<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 6, 1996
ROADMASTER INDUSTRIES, INC.
(D/B/A RDM SPORTS GROUP, INC.)
(Exact name of Registrant as Specified in its Charter)
----------------
DELAWARE 0-16482 84-1065239
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
250 SPRING STREET, N.W
SUITE 3 SOUTH
ATLANTA, GEORGIA 30303
(404) 586-9000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As previously reported, on July 18, 1996, Roadmaster Industries, Inc.
(doing business under the name RDM Sports Group, Inc. since September 6, 1996
and hereinafter the "Company") and its Roadmaster Corporation subsidiary
entered into a definitive agreement (the "Agreement") with Brunswick
Corporation ("Brunswick"), pursuant to which Brunswick was to acquire all of the
assets of the Company's bicycle and snow products business (which also includes
tricycles, wagons and junior ride-ons) for approximately $212,000,000 in cash
(the "Brunswick Transaction"). The Agreement also provides for: the assumption
by Brunswick of trade payables affiliated with the bicycle and snow products
being conveyed at the time of the closing, the grant to Brunswick of a
long-term lease of the Olney, Illinois facility (such lease being estimated to
have a present value of approximately $2.6 million), the assumption by
Brunswick of certain long-term indebtedness consisting of Industrial Revenue
Bonds and UDAG loans (the assumption of which Industrial Revenue Bonds and UDAG
loans will result in a reduction to the purchase price), and the establishment
by the Company of an escrow account in the amount of $10,000,000 to secure the
costs of the environmental remediation of the property at the Olney, Illinois
facility, for which the Corporation has indemnified Brunswick. At closing, the
Company repaid the UDAG loans; accordingly, the purchase price was not adjusted
for the assumption of such loans. The purchase price also is subject to
adjustment for changes in working capital between December 31, 1995 and the
Closing Date. The Agreement was approved by the Company's Board of Directors on
July 18, 1996. The transaction was subject to satisfaction of certain
conditions set forth in the Agreement, including, without limitation, the
consent of the Company's lenders under its Bank Credit Agreement and waivers
(the "Waivers") of certain provisions of the Indenture governing the Company's
11 3/4% Senior Subordinated Notes due 2002 (the "Notes") by the holders of the
required majority of such Notes.
On August 2, 1996, the Company commenced an Offer to Purchase and
Consent Solicitation to the holders of its Notes, whereby the Company offered
to purchase all of its outstanding Notes at a purchase price equal to one
hundred percent (100%) of such Notes' principal amount, plus accrued but unpaid
interest. Such Offer terminated on August 29, 1996. Consents to the required
Waivers under the Indenture were obtained from the holders of $88,433,000
principal amount of the Notes. Of such amount, $88,227,000 also were tendered
for purchase. The Waivers to the relevant Indenture provisions were effected
thereafter.
On September 6, 1996, the Company terminated its then existing bank
credit agreement and entered into a new bank credit agreement (the "Bank Credit
Agreement"). The Bank Credit Agreement has a three year term and provides for
borrowings of up to $130,000,000, based on eligible trade receivables and
inventory. Interest under the new Bank Credit Agreement is calculated at the
Agent's Reference Rate (as defined in the Bank Credit Agreement) plus
1.25% and includes a LIBOR Rate option which equals LIBOR plus 1.25%. The
monthly unused facility fee is .25% on the available unused portion of the
facility provided by the Bank Credit Agreement. Borrowings under the Bank
Credit Agreement are secured by security interests in substantially all of the
assets of the Company. The Bank Credit Agreement requires the maintenance of
various financial and other covenants, including minimum net worth, earnings to
interest expense coverage and prohibitions on various transactions without the
consent of the Lender.
Following implementation of the Waivers and concurrent with the
execution of the new Bank Credit Agreement, the Brunswick Transaction was
consummated on September 6, 1996. The Company used the net proceeds to reduce
its outstanding indebtedness under its old bank credit
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agreement by approximately $75,000,000 and to purchase $88,227,000 principal
amounts of its Notes for one hundred percent of their principal amount, plus
accrued but unpaid interest to the date of repurchase.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The Company stated it was not practicable to file at this time the
information required by Item 7 and that all information required by Item 7 will
be furnished within sixty (60) days of the required date for the filing of this
report.
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EXHIBITS
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10.1 Loan and Security Agreement dated as of September 6, 1996
between Roadmaster Corporation, Roadmaster Leisure, Inc.,
Willow Hosiery Company, Inc. And Hutch Sports USA, Inc., as
the Borrowers, and the Financial Institutions Named Therein,
as the Lenders, and Bank America Business Credit, Inc., as the
Agent
99.1 Press Release
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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.
ROADMASTER INDUSTRIES, INC.
(d/b/a RDM Sports Group, Inc.)
Date: September 20, 1996 By: /s/ Charles E. Sanders
-----------------------------------
Charles E. Sanders
Vice President and Secretary
Principal Accounting Officer)
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EXHIBIT 10.1
<PAGE> 2
LOAN AND SECURITY AGREEMENT
Dated as of September 6, 1996
among
ROADMASTER CORPORATION,
ROADMASTER LEISURE INC.,
WILLOW HOSIERY COMPANY, INC.
and
HUTCH SPORTS USA INC.
as the Borrowers
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
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TABLE OF CONTENTS
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ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.3 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.4 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 2
LOANS, LETTERS OF CREDIT AND ACCEPTANCES
2.1 Total Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Borrowing Provisions for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.4 Letters of Credit and Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.5 Interest Rate and Currency Hedging Contract Reserves . . . . . . . . . . . . . . . . . . . . . . . . 41
2.6 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.7 Automated Clearing House Transfers and Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 3
INTEREST AND FEES
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.2 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.3 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.4 Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.5 Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.6 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.7 Audit Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.8 Fee Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.9 Early Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.10 Currency Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.2 Termination of the Revolver Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.3 Place and Form of Payments; Extension of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.4 Payments as Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.5 Apportionment, Application and Reversal of Payments . . . . . . . . . . . . . . . . . . . . . . . . 47
4.6 Indemnity for Returned Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.7 Increased Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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4.8 Register; Agent's and Lenders' Books and Records; Monthly Statements . . . . . . . . . . . . . . . . 48
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.2 Perfection and Protection of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3 Location of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.4 Title to, Liens on, and Sale and Use of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.6 Access and Examination; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.7 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.8 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.9 Collection of Accounts; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.12 Assigned Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.13 Documents, Instruments, and Chattel Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.14 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.15 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.16 The Agent's and Lenders' Rights, Duties and Liabilities . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.2 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.3 Notices to the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
7.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents . . . . . . . . 64
7.2 Validity and Priority of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.3 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.4 Corporate Name; Prior Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.5 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.6 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.7 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.8 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.11 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.12 Real Estate; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.13 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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7.14 Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.16 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.17 Labor Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.19 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.20 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.21 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.23 Investment Company Act, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.24 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.25 Consummation of Brunswick Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.26 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.27 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.28 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.29 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.30 Eligibility of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.31 Public Utility Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
8.1 Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.2 Corporate Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.3 Compliance with Law and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.4 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.6 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.7 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.9 Mergers, Consolidations or Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.10 Distributions; Capital Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.11 Transactions Affecting Collateral or Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.12 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.14 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.15 Payment of Debt to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.16 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.17 Investment Banking and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.18 Business Conducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.19 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.20 Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.21 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.22 Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.23 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.24 Operating Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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8.25 Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.26 Adjusted Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.27 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.28 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.29 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the Closing Date . . . . . . . . . . . . . . . . . . . . 82
9.2 Conditions Precedent to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.3 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.4 Binding Effect; Assignment; Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE 13
THE AGENT
13.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.3 Rights, Exculpation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.5 Indemnification of the Agent by the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.6 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.8 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.9 Restrictions on Actions by Lenders; Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . 97
13.10 Agency for Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
13.11 Payments by Agent to Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.12 Concerning the Collateral and the Related Loan Documents . . . . . . . . . . . . . . . . . . . . . . 98
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
13.13 Field Audit Reports; Disclaimers by Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.1 Relations among Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE 14
MISCELLANEOUS
14.1 Cumulative Remedies; No Prior Recourse to Collateral . . . . . . . . . . . . . . . . . . . . . . . . 99
14.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
14.3 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver . . . . . . . . . . . . . . . 99
14.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
14.5 Other Security and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
14.6 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
14.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
14.8 Indemnity of the Agent and the Lenders by the Borrowers . . . . . . . . . . . . . . . . . . . . . . 102
14.9 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.10 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.11 Final Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.13 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.14 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
14.16 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
14.17 Contribution and Indemnification among the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . 105
</TABLE>
<PAGE> 8
EXHIBITS AND SCHEDULES
<TABLE>
<S> <C> <C>
EXHIBIT A - Borrowing Base Certificate
EXHIBIT B-1 - Financial Statements
EXHIBIT B-2 - Latest Projections
EXHIBIT B-3 - Form of Management Analysis
EXHIBIT B-4 - Pro Forma Statements of Borrowers
EXHIBIT C - Notice of Borrowing
EXHIBIT D - List of Closing Documents
EXHIBIT E - Form of Assignment and Acceptance
EXHIBIT F - Form of Shipper Guaranty Letter
SCHEDULE 2.3 - Accounts for Loans; Authorized Officers
SCHEDULE 2.4 - Outstanding Letters of Credit
SCHEDULE 5.3 - Locations of Collateral
SCHEDULE 7.2 - Permitted Liens
SCHEDULE 7.3 - Good Standing Jurisdictions
SCHEDULE 7.4 - Corporate Names; Trade Names
SCHEDULE 7.5 - Affiliates
SCHEDULE 7.9 - Debt
SCHEDULE 7.12 - Real Property and Leases; Permitted Sales
SCHEDULE 7.13 - Proprietary Rights
SCHEDULE 7.15 - Litigation
SCHEDULE 7.17 - Labor Contracts and Disputes
SCHEDULE 7.18 - Environmental Matters
SCHEDULE 7.21 - Employee Benefit Plans
SCHEDULE 7.26 - Investment Banking and Broker's Fees
SCHEDULE 7.29 - Bank Accounts
SCHEDULE 8.12 - Guaranty Obligations
SCHEDULE 12.3 - Eligible Assignees
SCHEDULE 13.11 - Lenders' Payment Instructions
SCHEDULE 14.7 - Notice Addresses
</TABLE>
<PAGE> 9
This LOAN AND SECURITY AGREEMENT is dated as of September 6,
1996 (this "Agreement"), among ROADMASTER CORPORATION, a Delaware corporation
("RMC"), with an office at 250 Spring Street, N.W., Atlanta, Georgia 30303,
ROADMASTER LEISURE INC., a corporation incorporated under the laws of the
province of Ontario, Canada ("RML"), with an office at 6040 Progress Street,
Niagara Falls, Ontario, WILLOW HOSIERY COMPANY, INC., a New York corporation
("Willow"), with an office at 1835 Airport Exchange Boulevard, Erlanger,
Kentucky 41018, and HUTCH SPORTS USA INC., a Delaware corporation ("Hutch"),
with an office at 1835 Airport Exchange Boulevard, Erlanger, Kentucky 41018
(RMC, RML, Willow and Hutch being sometimes hereinafter referred to
collectively as the "Borrowers" and individually as a "Borrower"), the
financial institutions named on the signature pages of this Agreement as
"Lenders" (such financial institutions and their respective successors and
assigns being sometimes hereinafter referred to collectively as the "Lenders"
and each of such financial institutions and its successors and assigns being
sometimes hereinafter referred to individually as a "Lender"), and BANKAMERICA
BUSINESS CREDIT, INC., a Delaware corporation ("BABC"), with an office at 231
South LaSalle Street, Chicago, Illinois 60697, as agent for the Lenders (in
such capacity as agent, the "Agent"). In consideration of the mutual conditions
and agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the Borrowers, the
Lenders and the Agent hereby agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"AAF" means AA Funding Corp., a Delaware corporation.
"Acceptance" means a banker's acceptance created for the
account of a Borrower or with respect to which a draft is caused to be accepted
or Acceptance Credit Support is provided, in any case pursuant to Section 2.4.
"Acceptance Credit Support" has the meaning specified in
Section 2.4(a).
"Acceptance Fee" has the meaning specified in Section 3.4.
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Accounts" means all of each Borrower's now owned or hereafter
acquired or arising accounts, contract rights, and any other rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.
"ACH Settlement Risk Reserve" means any and all reserves which
the Agent from time to time establishes, in its sole discretion, with respect
to ACH Transactions.
<PAGE> 10
"ACH Transactions" means the automated clearing house transfer
of funds by Bank of America for the account of a Borrower, whether pursuant to
agreement or overdrafts.
"Actava" means Metromedia International Group Inc., formerly
The Actava Group Inc., a Delaware corporation.
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period of a Borrower, such Borrower's combined net income after
provision for income taxes for such fiscal period, as determined in accordance
with GAAP and reported on the Financial Statements for such period, less any
and all of the following included in such net income: (a) gain or loss arising
from the sale of any capital asset; (b) gain arising from any write-up in the
book value of any asset; (c) earnings of any corporation, substantially all the
assets of which have been acquired by such Borrower in any manner, to the
extent realized by such other corporation prior to the date of acquisition; (d)
earnings of any business entity in which such Borrower has an ownership
interest unless (and only to the extent) such earnings shall actually have been
received by such Borrower in the form of cash distributions; (e) earnings of
any Person to which assets of such Borrower shall have been sold, transferred
or disposed of, or into which such Borrower shall have been merged, or which
has been a party with such Borrower to any consolidation or other form of
reorganization, prior to the date of such transaction; (f) gain arising from
the acquisition of any debt or equity securities of such Borrower or from
cancellation or forgiveness of any Debt; and (g) gain arising from any
extraordinary items, other than net operating loss offsets, as determined in
accordance with GAAP, or from any other non-recurring transaction.
"Adjusted Tangible Assets" means all of a Borrower's assets,
including all purchase accounting entries, but excluding (1) Intercompany
Accounts, (2) investments in the Parent, (3) Restricted Investments, (4) fixed
assets to the extent of any write-up in the book value thereof resulting from a
revaluation effective after the Closing Date, and (5) general intangibles,
advances and receivables due from officers, directors, employees and
stockholders, licenses, goodwill, prepaid expenses, covenants not to compete,
franchise fees, organizational costs, research and development costs, financing
and acquisition costs, deferred income tax receivables, long term trade
receivables (whether or not converted to notes), and such similar items as may
from time to time be determined in the reasonable discretion of the Lenders
(including leasehold improvements net of depreciation and deposits to the
extent such items are material and separately identified in the Financial
Statements).
"Adjusted Tangible Net Worth" means, with respect to a
Borrower, at any date: (a) the book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper reserves
as determined in accordance with GAAP) at which the Adjusted Tangible Assets of
such Borrower would be shown on a balance sheet of such Borrower at such date
prepared in accordance with GAAP less (b) the amount of Debt of such Borrower
(excluding (1) in the case of RMC, the then outstanding principal amounts of
the Subordinated Debt and the outstanding principal amount of Debt incurred
under the Subordinated Revolver, and (2) Debt incurred and subordinated to the
Obligations on a basis satisfactory in form and substance to the Agent and the
Lenders).
"Affiliate" means: (a) any Person which, directly or
indirectly, controls, is controlled by or is under common control with, any
Borrower; (b) any Person which beneficially owns or holds, directly or
indirectly, five percent (5.0%) or more of any class of Voting Stock of any
2
<PAGE> 11
Borrower; or (c) any Person, five percent (5.0%) or more of any class of the
Voting Stock (or if such Person is not a corporation, five percent (5.0%) or
more of the equity interest) of which is beneficially owned or held, directly
or indirectly, by any Borrower. Control (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used herein,
means the possession, directly or indirectly, of the power in any form to
direct or cause the direction of the management and policies of the Person in
question.
"Affiliate Guaranties" means those certain (a) Guaranties
dated as of the Closing Date executed by each of RNA, T.Q., International, NWR,
AWT and AAF in favor of the Agent, in each case guarantying the payment and
performance of the Obligations, and (b) Guaranties and Security Agreements
dated as of the Closing Date executed by each of DP and Diversified Trucking in
favor of the Agent, in each case guarantying the payment and performance of the
Obligations and granting to the Agent a security interest in certain of its
personal property as security therefor.
"Affiliate Pledges" means those certain Pledge Agreements
dated the Closing Date executed in favor of the Agent by (a) International,
pledging one hundred percent (100%) of the issued and outstanding capital stock
of RML now owned or hereafter acquired by International, (b) NWR, pledging one
hundred percent (100%) of the issued and outstanding capital stock of AWT now
owned or hereafter acquired by NWR, (c) RNA, pledging one hundred percent
(100%) of the issued and outstanding capital stock of AAF now owned or
hereafter acquired by RNA, and (d) DP, pledging the DP Note, in each case as
security for the obligations of such Affiliate of the Borrowers under the
applicable Affiliate Guaranty and the payment and performance of the
Obligations.
"Agent" means BankAmerica Business Credit, Inc., in its
capacity as agent for the Lenders, and any successor Agent appointed pursuant
to Section 13.7.
"Agent Advances" has the meaning specified in Section 2.3(h).
"Agent's Liens" means the Liens granted to the Agent, for the
ratable benefit of the Agent and the Lenders, pursuant to this Agreement and
the other Loan Documents.
"Aggregate Revolver Outstandings" means, at any time: (a) with
respect to any Borrower, the sum of (1) the unpaid balance of Revolving Loans
to such Borrower, (2) the aggregate amount of Pending Revolving Loans to such
Borrower, (3) forty percent (40%) of the aggregate undrawn face amount of all
outstanding Letters of Credit issued for the account of such Borrower that
support the purchase of Inventory that would not be excluded from Eligible
Inventory as a result of the application of any of the eligibility criteria set
forth in the definition of Eligible Inventory, (4) one hundred (100%) of the
aggregate undrawn face amount of all outstanding Letters of Credit issued for
the account of such Borrower that either (i) do not support the purchase of
Inventory, or (ii) support the purchase of Inventory that would be excluded
from Eligible Inventory as a result of the application of any of the
eligibility criteria set forth in the definition of Eligible Inventory, (5) the
aggregate amount of any unpaid reimbursement obligations in respect of the
Letters of Credit issued for the account of such Borrower, and (6) the
aggregate face amount of all outstanding Acceptances created for the account of
such Borrower; and (b) with respect to all of the Borrowers, the sum of
Aggregate Revolver Outstandings to or for the account of each Borrower at such
time.
3
<PAGE> 12
"Agreement and Plan of Reorganization" means that certain
Agreement and Plan of Reorganization dated as of July 20, 1994 among Actava,
DP, Hutch, NWR, Willow and the Parent, as amended, modified or supplemented
from time to time.
"American Playworld Purchase Agreement" means that certain
Asset Purchase Agreement dated February 28, 1994 between the Parent and
American Playworld, Inc., as amended, modified or supplemented from time to
time.
"Anniversary Date" means each anniversary of the Closing Date.
"Assigned Contracts" means, collectively, all of each
Borrower's rights and remedies under, and all moneys and claims for money due
or to become due to such Borrower under, any material contracts and any and all
amendments, supplements, extensions, and renewals thereof including, without
limitation, all rights and claims of such Borrower now or hereafter existing:
(a) under any insurance, indemnities, warranties, and guarantees provided for
or arising out of or in connection with the foregoing agreements; (b) for any
damages arising out of or for breach or default under or in connection with the
foregoing agreements; (c) to all other amounts from time to time paid or
payable under or in connection with the foregoing agreements; or (d) to
exercise or enforce any and all covenants, remedies, powers and privileges
thereunder.
"Assignment Agreements" means, collectively, those certain
three (3) Assignments of Representations, Warranties and Covenants dated the
Closing Date executed by the Parent and/or RMC, as the case may be, in favor of
the Agent, in connection with the Flexible Flyer Purchase Agreement, Agreement
and Plan of Reorganization and MZH Purchase Agreement, respectively.
"Assignment and Acceptance" has the meaning specified in
Section 12.3(a).
"Availability" means, at any time, (a) the Maximum Revolver
Amount at such time minus (b) the Aggregate Revolver Outstandings to or for the
accounts of all of the Borrowers at such time. In determining pursuant to
Sections 2.2, 2.3(g) or 2.3(h) whether Revolving Loans to be made on any date
would exceed Availability on such date, such proposed Revolving Loans shall be
counted as either Revolving Loans or Pending Revolving Loans for purposes of
calculating Availability on such date, but shall not be counted as both
Revolving Loans and Pending Revolving Loans.
"AWT" means AWTC, Inc., a Delaware corporation.
"BABC" means BankAmerica Business Credit, Inc., a Delaware
corporation.
"BABC Loan" and "BABC Loans" have the meanings specified in
Section 2.3(g).
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor entity
thereto.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.).
4
<PAGE> 13
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which
any Borrower or an ERISA Affiliate is, or within the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrowing" means a borrowing consisting of Revolving Loans
made on the same day by the Lenders (or by BABC in the case of a Borrowing
funded by BABC Loans) or by the Agent in the case of a Borrowing consisting of
an Agent Advance.
"Borrowing Base" means, at any time, the sum of (a) eighty
percent (80%) of the Net Amount of Eligible Accounts at such time plus (b) an
amount equal to the lesser of (1) $75,000,000, and (2) sixty percent (60%) of
the value of Eligible Inventory at such time.
"Borrowing Base Certificate" means a certificate of the chief
financial officers or treasurers of the Borrowers substantially in the form of
Exhibit A (or another form mutually acceptable to the Agent and the Borrowers)
setting forth calculations of the Borrowing Base and the Individual Borrowing
Bases, including a calculation of each component thereof, all in such detail as
shall be satisfactory to the Agent. All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrowers and certified to the Agent; provided, that
the Agent shall have the right to review and adjust, in the exercise of its
credit judgment, any such calculation (1) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and (2) to the
extent that such calculation is not in accordance with this Agreement.
"Brunswick Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated as of July 18, 1996 among the Parent, RMC and
Brunswick Corporation, as amended, modified or supplemented from time to time.
"Business Day" means any day that is not a Saturday, Sunday,
or a day on which banks in Chicago, Illinois are required or permitted to
close.
"Canadian Taxes" has the meaning specified in Section
3.1(c)(1).
"Capital Expenditures" means all payments due (whether or not
paid) during a fiscal period in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which have a
useful life of more than one year, including, without limitation, those arising
in connection with Capital Leases.
"Capital Lease" means any lease of property by any Borrower
that, in accordance with GAAP, should be reflected as a capital lease on the
balance sheet of such Borrower.
"Closing Date" means the date on which the initial Revolving
Loans are made hereunder.
"Closing Fee" has the meaning specified in Section 3.5.
5
<PAGE> 14
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, any successor statute, and the rules and regulations
promulgated thereunder.
"Collateral" has the meaning specified in Section 5.1.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 12.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
12.3, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Compliance Certificate" has the meaning specified in Section
6.2(d).
"Contaminant" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated
biphenyls ("PCBs"), or any hazardous or toxic constituent of any such substance
or waste.
"Currency Hedging Contract Exposure" means, with respect to
each Currency Hedging Contract, an amount equal to the product of the maximum
obligation of RMC or RML under such Currency Hedging Contract multiplied by a
percentage determined by Bank of America which percentage shall be comparable
to the percentages determined by Bank of America to apply to contracts of like
kind and term entered into by Bank of America.
"Currency Hedging Contract Reserve" has the meaning specified
in Section 2.5(b).
