), promises to pay to the order of HELLER FINANCIAL, INC., a Delaware
corporation ("HELLER"), the principal sum of Six Million Dollars ($6,000,000;
the "PRINCIPAL AMOUNT") and to pay interest on the outstanding principal amount
of this Term Loan Note (this "NOTE"), in accordance with Section 2 hereof. This
Note is the Term Loan Note defined in, and is delivered in connection with the
execution and delivery of, that certain Sixth Amendment (the "AMENDMENT";
capitalized terms used and not defined herein shall have the meanings ascribed
thereto in the Amendment) to the Amended and Restated Credit Agreement dated as
of May 20, 1997 (as amended, the "CREDIT AGREEMENT") by and among the Borrower,
Heller and each of the Lenders under the Credit Agreement.
1. MATURITY. If the Note has not previously been exchanged for
common stock of Acorn Holdings, Inc., a Delaware corporation ("ACORN"), in
accordance with Section 5 hereof, the Borrower shall repay the unpaid Principal
Amount outstanding hereunder on the later of (i) August 1, 2001 and (ii) the
date which is ninety-one (91) days after the Expiry Date, as defined in the
Credit Agreement (such date, the "MATURITY DATE").
2. INTEREST. The Borrower further agrees to pay interest
("INTEREST") on the unpaid Principal Amount hereunder until such amount shall be
paid in full at the rate of twelve percent (12%) per annum (the "INTEREST
RATE"). Interest shall be payable quarterly in arrears on each February 1, May
1, August 1 and November 1 (each such date, an "INTEREST PAYMENT DATE"), and on
the Maturity Date. Interest shall be paid by the Borrower by issuing to Heller,
on each Interest Payment Date, a term loan note evidencing principal
indebtedness in an amount equal to the Interest owing on such date, on terms and
conditions commensurate with those set forth in this Note. If any payment of
Interest hereunder becomes due and payable on a day other than a Business Day,
such Interest Payment Date shall be extended to the next succeeding Business Day
and Interest thereon shall be payable at the Interest Rate during such
extension.
3. PREPAYMENT. The unpaid Principal Amount, all accrued Interest and
any and all other sums payable to Heller hereunder may be prepaid by the
Borrower in full or in part at any time prior to the Maturity Date without
prepayment penalty, upon five (5) days prior written
<PAGE>
notice to Heller in accordance with the terms of Section 1.5(a) of the Credit
Agreement. All prepayments shall be applied in accordance with the terms of the
Credit Agreement.
4. DEFAULT / ACCELERATION. Upon the occurrence of an Event of
Default, Heller shall have the right to declare the unpaid Principal Amount and
all accrued Interest immediately due and payable.
5. EXCHANGE. Heller shall have the right, at any time during which
any unpaid Principal Amount remains outstanding hereunder, upon two (2) days
prior notice to the Borrower, to exchange the Note for a number of shares of
common stock of Acorn (the "SHARES") to be issued to Heller, or, at the election
of Heller, directly to the Persons named in the Exchange Direction (as defined
in the Subordinated Participation Agreement dated as of the date hereof by and
between Heller and the participants named therein) equal to (i) the sum of the
unpaid Principal Amount hereunder plus accrued and unpaid Interest through the
date of exchange, divided by (ii) Three Dollars and Fifty Cents ($3.50). No
fractional shares shall be issued thereupon and the recipient(s) of the Shares
shall receive a cash payment equal to the value of any fractional shares that
would be called for by the foregoing formula. The aforementioned formula will
be adjusted in the event of a stock split, stock dividend or similar event by
Acorn so that the exchange rights set forth herein are, after the occurrence of
such event, as possible to such rights prior to such event. As a condition to
the issuance of the Shares, the recipient(s) thereof, shall, at the time of
exchange, make such representations and warranties to Acorn and the Borrower as
they shall reasonably require so as to permit the issuance of the Shares without
registration thereof under the Securities Act of 1933, as amended, including,
without limitation, acknowledgement that the Shares will not be registered under
the Securities Act of 1933, as amended, will not be freely tradable on the
public markets, will be subject to certain restrictions imposed by that Act and
will have a legend on the certificates for such Shares so indicating. The
Borrower covenants to Heller to have available for exchange the number of Shares
necessary to satisfy its obligations hereunder. Upon exchange of the Note for
the Shares pursuant to this Section 5, the rights and obligations of the
Borrower and Heller hereunder shall be fully and forever satisfied.
6. SECURED OBLIGATIONS; PRIORITY. The obligations of the Borrower
under this Note are secured by the Collateral in accordance with the terms of
the Amendment. The Borrower covenants to Heller that its obligations under this
Note will, at all times, rank senior to all of the Borrower's obligations for
indebtedness for borrowed money (other than pursuant to the Credit Agreement and
any refinancings thereof, as to which its obligations hereunder will rank
junior), and will rank pari passu with all trade indebtedness of the Borrower.
7. MISCELLANEOUS.
(a) The Borrower hereby waives presentment, demand, protest,
notice of diligence and all other notices of any kind.
(b) This Note shall be governed by and construed in accordance
with the laws of the State of Illinois applicable to contracts wholly made and
performed in the State of Illinois.
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<PAGE>
(c) All amounts owing to Heller hereunder shall be paid to
Heller in accordance with the terms of the Credit Agreement.
(d) Heller shall have the right to assign its benefits
hereunder, or to grant participations therein, at its discretion, upon written
notice to the Borrower.
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IN WITNESS WHEREOF, The Borrower has executed this Term Loan Note as of
the day and date first above written.
UNIONTOOLS, INC.
By: /s/ John Jacob
-----------------------------
Name: John Jacob
Title: Vice President, Chief
Financial Officer
3
<PAGE>
EXHIBIT 99.4
SUBORDINATED PARTICIPATION AGREEMENT
THIS SUBORDINATED PARTICIPATION AGREEMENT (the "AGREEMENT") is made and
entered into as of this 28th day of October, 1999, by and among Heller
Financial, Inc. in its individual capacity ("HELLER") and (if applicable
pursuant to Section 11.17 hereof) certain other "Lender(s)" under the Loan
Agreement referred to below (each, individually (including Heller), a "SELLER"
and collectively, the "SELLERS") and Heller Financial, Inc. in its capacity as
Agent under the Loan Agreement referred to below (in such capacity, together
with its successors in such capacity, the "AGENT") and OCM Principal
Opportunities Fund, L.P. and TCW Special Credits, as general partner and/or
investment manager of the funds and accounts set forth on Schedule IA hereto
(collectively, the "PURCHASERS").