"Currency Hedging Contracts" means currency hedging
agreements, currency hedging swap agreements, currency hedging collar
agreements, options on any of the foregoing, or any other agreements or
arrangements designed to provide protection against fluctuations in exchange
rates with respect to currency, entered into between RMC or RML and Bank of
America and containing terms acceptable to the Agent and the Lenders.
"Debt" means all liabilities, obligations and indebtedness of
each Borrower to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise.
Without in any way limiting the generality of the foregoing, Debt shall
specifically include the following: (a) each Borrower's liabilities and
obligations to trade creditors; (b) all Obligations; (c) the Subordinated Debt,
indebtedness incurred under the Subordinated Revolver, and indebtedness in the
principal amount of $6,000,000 evidenced by a certain Fourth Subordinated Term
Note dated November 30, 1993 executed by RMC in favor of the Parent; (d)
indebtedness evidenced by the DP Note; (e) the Wisconsin Department of
Development Debt, the Opelika Debt and the Olney Trust Bank Debt; (f) all of
each Borrower's obligations for borrowed money; (g) all obligations and
liabilities of any Person secured by any Lien on any Borrower's property, even
though such Borrower shall not have assumed or become liable for the payment
6
<PAGE> 15
thereof; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the value of such property as would be shown on a balance sheet of
such Borrower prepared in accordance with GAAP; (h) all obligations or
liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement other than a true lease, with respect to
property used or acquired by any Borrower, even if the rights and remedies of
the lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which
are limited in recourse to such property shall be included in Debt only to the
extent of the value of such property as shown on a balance sheet of such
Borrower prepared in accordance with GAAP; (i) all accrued pension fund and
other employee benefit plan obligations and liabilities of such Borrower; (j)
all obligations and liabilities of such Borrower under Guaranties; and (k)
deferred taxes of such Borrower.
"Default" means any event or condition which would constitute
an Event of Default if any requirement in connection therewith for the giving
of notice or the lapse of time, or both, had been satisfied.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2.00%). Each Default Rate shall be adjusted simultaneously
with any change in the applicable Interest Rate.
"Defaulting Lender" has the meaning specified in Section
2.3(f)(2).
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; (b) the redemption or other
acquisition of any capital stock (or any options or warrants for such stock) of
such corporation; or (c) the payment of any amount or other distribution of
property to or for the benefit of any of its shareholders.
"Diversified Trucking" means Diversified Trucking Corp., an
Alabama corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"DP" means Diversified Products Corporation, an Alabama
corporation.
"DP Asset Transfer" means the transfer by DP to RMC on
December 6, 1994 of substantially all of DP's personal property, other than
certain general intangibles, in exchange for the DP Note.
"DP Note" means that certain non-interest bearing promissory
note dated as of December 6, 1994 in the original principal amount of
$58,100,000 executed by RMC and payable to DP.
7
<PAGE> 16
"DP Subordination Agreement" means that certain Subordination
Agreement dated the Closing Date between DP and the Agent with respect to that
certain Debt evidenced by the DP Note, as amended from time to time.
"Eligible Accounts" means those Accounts which are not
ineligible as the basis for Revolving Loans, based on the following criteria
and on such other criteria as the Agent may from time to time establish in its
sole credit judgment. Without intending to limit the Agent's discretion to
establish other criteria of eligibility, Eligible Accounts shall not include
any Account:
(a) which has a due date sixty (60) days or less after the
original invoice date and which is outstanding more than ninety (90)
days after the original invoice date;
(b) which has a due date more than one hundred fifty (150)
days after the original invoice date;
(c) which has a due date more than sixty (60) days but not
more than one hundred fifty (150) days after the original invoice date
(a "Dated Account") and which is (1) outstanding more than one hundred
fifty (150) days after the original invoice date or (2) more than
thirty (30) days past due;
(d) owing by any Account Debtor, if fifty percent (50%) or
more of all Accounts owing by such Account Debtor are ineligible by
reason of any of the criteria set forth in clauses (a), (b) or (c)
above;
(e) with respect to which any of the representations,
warranties, covenants, and agreements contained in this Agreement are
not or have ceased to be complete and correct or have been breached;
(f) with respect to which, in whole or in part, a check or
other instrument for the payment of money has been received, presented
for payment and returned uncollected for any reason;
(g) which represents a progress billing or as to which the
applicable Borrower has extended the time for payment without the
consent of the Agent; for the purposes hereof, "progress billing"
means any invoice for goods sold or leased or services rendered under
a contract or agreement pursuant to which the Account Debtor's
obligation to pay such invoice is conditioned upon the applicable
Borrower's completion of any further performance under the contract or
agreement;
(h) as to which any one or more of the following events has
occurred with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request
or petition for liquidation, reorganization, arrangement, adjustment
of debts, adjudication as a bankrupt, winding-up, or other relief
under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any
8
<PAGE> 17
general assignment by the Account Debtor for the benefit of creditors;
the appointment of a receiver or trustee for the Account Debtor or for
any of the assets of the Account Debtor; the institution by or against
the Account Debtor of any other type of insolvency proceeding (under
the bankruptcy laws of the United States, any foreign jurisdiction or
otherwise) or of any formal or informal proceeding for the dissolution
or liquidation of, settlement of claims against, or winding up of
affairs of, the Account Debtor; the sale, assignment, or transfer of
all or substantially all of the assets of the Account Debtor; the
nonpayment generally by the Account Debtor of its debts as they become
due; or the cessation of the business of the Account Debtor as a going
concern;
(i) if the aggregate Dollar amount of all Accounts owed by the
Account Debtor thereon exceeds a credit limit determined by the Agent
in its sole reasonable credit judgment, but only to the extent such
Account exceeds such limit;
(j) owed by an Account Debtor which: (1) does not maintain its
chief executive office in the United States or Canada; or (2) is the
government of any foreign country or sovereign state, province, or of
any state, municipality, or other political subdivision thereof, or of
any department, agency, public corporation, or other instrumentality
thereof; except to the extent that such Account is secured or payable
by letter of credit or acceptance terms acceptable to the Agent, any
such instrument having been assigned, upon the Agent's request, to the
Agent pursuant to documentation satisfactory to the Agent;
(k) owed by an Account Debtor which is an Affiliate or
employee of the applicable Borrower;
(l) except as provided in (o) below, as to which the
perfection of the Lien in such Account is governed by any federal,
state, local or foreign statutory requirements other than those of the
UCC or the PPSA;
(m) as to which the Lien in such Account is not valid or
enforceable or as to which the Agent does not have the right or
ability to obtain direct payment to the Agent of the proceeds of such
Account;
(n) which is owed by an Account Debtor to which the applicable
Borrower is indebted in any way, or which is subject to any right of
setoff by the Account Debtor, unless the Account Debtor has entered
into an agreement acceptable to the Agent to waive setoff rights; or
if the Account Debtor thereon has disputed liability or made any claim
with respect to any other Account due from such Account Debtor; but in
each such case only to the extent of such indebtedness, setoff,
dispute, or claim (provided, that sales allowances maintained by the
Borrowers and reflected on the Borrowers' Financial Statements shall
not be subject to this clause (n));
(o) which are owed by the government of the United States of
America, or any department, agency, public corporation, or other
instrumentality thereof, unless
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<PAGE> 18
the applicable Borrower has assigned its right to payment of such
Account to the Agent in accordance with the Federal Assignment of
Claims Act of 1940, as amended, and any other steps necessary to
perfect the Lien of the Agent have been taken to the Agent's
satisfaction with respect to such Account;
(p) which is owed by any state, municipality or other
political subdivision of the United States of America, or any
department, agency, public corporation, or other instrumentality
thereof and as to which the Agent determines that its Lien therein is
not or cannot be perfected or the applicable Borrower's right to
payment thereunder has not been assigned to the Agent in compliance
with any applicable law or regulation of such state, municipality or
other political subdivision;
(q) which arises out of a sale to an Account Debtor on a
bill-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis;
(r) which is evidenced by a promissory note or other
instrument or by chattel paper or which has been reduced to judgment;
(s) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Accounts have not been performed by the
applicable Borrower and accepted by the Account Debtor;
(t) the goods giving rise to such Account have been returned
by the Account Debtor, to the extent of such returned goods;
(u) if the Agent believes in its reasonable credit judgment
that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(v) which is owed by an Account Debtor which the Agent, in its
reasonable credit judgment, otherwise deems to be uncreditworthy;
(w) which is evidenced by a debit memo, to the extent of such
debit memo; or
(x) with respect to which the Account Debtor is located in any
State requiring filing of a Notice of Business Activities Report or
similar report in order to permit the applicable Borrower to seek
judicial enforcement in such State of payment of such Account, unless
the applicable Borrower has qualified to do business in such State or
has filed a Notice of Business Activities Report or similar report
with the appropriate State agency for the then current year.
"Eligible Inventory" means Inventory, determined on a
first-in-first-out basis and valued at the lower of cost or market value, that
constitutes raw materials or first quality finished
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<PAGE> 19
goods, and: (a) that is not, in the Agent's reasonable judgment, obsolete,
slow-moving or unmerchantable; (b) upon which the Agent has a first priority
perfected security interest; and (c) that the Agent otherwise deems eligible as
the basis for Revolving Loans based on such other credit and collateral
considerations as the Agent may from time to time establish in its sole credit
judgment. Without intending to limit the Agent's discretion to establish other
criteria of eligibility, no work-in-process, spare, service or used parts,
packaging and shipping material, supplies, bill and hold inventory, returned
Inventory (unless and until the related Account shall have been reduced with
respect to such returned Inventory, and provided that all of the other
above-stated criteria with respect to Eligible Inventory are satisfied),
defective Inventory, Inventory used for display or located in a showroom,
Inventory in transit the purchase of which was financed with a Letter of Credit
(which Inventory would not be excluded from Eligible Inventory as a result of
the application of any of the other eligibility criteria set forth in this
definition) or other Inventory in transit (provided, that such other Inventory
in transit may constitute Eligible Inventory so long as (i) all of the other
criteria with respect to eligibility are satisfied, (ii) all documents of title
with respect to such Inventory shall have been delivered to the custody of the
Agent or its designee and shall have been duly negotiated to the Agent in a
manner satisfactory to the Agent, or the Agent shall have been named as
consignee with respect thereto, and (iii) such Inventory is insured in a manner
satisfactory to the Agent and naming the Agent as loss payee), Inventory
located outside of the United States or Canada or on premises at locations not
permitted pursuant to this Agreement, or Inventory delivered to a Borrower on
consignment, shall constitute Eligible Inventory.
"Environmental Compliance Reserve" means any reserves which the
Agent from time to time establishes for amounts that are required to be
expended in order for the Borrowers and their respective operations and
property to comply with Environmental Laws or in order to correct any violation
by any Borrower or its operations or property of Environmental Laws.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance, orders and consent
decrees or other binding determination of any Public Authority relating to
health, safety, hazardous substances, and environmental matters applicable to
any Borrower's business and facilities (whether or not owned by such Borrower).
Such laws and regulations include, but are not limited to, the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as amended; the Clean Water Act, 42 U.S.C. Section 466 et
seq., as amended; the Clean Air Act, 46 U.S.C. Section 7401 et seq., as
amended; state and federal lien and environmental cleanup programs; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and U.S.
Department of Transportation regulations, each as from time to time hereafter
in effect.
"Environmental Lien" means a Lien in favor of any Public
Authority for (a) any liability under any Environmental Laws, or (b) damages
arising from, or costs incurred by such Public Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property for
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<PAGE> 20
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"Equipment" means all of each Borrower's now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including, without
limitation, data processing hardware and software, motor vehicles, aircraft,
dies, tools, jigs, and office equipment, as well as all of such types of
property leased by such Borrower and all of such Borrower's rights and
interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as any Borrower; (b) a partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with any Borrower; or (c) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
any Borrower, any corporation described in clause (a) above or any partnership,
trade or business described in clause (b) above.
"Event of Default" has the meaning specified in Section 10.1.
"Exchanges" means the transfer by Actava of one hundred
percent (100%) of the capital stock of each of DP, Hutch, NWR and Willow to the
Parent, in exchange for 19,169,000 shares of the common stock of the Parent,
effectuated by and between Actava and the Parent as of December 6, 1994
pursuant to the Agreement and Plan of Reorganization.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected in good faith by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Agreement" has the meaning specified in Section 3.8.
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"Financial Statements" means, according to the context in
which it is used, the financial statements attached hereto as Exhibit B-1, or
the pro forma balance sheet attached hereto as Exhibit B-4, or any financial
statements required to be given to the Lenders pursuant to Sections 6.2(a) and
(b), or any combination thereof.
"Fiscal Year" means the Borrowers' fiscal years for financial
accounting purposes, each of which is a year of twelve (12) fiscal months
commencing on January 1 and ending on December 31 of each year. Each week
commencing with January 1 will be a partial week unless January 1 occurs on a
Sunday, and each week ending on December 31 will be a partial week unless
December 31 occurs on a Saturday. A fiscal quarter consists of two fiscal
months of four weeks each and one fiscal month of five weeks.
"Flexible Flyer" means Flexible Flyer Industries, Inc., a
Delaware corporation, formerly known as Flexible Flyer Acquisition Corp., which
merged with and into RMC pursuant to the Flexible Flyer Merger.
"Flexible Flyer Merger" means the merger of Flexible Flyer
with and into RMC on January 31, 1994, with RMC being the surviving corporation
of such merger.
"Flexible Flyer Purchase Agreement" means that certain Asset
Purchase Agreement dated June 25, 1993 between the Parent and Par Industries,
Inc., as amended, modified or supplemented from time to time.
"Funding Date" means the date any Loans (including BABC Loans
and Agent Advances) are to be made hereunder.
"GAAP" means at any particular time generally accepted
accounting principles as in effect at such time, consistently applied;
provided, that with respect to the computation of the financial covenants set
forth in Sections 8.23 through 8.27, "GAAP" means at any particular time
generally accepted accounting principles as in effect on the Closing Date,
consistently applied.
"General Intangibles" means all of each Borrower's now owned
or hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of such Borrower of every
kind and nature (other than Accounts), including, without limitation, all
Proprietary Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications, trademarks,
service marks, trade names, trade secrets, goodwill, copyrights, computer
software, customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to such Borrower in connection with the
termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to such Borrower from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such
Borrower is beneficiary, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Borrower to secure
payment by an account debtor of any of the Accounts.
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<PAGE> 22
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other similar obligation of any other Person (the
"guaranteed obligations"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement, contingent or
otherwise: (a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the purchase
or payment of the guaranteed obligations or to maintain a working capital or
other balance sheet condition; or (c) to lease property or to purchase any debt
or equity Securities or other property or services.
"Hamilton Lamp" means Hamilton Lamp Corporation, a Delaware
corporation which merged with and into RMC pursuant to the Hamilton Lamp
Merger.
"Hamilton Lamp Merger" means the merger of Hamilton Lamp with
and into RMC on February 28, 1994, with RMC being the surviving corporation of
such merger.
"Hutch" means Hutch Sports USA Inc., a Delaware corporation,
one of the Borrowers hereunder and owner of one hundred percent (100%) of the
issued and outstanding capital stock of T.Q.
"Hutch Pledge" means that certain Pledge Agreement dated the
Closing Date executed by Hutch in favor of the Agent pledging one hundred
percent (100%) of the issued and outstanding capital stock of T.Q., now owned
or hereafter acquired by Hutch as security for the payment and performance of
the Obligations.
"Individual Availability" means, at any time with respect to
any Borrower, (a) the Individual Maximum Revolver Amount with respect to such
Borrower at such time minus (b) the Aggregate Revolver Outstandings to or for
the account of such Borrower at such time.
"Individual Borrowing Base" means
(a) at any time with respect to RMC, the sum of (1) eighty
percent (80%) of the Net Amount of Eligible Accounts of RMC at such
time plus (2) an amount equal to the lesser of (A) $60,000,000, and
(B) sixty percent (60%) of the value of Eligible Inventory of RMC at
such time;
(b) at any time with respect to RML, the sum of (1) eighty
percent (80%) of the Net Amount of Eligible Accounts of RML at such
time plus (2) an amount equal to the lesser of (A) $7,500,000, and (B)
sixty percent (60%) of the value of Eligible Inventory of RML at such
time;
(c) at any time with respect to Willow, the sum of (1) eighty
percent (80%) of the Net Amount of Eligible Accounts of Willow at such
time plus (2) an amount equal to the lesser of (A) $10,000,000, and
(B) sixty percent (60%) of the value of Eligible Inventory of Willow
at such time; and
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<PAGE> 23
(d) at any time with respect to Hutch, the sum of (1) eighty
percent (80%) of the Net Amount of Eligible Accounts of Hutch at such
time, and (2) an amount equal to the lesser of (A) $10,000,000, and
(B) sixty percent (60%) of the value of Eligible Inventory of Hutch at
such time.
"Individual Maximum Revolver Amount" means
(a) at any time with respect to RMC (1) the lesser of (A)
$100,000,000; or (B) the Individual Borrowing Base at such time with
respect to RMC; minus (2) the sum of (i) the Interest Rate Contract
Reserve then in effect; (ii) the Currency Hedging Contract Reserve
then in effect with respect to RMC; (iii) reserves for accrued
interest on the Obligations owing by RMC; and (iv) all other reserves
which the Agent deems necessary or desirable to maintain with respect
to RMC's account, including, without limitation, any Environmental
Compliance Reserve, ACH Settlement Risk Reserve with respect to RMC,
seasonal dilution adjustment reserve with respect to RMC, and reserves
for any amounts which the Agent or any Lender may be obligated to pay
in the future for the account of RMC;
(b) at any time with respect to RML (1) the lesser of (A)
$15,000,000; or (B) the Individual Borrowing Base at such time with
respect to RML; minus (2) the sum of (i) the Currency Hedging Contract
Reserve then in effect with respect to RML; (ii) reserves for accrued
interest on the Obligations owing by RML; and (iii) all other reserves
which the Agent deems necessary or desirable to maintain with respect
to RML's account, including, without limitation, any Environmental
Compliance Reserve or ACH Settlement Risk Reserve with respect to RML
and reserves for any amounts which the Agent or any Lender may be
obligated to pay in the future for the account of RML;
(c) at any time with respect to Willow (1) the lesser of (A)
$15,000,000; or (B) the Individual Borrowing Base at such time with
respect to Willow; minus (2) the sum of (i) reserves for accrued
interest on the Obligations owing by Willow; and (ii) all other
reserves which the Agent deems necessary or desirable to maintain with
respect to Willow's account, including, without limitation, any
Environmental Compliance Reserve or ACH Settlement Risk Reserve with
respect to Willow and reserves for any amounts which the Agent or any
Lender may be obligated to pay in the future for the account of
Willow; and
(d) at any time with respect to Hutch (1) the lesser of (A)
$20,000,000; or (B) the Individual Borrowing Base at such time with
respect to Hutch; minus (2) the sum of (i) reserves for accrued
interest on the Obligations owing by Hutch; and (ii) all other
reserves which the Agent deems necessary or desirable to maintain with
respect to Hutch's account, including, without limitation, any
Environmental Compliance Reserve or ACH Settlement Risk Reserve with
respect to Hutch and reserves for any amounts which the Agent or any
Lender may be obligated to pay in the future for the account of Hutch;
"Intercompany Accounts" means, as the context indicates, all
assets, however arising, consisting of amounts which are due to any Borrower
from any Affiliate, or liabilities, however arising, which are due from any
Borrower to any Affiliate.
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<PAGE> 24
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Interest Rate Contract Exposure" means, with respect to each
Interest Rate Contract, an amount equal to the product of the maximum
obligation of RMC under such Interest Rate Contract multiplied by a percentage
determined by Bank of America which percentage shall be comparable to the
percentages determined by Bank of America to apply to contracts of like kind
and term entered into by Bank of America.
"Interest Rate Contract Reserve" has the meaning specified in
Section 2.5.
"Interest Rate Contracts" means interest rate cap agreements,
interest rate swap agreements, interest rate collar agreements, options on any
of the foregoing, or any other agreements or arrangements designed to provide
protection against fluctuations in interest rates, entered into between RMC and
Bank of America and containing terms acceptable to the Agent and the Lenders.
"International" means International Sports and Fitness, Inc.,
a Delaware corporation, and owner of one hundred percent (100%) of the issued
and outstanding capital stock of RML.
"Inventory" means all of each Borrower's now owned and
hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, including,
without limitation, all returned goods, raw materials, work-in-process
inventory, finished goods and other materials and supplies of any kind, nature
or description which are or might be consumed in such Borrower's business or
used in connection with the packing, shipping, advertising, selling or
finishing of such goods, merchandise and such other personal property, and all
documents of title or other documents representing them.
"IRS" means the Internal Revenue Service or any successor
agency.
"ITA" means the Income Tax Act (Canada) and Regulations, as
amended, and any successor statute.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Lenders receive new projections pursuant to Section
6.2(e), the projections of the Borrowers' individual and combined balance
sheets, income statements and cash flows, on a monthly basis through December
31, 1997 and a quarterly basis thereafter through December 31, 1999, and
Availability and Individual Availability for each Borrower through December 31,
1997, attached hereto as Exhibit B-2; and (b) thereafter, the projections most
recently received by the Lenders pursuant to Section 6.2(e).
"L/C Credit Support" has the meaning specified in Section
2.4(a).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof.
"Letter of Credit" means a letter of credit issued or caused
to be issued for the account of a Borrower or with respect to which L/C Credit
Support is provided, in any case pursuant
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<PAGE> 25
to Section 2.4, and shall include those Letters of Credit previously issued for
the account of a Borrower and described on Schedule 2.4.
"Letter of Credit Fee" has the meaning specified in Section
3.3.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including without limitation, a security interest, charge, claim,
or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes; and (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
property.
"Loan Documents" means this Agreement, the Fee Agreement, the
Patent Agreements, the Trademark Agreements, the RMC Pledge, the Hutch Pledge,
the Assignment Agreements, the Mortgages, the Affiliate Guaranties, the
Affiliate Pledges, the Shipper Guaranty Letter, the Parent Subordination
Agreement, the Parent Guaranty, the Parent Pledge, the DP Subordination
Agreement and all other agreements, instruments, and documents heretofore, now
or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement, together with all amendments, restatements,
supplements, replacements, or other modifications thereof; provided, that the
Mortgages shall not constitute Loan Documents until such time as the Triggering
Date shall have occurred.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
"Majority Lenders" means, at any time, Lenders (other than
Defaulting Lenders) whose Pro Rata Shares aggregate at least sixty-six and
two-thirds percent (66.66%) as such percentage is determined under the
definition of Pro Rata Share set forth herein.
"Maximum Rate" has the meaning specified in Section 3.2.
"Maximum Revolver Amount" means, at any time, (a) the lesser
of (1) the Revolver Facility; or (2) the Borrowing Base at such time; minus (b)
the sum of (A) the Interest Rate Contract Reserve then in effect; (B) the
aggregate Currency Hedging Contract Reserve then in effect; (C) reserves for
accrued interest on the Obligations; and (D) all other reserves which the Agent
deems necessary or desirable to maintain with respect to any Borrower's
account, including, without limitation, any Environmental Compliance Reserve,
ACH Settlement Risk Reserve, seasonal dilution adjustment reserve, and reserves
for any amounts which the Agent or any Lender may be obligated to pay in the
future for the account of such Borrower.
"Mergers" means, collectively, the Flexible Flyer Merger, the
Hamilton Lamp Merger and the RRC Merger.