WITNESSETH:
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of May 20, 1997 among Uniontools, Inc. (the "BORROWER"), Acorn
Products, Inc., H.B. Sherman Manufacturing Company, Uniontools Irrigation, Inc.,
formerly known as UnionTools Watering Products, Inc., the Agent and the lending
institutions from time to time signatory thereto (the "LENDERS"), the Lenders
agreed to extend credit to the Borrower in the form of revolving credit
advances, standby letters of credit, risk participations and term loans;
WHEREAS, the Agent, the Lenders, the Loan Parties and the Borrower have
entered into that certain Sixth Amendment to Amended and Restated Credit
Agreement, dated as of the date hereof (the "AMENDMENT") providing, among other
things, for the making by certain of the Sellers to Borrower of an additional
term loan, referred to therein as the Term Loan, in one advance (such additional
loan, whether made by any one of the Sellers above or by Sellers under the Loan
Agreement, including the principal amount of any Term Notes issued by the
Borrower respect of interest on the Term Loans, the "TERM LOAN") subject to the
terms and conditions set forth therein (the aforementioned Amended and Restated
Credit Agreement, dated as of May 20, 1997, as heretofore amended, as amended by
the Amendment and as it may hereafter be further amended, supplemented, restated
or otherwise modified, is referred to herein as the "LOAN AGREEMENT");
WHEREAS, to evidence its obligation to repay the Term Loan under the Loan
Agreement, the Borrower issued to each Seller agreeing to make the Term Loan a
promissory note (whether one or more, and as they may from time to time be
amended, modified, supplemented, renewed, restated or replaced, individually or
collectively, as the context may require, together with any additional
paid-in-kind promissory notes issued in respect of interest on the Term Loan,
the "TERM NOTES") in the principal amount of the Term Loan;
<PAGE>
WHEREAS, the Purchasers acknowledge that the Loans, including the Term
Loan, are of value to the Purchasers, and subject to the terms and conditions
contained herein, the Sellers desire to convey to the Purchasers, and the
Purchasers desire to purchase and assume from the Sellers, an undivided,
non-voting, last out, subordinated participation interest in and to all of the
Sellers' right, title, interest, claims and causes of action in and to, or
arising under or in connection with (i) the Term Loan and the Loan Documents to
the extent applicable thereto, and (ii) any and all cash, securities, dividends
and other property or consideration, regardless of type, that may be exchanged
for, distributed or collected in respect of the foregoing ("PROCEEDS"). The
items described in clauses (i) and(ii) of this recital are referred to
collectively herein as the "TRANSFERRED INTERESTS";
WHEREAS, so long as Heller is the only Lender under the Loan Agreement
who has made a Term Loan, each reference herein to "Seller" or "Sellers" shall
mean only Heller; and
WHEREAS, certain capitalized terms used herein are defined in Section 6
hereof and capitalized terms used and not otherwise defined herein shall have
the meanings ascribed thereto in the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. PARTICIPATION AND CLOSING
1.1 PARTICIPATION; SUBORDINATION. (a) In the manner and to the
extent hereinafter set forth, the Sellers hereby grant, sell, transfer and
assign to the Purchasers and the Purchasers hereby accept, effective
immediately, without recourse to any Seller, an undivided non-voting junior and
fully subordinate last out participation in the Transferred Interests (the
"PARTICIPATION").
(b) Purchasers shall pay to the Sellers, in immediately
available funds, an amount equal to Six Million Dollars ($6,000,000) for the
Participation (the "PURCHASED AMOUNT").
(c) The obligations of the Purchasers hereunder are absolute,
unconditional and irrevocable and without limiting the generality of the
foregoing neither the existence of any Default (including, without limitation,
the occurrence of any insolvency proceeding or bankruptcy case of any kind with
respect to the Borrower or any other Loan Party) nor any breach by any Loan
Party under any Loan Document shall affect or limit the Purchasers' obligations
hereunder, regardless of whether any such Default or breach occurs before, after
or concurrently with the making of the Term Loan under the Loan Agreement.
(d) The Purchaser agree that except as set forth herein, as
between the
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<PAGE>
Sellers, the Lenders, Agent and the Purchasers, the Participation shall be
subject and subordinate in all respects to all interests of the Sellers (and the
other Lenders) in the Loans and shall be subordinate to (and not paid prior to)
the prior payment indefeasibly in full in cash of all of the Obligations of the
Borrower (including as a debtor-in possession) to the Lenders and the Agent
(including, without limitation, all post-petition interest, fees and expenses in
any bankruptcy proceeding, whether or not allowed by a bankruptcy court) and
termination of the Revolving Loan Commitments. For all purposes of this
Agreement, the term "Obligations" includes, without limitation, all of the
Loans, regardless of how or in what manner the Loans may be incurred, or whether
already incurred or incurred in the future by future advances or other financial
accommodations (including to the Borrower as a debtor-in-possession) made or
extended by the Lender(s) as of the date hereof or hereafter or by any other
persons or entities that become holders of Loans after the date hereof, whether
by amendment, modification, supplement or restatement or whether such future
advances or other financial accommodations are made at the discretion of the
Lender(s) or such other person or entity under the Loan Documents or pursuant to
the Revolving Loan Commitments or otherwise (collectively, "FULL PAYMENT").
Notwithstanding the foregoing, (i) the Purchasers shall be entitled to receive
payments in respect of the Term Loan in accordance with Section 1.5(a) of the
Loan Agreement ("SECTION 1.5 PAYMENTS"), which payments shall not be subject to
the subordination set forth in this Section 1.1(d), and (ii) the Purchasers'
rights hereunder shall rank pari passu with, and shall not be subject or
subordinate to, the success fee payable to the Lenders in accordance with
Section 1.3(d) of the Loan Agreement. For purposes of this Agreement, the term
"indefeasibly" shall be deemed to mean the ninety-first (91st) day following the
last payment to the Lenders and Agent in respect of Full Payment, subject,
however, to the disgorgement obligations of the Purchasers under Sections 3 and
5(b) hereof. The Purchasers' interests in the liens on and security interests
in the collateral securing the Term Loan from time to time (including, without
limitation, any guaranties by any third parties and any property in any
Seller's, Lender's or Agent's possession or control or in any deposit held or
other indebtedness owing by any Seller which may be or become collateral or
otherwise be available for payment to any Seller of the Loans or by reason of
the right of set-off, counterclaim or otherwise) (collectively, the
"COLLATERAL") shall be subject and subordinate to the Sellers' and Agent's liens
on and security interests in or other rights in the Collateral and otherwise
subject to the terms and conditions of this Agreement.
(e) Notwithstanding the sale of the Participation hereunder,
the Sellers shall remain the holders of the Term Loan, and the Participation
shall not give rise in any way to a direct obligation of the Borrower to the
Purchasers or any right of the Purchasers against the Borrower whether before or
after the bankruptcy or insolvency of the Borrower or any other Loan Party, and
the Sellers shall retain the right to vote any claim in respect of the Term Loan
and the Participation in any bankruptcy case or insolvency proceeding, provided
that following Full Payment (excluding payment of the Term Loan), each Seller's
right to vote any such claim shall be assigned to the Purchasers in accordance
with Section 5(b) below.
1.2 PURCHASE PRICE. The aggregate purchase price to be paid
hereunder at the Closing (the "PURCHASE PRICE") shall equal the Purchased
Amount.
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<PAGE>
1.3 CLOSING. The funding of the purchase contemplated hereby (the
"CLOSING") shall take place at the offices of Katten Muchin & Zavis, in Chicago,
Illinois, on the Funding Date.
2. ALLOCATIONS AND SUBORDINATION PROVISIONS
2.1 ALLOCATIONS. After the Funding Date, all monies received or held
by the Lenders or the Agent on or at any time from the Borrower or out of its
assets or as proceeds of any Collateral (i) as payments or prepayments of
interest on or principal or reimbursements of the Obligations, or (ii) as
proceeds from the sale or other disposition of the Collateral, or (iii) as
proceeds of set-offs or banker's liens or otherwise, and actually applied by the
Lenders to the payment of the Borrower's Obligations under the Loan Agreement
and the Notes, shall be applied first, to the Obligations in which the
Purchasers shall not have any participation (i.e., to the Obligations other than
the Term Loan) in such order as the Agent may elect, and then, following Full
Payment (excluding payment of the Term Loan and assuming that the Purchasers
shall have fulfilled their obligations to the Sellers hereunder) to the Term
Loan, in the same funds in which such amount was received. Notwithstanding the
foregoing, monies received by the Lenders or the Agent in respect of Section 1.5
Payments shall be paid to the Purchasers in accordance with Section 1.5(a) of
the Loan Agreement. Accordingly, in confirmation of the terms of the first
sentence herein above (but without limiting the generality thereof), subject to
the immediately preceding sentence, and except to the extent that the order of
items "first" through "fifth" below may be modified by the Agent or the Lenders,
all monies received or held by the Seller or the Agent as referred to in the
preceding sentence shall be applied, FIRST, to the payment in full of the costs
and expenses (including attorney's fees) incurred by the Agent and the Lenders
in effecting the recovery or collection of such monies or enforcing the Agent's
or the Lender's rights and remedies under the Loan Documents, SECOND, to the
payment in full of all fees, indemnities and other obligations of the Borrower
to the Agent and the Lenders under any Loan Document (other than the obligation
to pay principal and interest on the Loans), THIRD, to the payment in full of
interest accrued on Lenders' Share of the Loans (excluding the Term Loan) at the
rate specified in the Loan Agreement and the Notes, FOURTH, to the payment of
all principal then due (whether in ordinary course, by acceleration, or
otherwise) on the Lenders' Share of the Loans (excluding the Term Loan), FIFTH,
to the repayment in full of the principal of the Lenders' Share of the Loans
(excluding the Term Loan), SIXTH, to the payment in full of interest accrued on
the Term Loan at the rate specified in the Loan Agreement in respect of the Term
Loan, and, SEVENTH, to the repayment in full of the Term Loan. Notwithstanding
anything to the contrary contained in this paragraph, the Purchasers shall not
be entitled to share in any fee paid by the Borrower to any Seller. The Sellers'
actions hereunder are strictly administrative, and all payments to be made by
any Seller to the Purchasers hereunder shall be made only if, when and to the
extent funds received by the Sellers are available in accordance with the
priority of allocation provided for in this Section 2.1, and any repayment of
principal or interest to the Purchasers hereunder is solely dependent on receipt
by the Sellers of payment or proceeds from the Borrower.
2.2 WAIVERS. This Agreement shall be applicable both before and after
the
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<PAGE>
commencement, whether voluntary or involuntary, of any bankruptcy case or
insolvency proceeding of the Borrower (including, without limitation, the
Borrower as a debtor-in-possession). The Purchasers shall not be entitled to any
monies or other property or interests in property received by any Seller or the
Agent in accordance with the provisions of the Loan Documents, whether directly
or indirectly from the sale or liquidation of any Collateral, any payment or
distribution of any kind, whether in cash, properties or securities (excluding,
for purposes of this Section 2.2, (i) additional term notes issued by the
Borrower in accordance with the requirements of Section 2 of the Term Note and
(ii) the Shares (as defined herein below) to be issued by Holdings upon exchange
of the Term Note in accordance with Section 5 thereof), pursuant to any
bankruptcy case or insolvency proceeding or otherwise in reduction of its
Participation hereunder unless and until the Lenders have received Full Payment
(excluding payment of the Term Loan). Notwithstanding the foregoing, the
Purchasers shall be entitled to receive Section 1.5 Payments in accordance with
Section 1.5(a) of the Loan Agreement. Subject to the foregoing until the
Lenders have received Full Payment (excluding payment of the Term Loan), any
payment received by the Purchasers at any time with respect to the Term Loan
shall not be commingled with any assets of the Purchasers and shall be held in
trust for the benefit of the Sellers and the amount thereof remitted promptly to
the Sellers in the same type of funds as received by the Purchasers for
application to the payment of the Term Loan. In the event that any Seller makes
any debtor-in-possession financing arrangements with the Borrower, the proceeds
of which are used to repay in full or in part the Term Loan, the Purchasers
shall have a continuing participation in the replacement loan therefor on the
same terms and with the same priorities as set forth herein and no proceeds of
any such debtor-in-possession financing shall be paid in cash to the Purchasers
but shall instead be deemed to constitute a continuing Participation hereunder.