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<PAGE> 26
"Mortgages" means all real property mortgages, leasehold
mortgages, assignments of leases, mortgage deeds, deeds of trust, deeds to
secure debt, security agreements, and other similar instruments, which provide
the Agent a Lien, for the benefit of the Agent and the Lenders, on, or other
interest in any portion of the Premises or the Real Estate or which relate to
any such Lien or interest.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Borrower
or any ERISA Affiliate.
"MZH" means, collectively, MZH, Inc., a New Jersey
corporation, and MZH Contracting Corp., a Utah corporation.
"MZH Purchase Agreement" means, collectively, that certain
Option Agreement dated as of March 1, 1995, and that certain Asset Purchase
Agreement dated as of March 1, 1995, in each case among the Parent and MZH.
"Net Amount of Eligible Accounts" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature (other than
sales allowances maintained by the Borrowers and reflected on the Borrowers'
Financial Statements) at any time issued, owing, granted, outstanding,
available or claimed, and less fifty percent (50%) of the reserve for sales
allowances maintained by the Borrowers and reflected on the Borrowers'
Financial Statements or general ledgers, as the case may be.
"Notice of Borrowing" has the meaning specified in Section 2.3
(a)(1).
"NWR" means NWR, Inc., a Delaware corporation and owner of one
hundred percent (100%) of the issued and outstanding capital stock of AWT.
"NWR Asset Purchase Agreement" means that certain Asset
Purchase Agreement dated as of February 26, 1996 among the Parent, NWR, AWT and
Brunswick Corporation, as amended, modified or supplemented from time to time.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by each Borrower
to the Agent and/or any Lender, arising under or pursuant to this Agreement or
the other Loan Documents, whether or not evidenced by any note, instrument or
document, whether arising from an extension of credit, opening of a letter of
credit, currency hedging contract, interest rate contract, acceptance, loan,
guaranty, indemnification (including any indemnity made by the Agent or the
Lenders to Bank of America in connection with Currency Hedging Contracts and
Interest Rate Contracts) or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment from others, and any
participation by the Agent and/or any Lender in such Borrower's debts owing to
others), absolute or contingent, due or to become due, primary or secondary, as
principal or guarantor, and including, without limitation, all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to such Borrower hereunder or under any other Loan Document.
"Obligations" includes, without limitation, (a) all debts, liabilities, and
obligations now or hereafter owing from each
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<PAGE> 27
Borrower to the Agent and/or any Lender under or in connection with the Letters
of Credit, Currency Hedging Contracts and Interest Rate Contracts, and (b) all
debts, liabilities and obligations now or hereafter owing from any Borrower to
Bank of America, the Agent or any Lender arising from or related to ACH
Transactions.
"Olney Trust Bank Debt" means Debt that may be incurred by RMC
in a principal amount not to exceed $500,000, in connection with a term loan
made by Olney Trust Bank and secured solely by Real Estate constituting RMC's
Big Yank warehouse located in West Point, Mississippi pursuant to documentation
in form and substance satisfactory to the Lenders.
"Opelika Debt" means Debt that may be incurred by RMC in a
principal amount not to exceed $150,000, in connection with industrial revenue
development bonds issued by the City of Opelika, Alabama or a related
authority, pursuant to documentation in form and substance satisfactory to the
Lenders.
"Parent" means Roadmaster Industries, Inc., a Delaware
corporation, and owner of one hundred percent (100%) of the issued and
outstanding capital stock of RMC, Hutch, Willow, International, DP and NWR.
"Parent Guaranty" means that certain Guaranty dated the
Closing Date executed by the Parent in favor of the Agent guarantying the
payment and performance of the Obligations.
"Parent Pledge" means that certain Pledge Agreement dated the
Closing Date executed by the Parent in favor of the Agent pledging one hundred
percent (100%) of the issued and outstanding capital stock of RMC, Hutch,
Willow, International, DP and NWR now owned or hereafter acquired by the Parent
as security for the Parent's obligations under the Parent Guaranty and the
payment and performance of the Obligations.
"Parent Subordination Agreement" means that certain
Subordination Agreement dated the Closing Date between the Parent and the Agent
with respect to (a) the Subordinated Debt, (b) Debt incurred under the
Subordinated Revolver, and (c) that certain Debt in the principal amount of
$6,000,000 evidenced by a certain Fourth Subordinated Term Note dated November
30, 1993 executed by RMC in favor of the Parent, as amended from time to time.
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by
such Lender under this Agreement pursuant to Section 12.3(e), and who shall
have entered into a participation agreement in form and substance satisfactory
to such Lender.
"Patent Agreements" means the Patent Security Agreements dated
the Closing Date executed and delivered by (a) each Borrower to the Agent
pursuant to Section 5.2 and (b) DP and Diversified Trucking to the Agent, to
evidence and perfect the Agent's security interest in the present and future
patents and related licenses and rights of such Borrower, DP or Diversified
Trucking, as applicable, for the benefit of the Agent and the Lenders.
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"Payment Account" means each blocked bank account established
pursuant to Section 5.9, to which the funds of any Borrower (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or such Borrower, as
the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of Borrowing
received by the Agent but which Revolving Loans have not yet been advanced at
such time.
"Permitted Liens" means:
(a) Liens for taxes not yet payable or statutory Liens for
taxes in an amount not to exceed $100,000 provided that the payment of such
taxes which are due and payable is being contested in good faith and by proper
proceedings diligently pursued, and that reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor
and that a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens upon Equipment granted in connection with the
acquisition of such Equipment by the applicable Borrower after the date hereof
(including, without limitation, pursuant to Capital Leases), provided that (1)
the cost of each such acquisition constitutes a Capital Expenditure permitted
by Section 8.23, (2) the Debt incurred to finance each such acquisition is
permitted by Section 8.13, (3) each such Lien attaches only to the Equipment
acquired with the Debt secured thereby (including insurance and other proceeds
from the disposition of such Equipment), and (4) the principal amount of the
indebtedness secured by any item of Equipment shall not exceed 100% of the
actual cost thereof (excluding transportation, installation or other incidental
costs);
(d) deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(e) Liens which arise by operation of law under Article 2 of
the Uniform Commercial Code in favor of unpaid sellers of goods or prepaying
buyers of goods, or liens in items of any accompanying documents or proceeds of
either arising by operation of law under Article 4 of the Uniform Commercial
Code in favor of a collecting bank, and in respect of RML, Liens which arise
under Canadian provincial laws of similar application;
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(f) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, provided
that if any such Lien arises from the nonpayment of such claims or demands when
due, such claims or demands do not exceed $100,000 in the aggregate;
(g) reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of business of the applicable
Borrower;
(h) judgment Liens to the extent the attachment or enforcement
of such Liens would not result in an Event of Default hereunder; and
(i) Liens in existence on the Closing Date and reflected on
Schedule 7.2.
"Permitted Rentals" means the Rentals permitted to be paid by
any Borrower pursuant to Section 8.24.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Public Authority, or any other entity.
"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which any Borrower or any of its ERISA Affiliates
is, or within the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
"PPSA" means the Personal Property Security Act (Ontario), as
amended from time to time, and any other Canadian provincial legislation of
similar application, or legislation in the Northwest Territories and Northern
Territories of Canada of similar application.
"Premises" means the land identified by addresses on Schedule
7.12, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way
appertaining thereto, and which constitutes all of the real property in which
any Borrower or DP has any interests on the Closing Date; provided, that RMC's
fee interests in real property located in Olney, Illinois shall not constitute
Premises until such time as any lease arrangements with respect thereto with
Brunswick Corporation or its successors or assigns shall have expired without
Brunswick Corporation or such successors or assigns having exercised any option
to acquire fee title to such real property.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
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"Proprietary Rights" means all of each Borrower's now owned
and hereafter arising or acquired: licenses, franchises, permits, patents,
patent rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service mark applications, and all licenses and rights related to any of the
foregoing, including, without limitation, those patents, trademarks, service
marks and copyrights set forth on Schedule 7.13 hereto, and all other rights
under any of the foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing, and all
rights to sue for past, present and future infringement of any of the
foregoing.
"Public Authority" means the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or any department, agency, public corporation or other
instrumentality of any of the foregoing.
"Real Estate" means all of the present and future interests of
any Borrower or DP, as owner, lessee, or otherwise, in the Premises, including,
without limitation, any interest arising from an option to purchase or lease
the Premises or any portion thereof.
"Reference Rate" means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
in San Francisco, California, as its "reference rate." The "reference rate" is
a rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in the reference
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Reference Rate shall be adjusted simultaneously with any
change in the Reference Rate.
"Register" has the meaning specified in Section 12.3(c).
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" means all payments due from the lessee or sublessee
under a lease, including, without limitation, basic rent, percentage rent,
property taxes, utility or maintenance costs, and insurance premiums.
"Reportable Event" means any of the events described in
Section 4043 of ERISA.
"Restricted Investment" means any acquisition of property by
any Borrower in exchange for cash or other property, whether in the form of an
acquisition of stock, debt Security, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except acquisitions of the following: (a) fixed
assets to be used in the business of such Borrower, so long as the acquisition
costs thereof constitute Capital Expenditures permitted hereunder, and other
property purchased by such Borrower in the
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ordinary course of business to be used in the business of such Borrower,
including, without limitation, such property constituting Proprietary Rights;
(b) Inventory in the ordinary course of business; (c) current assets arising
from the sale or lease of goods or the rendition of services in the ordinary
course of business of such Borrower; (d) direct obligations of the United
States of America, or any agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
from the date of acquisition thereof; (e) certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, overnight bank deposits, or demand or time deposits maturing
within one (1) year, in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state
thereof (or, in the case of RML, Canada or the Province of Ontario) having
capital and surplus aggregating at least $100,000,000; and (f) commercial paper
given the highest rating by a national credit rating agency and maturing not
more than 270 days from the date of creation thereof.
"Revolver Facility" means, as the context may require, either
(a) $130,000,000, or (b) the Lenders' agreement to provide Revolving Loans,
Letters of Credit and Acceptances up to such amount subject to the terms of
this Agreement.
"Revolving Loans" has the meaning specified in Section 2.2,
and includes each BABC Loan and Agent Advance.
"RMC" means Roadmaster Corporation, a Delaware corporation,
one of the Borrowers hereunder and owner of one hundred percent (100%) of the
issued and outstanding capital stock of Diversified Trucking and RNA.
"RNA" means Roadmaster North America Corporation, a Delaware
corporation and owner of one hundred percent (100%) of the issued and
outstanding capital stock of AAF.
"RMC Pledge" means that certain Pledge Agreement dated the
Closing Date executed by RMC in favor of the Agent pledging (a) one hundred
percent (100%) of the issued and outstanding capital stock of Diversified
Trucking and RNA, and (b) certain promissory notes referred to in such Pledge
Agreement, now owned or hereafter acquired by RMC as security for the payment
and performance of the Obligations.
"RML" means Roadmaster Leisure Inc., a corporation
incorporated under the laws of the province of Ontario, Canada, and one of the
Borrowers hereunder.
"RRC" means Roadmaster Receivables Corporation, an Illinois
corporation which merged with and into RMC pursuant to the RRC Merger.
"RRC Merger" means the merger of RRC with and into RMC on the
Closing Date, with RMC being the surviving corporation of such merger.
"Security" has the meaning specified in Section 2(1) of the
Securities Act of 1933, as amended.
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"Senior Subordinated Notes" means the 11-3/4% Senior
Subordinated Notes Due 2002 issued pursuant to that certain Indenture dated as
of December 15, 1993 between the Parent and LaSalle National Bank, as Trustee
(the "Senior Subordinated Note Indenture"), as amended, modified or
supplemented from time to time.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.3(i)(1).
"Shipper Guaranty" means any guaranty, indemnity, air release
or other similar document or undertaking executed or provided by the Agent to a
carrier with respect to inventory that is covered by a merchandise Letter of
Credit and is subject to a bill of lading, airway bill or shipping document on
which the Agent is named as consignee, which guaranty, indemnity, air release,
document or undertaking permits the applicable Borrower to obtain possession of
such inventory without production of the applicable bill of lading, airway bill
or other shipping document.
"Shipper Guaranty Letter" means that certain letter agreement
dated as of the date hereof executed by each Borrower in favor of the Agent
with respect to indemnities and related matters in connection with Shipper
Guaranties, substantially in the form of Exhibit F.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including, without
limitation, contingent liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other
commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means the third Anniversary Date.
"Subordinated Debentures" means the 8% Convertible
Subordinated Debentures Due 2003 issued pursuant to that certain Indenture
dated as of July 15, 1993 between the Parent and LaSalle National Bank, as
Trustee, as amended, modified or supplemented from time to time.
"Subordinated Debt" means that certain Debt of RMC to the
Parent in the original principal amount of (a) $1,000,000 evidenced by that
certain promissory note dated August 31, 1988 executed by RMC in favor of the
Parent, (b) $1,150,000 evidenced by that certain promissory note
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dated August 10, 1987 executed by RMC in favor of the Parent, and (c)
$33,000,000 evidenced by that certain Third Subordinated Term Note dated
September 30, 1993 executed by RMC in favor of the Parent.
"Subordinated Revolver" means that certain Debt of RMC to the
Parent in the original principal amount of up to $94,000,000 incurred pursuant
to that certain Subordinated Revolving Credit Note dated as of December 29,
1993 between RMC and the Parent.
"Subsidiary" means, with respect to any Person, any
corporation of which more than fifty percent (50.0%) of the outstanding
Securities of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions), is at the time, directly
or indirectly through one or more intermediaries, owned by such Person and/or
one or more of its Subsidiaries.
"Supporting Letter of Credit" has the meaning specified in
Section 2.4.
"Telemarketing Sales" has the meaning specified in Section
5.9.
"Termination Date" means the earliest to occur of (a) the
Stated Termination Date, (b) the date the Revolver Facility is terminated
either by the Borrowers pursuant to Section 4.2 or by the Majority Lenders
pursuant to Section 10.2, and (c) the date this Agreement is otherwise
terminated for any reason whatsoever.
"Termination Event" means: (a) a Reportable Event with respect
to any Benefit Plan; (b) the withdrawal of any Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which such Borrower or ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (c) the imposition of an obligation on any Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (e) any event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; (f) the partial or
complete withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (g) the cessation of operations which results in the termination of
employment of twenty percent (20.0%) of Benefit Plan participants who are
employees of the applicable Borrower and its ERISA Affiliates.
"T.Q." means T.Q., Inc., a Kentucky corporation.
"Trademark Agreements" means the Trademark Security Agreements
dated the Closing Date executed and delivered by (a) each Borrower to the Agent
pursuant to Section 5.2 and (b) DP and Diversified Trucking to the Agent, to
evidence and perfect the Agent's security interest in the present and future
trademarks and related licenses and rights of such Borrower, DP or Diversified
Trucking, as applicable, for the benefit of the Agent and the Lenders.
"Triggering Date" means a date designated by the Agent
following the occurrence of either (a) Availability being less than $7,500,000,
or (b) any Default or Event of Default, and in
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either such case the Agent's election in its discretion to designate a
Triggering Date; provided, that the Triggering Date may not occur prior to two
(2) Business Days following the Agent's notice thereof to RMC.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of Illinois or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"Unused Acceptance Subfacility" means, with respect to
(a) RMC, an amount equal to $5,000,000 minus the aggregate
face amount of all outstanding Acceptances created for the account of
RMC;
(b) RML, an amount equal to $1,000,000 minus the aggregate
face amount of all outstanding Acceptances created for the account of
RML;
(c) Willow, an amount equal to $1,000,000 minus the aggregate
face amount of all outstanding Acceptances created for the account of
Willow; and
(d) Hutch, an amount equal to $1,000,000 minus the aggregate
face amount of all outstanding Acceptances created for the account of
Hutch.
"Unused Letter of Credit Subfacility" means, with respect to
(a) RMC, an amount equal to $20,000,000 minus the sum of the
aggregate maximum undrawn face amount of all outstanding Letters of
Credit, all unpaid reimbursement obligations with respect to Letters
of Credit and the aggregate face amount of all outstanding
Acceptances;
(b) RML, an amount equal to the lesser of (1) $20,000,000
minus the sum of the aggregate maximum undrawn face amount of all
outstanding Letters of Credit, all unpaid reimbursement obligations
with respect to Letters of Credit and the aggregate face amount of all
outstanding Acceptances, or (2) $3,000,000 minus the sum of the
aggregate maximum undrawn face amount of all outstanding Letters of
Credit issued for the account of RML, all unpaid reimbursement
obligations with respect to Letters of Credit issued for the account
of RML and the aggregate face amount of all outstanding Acceptances
created for the account of RML;
(c) Willow, an amount equal to the lesser of (1) $20,000,000
minus the sum of the aggregate maximum undrawn face amount of all
outstanding Letters of Credit, all unpaid reimbursement obligations
with respect to Letters of Credit and the aggregate face amount of all
outstanding Acceptances, or (2) $3,000,000 minus the sum of the
aggregate maximum undrawn face amount of all outstanding Letters of
Credit issued for the account of Willow, all unpaid reimbursement
obligations with respect to Letters of Credit issued for the account
of Willow and the aggregate face amount of all outstanding Acceptances
created for the account of Willow; and
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(d) Hutch, an amount equal to the lesser of (1) $20,000,000
minus the sum of the aggregate maximum undrawn face amount of all
outstanding Letters of Credit, all unpaid reimbursement obligations
with respect to Letters of Credit and the aggregate face amount of all
outstanding Acceptances, or (2) $3,000,000 minus the sum of the
aggregate maximum undrawn face amount of all outstanding Letters of
Credit issued for the account of Hutch, all unpaid reimbursement
obligations with respect to Letters of Credit issued for the account
of Hutch and the aggregate face amount of all outstanding Acceptances
created for the account of Hutch.
"Unused Line Fee" has the meaning specified in Section 3.6.
"Voting Stock" means Securities of any class or classes of a
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
"Willow" means Willow Hosiery Co., Inc., a New York
corporation, and one of the Borrowers hereunder.
"Wisconsin Department of Development Debt" means Debt pursuant
to the Major Economic Development and Fund Agreement between the Wisconsin
Department of Development and RMC and Promissory Note issued in connection with
such agreement in the original principal amount of $200,000.
1.2 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically
provided herein, in accordance with GAAP as consistently applied.
1.3 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein. Any
references herein to exhibits, schedules, sections or articles are references
to exhibits, schedules, sections or articles of this Agreement, unless
otherwise specified. Wherever appropriate in the context, terms used herein in
the singular also include the plural, and vice versa, and each masculine,
feminine, or neuter pronoun shall also include the other genders.
1.4 Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" shall mean "from and including" and the words "to" and "until"
shall each mean "to but excluding." Periods of days referred to in this
Agreement shall be counted in calendar days unless Business Days are expressly
prescribed and references in this Agreement to months and years shall be to
calendar months and calendar years unless otherwise specified.
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ARTICLE 2
LOANS, LETTERS OF CREDIT AND ACCEPTANCES
2.1 Total Credit Facility. Subject to all of the terms
and conditions of this Agreement, the Lenders severally agree to make available
a total credit facility of up to $130,000,000 for the Borrowers' use from time
to time during the term of this Agreement. Such credit facility shall be
comprised of the Revolver Facility consisting of revolving loans, letters of
credit and bankers' acceptances up to the Maximum Revolver Amount, as described
in Sections 2.2 and 2.4.
2.2 Revolving Loans. Subject to the satisfaction of the
applicable conditions precedent set forth in Article 9, each Lender severally
agrees, upon the Borrowers' request from time to time, to make revolving loans
(the "Revolving Loans") to the Borrowers, in an amount not to exceed either
such Lender's Pro Rata Share of Individual Availability for each Borrower or
Availability in the aggregate at such time (except with respect to BABC Loans
or Agent Advances). The Lenders, in their discretion, may unanimously elect to
make Revolving Loans or participate (as provided for in Section 2.4(f)) in L/C
Credit Support or Acceptance Credit Support, in excess of Availability or
Individual Availability on one or more occasions, but if they do so, neither
the Agent nor the Lenders shall be deemed thereby to have changed the limits of
the Maximum Revolver Amount or of the Individual Maximum Revolver Amounts, or
to be obligated to exceed such limits on any other occasion. If at any time (a)
the Aggregate Revolver Outstandings to or for the accounts of all Borrowers
exceed the Maximum Revolver Amount, the Lenders may refuse to make or otherwise
restrict the making of Revolving Loans, or (b) the Aggregate Revolver
Outstandings to or for the account of a Borrower exceed the Individual Maximum
Revolver Amount with respect to such Borrower, the Lenders may refuse to make
or otherwise restrict the making of Revolving Loans to such Borrower, in either
case on such terms as the Lenders determine until any such excess has been
eliminated, subject to the Agent's authority, in its discretion, to make Agent
Advances pursuant to the terms of Section 2.3(h); provided, that the remedies
by the Lenders described in the foregoing sentence in such event shall not be
deemed to limit any other remedies available to the Agent and the Lenders under
Section 10.2 of this Agreement or otherwise.
2.3 Borrowing Provisions for Loans. (a) Notice of
Borrowing. (1) Whenever a Borrower desires to borrow Revolving Loans under
Section 2.2 such Borrower shall deliver to the Agent a written request
substantially in the form of Exhibit C hereto (a "Notice of Borrowing") signed
by an authorized officer or employee of such Borrower, no later than 11:00 a.m.
(Chicago, Illinois time) on the requested Funding Date. The Notice of Borrowing
shall specify (i) the requested Funding Date (which shall be a Business Day),
(ii) the aggregate amount of the requested Revolving Loans, and (iii) the
account to which the proceeds of such Revolving Loans are to be transferred,
which account shall be one of the accounts specified by the Borrowers pursuant
to the first sentence of Section 2.3(b). In lieu of delivering the
above-described Notice of Borrowing the applicable Borrower may give the Agent
telephonic notice of such request by the required time; provided, however, that
such telephonic notice shall be confirmed in writing by delivery to the Agent
(a) immediately of a telecopy of a Notice of Borrowing which has been signed by
an authorized officer or employee of the applicable Borrower, and (b) promptly
of a Notice of Borrowing containing the
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original signature of an authorized officer or employee of the applicable
Borrower mailed by such Borrower to the Agent via United States mail on the
date such notice is given.
(b) Reliance upon Authority. Schedule 2.3 sets forth (1) the
accounts to which the Agent is authorized to transfer the proceeds of the Loans
requested by each Borrower pursuant to this Section 2.3, and (2) the names of
the officers and employees authorized to request Loans on behalf of each
Borrower. On or prior to the Closing Date, each Borrower shall provide the
Agent with a specimen signature of each such officer and employee. The Agent
shall be entitled to rely conclusively on such officer's or employee's
authority to request Loans on behalf of the applicable Borrower, the proceeds
of which are to be transferred to any of the accounts specified by such
Borrower pursuant to the immediately preceding sentence, until the Agent
receives written notice from any such authorized officer or employee to the
contrary. With respect to any oral request for a Loan, the Agent shall have no
duty to verify the identity of any individual representing himself as one of
the officers or employees authorized by the applicable Borrower to make such
requests on its behalf.
(c) No Liability. The Agent shall not incur any liability to
any Borrower as a result of acting upon any notice referred to in Sections
2.3(a) and (b), which notice the Agent believes to have been given by an
officer or employee duly authorized by the applicable Borrower to request Loans
on its behalf or for otherwise acting under this Section 2.3, and the crediting
of Loans to any of the accounts specified by the applicable Borrower pursuant
to the first sentence of Section 2.3(b) shall conclusively establish the
obligation of such Borrower to repay such Loans as provided herein.
(d) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.3(a) shall be irrevocable
and the applicable Borrower shall be bound to borrow the funds requested
therein in accordance therewith; provided, that any Notice of Borrowing (or
telephonic notice in lieu thereof) shall be revocable at any time up to one (1)
Business Day prior to the requested Funding Date specified therein.
(e) Agent's Election. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.3(a), the Agent shall elect, in its discretion,
(1) to have the terms of Section 2.3(f) apply to such requested Borrowing, or
(2) to request BABC to make a BABC Loan pursuant to the terms of Section 2.3(g)
in the amount of the requested Borrowing; provided, however, that if BABC
declines in its sole discretion to make a BABC Loan pursuant to Section 2.3(g),
the Agent shall elect to have the terms of Section 2.3(f) apply to such
requested Borrowing.
(f) Making of Loans. (1) In the event that the Agent shall
elect to have the terms of this Section 2.3(f) apply to a requested Borrowing
as described in Section 2.3(e), the Agent shall notify the Lenders by telecopy,
telephone or other similar form of transmission, of the requested Borrowing, no
later than 11:30 a.m. (Chicago, Illinois time) on the date of the Agent's
receipt of the applicable Notice of Borrowing pursuant to Section 2.3(a). Each
Lender shall make the amount of such Lender's Pro Rata Share of the requested
Borrowing available to the Agent in same day funds, to such account of the
Agent as the Agent may designate, on the Funding Date applicable thereto. After
the Agent's receipt of the proceeds of such Loans, upon satisfaction of the
applicable conditions precedent set forth in Article 9, the Agent shall make
the proceeds of such Loans available to the applicable Borrower on the
applicable Funding Date by transferring same day funds equal to
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the proceeds of such Loans received by the Agent to the account of such
Borrower, designated in writing by such Borrower.
(2) On any Funding Date in respect of a Borrowing, the Agent
shall be entitled to assume that each Lender has made the amount of such
Lender's Loan available to the Agent on such Funding Date, unless such Lender
shall have notified the Agent to the contrary. The Agent, in its sole
discretion, based upon such assumption, may make available to the applicable
Borrower a corresponding amount on such Funding Date. If such corresponding
amount had not in fact been made available to the Agent by any Lender, such
Lender and the Borrowers severally agree to repay to the Agent forthwith, on
demand, such corresponding amount, together with interest thereon for each day
during the period commencing on the date such amount is made available to the
applicable Borrower and ending on the date such amount is repaid to the Agent,
at (A) in the case of a Borrower, the interest rate applicable from time to
time to such Borrowing, and (B) in the case of a Lender, the Federal Funds
Rate. If such Lender repays to the Agent such corresponding amount, such amount
so repaid shall constitute a Loan to the applicable Borrower, and if both such
Lender and the applicable Borrower shall have repaid such corresponding amount,
the Agent shall promptly return to such Borrower such corresponding amount in
same day funds. The failure of any Lender to make any Loan on any Funding Date
(any such Lender, prior to the cure of such failure, being hereinafter referred
to as a "Defaulting Lender"), shall not relieve any other Lender of its
obligation, if any, hereunder to make a Loan on any Funding Date, but no Lender
shall be responsible for such failure of any such Defaulting Lender.
(3) In the event that a Defaulting Lender fails to fund its
Pro Rata Share of any Borrowing requested or deemed requested by a Borrower,
which such Defaulting Lender is obligated to fund under the terms of this
Agreement (the funded portion of such Borrowing being hereinafter referred to
as a "Non Pro Rata Loan"), until such Defaulting Lender's cure of such failure,
the proceeds of all amounts thereafter repaid to the Agent by or on behalf of
the applicable Borrower and otherwise required to be applied to such Defaulting
Lender's share of all other Obligations pursuant to the terms of this
Agreement, shall be advanced to such Borrower by the Agent on behalf of such
Defaulting Lender to cure, in full or in part, such failure by such Defaulting
Lender, but shall nevertheless be deemed to have been paid to such Defaulting
Lender in satisfaction of such other Obligations. Notwithstanding anything in
this Agreement to the contrary:
(A) any Defaulting Lender shall be deemed to have cured its
failure to fund its Pro Rata Share of any Borrowing at such time as an
amount equal to such Defaulting Lender's original Pro Rata Share of
the requested principal portion of such Borrowing is fully funded to
the applicable Borrower, whether made by such Lender itself or by
operation of the terms of this Section 2.3(f)(3), and whether or not
the Non Pro Rata Loan with respect thereto has been repaid;
(B) amounts advanced to a Borrower to cure, in full or in
part, any such Defaulting Lender's failure to fund its Pro Rata Share
of any Borrowing ("Cure Loans") shall bear interest at the rate
applicable to Revolving Loans in effect from time to time, and for all
other purposes of this Agreement shall be treated as if they were
Revolving Loans;
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(C) regardless of whether an Event of Default has occurred or
is continuing, and notwithstanding the instructions of the applicable
Borrower as to its desired application, all repayments of principal
which, in accordance with the terms of Section 4.5, would be applied
to Revolving Loans, shall be applied first, ratably, to all Revolving
Loans constituting Non Pro Rata Loans, second, ratably, to all
Revolving Loans other than those constituting Non Pro Rata Loans or
Cure Loans, and third, ratably, to all Revolving Loans constituting
Cure Loans;
(D) until any such Defaulting Lender's cure of the failure to
fund its Pro Rata Share of any Borrowing, for purposes of voting or
consenting to matters with respect to this Agreement or the other Loan
Documents requiring the consent of all the Lenders or the Majority
Lenders, such Defaulting Lender shall be deemed not to be a "Lender"
and its Commitment shall be deemed to be zero; and
(E) until any such Defaulting Lender's cure of the failure to
fund its Pro Rata Share of any Borrowing, (i) such Lender shall not be
entitled to any portion of the Unused Line Fee, and (ii) the Unused
Line Fee shall accrue in favor of the Lenders which have funded their
respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their
relative Commitments, and shall be calculated based upon the average
amount by which the aggregate Commitments of such performing Lenders
exceeds the sum of (a) the average daily outstanding amount of
Revolving Loans, (b) the average daily undrawn face amount of all
outstanding Letters of Credit, and (c) the average daily face amount
of all outstanding Acceptances.
The terms of this Section 2.3(f)(3) shall not be construed to increase or
otherwise affect the Commitment of any Lender other than a Defaulting Lender,
or relieve or excuse the performance by any Borrower of any of its duties or
obligations hereunder.
(g) Making of BABC Loans. In the event the Agent shall elect,
with the consent of BABC, to have the terms of this Section 2.3(g) apply to a
requested Borrowing as described in Section 2.3(e), BABC shall make a Loan in
the amount of such Borrowing (any such Loan made solely by BABC pursuant to
this Section 2.3(g) being referred to as a "BABC Loan" and such Loans being
referred to collectively as "BABC Loans") available to the applicable Borrower
on the Funding Date applicable thereto by transferring same day funds to an
account of such Borrower, designated in writing by such Borrower. Each BABC
Loan is a Revolving Loan hereunder and shall be subject to all the terms and
conditions applicable to other Loans except that all payments thereon shall be
payable to BABC solely for its own account (and for the account of the holder
of any participation interest with respect to such Loan created pursuant to
Section 2.3(i)(2)). The Agent shall not request BABC to make any BABC Loan if
the Agent shall have received written notice from any Lender or shall otherwise
have actual knowledge that one or more of the applicable conditions precedent
set forth in Article 9 will not be satisfied on the requested Funding Date for
the applicable Borrowing, or if the requested Borrowing would exceed either the
amount of Availability or Individual Availability with respect to the
applicable Borrower on the Funding Date. BABC shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Article 9
have been satisfied or the requested Borrowing would exceed the amount of
Availability or Individual
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Availability on the Funding Date applicable thereto prior to making, in its
sole discretion, any BABC Loan.
(h) Agent Advances. (1) Subject to the limitations set forth
in the provisos contained in this Section 2.3(h)(1), the Agent is hereby
authorized by the Borrowers and the Lenders, from time to time in the Agent's
discretion, (A) after the occurrence of a Default or an Event of Default, or
(B) at any time that any of the other applicable conditions precedent set forth
in Article 9 have not been satisfied, to make Revolving Loans to any Borrower
on behalf of the Lenders which the Agent, in its reasonable business judgment,
deems necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to any Borrower pursuant to the terms of this Agreement, including,
without limitation, costs, fees and expenses as described in Section 14.6 (any
of the advances described in this Section 2.3(h)(1) being hereinafter referred
to as "Agent Advances"); provided, that the Majority Lenders may at any time
revoke the Agent's authorization contained in this Section 2.3(h)(1) to make
Agent Advances, any such revocation to be in writing and to become effective
upon the Agent's receipt thereof.
(2) The Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving
Loans from time to time. The Agent shall notify each Lender and the applicable
Borrower in writing of each such Agent Advance, which notice shall include a
description of the purpose of such Agent Advance.
(i) Settlement. The Agent and the Lenders hereby agree that,
except in the case of Loans consisting of BABC Loans or Agent Advances, each
Lender's funded portion of the Loans is intended to be equal at all times to
such Lender's Pro Rata Share of the outstanding Loans. The Agent and the
Lenders agree (which agreement shall not be for the benefit of or enforceable
by any Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the BABC
Loans, Agent Advances and other Loans shall take place on a periodic basis in
accordance with the following provisions:
(1) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, with respect to (A) each outstanding BABC Loan, (B) each outstanding
Agent Advance, and (C) payments received, by notifying the other Lenders by
telecopy, telephone or other similar form of transmission, of such requested
Settlement, no later than 11:30 a.m. (Chicago, Illinois time) on the date of
such requested Settlement (the "Settlement Date"); provided, that settlement
with respect to interest and fees paid by the Borrowers under this Agreement
shall be on a daily basis. In the event that the Agent shall have elected to
have the terms of Section 2.3(f) apply to requested Borrowings, Settlement
Dates shall occur on a corresponding daily basis. Each Lender (other than BABC,
in the case of BABC Loans) shall make the amount of such Lender's Pro Rata
Share of the outstanding principal amount of the BABC Loans and Agent Advances
with respect to which Settlement is requested available to the Agent, for
itself or for the account of BABC, in same day funds, to such account of the
Agent as the Agent may designate, on the Settlement Date applicable thereto,
regardless of whether the applicable conditions precedent set forth in Article
9 have then been satisfied. Such amounts made available to the Agent shall be
applied against the amounts of the applicable BABC Loan or Agent
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Advance and, together with the portion of such BABC Loan or Agent Advance
representing BABC's Pro Rata Share thereof, shall constitute Loans of such
Lenders. If any such amount is not made available to the Agent by any Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after the Settlement
Date and thereafter at the Interest Rate then applicable to the Loans with
respect to which Settlement is to be made.
(2) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a BABC Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase and receive
from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to the Loans in which the participation is to be purchased.
(3) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BABC Loan or Agent
Advance pursuant to subsection (2) above, the Agent shall promptly distribute
to such Lender at its address provided pursuant to Section 13.11, such Lender's
Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such BABC Loan or Agent Advance.
(4) If any payments are received by the Agent which, in
accordance with the terms of this Agreement would be applied to the reduction
of Revolving Loans, and no BABC Loans or Agent Advances are then outstanding,
the Agent may pay over such amounts to BABC for application to BABC's other
outstanding Revolving Loans. If, as of any Settlement Date, payments received
since the then immediately preceding Settlement Date have been applied to
BABC's Revolving Loans other than BABC Loans and Agent Advances, as provided
for in the immediately preceding sentence, then BABC shall pay to the Agent,
for the accounts of the Lenders, to be applied to the outstanding Revolving
Loans of such Lenders, an amount such that each Lender shall have outstanding,
as of such Settlement Date, after giving effect to such payments, its Pro Rata
Share of such Revolving Loans; provided, that the Agent may net payments due
from BABC pursuant to this sentence against payments due to BABC pursuant to
Section 2.3(i)(1) on the applicable Settlement Date, and require either BABC or
the other Lenders, as applicable, to make only the amount of the payment due
after such netting. As of each Settlement Date, each of (x) BABC with respect
to BABC Loans, (y) the Agent with respect to Agent Advances, and (z) each
Lender with respect to the Loans other than BABC Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under
this Agreement on the actual average daily amount of funds employed by BABC,
the Agent or such Lender since the immediately preceding Settlement Date.
(j) Notation. The Agent shall record in the Register the
principal amount of the Revolving Loans owing to each Lender, including the
BABC Loans owing to BABC, and the Agent
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Advances owing to the Agent, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each
payment or prepayment of principal of such Lender's Revolving Loans in its
books and records, including computer records, such books and records
constituting rebuttably presumptive evidence, absent manifest error, of the
accuracy of the information contained therein.
(k) Lenders' Failure to Perform. All Loans (other than BABC
Loans and Agent Advances) shall be made by the Lenders simultaneously and in
accordance with their Pro Rata Shares. It is understood that (1) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall any Commitment of any Lender
be increased or decreased as a result of any failure by any other Lender to
perform its obligation to make any Loans hereunder, and (2) no failure by any
Lender to perform its obligation to make any Loans hereunder shall excuse any
other Lender from its obligation to make any Loans hereunder.
2.4 Letters of Credit and Acceptances.
(a) Agreement to Cause Issuance or Acceptance. Subject to the
terms and conditions of this Agreement, and in reliance upon the
representations and warranties of the Borrowers herein set forth, the Agent
agrees to (1)(A) cause Letters of Credit to be issued by Lenders under this
Agreement, or (B) provide credit support or enhancement or otherwise confirm
payment (any such credit support, enhancement or payment confirmation being
referred to as "L/C Credit Support") to banks other than Lenders, (which banks
shall be acceptable to the Agent) which issue Letters of Credit for the
respective accounts of the Borrowers in accordance with this Section 2.4 from
time to time during the term of this Agreement, and (2) cause drafts to be
accepted and Acceptances created for the respective accounts of the Borrowers,
and provide credit support or enhancement or otherwise confirm payment (any
such credit support, enhancement or payment confirmation being referred to as
"Acceptance Credit Support") in connection with Acceptances in accordance with
this Section 2.4 from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not have
any obligation to cause any Letter of Credit to be issued by a Lender or to
provide L/C Credit Support at any time if: (1) the maximum undrawn face amount
of the Letter of Credit is greater than the Unused Letter of Credit Subfacility
for the applicable Borrower at such time; (2) the maximum undrawn face amount
of the Letter of Credit (or forty percent (40.0%) of such face amount in the
case of a Letter of Credit supporting the purchase of Inventory that would not
be excluded from Eligible Inventory as a result of the application of any of
the eligibility criteria set forth in the definition of Eligible Inventory) and
all commissions, fees and charges due from the applicable Borrower in
connection with the opening thereof, are greater than Availability or
Individual Availability applicable to such Borrower at such time; (3) such
Letter of Credit has an expiration date later than thirty (30) days prior to
the Stated Termination Date, or more than one (1) year from the date of
issuance; or (4) such Letter of Credit would provide security with respect to
the obligations of any Borrower in connection with workers compensation laws
and regulations, to the extent that the sum of the undrawn face amounts of all
such Letters of Credit issued for the account of any Borrower would exceed
$8,000,000. The Agent shall not have any obligation to cause any Acceptance to
be created or to provide Acceptance Credit Support at any time if: (1) the face
amount of the Acceptance and all commissions, fees and charges due from the
applicable Borrower in connection with the creation
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thereof, are greater than Availability or Individual Availability applicable to
such Borrower at such time; or (2) such Acceptance has a maturity date more
than 180 days after the date of the draft to be accepted or later than thirty
(30) days prior to the Stated Termination Date.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 9, the
obligation of the Agent to cause any Letter of Credit to be issued or any
Acceptance to be created or to provide L/C Credit Support or Acceptance Credit
Support, is subject to the following conditions precedent having been satisfied
in a manner satisfactory to the Agent:
(1) in the case of a Letter of Credit, the applicable Borrower
shall have delivered to the proposed issuer of such Letter of Credit,
at such times and in such manner as such proposed issuer may
prescribe, an application in form and substance satisfactory to such
proposed issuer for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and
the form and terms of the proposed Letter of Credit shall be
satisfactory to the Agent and such proposed issuer;
(2) in the case of an Acceptance, the applicable Borrower
shall have entered into an acceptance agreement with the bank creating
such Acceptance and such other documents as may be required pursuant
to the terms thereof, and the terms of such acceptance agreement and
proposed Acceptance shall be satisfactory to the Agent and such bank;
and
(3) as of the date of issuance or creation, no order of any
court, arbitrator or Public Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters
of credit or creating banker's acceptances of the type and in the
amount of the proposed Letter of Credit or Acceptance, and no law,
rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Public Authority with jurisdiction over money center banks generally
shall prohibit, or request that the bank proposed to issue such Letter
of Credit or create such Acceptance refrain from, the issuance of
letters of credit or creation of banker's acceptances generally or the
issuance of such Letter of Credit or creation of such Acceptance.
(d) Issuance of Letters of Credit and Creation of Acceptances.
(1) Request for Issuance. The applicable Borrower shall give
the Agent three (3) Business Days' prior written notice, containing
the original signature of an authorized officer of such Borrower, of
such Borrower's request for the issuance of a Letter of Credit or
creation of an Acceptance. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit or
Acceptance, the effective date (which date shall be a Business Day) of
issuance of such proposed Letter of Credit or creation of such
proposed Acceptance, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such proposed Letter of
Credit is to expire or such Acceptance is to mature (which date shall
be a Business Day), the purpose for which such Letter of Credit is to
be issued or such Acceptance is to be created, and the beneficiary of
the Letter of Credit. In the case of a Letter of Credit, the
applicable Borrower shall attach to such notice the form of the
proposed Letter of Credit.
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(2) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit or creation of the
Acceptance set forth in the notice from the applicable Borrower
pursuant to Section 2.4(d)(1), (A) the amount of the applicable Unused
Letter of Credit Subfacility or Unused Acceptance Subfacility and (B)
the amount of Availability and Individual Availability as of such date
(for purposes of computing Availability and Individual Availability at
such time, giving effect to the issuance of such requested Letter of
Credit or creation of such requested Acceptance). If (i) (x) the
undrawn face amount of the requested Letter of Credit is not greater
than the applicable Unused Letter of Credit Subfacility or the face
amount of the requested Acceptance is not greater than the applicable
Unused Acceptance Subfacility, and (y) the issuance of such requested
Letter of Credit or creation of such requested Acceptance, and all
commissions, fees, and charges due from the applicable Borrower in
connection with the opening or creation thereof, would not cause
Availability or Individual Availability to be exceeded and (ii) the
Agent has received a certificate from the applicable Borrower stating
that the applicable conditions set forth in Article 9 have been
satisfied, the Agent shall cause such Letter of Credit to be issued or
Acceptance to be created on such proposed effective date of issuance
or acceptance.
(3) Notice of Issuance or Acceptance. The Agent shall give
each Lender written notice on each Settlement Date of all Letters of
Credit issued and Acceptances created since the preceding Settlement
Date.
(4) No Extensions or Amendment. The Agent shall not cause any
Letter of Credit to be extended or amended unless the requirements of
this Section 2.4(d) are met as though a new Letter of Credit were
being requested and issued.
(e) Payments Pursuant to Letters of Credit or Acceptances.
(1) Payment of Letter of Credit and Acceptance Obligations.
The Borrowers agree (A) to reimburse the issuer for any draw under any
Letter of Credit, the Agent, for the account of the Lenders, upon any
payment pursuant to any L/C Credit Support, and the Agent for any
payment made under a Shipper Guaranty, in each case immediately upon
demand, and to pay to such issuer the amount of all other obligations
and other amounts payable to such issuer under or in connection with
any Letter of Credit, and (B) to pay the accepting bank on the
maturity date of each Acceptance the face amount of such Acceptance,
and to pay to such accepting bank the amount of all other obligations
and other amounts payable to such accepting bank in connection with
any Acceptance, in each case immediately when due, irrespective of any
claim, set-off, defense or other right which any Borrower may have at
any time against such issuer, accepting bank or any other Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations and
Acceptance Obligations. In the event that the issuer of any Letter of
Credit honors a draw under such Letter of Credit, the Agent shall have
made any payment pursuant to any L/C Credit Support, the Agent makes a
payment under a Shipper Guaranty, or an accepting bank makes payment
under any Acceptance, and the Borrowers shall not have repaid such
amount to such issuer or accepting bank or the Agent, as applicable,
pursuant to Section 2.4(e)(1), the Agent
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shall, upon receiving notice of such failure, notify each Lender of
such failure, and each Lender unconditionally agrees to pay to the
Agent, for the account of such issuer or accepting bank or the Agent,
as applicable, as and when provided hereinbelow, an amount equal to
such Lender's Pro Rata Share of the amount of such payment in Dollars
and in same day funds. If the Agent so notifies the Lenders prior to
11:30 a.m. (Chicago, Illinois time) on any Business Day, each Lender
shall make available to the Agent the amount of such payment, as
provided in the immediately preceding sentence, on such Business Day.
Such amounts paid by the Lenders to the Agent shall constitute
Revolving Loans which shall be deemed to have been requested by the
applicable Borrower pursuant to Section 2.3 as set forth in Section
4.4.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance of
any Letter of Credit or creation of any Acceptance in accordance with
Section 2.4(d), or any Shipper Guaranty by the Agent pursuant to
Section 2.4(i)(7), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty,
an undivided interest and participation in such Letter of Credit (if
issued by a Lender), Acceptance (if created by a Lender), or
applicable L/C Credit Support, Acceptance Credit Support or Shipper
Guaranty, equal to such Lender's Pro Rata Share of the face amount of
such Letter of Credit, Acceptance or Shipper Guaranty (including,
without limitation, all obligations of the Borrowers with respect
thereto, and any security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from a Borrower on account of reimbursement
obligations in respect of a Letter of Credit, Acceptance, L/C Credit
Support, Acceptance Credit Support or Shipper Guaranty, as to which
the Agent has previously received payment from a Lender for the
account of the issuer or accepting bank, the Agent shall promptly pay
to such Lender such Lender's Pro Rata Share of such payment from such
Borrower in Dollars. Each such payment shall be made by the Agent on
the Business Day on which the Agent receives immediately available
funds paid to such Person pursuant to the immediately preceding
sentence, if received prior to 11:30 a.m. (Chicago, Illinois time) on
such Business Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreement executed in connection therewith, application
for any Letter of Credit, acceptance agreement or applicable L/C
Credit Support, Acceptance Credit Support or Shipper Guaranty, and
such other documentation as may reasonably be requested by such
Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or
Acceptance or with respect to any L/C Credit Support or Acceptance
Credit Support, and the obligations of the Borrowers to make payments
to the Agent, for the account of the Lenders, shall be irrevocable,
not subject to any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement
(assuming, in the case of the obligations of the Lenders to make
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such payments, that the Agent has caused such Letter of Credit to be
issued or Acceptance to be created in accordance with the terms of
Section 2.4(d)), including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, set-off, defense or
other right which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Agent, the issuer
of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit or
Acceptance, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions
between any Borrower or any other Person and the beneficiary
named in any Letter of Credit);
(C) any draft, certificate or any other document
presented under a Letter of Credit or in connection with an
Acceptance proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents; or
(E) the occurrence of any Default or Event of Default.