Without limiting the generality of the foregoing, the Purchasers will not as a
result of the Closing or otherwise, directly or indirectly, unless otherwise
explicitly provided in this Agreement, acquire (and the Purchasers hereby waive
and agree that they will not, unless otherwise explicitly provided in this
Agreement, exercise) (a) any right to vote the Participation acquired hereunder,
provided that notwithstanding any other provision contained herein, without the
prior written consent of the Purchasers the Sellers shall not agree to: (1) a
reduction of the principal amount of, or rate of interest on, the Term Loan, (2)
a change the stated date for final payment of the Term Loan or interest thereon
(unless concurrently with any such date change, the maturity date or final
termination date of the outstanding Revolving Loans and Acquisition Loans are
extended so that the Term Loan and interest thereon retain stated maturity dates
no later than thirty-one days following final stated maturity of the Acquisition
Loans and/or Revolving Loans) or (3) a change in the exchange rate or terms of
exchange of the Term Loan for the Shares; PROVIDED that the terms of the
foregoing proviso shall not be applicable in the event of any bankruptcy case or
insolvency proceedings or similar action of any kind, (b) any right to vote on
any matter as a participant under the Loan Agreement or any other Loan Document,
(c) any right to receive payments directly from the Borrower or any other Loan
Party under the Loan Agreement or otherwise in respect of the Obligations or the
Participation acquired hereunder, (d) any right to require any Seller or the
Agent to marshal any of the Collateral or any other Collateral for the Loans or
that the any Seller, Lender or the Agent pursue or not pursue any guarantor, (e)
any rights of recourse to or with respect to the Collateral or any other assets
or property of the Borrower or any other security for any or all of the Loans
and other
5
<PAGE>
Obligations or any other rights to proceed or deal directly with or against the
Borrower in respect of the Term Loan (or any other Obligations) or the
Participation or the Collateral until, in each case, such time as the Lenders
have been indefeasibly repaid in full in cash all of their respective interests
in the Loans and other Obligations (i.e., Full Payment), (f) ask, demand, sue
for, take, receive, accept or retain from any source (other than any Seller) any
payment with respect to the Participation or any security or collateral
therefor, (g) make or present any proof of claim against the Borrower with
regard to the Participation in the event of any distribution of assets or
readjustment of indebtedness of the Borrower whether by reason of a bankruptcy
or the application of the assets of the Borrower to the payment or liquidation
thereof, or contest any use of cash collateral or debtor-in-possession financing
arrangements consented to by any Seller, or (h) set off any amounts owing to the
Purchasers by the Borrower with regard to the Participation against any amounts
owing by the Purchasers to the Borrower. The Purchasers agree that they shall
not become members of any creditors committee nor shall the Purchasers extend
any debtor in possession financing arrangements to the Borrower or any other
Loan Party unless all of the Obligations (other than the Term Loan) have been
satisfied in full. All references in this Agreement to the Term Loan shall also
include any proceeds, replacements and substitutions for the Term Loan,
including, without limitation, cash, stock, notes or any other property received
in any bankruptcy, insolvency or liquidation proceedings relating to the
Borrower and the terms and conditions of this Agreement shall apply to any and
all of the foregoing referred to in this sentence.
3. EFFECT OF PAYMENT RESCISSION. If, after any Seller has paid to
the Purchasers the Purchasers' share of any amount received by any Seller or of
any application of funds made by the Lenders in respect of the Loans, such
payment or application is rescinded or must otherwise be returned by the Lenders
or the Agent, whether to the Borrower or to a trustee, receiver, liquidator,
custodian or other similar official or otherwise, for any reason, the Purchasers
will upon demand by any Seller or the Agent promptly pay back to such Seller as
applicable the Purchasers' share of the amount so returned, together with the
Purchasers' share of any interest paid by the Seller with respect thereto.
4. RIGHTS OF LENDERS
4.1 EXERCISE OF RIGHTS AND REMEDIES. (a) The Purchasers covenant
and agree that, until such time as the Lenders have been indefeasibly repaid in
full in cash all of their respective interests in the Obligations (I.E., until
Full Payment), without notice to or by the Purchasers and without affecting or
impairing in any way the obligations or liability of the Purchasers hereunder,
the Agent or any Lender may, from time to time, all in their sole discretion, as
though the Sellers had not sold the Participation, exercise any right or remedy
that the Agent or such Lender may have with respect to any or all of the Loans
and other Obligations or any Collateral or other assets or property securing any
or all of the Loans and other Obligations or any guaranty thereof, including,
without limitation, judicial foreclosure, nonjudicial foreclosure, exercise of a
power of sale, and taking a deed, assignment or transfer in lieu of foreclosure
as to any such property and the Purchasers expressly waive any defense based
upon the exercise of any such right or remedy, notwithstanding the effect
thereof upon any of the Purchasers' rights, including, without limitation, any
destruction of the Purchasers'
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<PAGE>
right of subrogation against Borrower.
(b) The Sellers hereby agree that notwithstanding anything to
the contrary contained herein, the right of the Sellers to exchange the Term
Loan for capital stock of Holdings (the "SHARES") pursuant to Section 5 of the
Term Note shall be exercisable by the Sellers only upon the written direction
(the "EXCHANGE DIRECTION") of the Purchasers in the form attached hereto as
Exhibit A. The Sellers further agree that upon receipt of the Exchange
Direction, the Sellers shall promptly (i) comply with the terms thereof and of
such Section 5 and (ii) designate that the Shares be issued in the name of the
Person specified in the Exchange Direction.
4.2 COSTS. Subject to Section 5.2(b) below, the Lenders and the Agent
shall determine in their sole discretion whether to incur any costs or expenses
(including attorneys' fees and court costs, collection expenses and other legal
or extraordinary expenses), in connection with the collection of any monies from
the Borrower or out of its assets, the enforcement of any of the Lenders' or the
Agent's rights and remedies under the Loan Agreement or any other Loan Documents
and the care, preservation or disposition of the Collateral. In the event that
the Lenders or the Agent incur any such costs or expenses, such costs and
expenses shall, in accordance with Section 2.1 above, be payable out of any
monies received or held by the Lenders or the Agent from the Borrower or out of
the Borrower's or any Loan Party's assets before such monies are applied to the
payment of the principal of or interest on the Loans.
5. ADMINISTRATION. (a) Except upon an assignment as provided in
subsection (b) of this Section 5, the account of the Borrower and all
transactions in connection therewith shall be conducted solely in the Lenders',
the Sellers' or the Agent's name, without charge to the Purchasers for the
Sellers' or the Agent's administrative or clerical expenses except as provided
in Section 4.2 and/or Section 9 hereof. So long as any Loans are outstanding the
respective Seller or the Agent as applicable shall service and manage the Loans
and handle all matters concerning the Collateral (including the protection,
preservation and disposition thereof) in accordance with the Seller's or Agent's
usual practice in managing their respective affairs in the ordinary course of
business; PROVIDED, HOWEVER, that neither any Seller nor the Agent shall be
liable for any error of judgment or for any action taken or omitted by any
Seller or the Agent except for actions taken or omitted by such Seller or the
Agent as a result of such Seller's or the Agent's bad faith or willful
misconduct as determined by a court of competent jurisdiction after all possible
appeals have been exhausted.
(b) Upon payment in full of the Lenders' Share of the Loans and
all other amounts owing to the Lenders and the Agent under the Loan Agreement,
the Note and the other Loan Documents (other than the principal amount of the
Term Loan and interest accrued thereon), no Seller nor the Agent shall have any
obligation to enforce their rights under this Agreement for the Purchasers'
benefit, including, without limitation, their rights in the Collateral, but the
Sellers shall upon the request of the Purchaser promptly thereafter assign to
the Purchasers the Sellers' respective rights under the Term Notes, without
recourse, representation or warranty of any kind; PROVIDED, HOWEVER, that any
such assignment shall
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automatically and without further action revert to the respective Seller in the
event that such Seller is required to disgorge any payment theretofore received
by such Seller in respect of the Loans or such payment is otherwise rescinded as
a result of any of the circumstances set forth in Section 3 above, and the
Purchasers will upon demand by any Seller or the Agent promptly pay back to such
Seller as applicable any amount received by the Purchasers in respect of the
Term Loan up to the amount disgorged by such Seller.