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of any Borrower received by the Agent with respect to a
Letter of Credit, an Acceptance, L/C Credit Support, Acceptance Credit Support
or a Shipper Guaranty (or any guaranty by any Borrower or reimbursement
obligation of any Borrower relating thereto) and distributed by the Agent to
the Lenders on account of their respective participations therein, is
thereafter set aside, avoided or recovered from the Agent in connection with
any receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Agent, pay to the Agent their respective Pro Rata Shares of such
amount set aside, avoided or recovered, together with interest at the rate
required to be paid by the Agent upon the amount required to be repaid by it.
(h) Compensation for Letters of Credit and Acceptances.
(1) Letter of Credit Fee and Acceptance Fee. The Borrowers
agree to pay to the Agent, for each Letter of Credit, the Letter of
Credit Fee specified in, and in accordance with the terms of, Section
3.3. The Borrowers agree to pay to the Agent, for each Acceptance, the
Acceptance Fee specified in, and in accordance with the terms of,
Section 3.4.
(2) Issuer and Accepting Bank Fees and Charges. The Borrowers
shall pay to the issuer of any Letter of Credit, or to the Agent, for
the account of any such issuer, solely for
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the account of such issuer, such fees and other charges as are charged
by such issuer for letters of credit issued by it, including, without
limitation, its standard fees for issuing, administering, amending,
renewing, paying and canceling letters of credit and all other fees
associated with issuing or servicing letters of credit, as and when
assessed. The Borrowers shall pay to the accepting bank on any
Acceptance, or to the Agent, for the account of any such accepting
bank, solely for the account of such accepting bank, such fees and
other charges as are charged by such accepting bank for acceptances
created by it, including, without limitation, its standard fees for
creating banker's acceptances, as and when assessed.
(i) Indemnification; Exoneration.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.4, each Borrower hereby agrees to
protect, indemnify, pay and save the Lenders and the Agent harmless
from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys'
fees) which any Lender or the Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of
Credit or the creation of any Acceptance or the provision of any
Acceptance Credit Support in connection therewith, or the execution
and delivery of any Shipper Guaranty. The agreement contained in this
Section 2.4(i)(1) shall survive the payment in full of the
Obligations.
(2) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders and the Agent, each Borrower assumes all risks
of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Lenders and
the Agent shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the
Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C)
the failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of Credit;
(D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders or
the Agent, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
Public Authority. None of the foregoing shall affect, impair or
prevent the vesting of any rights or powers of the Agent or any Lender
under this Section 2.4(i).
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(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent or any Lender under or in connection
with any of the Letters of Credit or Acceptances or any related
certificates, if taken or omitted in good faith, shall not put the
Agent or any Lender under any resulting liability to any Borrower or
relieve any Borrower of any of its obligations hereunder to any such
Person.
(4) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, each Borrower hereby appoints the
Agent, or the Agent's designee, as its attorney, with full power and
authority: (A) to sign and/or endorse such Borrower's name upon any
warehouse or other receipts; (B) to sign such Borrower's name on bills
of lading and other negotiable and non-negotiable documents; (C) to
clear Inventory through customs in the Agent's or such Borrower's
name; (D) to complete in the Agent's or such Borrower's name, any
order, sale or transaction, obtain the necessary documents in
connection therewith, and collect the proceeds thereof; and (E) to do
such other acts and things as are necessary in order to enable the
Agent to obtain possession of the Inventory and to obtain payment of
the Obligations. Neither the Agent nor its designee, as each
Borrower's attorney, will be liable for any acts or omissions, nor for
any error of judgment or mistakes of fact or law, absent gross
negligence. This power, being coupled with an interest, is irrevocable
until all Obligations have been paid and satisfied.
(5) Account Party. Each Borrower hereby authorizes and directs
any issuer of a Letter of Credit to name such Borrower as the "Account
Party" therein and to deliver to the Agent all instruments, documents
and other writings and property received by the issuer pursuant to the
Letter of Credit, and to accept and rely upon the Agent's instructions
and agreements with respect to all matters arising in connection with
the Letter of Credit or the application therefor.
(6) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, each Borrower will, at the Agent's
request, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or
instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order, and if they
shall come into a Borrower's possession such Borrower shall deliver
them, at the Agent's request, to the Agent in their original form.
Each Borrower shall also, at the Agent's request, designate the Agent
as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(7) Shipper Guaranties. Upon the request of a Borrower, the
Agent may, in its sole discretion, (a) execute and deliver from time
to time Shipper Guaranties, and (b) negotiate to such Borrower bills
of lading on which the Agent is named as consignee, in any such case
to enable such Borrower to obtain possession of inventory from a
carrier prior to the applicable bill of lading or other title
documents being available for presentation. In no event shall the
Agent execute or deliver any Shipper Guaranty unless the applicable
Borrower has executed and delivered to the Agent the Shipper Guaranty
Letter.
(j) Supporting Letter of Credit; Cash Collateral.
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(1) If, notwithstanding the provisions of Section 2.4(b) and
Section 11.1, any Letter of Credit or Acceptance is outstanding upon the
termination of this Agreement, then upon such termination the Borrowers shall
cause the termination of such Letter of Credit or Acceptance. If, at the
Agent's election, any such Letter of Credit or Acceptance remains outstanding,
then the Borrowers shall deposit with the Agent, for the ratable benefit of the
Agent and the Lenders, with respect to each Letter of Credit and Acceptance
then outstanding, as the Agent shall specify, either (A) a standby letter of
credit (a "Supporting Letter of Credit") in form and substance satisfactory to
the Agent, issued by an issuer satisfactory to the Agent in an amount equal to
the greatest amount for which such Letter of Credit may be drawn, plus any fees
and expenses associated with such Letter of Credit, and the face amount of each
such Acceptance, under which Supporting Letter of Credit the Agent is entitled
to draw amounts necessary to reimburse the Agent and the Lenders for payments
made by the Agent and the Lenders under such Letter of Credit, in connection
with such Acceptance, or under any L/C Credit Support or Acceptance Credit
Support provided with respect thereto, and any fees and expenses associated
with such Letter of Credit or Acceptance, or (B) cash in amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent or the
Lenders under such Letter of Credit, in connection with such Acceptance, or
under any L/C Credit Support or Acceptance Credit Support provided with respect
thereto, and any fees and expenses associated with such Letter of Credit or
Acceptance. Such Supporting Letter of Credit or deposit of cash shall be held
by the Agent, for the ratable benefit of the Agent and the Lenders, as security
for, and to provide for the payment of, the aggregate undrawn face amount of
such Letters of Credit and the face amount of such Acceptance remaining
outstanding.
(2) The Borrowers shall, upon the request of the Agent, which
may be made at any time that (i) an Event of Default has occurred and is
continuing, deliver to the Agent cash collateral for any Letter of Credit or
Acceptance outstanding, or (ii) Availability or Individual Availability is less
than zero, deliver to the Agent cash collateral for any Letter of Credit or
Acceptance in the amount by which Availability or Individual Availability is
less than zero.
2.5 Interest Rate and Currency Hedging Contract Reserves. (a) The
Agent and the Lenders acknowledge that RMC may be entering into Interest Rate
Contracts from time to time during the term of this Agreement, and RMC
acknowledges that neither the Agent nor any Lender has any obligation to obtain
or to cause to be entered into any such Interest Rate Contracts. In the event
that such Interest Rate Contracts shall be entered into, a reserve (the
"Interest Rate Contract Reserve") shall be established against the Maximum
Revolver Amount and Individual Maximum Revolver Amount with respect to RMC in
the aggregate amount of Interest Rate Contract Exposure from time to time with
respect to all Interest Rate Contracts. At no time shall RMC permit the
aggregate amount of Interest Rate Contract Exposure to exceed $5,000,000.
(b) The Agent and the Lenders acknowledge that RMC and RML may
be entering into Currency Hedging Contracts from time to time during the term
of this Agreement, and RMC and RML acknowledge that neither the Agent nor any
Lender has any obligation to obtain or to cause to be entered into any such
Currency Hedging Contracts. In the event that such Currency Hedging Contracts
shall be entered into, a reserve (the "Currency Hedging Contract Reserve")
shall be established against the Maximum Revolver Amount and Individual Maximum
Revolver Amount with respect to RMC or RML, as
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applicable, in the aggregate amount of Currency Hedging Contract Exposure from
time to time with respect to all Currency Hedging Contracts of RMC or RML, as
applicable. At no time shall the aggregate amount of Currency Hedging Contract
Exposure with respect to (A) RML exceed $2,000,000, or (B) RMC and RML, on a
combined basis, exceed $5,000,000.
2.6 Disbursements. The parties hereto agree that the Agent may
deliver the proceeds of Loans to be made to RML either directly to RML, or
indirectly to RML by first funding proceeds to RMC, as RML's borrowing agent,
and having RMC provide such funds to RML.
2.7 Automated Clearing House Transfers and Overdrafts. Any
Borrower may request, and the Agent may, in its sole and absolute discretion,
arrange for the Borrower to obtain from Bank of America, ACH Transactions. Each
Borrower agrees to indemnify and hold Bank of America, the Agent and the
Lenders harmless from all losses, liabilities, costs, expenses and claims
incurred by Bank of America, the Agent or the Lenders arising from or related
to such ACH Transactions. Each Borrower acknowledges and agrees that the
obtaining of any ACH Transactions with respect to such Borrower by Bank of
America shall be based upon the sole and absolute discretion and subject to all
rules and regulations of Bank of America, and made in reliance upon the
indemnity in favor of Bank of America, the Agent and the Lenders with respect
to all risks of loss associated with ACH Transactions.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid amount thereof (including, to the extent permitted by
law, on interest on such Loans not paid when due) from the date made until paid
in full in cash. All Obligations shall bear interest at a per annum rate equal
to one and one-quarter of one percent (1.25%) plus the Reference Rate, but not
to exceed the Maximum Rate. Each change in the Reference Rate shall be
reflected in such interest rate as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and
actual days elapsed. Except as otherwise provided herein, accrued interest will
be payable in arrears on the first day of each month hereafter.
(b) Default Rate. If any Default or Event of Default occurs
and the Majority Lenders in their discretion so elect, then, while any such
Default or Event of Default is outstanding, all of the Obligations shall bear
interest at the Default Rate applicable thereto.
(c) Canadian Matters.
(1) Each payment of interest or other fees or charges payable
hereunder to the Agent or any Lender shall be made without deduction
or withholding on account of any tax imposed, levied, collected,
withheld or assessed by Canada, any province or any municipality
thereof, or any department, agency, subdivision or instrumentality of
any of them, pursuant to the ITA or the Canada-U.S. Income Tax
Convention (1980) ("Canadian Taxes").
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(2) In the event that RML shall be obligated under applicable
law to make any deduction for or withholding on account of Canadian
Taxes from any payment of interest or other fees or charges payable
hereunder to the Agent or any Lender, RML shall deduct or withhold
from such payment such amounts, not exceeding the minimum amounts, as
may be required by applicable law and RML shall promptly pay such
amounts to the appropriate taxation authorities and obtain official
receipts or other satisfactory evidence of the payment of such amounts
to the appropriate taxation authorities and shall promptly provide the
same to the Agent and such Lender.
(3) In the event that RML makes any deduction or withholding
as provided in Section 3.l(c)(2), concurrently with the payment to the
Agent or any Lender of each amount to which such deduction or
withholding is applicable, RML shall pay to the Agent or such Lender
such additional amounts ("Gross-Up Payments") as may be necessary to
insure that after withholding all applicable amounts on account of
Canadian Taxes from any payments made hereunder, including any
Gross-Up Payments, the Agent or such Lender receives an amount in
Dollars equal to the full amount which it would have received if no
withholding had been required in respect of Canadian Taxes.
(4) The provisions of this Section 3.1(c) and the
obligations of the Borrowers hereunder shall survive the termination
of this Agreement and the repayment of the Obligations hereunder.
(5) For purposes of the Interest Act (Canada), the yearly rate
of interest or the yearly rate of any fee, or the rate of such
interest or fee per annum, equal to the rate of such interest or fee
payable hereunder for any period, is the rate of such interest or fee
payable hereunder multiplied by a fraction, the numerator of which is
the actual number of days in the year in which such period commenced
(i.e. 365 or 366, as the case may be) and the denominator of which is
360.
3.2 Maximum Interest Rate. In no event shall any interest
rate hereunder exceed the maximum rate permissible for corporate borrowers
under applicable law (the "Maximum Rate"). If, in any month, any interest rate,
absent such limitation, would have exceeded the Maximum Rate, then the interest
rate for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations under this Agreement, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount
of interest which would, but for this Section 3.2, have been paid or accrued if
the interest rates otherwise set forth in this Agreement had at all times been
in effect, then the Borrowers shall, to the extent permitted by applicable law,
pay the Agent, for the account of the Lenders, an amount equal to the
difference between (a) the lesser of (1) the amount of interest which would
have been charged if the Maximum Rate had, at all times, been in effect or (2)
the amount of interest which would have accrued had the interest rates
otherwise set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the event
that a court determines that the Agent and/or any Lender has received interest
and other charges hereunder in excess of the
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Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the Borrowers such excess.
3.3 Letter of Credit Fee. The Borrowers shall pay the
Agent, for the account of the Lenders, for each Letter of Credit, a fee
("Letter of Credit Fee") equal to one and one-quarter percent (1.25%) per annum
of the undrawn face amount of each such Letter of Credit issued for a
Borrower's account at such Borrower's request. The Letter of Credit Fee shall
be payable monthly, in arrears, on the first day of each month. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed. The Borrowers shall also pay the costs, fees, or
expenses of the Person issuing the Letter(s) of Credit, all in accordance with
Section 2.4 and any Letter of Credit reimbursement agreement. Any Letter of
Credit Fee payable hereunder shall be increased by two percent (2.00%) during
any period in which the Default Rate shall be in effect.
3.4 Acceptance Fee. The Borrowers shall pay the Agent,
for the account of the Lenders, for each Acceptance, a fee ("Acceptance Fee")
equal to one and one-quarter percent (1.25%) per annum of the face amount of
each such Acceptance created for a Borrower's account at such Borrower's
request. The Acceptance Fee shall be payable monthly, in arrears, on the first
day of each month. The Acceptance Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. The Borrowers shall also
pay the costs, fees, or expenses of the bank creating each Acceptance, all in
accordance with Section 2.4 and any acceptance agreement. Any Acceptance Fee
payable hereunder shall be increased by two percent (2.00%) during any period
in which the Default Rate shall be in effect.
3.5 Closing Fee. The Borrowers will pay the Agent, for
the account of the Lenders, ratably in accordance with their respective Pro
Rata Shares, on the Closing Date, a closing fee (the "Closing Fee") in the
amount of $650,000. The Borrowers, the Lenders and the Agent agree that the
Closing Fee shall be financed by the Lenders as Revolving Loans and shall be
fully earned by the Lenders on the Closing Date.
3.6 Unused Line Fee. The Borrowers shall pay to the
Agent, for the account of the Lenders, in arrears on the first day of each
month and on the date of the termination of the Revolver Facility, an unused
line fee (the "Unused Line Fee") on the amount (the "Unused Amount") by which
the Revolver Facility exceeded the sum of (a) the average daily outstanding
amount of Revolving Loans (with such amount calculated for this purpose by
giving immediate application to all amounts received by the Agent or any
Lender), (b) the average daily undrawn face amount of all outstanding Letters
of Credit, and (c) the average daily face amount of all outstanding
Acceptances, in each case during the immediately preceding month, in an amount
equal to one-quarter of one percent (0.25%) per annum of the Unused Amount. The
Unused Line Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed. As provided for in Section 5.9(c), all payments
received by the Agent on account of Accounts or as proceeds of other Collateral
shall be deemed to be credited to the applicable Borrower's loan account
immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 3.6.
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3.7 Audit Fee. The Borrowers shall pay to the Agent,
solely for its own account, all costs and expenses reasonably incurred by the
Agent's internal auditors in connection with audits of the Borrowers performed
by the Agent during the term of this Agreement. The Agent's internal auditors
shall be billed at the rate of $300 per day per auditor plus reasonably
incurred out-of-pocket expenses (including travel expenses).
3.8 Fee Agreement. The Borrowers shall pay to the Agent,
solely for its own account, certain fees in addition to those described in this
Agreement, in accordance with the terms of that certain Fee Agreement dated the
Closing Date (the "Fee Agreement") among the Agent and the Borrowers.
3.9 Early Termination Fee. If the Revolver Facility is
terminated by the Borrowers pursuant to Section 4.2 (a) on or before the first
Anniversary Date, the Borrowers shall pay to the Agent, for the ratable benefit
of the Lenders, an early termination fee equal to $3,900,000, (b) after the
first Anniversary Date and on or before the second Anniversary Date, the
Borrowers shall pay to the Agent, for the ratable benefit of the Lenders, an
early termination fee equal to $2,600,000, or (c) after the second Anniversary
Date and on or before the third Anniversary Date, the Borrowers shall pay to
the Agent, for the ratable benefit of the Lenders, an early termination fee
equal to $1,300,000. Notwithstanding the immediately preceding sentence, in the
event that the Revolver Facility is terminated by the Borrowers on or before
the first Anniversary Date as a result of the sale by RMC of its toy business
(including its business lines consisting of swing sets, bulk toys and
trampolines), whether such sale is effectuated by means of a sale of assets or
capital stock, a merger or by any other means, such early termination fee shall
not be required to be paid. In addition, BABC's ratable portion of any early
termination fee payable pursuant to this Section 3.9 shall not be required to
be paid in the event that the Revolver Facility is terminated by the Borrowers
pursuant to a refinancing of the Obligations pursuant to which the Agent or
Bank of America or another affiliate of Bank of America shall (1) act as sole
agent for the lenders and (2) receive, in connection with such refinancing and
on or prior to the closing thereof, fees in an aggregate amount at least equal
to BABC's ratable portion of such early termination fee.
3.10 Currency Conversion. All obligations payable under
this Agreement or secured hereby, including principal, interest, costs,
expenses, charges, premiums, fees, rates and other amounts, shall be due and
payable in Dollars. In any proceeding in which the amount of any obligation
payable hereunder must be converted into Canadian currency, the amount of such
obligation shall be converted into an amount in Canadian currency sufficient to
purchase the amount of the obligation in Dollars at a chartered bank in
Ontario, Canada at the close of business on the first day on which such bank
quotes a Canadian dollar rate for purchase of such amount of Dollars before the
day on which payment of the obligation is received by the Agent, for the
account of the Lenders, but the Lenders shall have a separate cause of action
against the Borrowers for the amount, if any, by which the amount paid to the
Agent, for the account of the Lenders, in respect of the obligation in any
currency other than Dollars, when promptly converted to Dollars under normal
banking procedures and in an appropriate market of the Agent's choice, fails to
yield (net after any cost of conversion) the full amount of the obligation in
Dollars.
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ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the
outstanding principal balance of the Revolving Loans, plus all accrued but
unpaid interest thereon, upon the termination of this Agreement for any reason.
The Borrowers may prepay Revolving Loans at any time, and reborrow subject to
the terms of this Agreement. In addition, and without limiting the generality
of the foregoing, the Borrowers shall pay to the Agent, for the account of the
Lenders, on demand, (a) the amount by which the Aggregate Revolver Outstandings
to or for the accounts of all Borrowers exceed the Maximum Revolver Amount, and
(b) the amount by which the Aggregate Revolver Outstandings to or for the
account of a Borrower exceed the Individual Maximum Revolver Amount with
respect to such Borrower.
4.2 Termination of the Revolver Facility. The Borrowers
may terminate the Revolver Facility in whole, but not in part, upon (a) at
least thirty (30) Business Days' notice to the Agent and the Lenders, (b) the
payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation of all outstanding Letters of Credit,
Interest Rate Contracts and Currency Hedging Contracts, (c) the provision of a
Supporting Letter of Credit or cash collateral in the amount of any outstanding
Acceptance, in the manner set forth in Section 2.4(j)(1), (d) the payment of
the early termination fee set forth in Section 3.9, if applicable, and (e) the
payment in full in cash of all other Obligations, together with accrued
interest thereon; provided, that the Borrowers shall not be required to cancel
all Interest Rate Contracts and Currency Hedging Contracts pursuant to the
foregoing clause (b) in the event that (1) the Revolver Facility shall be
terminated pursuant to a refinancing of the Obligations by the Lenders or by
Bank of America, or (2) all obligations of any Borrower under such Interest
Rate Contracts and Currency Hedging Contracts shall be secured in a manner and
pursuant to documentation in form and substance satisfactory to the Agent and
Bank of America.
4.3 Place and Form of Payments; Extension of Time. All
payments of principal, interest, premium, and other sums due to the Agent or
the Lenders shall be made at the Agent's address specified pursuant to Section
14.7. Except for proceeds received directly by the Agent, all such payments
shall be made in immediately available funds. If any payment of principal,
interest, premium, or other sum to be made hereunder becomes due and payable on
a day other than a Business Day, the due date of such payment shall be extended
to the next succeeding Business Day and interest thereon shall be payable at
the applicable Interest Rate during such extension.
4.4 Payments as Revolving Loans. All payments of
interest, reimbursement obligations in connection with Letters of Credit,
Acceptances, fees, premiums and other sums payable hereunder, including all
reimbursement for expenses pursuant to Section 14.6, may, at the option of the
Agent, in its sole discretion, subject only to the terms of this Section 4.4,
be paid from the proceeds of Revolving Loans made hereunder, whether made
following a request by a Borrower pursuant to Section 2.3 or a deemed request
as provided in this Section 4.4. Each Borrower hereby irrevocably authorizes
the Lenders to make Revolving Loans (including BABC Loans by BABC or Agent
Advances by the Agent), upon notice from the Agent as described in the next
succeeding sentence, for the purpose of paying interest, reimbursement
obligations in connection with Letters
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of Credit or Acceptances, fees, premiums and other sums payable hereunder,
including reimbursing expenses pursuant to Section 14.6, and agrees that all
such Revolving Loans so made shall be deemed to have been requested by it
pursuant to Section 2.3, as of the date of the aforementioned notice. The Agent
may request Revolving Loans on behalf of a Borrower as described in the
immediately preceding sentence, but notwithstanding anything to the contrary
contained herein, any notice required to be given to any Lender by the Agent in
connection with any BABC Loans made pursuant to this Section 4.4 may be made
contemporaneously with the Settlement relating thereto.
4.5 Apportionment, Application and Reversal of Payments.
Aggregate principal and interest payments shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders. All payments received
with respect to a Borrower shall be remitted to the Agent and all such payments
not relating to principal or interest of specific Loans, or not constituting
payment of specific fees, and all proceeds of Accounts or other Collateral
received by the Agent, shall be applied, ratably, subject to the provisions of
this Agreement, first, to pay any fees, expense reimbursements or indemnities
then due to the Agent and the Lenders from such Borrower under or in connection
with this Agreement or any other Loan Document (including, without limitation,
amounts arising out of ACH Transactions); second, to pay interest due in
respect of the BABC Loans and Agent Advances to such Borrower; third, to pay or
prepay principal of the BABC Loans and Agent Advances to such Borrower; fourth,
to pay interest due in respect of all Loans (other than the BABC Loans and
Agent Advances) to such Borrower and unpaid reimbursement obligations in
respect of Letters of Credit issued or Acceptances created for the account of
such Borrower; fifth, to pay or prepay principal of the Revolving Loans (other
than the BABC Loans and Agent Advances) to such Borrower and to pay any unpaid
reimbursement obligations in respect of Letters of Credit or Acceptances, as
applicable; sixth, to provide cash collateral for any outstanding Letters of
Credit or Acceptances; and seventh, to the payment of any other Obligation due
to the Agent or any Lender by such Borrower. The Agent shall distribute to each
Lender promptly, and in any event no later than the then next succeeding
Settlement Date, pursuant to the applicable wire transfer instructions set
forth in Section 13.11, or pursuant to such other instructions as such Lender
may deliver to the Agent in writing, such funds as it may be entitled to
receive, subject to the provisions of Section 2.3(i). If any such amount is not
so made available to any Lender, such Lender shall be entitled to recover such
amount on demand from the Agent together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after the date payable and
thereafter at the Interest Rate then applicable to the Revolving Loans. The
Agent and the Lenders shall have the continuing and exclusive right to apply
and reverse and reapply any and all such proceeds and payments to any portion
of the Obligations.