6. DEFINITIONS. For purposes hereof, (a) "LOANS" shall mean the
loans, advances or other financial accommodations made by Lenders to the
Borrower (including, without limitation, Term Loans and the Risk Participation
Liabilities owing to the Lenders) from time to time under the Loan Agreement,
(b) "LENDERS' SHARE OF THE LOANS" shall mean the excess, if any, of the
Obligations outstanding from time to time over the amount of the Term Loan, (c)
"NOTE" shall mean collectively the promissory notes evidencing the Loans from
time to time and shall include the Risk Participation Liabilities whether or not
evidenced by any promissory note, and (d) "SECURITY DOCUMENTS" shall mean the
Loan Documents, as defined in the Loan Agreement, relating to collateral
security for the Loans each between the Agent and any other Loan Party, as each
such Agreement may be supplemented, modified, amended and/or renewed.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 PURCHASERS REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Purchasers hereby represent and warrant to the Sellers and the Agent, subject to
Section 11.18 below, that:
(a) this Agreement has been duly and validly authorized,
executed and delivered and constitutes the valid and binding obligation of the
Purchasers, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(b) the execution and delivery of this agreement does not
violate or constitute a default under any order, judgment, decree, instrument,
contract, agreement or other document to which the Purchasers are a party or by
which it or its property is affected or bound;
(c) it is in the Purchasers' direct interest to assist the
Borrower by entering into this Agreement and providing this commitment;
(d) the Purchasers are experienced and knowledgeable in
financial matters and are fully aware of the current financial condition of
Borrower and is executing and delivering this Agreement at Borrower's request
and based solely upon the Purchasers' own independent investigation of all
matters pertinent hereto and are not relying in any manner upon any
representation or statements of any Seller, Lender or the Agent with respect
thereto;
(e) the Purchasers are in a position to obtain, and hereby
assume, full
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responsibility for obtaining any additional information concerning Borrower's
financial condition and any other matter pertinent hereto as the Purchasers may
desire, and not relying upon or expecting any Seller, Lender or the Agent to
furnish to the Purchasers any information now or hereafter in any Seller's
possession concerning the same or any other matter; and
(f) the Purchasers will, independently and without reliance
upon any Seller, Lender or the Agent and based on such documents and information
as the Purchasers may deem appropriate at the time, continue to make their own
credit decisions with respect to the Participation sold to the Purchasers
hereunder.
7.2 ACKNOWLEDGMENT OF LIMITATION. The Purchasers acknowledge that no
Seller, Lender or the Agent has made representations or warranties (express or
implied) as to, and no Seller, Lender or the Agent assumes nor shall any Seller,
Lender or the Agent have any liability or responsibility (express or implied)
for or with respect to, (a) the due execution, legality, validity or
enforceability of the Loan Agreement, the Notes or any other Loan Document, (b)
the collectability of the Loans, (c) the financial condition of the Borrower or
any other obligor under any Loan Document, (d) the value of the Collateral or of
any Lender's or Agent's ability to realize upon the Collateral, (e) the accuracy
or completeness of any statement, representation or warranty made by the
Borrower or any other Loan Party in or in connection with any Loan Document, (f)
the accuracy or completeness of any credit or other information furnished by any
Seller, Lender or the Agent to the Purchasers, (g) the performance or observance
by the Borrower or any other Loan Party of any of the terms, covenants or
conditions of the Loan Agreement, the Notes or any other Loan Document or (h)
the legality, validity, enforceability or priority of the Purchasers' interest
in the Term Loan or the Collateral. The Purchasers acknowledge that they have
received and reviewed copies of the Loan Agreement, the Notes and the other Loan
Documents and that the Purchasers have, based on the Purchasers' review of the
Loan Documents and such other documents and information as the Purchasers have
deemed appropriate, made their own credit analysis and decision to purchase the
Participation pursuant to the terms of this Agreement. Neither any Seller nor
the Agent shall be under any obligation to provide the Purchasers with any
information which has been or may hereafter be from time to time received by any
Seller or the Agent from the Borrower or any Loan Party with respect to the Loan
Agreement, the Loans or the other Loan Documents.
7.3 SELLERS' REPRESENTATIONS. Each Seller represents and warrants to
the Purchasers that this Agreement is such Seller's valid and binding obligation
enforceable in accordance with its terms.
7.4 SURVIVAL. All agreements, representations and warranties made in
this Agreement shall survive delivery of this Agreement.
8. TERMINATION. This Agreement, and each of the rights and
obligations hereunder shall terminate on the earliest to occur of (a) the
indefeasible repayment in full in cash of all Loans and other Obligations under
the Loan Agreement (including, without limitation, the Term Loan), and the
permanent reduction of the Commitments to zero (i.e., Full Payment) and
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(b) the repayment in full in cash of all Loans and other Obligations under the
Loan Agreement with the proceeds of a refinancing by the Borrower of the Loan
Agreement, and the permanent reduction of the Revolving Loan Commitments to
zero, and (c) if expressly consented to in writing by the Sellers, the date of a
refinancing (if any) of the Term Loan on terms and conditions satisfactory to
Lenders and Agent, and (d) exchange of the Term Loan for the Shares, and
assignment to the Purchasers of all of the Sellers' right, title and interest in
and to the Shares, in accordance with the terms of Section 2 of the Note and
Section 4.1(b) herein above.
9. INDEMNIFICATION; DEFAULT BY PURCHASERS; WITHHOLDING TAXES.
9.1 The Purchasers hereby exonerate and hold harmless each Seller,
Lender and the Agent from any obligation or liability, express or implied,
suffered by the Purchasers as a result of (i) any loss, depreciation of or
failure to realize upon, the Loans or any Collateral securing the Loans or (ii)
the Sellers', the Lenders' or the Agent's exercising or refraining from
exercising any rights or taking or refraining from taking any actions arising
pursuant to the Loans or (iii) the failure by the Sellers, the Lenders or the
Agent to collect or receive payments of any sums owing from the Borrower with
respect to the Loans, or for any mistake, omission or error of judgment in
passing upon or accepting the Loans, the Collateral securing the Loans, if any,
the Loan Documents, or in making any advances of monies or extensions of credit
to Borrower in respect of the Loans, or in making any examinations, audits, or
reviews of the affairs of Borrower in enforcing any remedies with respect to the
Loans, or in granting to Borrower extensions of time for payment of the Loans,
or in administering or monitoring the Loans and the Collateral securing the
Loans. The Sellers, the Lenders and the Agent may consult with legal counsel,
independent public accountants and other experts selected by them and shall not
be liable for any action taken or omitted to be taken by them (i) in accordance
with the advice of such Person or (ii) in connection with the Loans or the Loan
Documents pursuant to any notice, consent, certificate or other writing received
by any Seller, Lender or the Agent and believed by such Seller, Lender or the
Agent in good faith to be genuine. Notwithstanding the foregoing, the
Purchasers shall have no obligation to exonerate or hold harmless the Sellers,
the Lenders or the Agent with respect to any such loss, cost, obligation or
liability incurred by the Purchasers or any of them as a result of the gross
negligence or willful misconduct of any Seller, Lender or the Agent. References
to any Seller, Lender or the Agent in his Section 9 will be deemed to include
its respective officers, directors, employees, agents, auditors, attorneys,
affiliates, subsidiaries, successors, and assigns. Nothing contained in this
Section 9.1 shall be deemed to be a guaranty (or other assurance) by the
Purchasers of the payment to the Sellers, Lenders or Agent of any of the
Obligations.
9.2 COSTS AND INDEMNIFICATION. (a) All routine costs and expenses
of administering the Loan Agreement and the Loans shall be borne exclusively by
the Lenders, except that any costs, expenses, attorneys' fees or disbursements
which the Lenders or the Agent may incur after the Funding Date in enforcing,
maintaining or preserving rights with respect to the Term Loan, under the Loan
Agreement or the Loan Documents as they pertain to the Term Loan, or which may
be incurred in enforcing, protecting or realizing on the Collateral securing the
Term Loan shall, to the extent not reimbursed by the Borrower, be
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shared by the Purchasers based on the proportionate share that the Term Loan
bears to all of the Loans and Risk Participation Liabilities.
(b) The Purchasers agree to reimburse each Seller, Lender and
the Agent (to the extent not reimbursed by the Borrower and without limiting the
obligations of the Borrower under the Loan Documents), ratably from and against
any and all claims of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against any Seller, Lender and the Agent in any way
relating to or arising out of this Agreement with respect to the Term Notes
(including any claim relating to the exchange of the Term Notes for the Shares
(including any claims arising under securities laws)); PROVIDED, HOWEVER, that
the Purchasers shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from any Seller's or Lender's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction after the possible appeals have been exhausted. The Purchasers
agree to indemnify and hold each Seller, Lender and the Agent harmless against
any and all losses, liabilities, costs and expenses (including, without
limitation, all expenses of litigation or preparation thereof, whether or not
any Seller, Lender or the Agent, is a party thereto and all reasonable
attorneys' fees) incurred by any Seller, Lender or the Agent, in connection with
any legal action or proceeding arising as a result of this Agreement, the Term
Notes (including any and all losses, liabilities, costs and expenses relating to
the exchange of the Term Notes for the Shares (including any claims arising
under securities laws)) or the sale of the Participation hereunder.
9.3 NO INCONSISTENT ACTIONS. The Purchasers hereby agree that they
will not, directly or indirectly, take any action or vote in any way that would
be in violation of, or be inconsistent with, or result in a breach of, this
Agreement or so as to challenge or contest in any bankruptcy case or insolvency
proceeding or otherwise the validity or enforceability of this Agreement or any
of the Loan Documents or any lien on or security interest in any Collateral. The
Purchasers acknowledge and agree that the provisions herein contained are, and
are intended to be, an inducement and a consideration to the Sellers and the
Lenders to continue to hold or to acquire and continue to hold the Loans and
each Seller shall be deemed conclusively to have relied on such provisions in
making the Term Loan and in continuing to hold the Loans. If the Purchasers
shall attempt to take any action in violation of this Agreement, any Seller,
Lender or the Agent may interpose as a defense or plea the making of this
Agreement and any Seller, Lender or the Agent may intervene and interpose such
defense in its name, and any Seller, Lender or the Agent may by virtue of this
Agreement restrain the violation thereof.
9.4 WITHHOLDING TAXES. The Purchasers represent that they are
entitled to receive all payments hereunder without the withholding of any tax
and will furnish to the Sellers such forms, certifications, statements and other
documents as any Seller may request from time to time in evidence and
confirmation thereof and to enable any Seller to comply with any applicable laws
or regulations relating thereto.
10. LOAN DOCUMENTS. To the fullest extent permitted by law (taking
into account all waivers permitted by law), the validity and enforceability of
this Agreement shall not be
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impaired or affected by any of the following: (a) any extension, amendment,
modification or renewal of, or indulgence with respect to, or increases with
respect to, or substitutions for, the Loans or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission by the Agent to
perfect or maintain any Lien on, or preserve rights to, any security or
collateral or to enforce any right, power or remedy with respect to the Loans or
any part thereof or any agreement relating thereto, or any collateral securing
the Loans, or any part thereof; (c) any waiver of any right, power or remedy or
of any default with respect to the Loans or any part thereof for any agreement
relating thereto or with respect to any Collateral securing the Loans or any
part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any Collateral
(other than all or substantially all of the Collateral) securing the Loans or
any part thereof, any guaranties with respect to the Loans or any part thereof,
or any other obligation of any Person with respect to the Loans or any part
thereof, (e) the enforceability or validity of the Loans or any part thereof or
the genuineness, enforceability or validity of any agreement relating thereto or
with respect to any Collateral securing the Loans or any part thereof; (f) the
application of payments received from any source to the payment of indebtedness
other than the Loans or any part thereof or amounts which are not covered by
this Agreement even though any Seller, Lender or the Agent might lawfully have
elected to apply such payments to any part or all of the Loans or to amounts
which are not covered by this Agreement; (g) any change of ownership of the
Borrower or the insolvency, bankruptcy or any other change in the legal status
of the Borrower; (h) te change in or the imposition of any law, decree,
regulation or other governmental act which does or might impair, delay or in any
way affect the validity, enforceability or the payment when due of the Loans;
(i) the existence of any claim, setoff or other rights which the Purchasers may
have at any time against the Borrower or any Seller, Lender or the Agent or any
Person related thereto, whether in connection herewith or any unrelated
transaction; (j) the success or failure of the business of the Borrower or the
inability of the Purchasers to realize anticipated benefits therefrom; (k) any
borrowing, use of cash collateral, or grant of a Lien by the Borrower, as debtor
in possession, under Section 363 or 364 of the United States Bankruptcy Code or
otherwise; (l) the disallowance of all or any portion of any Seller's claims for
repayment of the Loans under Section 502 or 506 of the United States Bankruptcy
Code or otherwise; or (m) any other fact or circumstance which might otherwise
constitute grounds at law or equity for the discharge or release of the
Purchasers from their obligations hereunder, all whether or not any of the
Purchasers shall have had notice or knowledge of any act or omission referred to
in the foregoing clauses (a) through (m) of this Section. Without limiting the
generality of the foregoing, any Seller or Lender may lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not a party hereto or acting as Agent, and no such lending
or other activities shall affect or modify in any way any of any Seller's,
Lender's or Agent's rights hereunder or any Purchasers' obligations hereunder.