4.6 Indemnity for Returned Payments. If after receipt of
any payment of, or proceeds applied to the payment of, all or any part of the
Obligations, the Agent or any Lender is for any reason compelled to surrender
such payment or proceeds to any Person, because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible set-off, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended
to be satisfied shall be revived and continue and this Agreement shall continue
in full force as if such payment or proceeds had not been received by the Agent
or such Lender, and the Borrowers shall be liable to pay to the Agent, and
hereby do indemnify the Agent and the Lenders and hold the Agent and the
Lenders harmless for, the amount
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of such payment or proceeds surrendered. The provisions of this Section 4.6
shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this Section 4.6 shall
survive the termination of this Agreement.
4.7 Increased Capital. (a) If any Lender determines that
compliance by such Lender with any guideline or request from any central bank
or other Public Authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
such Lender, or any corporation controlling such Lender, and such Lender
reasonably determines that the amount of such capital is increased by or based
upon its Commitment or its making or maintaining Loans hereunder, or its
commitment to participate (as provided for in Section 2.4(f)) in any Letter of
Credit, Acceptance or L/C Credit Support or Acceptance Credit Support, or to
otherwise extend credit to the Borrowers hereunder, and other commitments of
this type, then, upon demand by such Lender, the Borrowers agree to immediately
pay to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to such Lender's Commitment or its
commitment to participate (as provided for in Section 2.4(f)) in any Letter of
Credit, Acceptance or L/C Credit Support or Acceptance Credit Support. A
certificate as to the amount of such increased cost, submitted to the Borrowers
and the Agent by the applicable Lender shall, absent manifest error, be
conclusive and binding on the Borrowers for all purposes.
(b) In the event that the sum of the amounts paid by the
Borrowers to any Lender pursuant to Section 4.7(a) shall exceed $1,000,000,
such Lender shall, at the request of the Borrowers, assign its Commitment, the
Loans owing to it and its rights and obligations with respect to Letters of
Credit and Acceptances, in accordance with the terms of Section 12.3, to a
commercial bank or other financial institution identified by the Borrowers and
acceptable to the Agent. No Lender shall be required to make any assignment
pursuant to the immediately preceding sentence unless (1) such assignment shall
become effective within one hundred twenty (120) days following the date on
which the sum of the amounts paid by the Borrowers to such Lender pursuant to
Section 4.7(a) shall have exceeded $1,000,000, and (2) the Borrowers shall have
given the Agent and the Lenders written notification of such proposed
assignment at least ninety (90) days prior thereto.
4.8 Register; Agent's and Lenders' Books and Records;
Monthly Statements. Each Borrower agrees that the Register and each Lender's
books and records showing the Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any action or
proceeding arising therefrom, and shall constitute prima facie proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note
or other instrument. The Agent will provide to the Borrowers a monthly
statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrowers and an account stated (except for reversals and reapplications of
payments made as provided in Sections 4.5 and 4.6 and corrections of errors
discovered by the Agent), unless the Borrowers notify the Agent in writing to
the contrary within thirty (30) days after such statement is rendered. In the
event a timely written notice of objections is given by the
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Borrowers, only the items to which exception is expressly made will be
considered to be disputed by the Borrowers.
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest. (a) As security for all
Obligations, each Borrower hereby grants to the Agent, for the ratable benefit
of the Agent and the Lenders, a continuing security interest in, lien on,
assignment of, and right of set-off against all of the following property of
such Borrower, whether now owned or existing or hereafter acquired or arising
and regardless of where located:
(1) all Accounts, contract rights, letters of credit, Assigned
Contracts, chattel paper, instruments, notes, documents, and documents
of title;
(2) General Intangibles;
(3) Inventory;
(4) Equipment;
(5) all moneys, investment property, Securities, and other
property of any kind of such Borrower in the possession or under the
control of the Agent or any Lender, any assignee of or participant in
the Obligations, or a bailee of any such party or such party's
affiliates;
(6) all of such Borrower's deposit accounts, credits, and
balances with and other claims against the Agent or any Lender or any
of its affiliates or any other financial institution with which such
Borrower maintains deposits;
(7) all books, records and other property relating to or
referring to any of the foregoing, including, without limitation, all
books, records, ledger cards, data processing records, computer
software (subject to any restrictions contained in any licensing
agreement with respect thereto) and other property and General
Intangibles at any time evidencing or relating to any of the
foregoing; and
(8) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to all
or any of the foregoing.
All of the foregoing, together with any other property of any Borrower,
including the Real Estate of the Borrowers, and the Real Estate of DP, in which
the Agent shall at any time be granted a Lien, is hereinafter collectively
referred to as the "Collateral."
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(b) The Borrowers and DP have executed and delivered, or
shall, on the Closing Date execute and deliver, to the Agent such Mortgages and
such other agreements which purport to grant to the Agent, for the ratable
benefit of the Agent and the Lenders, continuing and perfected mortgage liens
on the Real Estate of the Borrowers and DP. Prior to the Triggering Date, such
Mortgages and other agreements shall be held by the Agent, shall not be
recorded and shall not be effective to grant a Lien on any Real Estate
described therein or otherwise be of any force or effect. From and after the
Triggering Date, such Mortgages and other agreements shall be effective and may
be recorded by the Agent. In addition, promptly after the Triggering Date, the
Borrowers and DP shall provide to the Agent title insurance with respect to the
Real Estate covered by such Mortgages in form, substance and amount
satisfactory to the Agent.
(c) All of the Obligations shall be secured by all of the
Collateral.
5.2 Perfection and Protection of Security Interest. Each
Borrower shall, at its expense, subject to the terms of Section 5.1, perform
all steps requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including, without limitation: (a) executing and
recording of the Mortgages, the Patent Agreements, and the Trademark Agreements
and executing and filing financing or continuation statements, and amendments
thereof, in form and substance satisfactory to the Agent; (b) delivering to the
Agent the original certificates of title for motor vehicles with the Agent's
security interest properly endorsed thereon; (c) delivering to the Agent the
originals of all instruments, documents, and chattel paper, and all other
Collateral of which the Agent determines it should have physical possession in
order to perfect and protect the Agent's security interest therein, duly
endorsed or assigned to the Agent without restriction; (d) delivering to the
Agent warehouse receipts covering any portion of the Collateral located in
warehouses and for which warehouse receipts are issued; (e) following the
occurrence of any Event of Default, transferring Inventory to warehouses
designated by the Agent; (f) placing notations on such Borrower's books of
account to disclose the Agent's security interest; (g) delivering to the Agent
all letters of credit on which such Borrower is named beneficiary; and (h)
taking such other steps as are deemed necessary or desirable by the Agent to
maintain and protect the Agent's Liens. To the extent permitted by applicable
law, the Agent may file, without the applicable Borrower's signature, one or
more financing statements disclosing the Agent's Liens. Each Borrower agrees
that a carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any of a Borrower's agents or processors, then
such Borrower shall notify the Agent thereof and shall notify such Person of
the Agent's security interest in such Collateral and, upon the Agent's request,
instruct such Person to hold all such Collateral for the Agent's account
subject to the Agent's instructions. If at any time any Collateral (other than
(a) Collateral in transit at such time, or (b) additional Collateral not in
excess of $100,000 in aggregate value at such time, provided, that any such
Collateral consisting of Inventory shall not be deemed Eligible Inventory) is
located on any premises that are not owned by a Borrower, then the Borrowers
shall obtain written waivers, in form and substance satisfactory to the Agent,
of all present and future Liens to which the owner or lessor or any mortgagee
of such premises may be entitled to assert against the Collateral.
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From time to time, each Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral,
but any Borrower's failure to do so shall not affect or limit the Agent's
security interest or the Agent's other rights in and to the Collateral. So long
as this Agreement is in effect and until all Obligations have been fully
satisfied, the Agent's Liens shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of calculating the
Maximum Revolver Amount or any Individual Maximum Revolver Amount, or as the
basis for any advance, loan, extension of credit, or other financial
accommodation).
5.3 Location of Collateral. Each Borrower represents and
warrants to the Agent and the Lenders that: (a) Schedule 5.3 is a correct and
complete list of each such Borrower's chief executive office, the location of
its books and records, the locations of the Collateral, and the locations of
all of its other places of business; and (b) Schedule 5.3 correctly identifies
any of such facilities and locations that are not owned by such Borrower and
sets forth the names of the owners and lessors or sublessors of, and, to the
best of such Borrower's knowledge, the holders of any mortgages on, such
facilities and locations. Each Borrower covenants and agrees that it will not
(1) maintain any Collateral at any location other than those listed on Schedule
5.3 with respect to such Borrower, (2) otherwise change or add to any of such
locations, or (3) change the location of its chief executive office from the
location identified in Schedule 5.3, unless it gives the Agent at least thirty
(30) days' prior written notice thereof and executes any and all financing
statements and other documents that the Agent requests in connection therewith.
Without limiting the foregoing, each Borrower represents that all of such
Borrower's Inventory (other than Inventory in transit) is, and covenants that
all of such Borrower's Inventory will be, located either (a) on premises owned
by such Borrower, (b) on premises leased by such Borrower, provided that the
Agent has received an executed landlord waiver from the landlord of such
premises in form and substance satisfactory to the Agent, or (c) in a public
warehouse or on the premises of a processor, provided that the Agent has
received an executed bailee letter from the applicable public warehouseman or
processor in form and substance satisfactory to the Agent.
5.4 Title to, Liens on, and Sale and Use of Collateral.
Each Borrower represents and warrants to the Agent and the Lenders and agrees
with the Agent and the Lenders that: (a) all of such Borrower's Collateral and
Real Estate is and will continue to be owned by such Borrower free and clear of
all Liens whatsoever, except for Permitted Liens, and except for a mortgage
Lien on RMC's Big Yank warehouse located in West Point, Mississippi securing
the Olney Trust Bank Debt; (b) the Agent's Liens in the Collateral will not be
subject to any prior Lien except for those Permitted Liens, if any,
specifically identified on Schedule 7.2, and except for a mortgage Lien on
RMC's Big Yank warehouse located in West Point, Mississippi securing the Olney
Trust Bank Debt; (c) such Borrower will use, store, and maintain the Collateral
with all reasonable care and will use the Collateral for lawful purposes only;
and (d) such Borrower will not, without the Agent's prior written approval,
sell, or dispose of or permit the sale or disposition of any Collateral, except
for (1) sales of Inventory in the ordinary course of business, and (2)
dispositions of Equipment permitted by Section 5.11. The inclusion of proceeds
in the Collateral shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
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5.5 Appraisals. Whenever a Default or Event of Default
exists, and at such other times not more frequently than once a year as the
Agent requests, the Borrowers shall, at their expense and upon the Agent's
request, provide the Agent with additional appraisals or updates thereof of any
or all of the Collateral from an appraiser, and prepared on a basis,
satisfactory to the Agent.
5.6 Access and Examination; Confidentiality. (a) The
Agent, accompanied by any Lender which so elects, may at all reasonable times
(and at any time when a Default or Event of Default exists) have access to,
examine, audit, make extracts from or copies of and inspect any or all of each
Borrower's records, files, and books of account and the Collateral, and discuss
each Borrower's affairs with such Borrower's officers and management. Each
Borrower will deliver to the Agent any instrument necessary for the Agent to
obtain records from any service bureau maintaining records for such Borrower.
The Agent may, and at the direction of the Majority Lenders shall, at any time
when a Default or Event of Default exists, and at the Borrowers' expense, make
copies of all of each Borrower's books and records, or require the Borrowers to
deliver such copies to the Agent. The Agent may, without expense to the Agent,
use such of the Borrowers' respective personnel, supplies, and premises as may
be reasonably necessary for maintaining or enforcing the Agent's Liens.
(b) Each Borrower agrees that the Agent and each Lender may
use such Borrower's name in advertising and promotional material and in
conjunction therewith disclose the general terms of this Agreement, subject to
such Borrower's prior consent for uses other than in a traditional tombstone,
which consent shall not be unreasonably withheld or delayed. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by any Borrower and provided to the Agent or such Lender by or on
behalf of such Borrower, under this Agreement or any other Loan Document, and
neither the Agent, nor such Lender nor any of their respective affiliates shall
use any such information other than in connection with or in enforcement of
this Agreement and the other Loan Documents, except to the extent that such
information (1) was or becomes generally available to the public other than as
a result of disclosure by the Agent or such Lender, or (2) was or becomes
available on a nonconfidential basis from a source other than such Borrower,
provided that such source is not bound by a confidentiality agreement with such
Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (A) at the request or pursuant to
any requirement of any Public Authority to which the Agent or such Lender is
subject or in connection with an examination of the Agent or such Lender by any
such Public Authority; (B) pursuant to subpoena or other court process; (C)
when required to do so in accordance with the provisions of any applicable
requirement of law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent, any Lender or their respective
affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to the Agent's or such Lender's independent auditors, accountants, attorneys
and other professional advisors; (G) to any affiliate of the Agent or such
Lender, or to any Participating Lender or assignee under any Assignment and
Acceptance, actual or potential, provided that such affiliate, Participating
Lender or assignee agrees to keep such information confidential to the same
extent required of the Agent and the Lenders hereunder; and (H) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which such Borrower is party or is deemed party with the
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Agent or such Lender; provided, further, that in the case of disclosures
pursuant to the foregoing clauses (A) through (D), the Agent or such Lender
shall notify the applicable Borrower of the disclosure as promptly as is
reasonably practicable and cooperate with such Borrower in protecting the
confidential nature of the information which must be so disclosed.
5.7 Collateral Reporting. The Borrowers will provide the
Agent, on a daily basis, with a schedule of Accounts created since the last
such schedule, together with, if requested, copies of invoices therefor, in
form and substance satisfactory to the Agent. In addition, the Borrowers will
provide the Agent, on a weekly basis, with a current forecast of Availability,
and Individual Availability for each Borrower, for the thirteen (13) weeks
commencing on the date of such forecast. In addition, the Borrowers will
provide the Agent with the following documents at the following times in form
satisfactory to the Agent: (a) upon request, copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips; (b)
upon request, copies of shipping and delivery documents; (c) Inventory reports
by location and category on a twice-monthly basis; (d) perpetual Inventory
reports on a twice-monthly basis; (e) monthly agings of accounts receivable and
accounts payable; (f) upon request, copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by any Borrower; (g)
such other reports as to the Collateral as the Agent or any Lender shall
request from time to time; and (h) with the delivery of each of the foregoing,
a certificate of each Borrower executed by an officer thereof certifying as to
the accuracy and completeness of the foregoing. If any of any Borrower's
records or reports of the Collateral are prepared by an accounting service or
other agent, each Borrower hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Agent and the Lenders. Any
amounts contained in reports provided by or with respect to RML pursuant to
this Section 5.7 may be expressed in Canadian dollars (provided they are so
identified in such reports); provided, that all amounts contained in any
Borrowing Base Certificate shall be expressed in Dollars.
5.8 Accounts. (a) Each Borrower hereby represents and
warrants to the Agent and the Lenders that: (1) each existing Account
represents, and each future Account will represent, a bona fide sale or lease
and delivery of goods by such Borrower or rendition of services by such
Borrower in the ordinary course of such Borrower's business; (2) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim known to such Borrower and not disclosed to the Agent
and the Lenders pursuant to this Agreement; (3) no payment will be received
with respect to any Account, and no credit, discount, or extension, or
agreement therefor will be granted on any Account, except as reported to the
Agent and the Lenders in accordance with this Agreement; (4) each copy of an
invoice delivered to the Agent by a Borrower will be a genuine copy of the
original invoice sent to the Account Debtor named therein; and (5) all goods
described in each invoice will have been delivered to the Account Debtor and
all services of the applicable Borrower described in each invoice will have
been performed.
(b) No Borrower shall re-date any invoice or sale or make
sales on extended dating beyond that customary in such Borrower's business or
extend or modify any Account. If any Borrower becomes aware of any matter which
may materially affect the collectability of any Account, including information
regarding the Account Debtor's creditworthiness, such Borrower will promptly so
advise the Agent.
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(c) No Borrower shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without the Agent's written consent. If the Agent
consents to the acceptance of any such instrument, it shall be considered as
evidence of the Account and not payment thereof and the applicable Borrower
will promptly deliver such instrument to the Agent appropriately endorsed,
regardless of the form of presentment, demand, protest or notice of dishonor
with respect thereto.
(d) Each Borrower shall notify the Agent promptly of all
disputes and claims with Account Debtors and settle or adjust them at no
expense to the Agent or any Lender, but no discount, credit or allowance shall
be granted to any Account Debtor without the Agent's consent, except for
discounts, credits and allowances made or given with respect to Accounts in the
ordinary course of the applicable Borrower's business when no Event of Default
exists hereunder. Each Borrower shall send the Agent a copy of each credit
memorandum in excess of (1) $100,000 in the case of RMC, and $50,000 in the
case of each other Borrower, as soon as issued. The Agent may, and at the
direction of the Majority Lenders shall, at all times when an Event of Default
exists hereunder, settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will credit
the applicable Borrower's loan account with only the net amounts received by
the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to any Borrower
when no Event of Default exists, then such Borrower shall promptly determine
the reason for such return and shall issue a credit memorandum to the Account
Debtor in the appropriate amount. Each Borrower shall immediately report to the
Agent any return involving an amount in excess of (1) $100,000 in the case of
RMC, and (2) $50,000 in the case of each other Borrower. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to any
Borrower when an Event of Default exists, such Borrower shall: (1) hold the
returned Inventory in trust for the Agent; (2) segregate all returned Inventory
from all of its other property; (3) dispose of the returned Inventory solely
according to the Agent's written instructions; and (4) not issue any credits or
allowances with respect thereto without the Agent's prior written consent. All
returned Inventory shall be subject to the Agent's Liens thereon. Whenever any
Inventory is returned, the related Account shall be deemed ineligible to the
extent of the return and the Maximum Revolver Amount and the applicable
Individual Maximum Revolver Amount shall be adjusted accordingly.
5.9 Collection of Accounts; Payments. (a) Except with
respect to sales generated pursuant to the Borrowers' telemarketing program and
repaid by consumer credit cards ("Telemarketing Sales"), the proceeds of which
shall be collected, processed and remitted to the Agent on a basis satisfactory
to the Agent, each Borrower shall establish a lock-box service for collections
of its Accounts at a bank or banks mutually acceptable to the Agent and such
Borrower and pursuant to documentation satisfactory to the Agent. Each Borrower
shall instruct all of its Account Debtors to make all payments directly to the
address or addresses established for such service, other than those relating to
Telemarketing Sales. If, notwithstanding such instructions, any Borrower
receives any proceeds of Accounts, it shall receive such payments as the
Agent's and the Lenders' trustee, and shall immediately deliver such payments
to the Agent in their original form (other than in the case of payments
received in the form of foreign currency, which shall be
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exchanged by the applicable Borrower and immediately remitted to the Agent in
Dollars) duly endorsed in blank or deposit them into a Payment Account, as the
Agent may direct. Notwithstanding the foregoing, so long as no Default or Event
of Default shall have occurred and be continuing, RML shall be entitled to
retain all proceeds of its Accounts received in its lock-box or received
directly by it, to fund its immediate working capital needs, and shall remit to
the Agent all proceeds of its Accounts in excess of such immediate working
capital needs no less frequently than once every two weeks. All collections
received in any such lock-box or Payment Account or directly by a Borrower, the
Agent or any Lender, and all funds in any Payment Account or other account to
which such collections are deposited, shall be the sole property of the Agent
and the Lenders and subject to the Agent's and the Lenders' sole control. The
Agent or the Agent's designee may (1) at any time upon the occurrence and
during the continuance of an Event of Default, notify obligors that the
Accounts have been assigned to the Agent and of the Agent's security interest
therein, and (2) collect Accounts directly and charge the collection costs and
expenses to the applicable Borrower's loan account as a Revolving Loan as
described in Section 4.4. At the Agent's request, each Borrower shall execute
and deliver to the Agent such documents as the Agent shall require to grant the
Agent access to any post office box in which collections of Accounts are
received. No Borrower shall open, establish or maintain any depository account
without first having delivered to the Agent a duly executed and delivered
restricted account agreement satisfactory to the Agent.
(b) If sales of Inventory are made for cash, the applicable
Borrower shall within two (2) Business Days, deliver to the Agent or deposit
into a Payment Account the identical checks, cash, or other forms of payment
which such Borrower receives, other than minor cash proceeds from sales of
Inventory which are deposited in RMC's petty cash account in accordance with
past practices.
(c) All payments received by the Agent on account of Accounts
or as proceeds of other Collateral will be the Agent's sole property and will
be credited to the applicable Borrower's loan account (conditional upon final
collection) after allowing one (1) Business Day for collection; provided, that
for purposes of (1) determining Availability or Individual Availability, (2)
calculating the Unused Line Fee pursuant to Section 3.6, and (3) calculating
the amount of interest to be distributed by the Agent to the Lenders (but not
the amount of interest payable by the Borrower), all such payments shall be
credited to the applicable Borrower's loan account immediately upon receipt.
5.10 Inventory. Each Borrower represents and warrants to
the Agent and the Lenders and agrees with the Agent and the Lenders that all of
the Inventory, other than supplies and scrap, is and will be, following the
completion of necessary finishing and processing functions with respect to raw
materials and work in process, held for sale or lease, or to be furnished in
connection with the rendition of services, in the ordinary course of such
Borrower's business, and is and will be fit for such purposes. Each Borrower
will keep such Inventory in good and marketable condition, at its own expense.
No Borrower will, without prior written notice to the Agent, acquire or accept
any Inventory on consignment or approval; provided, that the Borrowers may
acquire or accept Inventory on consignment having an aggregate value not in
excess of $4,000,000 at any time with respect to all of the Borrowers; and
provided, further, that all Inventory accepted by a Borrower on consignment
shall be clearly identified as such and segregated from Inventory which is not
on consignment. Each Borrower agrees that all Inventory will be produced in
accordance with the
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Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. Each Borrower will maintain a perpetual
inventory reporting system at all times, and will conduct cycle counts in
accordance with the requirements of its independent certified public
accountants. Each Borrower will conduct a physical count of its Inventory at
least once during each twelve-month period, and at such other times as the
Agent shall request following the Triggering Date or during the continuance of
any Event of Default, and shall promptly supply the Lenders with a copy of such
count accompanied by a report of the value of such inventory (determined on a
first-in-first-out basis and valued at the lower of cost or market value). No
Borrower will, without the Agent's written consent, sell any Inventory on a
bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis, except for Telemarketing Sales made by RMC
on a repurchase or return basis, provided, that the sum of the outstanding face
amounts of the Accounts generated pursuant to such Telemarketing Sales shall
not exceed $1,000,000 at any time.