11. MISCELLANEOUS.
11.1 AMENDMENT. The terms and provisions hereof may not be waived,
altered, modified or amended, except in writing executed by all of the parties
hereto.
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11.2 NOTICES. Any notice that a party shall be required or shall
desire to give to any other hereunder shall be given by personal delivery, by
telecopy or by depositing the same in the U.S. mail first class postage prepaid,
return receipt requested at the address specified with respect to each party on
the signature page hereof, and any such notice shall be deemed duly given on the
date of personal delivery or the date of transmission by telecopier or three
days after the date of mailing as aforesaid. Any party may change its address
for the purpose of receiving notices hereunder by giving written notice thereof
to the other parties in accordance therewith. Notwithstanding the foregoing,
any notice to the Purchasers shall be deemed to have been delivered to all of
the Purchasers upon delivery of the same to Kenneth Liang, in his capacity as
the designated representative to receive notices on behalf of the Purchasers
hereunder, in accordance with this Section 11.2. Such notices shall be given to
the Purchasers c/o Kenneth Liang, Oaktree Capital Management, LLC, 333 South
Grand Avenue, 28th Floor, Los Angeles, CA 90071, facsimile (213) 830-8522.
11.3 REFERENCES TO BORROWER. The term "Borrower" as used herein shall
also refer to the successors and assigns of the Borrower including, without
limitation, a receiver, trustee, custodian or debtor or debtor in possession of
or for such Borrower. No other Person (including, without limitation, the
Borrower) shall have any right, benefit, priority or interest under, or because
of the existence of, this Agreement or shall be a direct or indirect beneficiary
of or have any direct or indirect cause of action or claim in connection with
this Agreement, nor shall this Agreement affect the obligations of the Borrower
to any Seller or the Agent under the Loan Agreement or any other Loan Document.
11.4 SECTION HEADINGS. Section headings are used herein for
convenience of reference only. Each party acknowledges that the same may not
describe completely the subject matter of the applicable Section and the same
shall not be used in any manner to construe, limit, define or interpret any term
or provision hereof.
11.5 ASSIGNMENT. The Purchasers may not assign, sell, participate,
pledge, hypothecate, exchange or otherwise transfer all or any part of the
Participation without the prior written consent of the Sellers, which consent
shall not be unreasonably withheld. Any assignment permitted in accordance with
this Section 11.5 shall be conditioned upon such assignee's expressly agreeing
in writing to be bound by the obligations of the Purchasers hereunder and the
terms and conditions of this Agreement.
11.6 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The provisions contained in this Agreement relating to the
priority of payments with respect to the Obligations and the subordination of
the Participation are intended solely to define the relative rights of the
Seller, Lenders, Agent and the Purchasers and their respective successors and
permitted assigns. Nothing contained in this agreement is intended to or shall
impair, as between the holders of the Obligations and the Borrower, the
obligation of the Borrower to pay the Obligations, or is intended to or shall
affect the relative rights of the Borrower or creditors of the Borrower other
than the Sellers and, as holders of the Participation, the Purchasers.
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11.7 NOT SECURITIES. The Purchasers acknowledge that the
Participation is being made at the Purchasers' request and suggestion based upon
the Borrower's request to the Sellers, and is the purchase of an undivided,
subordinate interest in an ordinary debt and related Collateral, if any. The
Purchasers acknowledge that the Loan Documents, this Agreement and the
Participation hereunder are not intended to constitute a security for purposes
of any applicable securities law and are not being acquired with a view for
resale that would violate any applicable securities law. The Purchasers are
purchasing the Participation to assist the Borrower in meeting its immediate
working capital needs which could not otherwise be met. Nothing herein contained
shall create a partnership or joint venture or confer upon any of the parties
hereto any interest in, or subject any of them to any liability for the
business, assets, profits, losses or obligations of the other, except only for
the transfer of the interest represented by the sale of the Participation in
which the Purchasers are expressly hereunder participating with the Sellers. The
execution of this Agreement shall not impose any fiduciary or other similar duty
on the Sellers, Lenders or the Agent in relation to the Purchasers.
11.8 CONSTRUCTION: SEVERABILITY. If any provision of this Agreement or
the application hereof to any party or circumstances is held invalid, void,
inoperative or unenforceable, the remainder of this Agreement and the
application of such provision to other parties or circumstances shall not be
affected thereby, the provisions of this Agreement being severable in such
instance. Ambiguities herein shall not be construed against the Sellers,
Lenders or the Agent. Defined terms may, unless the context otherwise requires,
be used in the singular or the plural, depending on the reference.
11.9 DELAYS. No delay, omission or neglect with respect to the
exercise of any right under this Agreement shall impair such right or be
construed to be a waiver or any acquiescence herein and any single or partial
exercise of any such right shall not preclude other or further exercise hereof
or the exercise of any other right. All remedies contained in this Agreement
and the documents, instruments and collateral related thereto or otherwise
afforded to the Sellers, Lenders or the Agent by law or in equity shall be
cumulative and all shall be available to the Sellers, Lenders or the Agent until
Full Payment of the Loans.
11.10 SPECIFIC ENFORCEMENT; NO IMPAIRMENT. The Purchasers agree that
(a) the provisions of this Agreement shall be specifically enforceable against
it by each Seller and irrevocably waives any defense based upon the adequacy of
a remedy at law which might be asserted as a bar to such remedy of specific
performance and (b) without notice to or further assent by it, the Loans may
from time to time, in whole or in part, be renewed, extended, increased or
released by the Lenders, the Sellers or the Agent, as any of them may deem
advisable, and that any Seller and/or the Agent may take any other action it may
deem necessary or appropriate in connection with the Loans, all without in any
manner or to any extent impairing or affecting the obligations of the Purchasers
hereunder.
11.11 ENTIRE AGREEMENT. This Agreement, together with any schedules and
exhibits hereto constitute the entire agreement among the parties hereto with
respect to the subject matter hereof. All previous agreements between the
parties hereto with respect to the subject matter hereof, written or oral, are
superseded by this Agreement. All representations,
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warranties, covenants and agreements shall survive execution, delivery of this
Agreement and the purchase and sale of the Participation contemplated herein.
11.12 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Illinois.
11.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, and facsimile copies of any signature
will be treated as original signatures.
11.14 CONSENT TO JURISDICTION. THE PURCHASERS HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK,
STATE OF ILLINOIS OR WITHIN NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY
AGREES THAT, SUBJECT TO SELLERS' OR AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TERM NOTE(S), OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. THE PURCHASERS HEREBY SUBMIT
TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT,
SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION
11.2 HEREOF. THE PURCHASERS ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS OR ALLEGED LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR SIMILAR BASIS, AND IRREVOCABLY AGREE
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
THE TERM NOTE(S), THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
11.15 CURRENT. All payments required hereunder shall be made in United
States dollars.