5.11 Equipment. Each Borrower represents and warrants to
the Agent and the Lenders and agrees with the Agent and the Lenders that all of
the Equipment is and will be used or held for use in such Borrower's business,
and is and will be fit for such purposes. Each Borrower shall keep and maintain
its Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof. Each Borrower
shall promptly inform the Agent of any material additions to or deletions from
its Equipment. No Borrower shall permit any Equipment to become a fixture to
real property or an accession to other personal property, unless the Agent has
a valid, perfected, and first priority Lien in such real or personal property.
No Borrower will, without the Agent's prior written consent, alter or remove
any identifying symbol or number on its Equipment. No Borrower shall, without
the Agent's prior written consent, sell, lease as a lessor, or otherwise
dispose of any of the Equipment; provided, however, that the Borrowers may
dispose of obsolete or unusable Equipment having an orderly liquidation value
no greater $150,000 in the aggregate in any Fiscal Year, without the Agent's
consent, subject to the conditions set forth below. In the event any of the
other Equipment is sold, transferred or otherwise disposed of, (1) if such
sale, transfer or disposition is effected without replacement of such
Equipment, or such Equipment is replaced by Equipment leased by the applicable
Borrower or by Equipment purchased by such Borrower subject to a Lien, then the
applicable Borrower shall deliver all of the cash proceeds of any such sale,
transfer or disposition to the Agent, which proceeds shall be applied to the
repayment of the Obligations and without premium or penalty or (2) if such
sale, transfer or disposition is made in connection with the purchase by the
applicable Borrower of replacement Equipment (other than Equipment subject to a
Lien), then such Borrower shall use the proceeds of such sale, transfer or
disposition to finance the purchase by such Borrower of such replacement
Equipment and shall deliver to the Agent written evidence of the use of the
proceeds for such purchase. All replacement Equipment purchased by a Borrower
shall be free and clear of all Liens, except for Permitted Liens (other than
such Liens upon Equipment granted in connection with the acquisition of such
Equipment by the applicable Borrower).
5.12 Assigned Contracts. Each Borrower shall fully perform
all of its obligations under each of its Assigned Contracts, and shall enforce
all of its rights and remedies thereunder, in each case, as it deems
appropriate in its business judgment; provided, however, that no Borrower shall
take any action or fail to take any action with respect to the Assigned
Contracts which would cause the termination of a material Assigned Contract or
result in a waiver or other loss of any
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material right or remedy of such Borrower thereunder. Without limiting the
generality of the foregoing, each Borrower shall take all action necessary or
appropriate to permit, and shall not take any action which would have any
adverse effect upon, the full enforcement of all indemnification rights under
its Assigned Contracts. No Borrower shall, without the prior written consent of
the Majority Lenders, modify, amend, exercise rights of set-off with respect
to, supplement, compromise, satisfy, release, or discharge any of the Assigned
Contracts, any collateral securing the same, any Person liable directly or
indirectly with respect thereto, or any agreement relating to any of the
Assigned Contracts or the collateral therefor. Each Borrower shall notify the
Agent in writing, promptly after such Borrower becomes aware thereof, of any
event or fact which could give rise to any claim by it in excess of $150,000
for indemnification under any of its Assigned Contracts, and shall diligently
pursue such right and report to the Agent on all further developments with
respect thereto. Each Borrower shall remit directly to the Agent for
application to the Obligations in such order as the Majority Lenders shall
determine and without premium or penalty, all amounts received by such Borrower
as indemnification or otherwise pursuant to the Assigned Contracts. If any
Borrower shall fail after the Agent's demand to pursue diligently any right
under the Assigned Contracts, or if an Event of Default exists, then the Agent
may, and at the direction of the Majority Lenders shall, directly enforce such
right in its own or such Borrower's name and may enter into such settlements or
other agreements with respect thereto as the Agent or the Majority Lenders, as
applicable, shall determine and without premium or penalty. In any suit,
proceeding or action brought by the Agent under any Assigned Contract for any
sum owing thereunder or to enforce any provision thereof, the Borrowers shall
indemnify and hold the Agent harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaims, recoupment,
or reduction of liability whatsoever of the obligor thereunder arising out of a
breach by the applicable Borrower of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing from such
Borrower to or in favor of such obligor or its successors. All such obligations
of the applicable Borrower shall be and remain enforceable only against such
Borrower and shall not be enforceable against the Agent. Notwithstanding any
provision hereof to the contrary, each Borrower shall at all times remain
liable to observe and perform all of its duties and obligations under its
Assigned Contracts, and the Agent's or any Lender's exercise of any of their
respective rights with respect to the Collateral shall not release such
Borrower from any of such duties and obligations. Neither the Agent nor any
Lender shall be obligated to perform or fulfill any of any Borrower's duties or
obligations under the Assigned Contracts or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to collect
or enforce any performance, any payment of any amounts, or any delivery of any
property.
5.13 Documents, Instruments, and Chattel Paper. Each
Borrower represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that (a) all documents, instruments, and chattel
paper describing, evidencing, or constituting Collateral, and all signatures
and endorsements thereon, are and will be complete, valid, and genuine, and (b)
all goods evidenced by such documents, instruments, and chattel paper are and
will be owned by such Borrower free and clear of all Liens other than Permitted
Liens; provided, however, that such representation and warranty contained in
the foregoing clause (a) with respect to any document or instrument received in
connection with an Account is made to the best of such Borrower's knowledge.
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5.14 Right to Cure. The Agent may, in its discretion and
at any time, and shall, at the direction of the Majority Lenders, for the
Borrowers' account and at the Borrowers' expense, pay any amount or do any act
required of any Borrower hereunder or requested by the Agent to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Borrower fails to pay or do, including, without
limitation, payment of any judgment against any Borrower, any insurance
premium, any warehouse charge, any finishing or processing charge, any
landlord's claim, and any other Lien upon or with respect to the Collateral.
All payments that the Agent makes under this Section 5.14 and all out-of-pocket
costs and expenses that the Agent pays or incurs in connection with any action
taken by it hereunder shall be charged to the applicable Borrower's loan
account as a Revolving Loan as described in Section 4.4. Any payment made or
other action taken by the Agent under this Section 5.14 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
5.15 Power of Attorney. Each Borrower hereby appoints the
Agent and the Agent's designees as such Borrower's attorney, with power: (a) to
endorse such Borrower's name on any checks, notes, acceptances, money orders,
or other forms of payment or security that come into the Agent's or any
Lender's possession; (b) to sign such Borrower's name on any invoice, bill of
lading, warehouse receipt or other document of title relating to any
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements and other public records, on verifications
of Accounts and on notices to Account Debtors; (c) to notify the post office
authorities, when an Event of Default exists, to change the address for
delivery of such Borrower's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Borrower; (d) to send
requests for verification of accounts to customers or account debtors; (e) to
clear Inventory, the purchase of which was financed with Letters of Credit or
Acceptances, through customs in such Borrower's name, the Agent's name or the
name of the Agent's designee, and to sign and deliver to customs officials
powers of attorney in such Borrower's name for such purpose; and (f) to do all
things necessary to carry out this Agreement. Each Borrower ratifies and
approves all acts of the Agent and the Agent's designee as such attorney. None
of the Lenders or the Agent nor the attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law. This power,
being coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
5.16 The Agent's and Lenders' Rights, Duties and
Liabilities. Each Borrower assumes all responsibility and liability arising
from or relating to the use, sale or other disposition of the Collateral.
Neither the Agent, nor any Lender, nor any of their respective officers,
directors, employees or agents shall be liable or responsible in any way for
the safekeeping of any of the Collateral, or for any act or failure to act with
respect to the Collateral, or for any loss or damage thereto, or for any
diminution in the value thereof, or for any act of default of any warehouseman,
carrier, forwarding agency or other Person whomsoever, all of which shall be at
the Borrowers' sole risk; provided, however, that the Agent shall be
responsible for the safekeeping of Collateral consisting of certificates
representing shares of capital stock pledged and delivered to the Agent by any
Borrower. The Obligations shall not be affected by any failure of the Agent or
any Lender to take any steps to perfect the Agent's Liens or to collect or
realize upon the Collateral, nor shall loss of or damage to the Collateral
release any Borrower from any of the Obligations. Following the occurrence of
an Event of Default, the Agent may, and at the direction of the Majority
Lenders shall, without notice to or consent from any Borrower, sue upon or
otherwise collect, extend the time for
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payment of, modify or amend the terms of, compromise or settle for cash,
credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of any Borrower for the Obligations or under
this Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and any Borrower.
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records. Each Borrower shall maintain, at
all times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 6.2(a). Each Borrower shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. Each Borrower shall maintain at all times books and records pertaining to
the Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all payments
received and all credits and extensions granted with respect to the Accounts;
(b) the return, rejections, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory; and (c) all other dealings affecting the
Collateral.
6.2 Financial Information. The Borrowers shall promptly
furnish or cause to be furnished, to the Agent and the Lenders, all such
financial information as the Agent or any Lender shall reasonably request, and
notify its auditors and accountants that the Agent, on behalf of the Lenders,
is authorized to obtain such information directly from them. Without limiting
the foregoing, the Borrowers will furnish or cause to be furnished to the Agent
and the Lenders, in such detail as the Agent or the Lenders shall request, the
following:
(a) Consolidated audited balance sheets, statements of income
and expense, cash flows and stockholders equity, as soon as available,
but in any event not later than 120 days after the close of each
Fiscal Year, for such Fiscal Year, for the Parent and its consolidated
Subsidiaries, and for each Borrower and its consolidated Subsidiaries
(together, in each case, with consolidating schedules supporting the
computations contained therein in a form reasonably satisfactory to
the Agent); in any such case together with the accompanying notes
thereto, setting forth in such case in comparative form figures for
the previous Fiscal Year, all in reasonable detail, fairly presenting
the financial position and the results of operations of the Parent and
its Subsidiaries or Borrowers and their consolidated Subsidiaries, as
applicable, as at the date thereof and for the Fiscal Year then ended,
and prepared in accordance with GAAP. All such statements described in
this Section 6.2(a) shall be examined in accordance with generally
accepted auditing standards by and accompanied by a report thereon
unqualified as to scope of independent certified public accountants
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selected by the Parent and the Borrowers and reasonably satisfactory
to the Agent. The Parent and the Borrowers, simultaneously with
retaining such independent public accountants to conduct such annual
audit, shall send a letter to such accountants, with a copy to the
Agent and the Lenders, notifying such accountants that one of the
primary purposes for retaining such accountants' services and having
audited financial statements prepared by them is for use by the Agent
and the Lenders. Each Borrower hereby authorizes the Agent to
communicate directly with its certified public accountants and, by
this provision, authorizes those accountants to disclose to the Agent
any and all financial statements and other supporting financial
documents and schedules relating to such Borrower and to discuss
directly with the Agent the finances and affairs of such Borrower.
(b) As soon as available, but in any event not later than the
end of the next succeeding calendar month, consolidated unaudited
balance sheets and statements of income and expense, as at the end of
each fiscal month, for the Parent and its consolidated Subsidiaries
(together, in each case, with consolidating schedules supporting the
computations contained therein in a form reasonably satisfactory to
the Agent), and individual statements of cash flow for the Borrowers
for such fiscal month (with statements of cash flow for the Borrowers
to be delivered on a combined basis for each fiscal quarter), and, in
each case, for the period from the beginning of the Fiscal Year to the
end of such fiscal month, setting forth in each case in comparative
form figures for the corresponding periods in the previous Fiscal Year
and figures from the current management budget, together with an
analysis of sales of each Borrower by product line and customer for
such fiscal month and for the period from the beginning of the Fiscal
Year to the end of such fiscal month, all in reasonable detail,
reflecting all "push-down" accounting entries, consistent with the
Borrowers' past practices, fairly presenting the financial position
and results of operation of the Parent and its consolidated
Subsidiaries or the Borrowers, as applicable, as at the date thereof
and for such periods, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required pursuant
to Section 6.2(a). Such statements provided under this Section 6.2(b)
shall be certified by the chief financial officers or treasurers of
the Parent and the Borrowers as fairly presenting the financial
position and results of operations of the Borrowers as of the date
thereof and for such periods, subject to normal year-end adjustments.
In addition to the Financial Statements required to be delivered
pursuant to the foregoing provisions of this Section 6.2(b), in the
event that GAAP in effect for the period with respect to which such
Financial Statements shall have been prepared shall be different from
GAAP in effect on the Closing Date, the Borrowers shall furnish to the
Agent additional such Financial Statements prepared on the basis of
GAAP in effect on the Closing Date.
(c) With each of the audited Financial Statements delivered
pursuant to Section 6.2(a), a certificate of the independent certified
public accountants that examined such statements to the effect that
they have reviewed and are familiar with the Loan Documents and that,
in examining such Financial Statements, they did not become aware of
any fact or condition which then constituted a Default or Event of
Default as a result of a breach of any of the covenants set forth in
Sections 8.9, 8.10(a), 8.13, 8.15, 8.16, 8.20 and 8.22 through 8.27
and in Section 15 of the Parent Guaranty, except for those, if any,
described in
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reasonable detail in such certificate; provided, that such accountants
will not opine with respect to the covenants contained in Section
8.15(a) and (b), and the second sentence of Section 8.16, to the
extent such covenants refer to the occurrence of certain events, or
the taking of certain actions, while a Default or Event of Default is
outstanding.
(d) With each of the audited and unaudited Financial
Statements delivered pursuant to Sections 6.2(a) and (b), a
certificate of the treasurer of RMC, chief financial officer of each
other Borrower and chief financial officer of the Parent (each such
certificate, a "Compliance Certificate"), (1) setting forth in
reasonable detail the calculations required to establish that the
Borrowers were in compliance with the covenants set forth in Sections
8.23 through 8.27 during the period covered in such Financial
Statements, the Parent was in compliance with the covenants set forth
in Section 15 of the Parent Guaranty; (2) stating that, except as
explained in reasonable detail in such certificate, (A) all of the
representations, warranties and covenants of the Borrowers contained
in this Agreement and the other Loan Documents, or Parent contained in
the Parent Guaranty, as applicable, are correct as at the date of such
certificate and (B) no Event of Default then exists or existed during
the period covered by such Financial Statements; and (3) describing
and analyzing in reasonable detail all material trends, changes and
developments in each and all Financial Statements, and such other
matters as are described on Exhibit B-3 attached hereto, such
description and analysis to be in form and substance satisfactory to
the Agent and the Lenders. If such certificate discloses that a
representation or warranty is not correct, or that a covenant has not
been complied with, or that an Event of Default existed or exists,
such certificate shall set forth what action the applicable Borrower
or the Parent, as applicable, has taken or proposes to take with
respect thereto.
(e) No sooner than 90 days and no fewer than 30 days prior to
the beginning of each Fiscal Year, consolidated and consolidating
projected balance sheets, statements of income and expense, and
statements of cash flow for the Parent and its Subsidiaries as at the
end of and for each fiscal month of such Fiscal Year; provided, that
in the event that at any time during such Fiscal Year the actual
amounts of (1) sales, (2) operating income, or (3) net income, in each
case for the Parent and its Subsidiaries and on a year-to-date basis,
shall be in excess of twenty-five percent (25.0%) below the applicable
projected amounts contained in such statements of income and expense,
the Borrowers shall furnish to the Agent and the Lenders revised
projected financial statements reflecting such performance.
(f) Promptly upon their becoming available, copies of each
proxy statement, financial statement, report filed with the Securities
and Exchange Commission, and report which any Borrower sends to its
stockholders or public debt holders.
(g) Upon the Agent's request, promptly after filing with the
PBGC and the IRS a copy of each annual report or other filing filed
with respect to each Plan of any Borrower or any Affiliate.
(h) Promptly upon their becoming available (and in the case of
reports on (1) Form 10-K, no later than 90 days following the end of
each Fiscal Year, and (2) Form 10-Q, no later than 45 days following
the end of each fiscal quarter or, in either such case if later, the
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end of any relevant extension period granted by the Securities and
Exchange Commission, a copy of the waiver with respect to which shall
have been furnished to the Agent), copies of all proxy statements,
annual reports, reports on Forms 10-K, 10-Q and 8-K, financial
statements and other reports which the Parent sends to its
stockholders or the Securities and Exchange Commission.
(i) A Borrowing Base Certificate on each Business Day.
(j) Such additional information as the Agent or any Lender may
from time to time reasonably request regarding the financial and
business affairs of the Borrowers.
Any amounts contained in Financial Statements or other reports provided
pursuant to this Section 6.2 by or with respect to RML shall be expressed in
Dollars.
6.3 Notices to the Lenders. The Borrowers shall notify
the Lenders, in writing, of the following matters at the following times:
(a) Promptly and in any event within two (2) Business Days
after becoming aware thereof, any Default or Event of Default.
(b) Within two (2) Business Days after becoming aware thereof,
the assertion by the holder of any preferred capital stock of any
Borrower or of any Debt in an outstanding principal amount equal to or
exceeding $50,000, that a default exists with respect thereto or that
any Borrower is not in compliance with the terms thereof, or the
threat or commencement by such holder of any enforcement action
because of such asserted default or noncompliance.
(c) Within two (2) Business Days after becoming aware thereof,
any material adverse change in any Borrower's property, business,
operations, financial condition or prospects.
(d) Within two (2) Business Days after becoming aware thereof,
any pending or threatened action, suit, proceeding, or counterclaim by
any Person, or any pending or threatened investigation by a Public
Authority, which may materially and adversely affect the Collateral,
the repayment of the Obligations, the Agent's or any Lender's rights
under the Loan Documents, or any Borrower's property, business,
operations, financial condition or prospects.
(e) Within two (2) Business Days after becoming aware thereof,
any pending or threatened strike, work stoppage, material unfair labor
practice claim, or other material labor dispute affecting any
Borrower.
(f) Within two (2) Business Days after becoming aware thereof,
any violation of any law, statute, regulation, or ordinance of any
Public Authority applicable to any Borrower or its properties, which
may materially and adversely affect the Collateral, the repayment of
the Obligations, the Agent's or any Lender's rights under the Loan
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Documents, or such Borrower's property, business, operations,
financial condition or prospects.
(g) Within two (2) Business Days after becoming aware thereof,
any violation by any Borrower of any Environmental Law or any notice
that any Borrower receives asserting that such Borrower is not in
compliance with any Environmental Law or that its compliance is being
investigated by a Public Authority.
(h) Within two (2) Business Days after receipt thereof, any
notice that any Borrower is or may be liable to any Person as a result
of the Release or threatened Release of any Contaminant or that such
Borrower is subject to investigation by any Public Authority
evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant.
(i) Within two (2) Business Days after becoming aware thereof,
the imposition of any Environmental Lien against any property of any
Borrower.
(j) Any change in any Borrower's name, jurisdiction of
incorporation, or form of organization, trade names or trade styles
under which such Borrower will sell Inventory or create Accounts, or
to which instruments in payment of Accounts may be made payable, at
least thirty (30) days prior thereto; provided, that in any such
event, such Borrower shall, in accordance with Section 5.2, execute
and deliver to the Agent and the Lenders such agreements, instruments
and documents as the Agent shall request in order to maintain the
perfection of the Agent's Liens.
(k) Within two (2) Business Days after any Borrower or any
ERISA Affiliate of any Borrower knows or has reason to know, that a
Termination Event or a prohibited transaction (as defined in Sections
406 of ERISA and 4975 of the Code) has occurred, and, when known, any
action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto.
(l) Within five (5) Business Days after the filing thereof
with the IRS, the DOL or the PBGC, as applicable, copies of the
following: (1) each annual report (form 5500 series), including
Schedule B thereto, filed with respect to each Benefit Plan and (2) a
copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by any Borrower or its ERISA
Affiliate from the IRS, the DOL or the PBGC with respect to such
request.
(m) Within five (5) Business Days after receipt thereof by any
Borrower or its ERISA Affiliate, copies of the following: (1) each
actuarial report for any Benefit Plan or Multiemployer Plan and annual
report for any Multiemployer Plan; (2) any notices of the PBGC's
intention to terminate a Benefit Plan or to have a trustee appointed
to administer such Benefit Plan; (3) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a
Plan under Section 401(a) of the Code; or (4) any notice from a
Multiemployer Plan regarding the imposition of withdrawal liability.
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(n) Within three (3) Business Days after the occurrence
thereof: (1) any increases in the benefits of any existing Benefit
Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or its ERISA Affiliate
was not previously contributing; or (2) any failure by any Borrower or
its ERISA Affiliate to make a required installment or any other
required payment under Section 412 of the Code on or before the due
date for such installment or payment.
(o) Within three (3) Business Days after any Borrower or its
ERISA Affiliate knows or has reason to know that any of the following
events has or will occur: (1) a Multiemployer Plan has been or will be
terminated; (2) the administrator or plan sponsor of a Multiemployer
Plan intends to terminate a Multiemployer Plan; or (3) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA
to terminate a Multiemployer Plan.
For purposes of subsections (k) through (o) above, each Borrower and any ERISA
Affiliate of each Borrower shall be deemed to know all facts known by the
Administrator of any Plan of which such Borrower or ERISA Affiliate is the plan
sponsor.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that the applicable
Borrower or ERISA Affiliate has taken or proposes to take with respect thereto.
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and the
Lenders, that:
7.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents. Each Borrower has the corporate power and
authority to execute, deliver and perform this Agreement and other Loan
Documents and Mortgages to which it is a party, to incur the Obligations, and
to grant to the Agent Liens upon and security interests in the Collateral. Each
Borrower has taken all necessary corporate action (including, without
limitation, obtaining approval of its stockholders) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents and
Mortgages to which it is a party. No consent, approval, or authorization of, or
declaration or filing with, any Public Authority, and no consent of any other
Person, is required in connection with any Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents and Mortgages to
which it is a party, except for those already duly obtained or made. Each of
this Agreement and the other Loan Documents and Mortgages to which it is a
party has been duly executed and delivered by each Borrower, and constitute the
legal, valid and binding obligation of such Borrower, enforceable against it in
accordance with its terms (except as such enforcement may be limited by general
principles of equity, and bankruptcy, reorganization, insolvency, moratorium
and similar laws affecting creditors' rights generally) and without defense,
setoff, or counterclaim of which such Borrower has knowledge. Each Borrower's
execution,
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delivery, and performance of this Agreement and the other Loan Documents and
Mortgages to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or constitute a default under, or result
in the creation or imposition of any Lien upon the property of such Borrower by
reason of the terms of (a) any contract, mortgage, Lien, lease, agreement,
indenture, or instrument to which such Borrower is a party or which is binding
upon it, (b) any judgment, law, statute, rule or governmental regulation
applicable to such Borrower, or (c) the Certificate or Articles of
Incorporation or By-laws of such Borrower.
7.2 Validity and Priority of Security Interest. The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Agent, for the ratable benefit of the Agent and
the Lenders. Such Liens (1) in Collateral in existence on the Closing Date
constitute, and (2) in Collateral arising after the Closing Date shall
constitute (assuming the filing of all appropriate continuation statements),
and in the Real Estate shall constitute (assuming the filing of the Mortgages),
perfected and continuing Liens, having priority over all other Liens on the
Collateral except those Permitted Liens specifically identified on Schedule
7.2, securing all the Obligations, and enforceable against each Borrower and
all third parties.
7.3 Organization and Qualification. Each Borrower (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the jurisdiction of its incorporation; (b) is qualified to do business as a
foreign corporation and is in good standing in the jurisdictions set forth on
Schedule 7.3, which are the only jurisdictions in which qualification is
necessary in order for it to own or lease its property and conduct its
business; and (c) has all requisite power and authority to conduct its business
and to own its property.