11.16 WAIVER. THE PURCHASERS AND THE SELLERS AND THE AGENT ACKNOWLEDGE
THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED. THE PURCHASERS, THE SELLERS AND THE AGENT EACH HEREBY KNOWINGLY,
VOLUNTARILY, AND WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY FOR ALL
DISPUTES INVOLVING OR RELATING TO THIS AGREEMENT. NEITHER THE PURCHASERS NOR ANY
SELLER NOR THE AGENT WILL BE DEEMED TO HAVE RELINQUISHED THIS JURY TRIAL WAIVER
UNLESS SUCH RELINQUISHMENT IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY TO BE
CHARGED.
11.17 ADDITIONAL SELLERS. Without limiting the generality of any other
provision
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contained herein (including the right of a Seller to assign), at any time that
any Lender (besides Heller) becomes a holder of all or any portion of the Term
Loan as confirmed in writing to Purchasers by Heller, such other Lender shall
thereupon, without further action hereunder by any other person, firm or entity,
be deemed to be a Seller hereunder as if it were an original party hereto and
each reference to "Seller" shall also mean and be a reference to such other
Lender. Each such new Seller shall execute and deliver to the other parties
hereto a counterpart signature page hereof in form and substance satisfactory to
Heller in confirmation of the foregoing.
11.18 LIMITATIONS ON LIABILITY OF PURCHASERS. The parties hereto
acknowledge and agree that in no event shall any of the partners, officers,
directors, shareholders, employees, agents or investment managers (collectively,
"Representatives") of Oaktree Capital Management, LLC or TCW Special Credits or
of any Purchasers have any obligation or liability to Sellers for any action
taken or omitted to be taken or omitted by or on behalf of any Purchasers
hereunder or in connection herewith (such obligation and liability being the
sole responsibility of such Purchasers hereunder) except for any liability or
obligation arising from gross negligence or willful misconduct. The parties
hereto further acknowledge and agree that (i) all obligations and liabilities of
each Purchasers under this Agreement or in connection herewith are enforceable
solely against such Purchasers and their assets and not against the assets of
Oaktree Capital Management, LLC or TCW Special Credits or of any Purchasers or
any Representatives of Oaktree Capital Management, LLC or TCW Special Credits or
of any Purchasers, and (ii) the obligations and liabilities of each of the
Purchasers shall be several in the proportions set forth on Schedule IA hereto
and not joint and several.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
HELLER FINANCIAL, INC.,
as a Seller and as Agent
By /s/ William Vukovich
-------------------------
Name: William Vukovich
Title: Assistant Vice President
500 West Monroe
Chicago, Illinois 60661
Attn: HBC Portfolio Manager
Telecopy No.: (312) 441-7026
Attn: Legal Department/HBC
Telecopy No.: (312) 441-6969
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
By: /s/ Stephen A. Kaplan
-------------------------
Stephen A. Kaplan
Principal
By: /s/ Vincent J. Cebula
-------------------------
Vincent J. Cebula
Managing Director
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<PAGE>
TCW SPECIAL CREDITS, as general partner and
investment manager of the funds and
accounts set forth on Schedule I
By: TCW Asset Management Company
Its: Managing General Partner
By: /s/ Richard Masson
-------------------------
Richard Masson
Authorized Signatory
By: /s/ Matthew Barrett
-------------------------
Matthew Barrett
Authorized Signatory
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<PAGE>
SCHEDULE I
TCW SPECIAL CREDITS FUND IIIB
TCW SPECIAL CREDITS TRUST IIIB
THE COMMON FUND FOR BOND INVESTMENTS, INC.
DELAWARE STATE EMPLOYEES' RETIREMENT FUND
WEYERHAEUSER COMPANY MASTER RETIREMENT TRUST (TCW)
TCW SPECIAL CREDITS TRUST
TCW SPECIAL CREDITS TRUST IV
TCW SPECIAL CREDITS TRUST IV-A
TCW SPECIAL CREDITS FUND IV
TCW SPECIAL CREDITS PLUS FUND
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<PAGE>
SCHEDULE IA
<TABLE>
<CAPTION>
PARTICIPANT ALLOCATION
----------- ----------
<S> <C>
TCW SPECIAL CREDITS FUND IIIB 17.333%
TCW SPECIAL CREDITS TRUST IIIB 12.333%
THE COMMON FUND FOR BOND INVESTMENTS, INC. 1.167%
DELAWARE STATE EMPLOYEES RETIREMENT FUND 3.333%
WEYERHOUSER COMPANY MASTER RETIREMENT TRUST (TCW) 6.333%
TCW SPECIAL CREDITS TRUST 8.667%
TCW SPECIAL CREDITS TRUST IV 5.000%
TCW SPECIAL CREDITS TRUST IV-A 1.833%
TCW SPECIAL CREDITS FUND IV 5.667%
TCW SPECIAL CREDITS PLUS FUND 6.333%
OCM PRINCIPAL OPPORTUNITIES FUND, L.P. 32.000%
</TABLE>
20
<PAGE>
Exhibit A to
Subordinated Participation
Agreement
[PURCHASERS]
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Exchange Instruction
Ladies and Gentlemen:
With reference to the Subordinated Participation Agreement dated as of October
___, 1999 (the "Participation Agreement"; capitalized terms used and not defined
herein shall have the meanings ascribed to such terms in the Participation
Agreement), by and between [Purchaser] and Heller Financial, Inc., a Delaware
corporation ("Heller"), you are hereby authorized and instructed to exercise the
right granted to you pursuant to Section 5 of the Term Loan Note (the "Note")
issued in your favor on October ___, 1999, by UnionTools, Inc., a Delaware
corporation.
Without limiting the foregoing, you are hereby instructed to (i) submit a
written notice to the Borrower in accordance with Section 5 of the Note within
___ days of your receipt of this instruction and (ii) designate
[___________________] as the Person in whose name the Shares should be issued in
accordance with Section 4.1(b) of the Participation Agreement.
In consideration of the foregoing, the [Purchaser] hereby represents and
warrants to you and to the Borrower as follows:
(a) We are each an "accredited investor" within the meaning of Rule
501 of the Securities Act of 1933, as amended (the "Act");
21
<PAGE>
(b) The Shares are being acquired by us for our own account, and not
with a view to any distribution thereof in a transaction that
would violate the Act or the securities laws of any State of the
United States or any other applicable jurisdiction;
(c) We intend to hold the Shares for investment purposes only and have
no present intention to resell the Shares;
(d) We acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
acquire the Shares; and
(e) We understand that the Shares are being offered in a transaction
not involving any public offering within the meaning of the Act
and that the Shares have not been and will not be registered under
the Act.
Sincerely,
[PURCHASERS]
22