7.4 Corporate Name; Prior Transactions. No Borrower has, during
the past five (5) years, been known by or used any other corporate or
fictitious name, or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property outside of the ordinary course of business, except for the Mergers,
the transactions contemplated pursuant to the American Playworld Purchase
Agreement and the MZH Option Agreement and MZH Asset Purchase Agreement, the
Exchanges, the DP Asset Transfer and as set forth on Schedule 7.4.
7.5 Subsidiaries and Affiliates. Schedule 7.5 is a correct and
complete list of the name and relationship to each Borrower of each and all of
such Borrower's Affiliates. None of the Parent, any Borrower, International,
NWR, AWT, T.Q., RNA, AAF, DP nor Diversified Trucking has any Subsidiaries
other than as set forth on the corporate organizational chart included in
Schedule 7.5.
7.6 Financial Statements and Projections. (a) The Borrowers have
delivered to the Lenders the audited balance sheet and related statements of
income, retained earnings, statement of cash flows, and changes in stockholders
equity for the Fiscal Year ended December 31, 1995, accompanied by the report
thereon of Arthur Andersen & Co. The Borrowers have also delivered to the
Lenders the unaudited balance sheet and related statements of income and
expense and cash flows for the first seven (7) fiscal months of the 1996 Fiscal
Year and the first and second fiscal quarters of Fiscal Year 1996. Such
financial statements are attached hereto as Exhibit B-1. All such financial
statements have been prepared in accordance with GAAP and present accurately
and fairly
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the financial position of the Borrowers as at the dates thereof and its results
of operations for the periods then ended.
(b) The Latest Projections, attached hereto as Exhibit B-2,
represent each Borrower's best estimate of such Borrower's future financial
performance for the periods set forth therein. The Latest Projections have been
prepared on the basis of the assumptions set forth therein, which each Borrower
believes are fair and reasonable in light of current and reasonably foreseeable
business conditions.
(c) The pro forma consolidated balance sheet of the Borrowers
as of August 30, 1996, attached hereto as Exhibit B-4, presents fairly and
accurately the Borrowers' financial condition as at such date as if the
transactions contemplated by the Brunswick Asset Purchase Agreement had
occurred on such date and the Closing Date had been such date and the Loans
anticipated to be made on such date and Letters of Credit and Acceptances
anticipated to be issued or created on such date had been made, issued or
created, and such balance sheet has been prepared in accordance with GAAP. In
addition to the pro forma consolidated balance sheet described in this Section
7.6(c), the Borrowers shall deliver to the Agent and the Lenders an opinion of
its certified public accountants, acceptable in form and substance to the Agent
and the Lenders, with respect to the tax treatment of the transactions
consummated pursuant to the NWR Asset Purchase Agreement and Brunswick Asset
Purchase Agreement.
7.7 Capitalization. (a) RMC's authorized capital stock consists of
1000 shares of common stock, par value $.01 per share, of which 1000 shares are
validly issued and outstanding, fully paid and non-assessable, and are owned
beneficially and of record by the Parent.
(b) RML's authorized capital stock consists of 40,000 shares
of common stock, of which 12,100 shares are validly issued and outstanding,
fully paid and non-assessable, and are owned beneficially and of record by
International.
(c) International's authorized capital stock consists of (1)
10,000,000 shares of common stock, of which 1000 shares are validly issued and
outstanding, fully paid and non-assessable, and are owned beneficially and of
record by the Parent, and (2) 5,000,000 shares of preferred stock, of which no
shares are issued and outstanding.
(d) Willow's authorized capital stock consists of 100,000
shares of common stock, par value $1.00 per share, of which 46,000 shares are
validly issued and outstanding, fully paid and non-assessable, and are owned
beneficially and of record by the Parent.
(e) Hutch's authorized capital stock consists of 1000 shares
of common stock, par value $1.00 per share, of which 1000 shares are validly
issued and outstanding, fully paid and non-assessable, and are owned
beneficially and of record by the Parent.
7.8 Solvency. Each Borrower is Solvent prior to and after giving
effect to the making of the Loans to be made on the Closing Date, and shall be
Solvent at all times thereafter.
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7.9 Debt. After giving effect to the making of the Loans to be
made on the Closing Date, no Borrower has any Debt, except (a) the Obligations,
(b) Debt set forth on Schedule 7.9, and (c) trade payables and other
contractual obligations arising in the ordinary course of business since
December 31, 1995.
7.10 Distributions. On and after the Closing Date, no Distribution
has been declared, paid, or made upon or in respect of any capital stock or
other Securities of any Borrower except as expressly permitted hereby.
7.11 Title to Property. Each Borrower has good, indefeasible, and
merchantable title to all of its property other than property leased by it
(including, without limitation, the assets reflected on the December 31, 1995
Financial Statements delivered to the Agent and the Lenders, except as disposed
of in the ordinary course of business since the date thereof or as otherwise
expressly permitted hereby), free of all Liens except Permitted Liens.
7.12 Real Estate; Leases. Schedule 7.12 sets forth a correct and
complete list of all Real Estate owned by any Borrower or DP as of the Closing
Date, all leases and subleases of real or personal property by any Borrower as
lessee or sublessee, and all leases and subleases of real or personal property
by any Borrower as lessor, lessee, sublessor or sublessee. Except as set forth
on Schedule 7.12, each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect and, to the best of
each Borrower's knowledge, no default by any party to any such lease or
sublease exists.
7.13 Proprietary Rights. Schedule 7.13 sets forth a correct and
complete list of all of the Proprietary Rights which are filed with the United
States Patent and Trademark Office, and any other material Proprietary Rights.
None of the Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 7.13. To the best of each
Borrower's knowledge, none of the Proprietary Rights, other than Proprietary
Rights subject to a licensing agreement or similar arrangement set forth on
Schedule 7.13, infringes on or conflicts with any other Person's property, and
no other Person's property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights described on Schedule 7.13 constitute all of the
property of such type necessary to the current and anticipated future conduct
of each Borrower's business.
7.14 Trade Names. All trade names or styles under which any
Borrower will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on Schedule 7.4.
7.15 Litigation. Except as set forth on Schedule 7.15, and except
for suits, proceedings or counterclaims against a Borrower seeking relief of
$50,000 or less, there is no pending or (to the best of each Borrower's
knowledge) threatened, action, suit, proceeding, or counterclaim by any Person,
or investigation by any Public Authority, or any basis for any of the
foregoing, which could reasonably be expected to materially and adversely
affect the Collateral, the repayment of the Obligations, the Agent's or any
Lender's rights under the Loan Documents, or any Borrower's property, business,
operations, financial condition or prospects.
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7.16 Restrictive Agreements. No Borrower is a party to any contract
or agreement, or subject to any charter or other corporate restriction, which
affects its ability to execute, deliver, and perform the Loan Documents or
Mortgages or repay the Obligations, or which materially and adversely affects
or, insofar as such Borrower can reasonably foresee, could reasonably be
expected to materially and adversely affect, such Borrower's property,
business, operations, financial condition or prospects, or would in any respect
materially and adversely affect the Collateral, the repayment of the
Obligations, the Agent's or any Lender's rights under the Loan Documents or
Mortgages, or such Borrower's property, business, operations, financial
condition or prospects.
7.17 Labor Disputes. Except as set forth on Schedule 7.17, (a)
there is no collective bargaining agreement or other labor contract covering
employees of any Borrower, (b) no such collective bargaining agreement or other
labor contract is scheduled to expire during the term of this Agreement, and
(c) no union or other labor organization is known by any Borrower to be seeking
to organize, or to be recognized as, a collective bargaining unit of employees
of any Borrower or for any similar purpose, and (d) there is no pending or (to
the best of any Borrower's knowledge) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against
or affecting any Borrower or its employees.
7.18 Environmental Matters. Except as otherwise disclosed on
Schedule 7.18:
(a) Each Borrower and its Subsidiaries, and, to the best of
its knowledge, each of their respective predecessors in interest, has
complied in all material respects with all Environmental Laws and
health and safety laws applicable to its property and business, and no
Borrower or Subsidiary of such Borrower, nor any of their respective
present property or operations, nor any predecessor's past property or
operations, is subject to any order from or agreement with any Public
Authority or private Person respecting (1) compliance with any
Environmental Law or health or safety requirements of law, or (2) any
potential liabilities and costs or remedial action arising from the
Release or threatened Release of a Contaminant.
(b) Each Borrower, and each of its Subsidiaries, has obtained
all environmental, health and safety permits necessary for its
operation, and all such permits are in good standing, and such
Borrower and Subsidiaries are in compliance with all terms and
conditions of such permits.
(c) Except as necessary in the ordinary course of business,
and in all cases in compliance with Environmental Laws, no Borrower,
and no Subsidiaries of any Borrower, nor, to the best of each
Borrower's knowledge, any predecessor of any Borrower, has generated,
handled, used, stored or disposed of any hazardous or toxic waste or
substance, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law, on or off its property (whether or not owned by
it), nor has any Borrower filed any notice with any Public Authority
indicating such generation, handling, use, storage or disposal.
(d) No Borrower has any material contingent liability with
respect to noncompliance with any Environmental Laws or any Release or
threatened Release of a Contaminant or the generation, handling, use,
storage, or disposal of hazardous or toxic wastes or substances.
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(e) No Borrower, and no Subsidiary of any Borrower, nor to the
best of each Borrower's knowledge, any of any Borrower's predecessors
in interest, has received any summons, complaint, order or similar
notice that it is not in compliance with, or that any Public Authority
is investigating its compliance with, any Environmental Laws or health
and safety laws or that it is or may be liable to any other Person as
a result of a Release or threatened Release of a Contaminant.
(f) None of the operations of any Borrower or its Subsidiaries
is the subject of any investigation by any Public Authority evaluating
whether any remedial action is needed to respond to a Release or
threatened Release of a Contaminant.
(g) Except as necessary in the ordinary course of business,
and in all cases in compliance with Environmental Laws, there is not
now, nor has there ever been on or in the Premises:
(1) any generation, treatment, recycling, storage or disposal
of any hazardous waste, as that term is defined under 40 CFR
Part 261 or any equivalent Environmental Law,
(2) any underground storage tanks or surface impoundments,
(3) any asbestos containing material, or
(4) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.
(h) No Borrower, and no Subsidiary of any Borrower, has filed
any notice under any applicable Environmental Law reporting a Release
of a Contaminant into the environment.
(i) None of the products manufactured, distributed or sold by
any Borrower or any of its Subsidiaries contains asbestos containing
material.
(j) No Environmental Lien has attached to any property of any
Borrower or any of its Subsidiaries.
(k) No Environmental Property Transfer Acts are applicable to
the transactions contemplated by this Agreement, and each Borrower has
provided all notices and obtained all necessary environmental permit
transfers and consents, if any, required in order to consummate the
transactions contemplated by this Agreement, to perfect the Agent's
Liens and to operate such Borrower's business as presently or proposed
to be operated.
7.19 No Violation of Law. No Borrower is in violation of any law,
statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation would in any respect materially and adversely affect the
Collateral, the repayment of the Obligations, the Agent's or any Lender's
rights under the Loan Documents or Mortgages, or such Borrower's property,
business, operations, financial condition or prospects.
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7.20 No Default. No Borrower is in default with respect to any
note, indenture, loan agreement, mortgage, lease, deed, or other agreement to
which such Borrower is a party or by which it is bound, which default would
materially and adversely affect the Collateral, the repayment of the
Obligations, the Agent's or any Lender's rights under the Loan Documents or
Mortgages, or such Borrower's property, business, operations, financial
condition or prospects.
7.21 ERISA. (a) No Borrower, and no ERISA Affiliate, maintains or
contributes to any Plan other than those listed on Schedule 7.21.
(b) No Plan has been terminated or partially terminated or is
insolvent or in reorganization, nor have any proceedings been instituted to
terminate or reorganize any Plan, except as set forth on Schedule 7.21.
(c) No Borrower, and no ERISA Affiliate, has any withdrawal
liability, including contingent withdrawal liability, to any Benefit Plan
pursuant to Title IV of ERISA.
(d) No Borrower, and no ERISA Affiliate, has incurred any
liability to the PBGC which remains outstanding other than the payment of
premiums, and there are no premium payments which have become due which are
unpaid.
(e) No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code),
whether or not waived.
(f) No Borrower, and no ERISA Affiliate, has breached any of
the responsibilities, obligations or duties imposed on it by ERISA or
regulations promulgated thereunder with respect to any Plan. Each Plan is in
substantial compliance with ERISA, and no Borrower, and no ERISA Affiliate, has
received any notice asserting that a Plan is not in compliance with ERISA.
(g) Each Plan which is intended to be a qualified Plan has
been determined by the IRS to be qualified under Section 401(a) of the Code as
currently in effect and each trust related to such Plan has been determined to
be exempt from federal income tax under Section 501(a) of the Code.
(h) Except as provided on Schedule 7.21, no Borrower, and no
ERISA Affiliate, maintains or contributes to any employer welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Section 601
of ERISA.
(i) Schedule B to the most recent annual report filed with the
IRS with respect to each Benefit Plan and furnished to the Lenders is complete
and accurate. Since the date of each such Schedule B, there has been no adverse
change in funding status or financial condition of the Benefit Plan relating to
such Schedule B.
(j) No Borrower, and no ERISA Affiliate, has failed to make a
required installment under subsection (m) of Section 412 of the Code or any
other payment required under Section 412 of the Code on or before the due date
for such installment or other payment.
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(k) No Borrower, and no ERISA Affiliate, is required to
provide security to a Plan under Section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the plan year.
(l) No Borrower, and no ERISA Affiliate or fiduciary of any
Plan which is not a Multiemployer Plan (1) has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
or (2) has taken or failed to take any action which would constitute or result
in a Termination Event.
(m) No Borrower, and no ERISA Affiliate, has failed to make a
required contribution or payment to a Multiemployer Plan nor has any Borrower
or any ERISA Affiliate made a complete or partial withdrawal under Sections
4203 or 4205 of ERISA from a Multiemployer Plan.
(n) Each Borrower has given to the Agent and the Lenders
copies of all of the following: each Benefit Plan and related trust agreement
(including all amendments to such Plan and trust) in existence or committed to
as of the date hereof and the most recent summary plan description, actuarial
report, determination letter issued by the IRS and Form 5500 filed in respect
of each such Benefit Plan in existence; a listing of all of the Multiemployer
Plans with the aggregate amount of the most recent annual contributions
required to be made by such Borrower and all of its ERISA Affiliates to each
such Multiemployer Plan, any information which has been provided to such
Borrower or its ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan and the collective bargaining agreement pursuant to which
such contribution is required to be made; each employee welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Section 601
of ERISA, the most recent summary plan description for such plan and the
aggregate amount of the most recent annual payments made to terminated
employees under each such Plan.
(o) No Borrower, and no ERISA Affiliate of any Borrower has,
or would reasonably be expected to have, any liability under Sections 4063,
4064, 4069, 4204 or 4212(c) of ERISA.
7.22 Taxes. Each Borrower has filed all tax returns and other
reports which it was required by law to file on or prior to the date hereof and
has paid all taxes, assessments, fees, and other governmental charges, and
penalties and interest, if any, against it or its property, income, or
franchise, that are due and payable.
7.23 Investment Company Act, etc. No Borrower is an "investment
company" nor an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (15 U.S.C. Section 80(a)(1), et
seq.), nor is any Borrower subject to any other state or federal regulation
limiting its ability to incur Debt. The making of the Loans and other financial
accommodations hereunder by the Agent and the Lenders, the application of the
proceeds and repayment thereof by the Borrowers and the consummation of the
other transactions contemplated by this Agreement and the other Loan Documents
do not violate any provisions of such laws or any rule, regulation or order
issued by the Securities and Exchange Commission or other Public Authority
thereunder.
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7.24 Margin Stock. No Borrower owns any "margin stock," as that
term is defined in Regulations G and U of the Federal Reserve Board, and the
proceeds of the Loans and the other financial accommodations made pursuant to
this Agreement will be used only for the purposes contemplated hereunder. None
of the transactions contemplated by this Agreement will violate Regulations G,
T, U or X of the Federal Reserve Board. None of the Loans or other financial
accommodations hereunder will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin stock, for the purpose of reducing or
retiring any Debt or other Person's indebtedness which was originally incurred
to purchase or carry any margin stock, or for any other purpose which might
cause any such loan or other financial accommodation to be considered a
"purpose credit" within the meaning of Regulation G, U or X of the Federal
Reserve Board. No Borrower will either take or permit any agent acting on its
behalf to take any action which might cause any transaction, obligation or
right created by this Agreement, or any document or instrument delivered
pursuant hereto, to violate any regulation of the Federal Reserve Board.
7.25 Consummation of Brunswick Sale. The Borrowers have delivered
to the Agent and the Lenders correct and complete executed copies of the
Brunswick Asset Purchase Agreement, all amendments, schedules and exhibits
thereto, and all other agreements, documents, and certificates which have been
executed and delivered in connection with the transactions contemplated
thereby. The Brunswick Asset Purchase Agreement has been duly authorized and
executed and is the valid and binding obligation of each of the Parent, RMC and
Brunswick Corporation, enforceable in accordance with its terms. Each of the
parties thereto has performed all obligations, covenants and conditions
required of it prior to or as a condition to the consummation of the
transactions contemplated by the Brunswick Asset Purchase Agreement. Neither
the Parent nor RMC is in default in any material respect, and to the best of
each Borrower's knowledge, Brunswick Corporation is not in default in any
material respect, of any of its obligations under the Brunswick Asset Purchase
Agreement, and all representations and warranties in the Brunswick Asset
Purchase Agreement of the Parent or RMC are complete and correct as of the
Closing Date in all material respects as if made at and as of such time. On or
prior to the Closing Date, (1) any consent, approval, or authorization of, or
declaration or filing with, any Public Authority, and any consent of any other
Person, required in connection with the consummation of the transactions
described in the Brunswick Asset Purchase Agreement, have been obtained or
made, and (2) such transactions have been consummated in accordance with all
applicable state and federal laws.
7.26 Broker's Fees. No broker or finder is entitled to receive
compensation for services rendered with respect to the transactions described
in this Agreement, other than as set forth on Schedule 7.26.
7.27 No Material Adverse Change. No material adverse change has
occurred in the property, business, operations, financial condition or
prospects of any Borrower since April 30, 1996.
7.28 Disclosure. Neither this Agreement nor any document or
statement furnished to the Agent or any Lender by or on behalf of any Borrower
hereunder contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements contained herein or
therein not misleading.
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7.29 Bank Accounts. Schedule 7.29 contains a complete and accurate
list of all bank accounts maintained by any Borrower with any bank or other
financial institution.
7.30 Eligibility of Collateral. Each Account or item of Inventory
which any Borrower shall, expressly or by implication, request the Agent to
classify as an Eligible Account or as Eligible Inventory, respectively, will,
to the best of such Borrower's knowledge, as of the time when such request is
made, conform in all respects to the requirements of such classification set
forth in the respective definitions of "Eligible Accounts" and "Eligible
Inventory" set forth herein.
7.31 Public Utility Holding Company. No Borrower is a "holding
company" or a "subsidiary company" of a "holding company" or an Affiliate of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender that, so long as
any of the Obligations remain outstanding or this Agreement is in effect:
8.1 Taxes and Other Obligations. Each Borrower shall (a) file when
due all tax returns and other reports which it is required to file, (b) pay, or
provide for the payment, when due, of all taxes, fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, satisfactory evidence of its timely compliance with the
foregoing and (c) pay when due all claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, and all other indebtedness owed
by it and perform and discharge in a timely manner all other obligations
undertaken by it; provided, however, that the Borrowers need not pay any tax,
fee, assessment, governmental charge, or Debt, or discharge any other
obligation, that any of them is contesting in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves are maintained,
so long as no Lien, other than a Permitted Lien, results from such non-payment.
8.2 Corporate Existence and Good Standing. Each Borrower shall
maintain its corporate existence and its qualification and good standing in all
jurisdictions necessary to conduct its business and own its property, and shall
obtain and maintain all licenses, permits, franchises and governmental
authorizations necessary to conduct its business and own its property.
8.3 Compliance with Law and Agreements. Each Borrower shall comply
with the material terms and provisions of each judgment, law, statute, rule,
and governmental regulation applicable to it and each material contract,
mortgage, lien, lease, indenture, order, instrument, agreement, or document to
which it is a party or by which it is bound.
8.4 Maintenance of Property. Each Borrower shall maintain all of
its property necessary and useful in its business in good operating condition
and repair, ordinary wear and tear excepted.
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8.5 Insurance. Each Borrower shall maintain, with financially
sound and reputable insurers, insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; and such other hazards or of such
other types as is customary for Persons of established reputation engaged in
the same or similar business, as the Agent in its discretion shall specify, in
amounts, and under policies acceptable to the Agent; provided, however, that
with respect to such insurance for business interruption and public liability,
such policies shall be acceptable to the Majority Lenders, and provided,
further, that such policies shall be deemed acceptable to the Majority Lenders
in the event that the Lenders shall have received written summaries or copies
thereof and shall not have promptly objected thereto. Without limiting the
foregoing, each Borrower shall also maintain flood insurance, in the event of a
designation of the area in which any Real Estate is located as "flood prone" or
a "flood risk area," as defined by the Flood Disaster Protection Act of 1973,
in an amount to be reasonably determined by the Agent, and shall comply with
the additional requirements of the National Flood Insurance Program as set
forth in said Act.
Each Borrower shall cause the Agent, for the ratable benefit of the
Agent and the Lenders, to be named in each such policy as secured party or
mortgagee and loss payee or additional insured, in a manner acceptable to the
Agent. Each policy of insurance shall contain a standard lender's loss payable
clause or endorsement, which shall include a requirement that the insurer give
not less than thirty (30) days' prior written notice to the Agent in the event
of cancellation of the policy for any reason whatsoever and a statement that
the interest of the Agent shall not be impaired or invalidated by any act or
neglect of the applicable Borrower or the owner of any premises for purposes
more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the applicable Borrower when due, and certificates
of insurance and, if requested by the Agent or any Lender, photocopies of the
policies shall be delivered to the Agent, in each case for distribution by the
Agent to each of the Lenders. If any Borrower fails to procure such insurance
or to pay the premiums therefor when due, the Agent may do so from the proceeds
of Revolving Loans as described in Section 4.4.
Each Borrower shall promptly notify the Agent and the Lenders of any
material loss, damage, or destruction to the Collateral or arising from its
use, whether or not covered by insurance. The Agent is hereby authorized to
collect all insurance proceeds directly. After deducting from such proceeds the
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent may apply such proceeds to the reduction of the Obligations, without
premium or penalty, in such order as the Majority Lenders shall determine, or
at the option of the Majority Lenders, may permit or require the applicable
Borrower to use such money, or any part thereof, to replace, repair, restore or
rebuild the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss,
damage or destruction. Without limiting the foregoing, in case of any loss,
damage or destruction with respect to any of the Equipment or Real Estate,
including any improvements, the Agent is authorized to collect all insurance
proceeds payable in connection therewith and apply them at the option of the
Majority Lenders, to the reduction of the Revolving Loans without premium or
penalty or to any of the other Obligations then due hereunder. The Agent may
permit or require the applicable Borrower to use any such insurance proceeds,
or any part thereof, to replace, or to repair, restore or rebuild, the lost,
damaged or destroyed property; provided, that (a) if the amount of any loss,
damage or destruction is less than
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$250,000, or (b) if the loss, damage or destruction is to Real Estate prior to
the Triggering Date, the Agent shall permit the applicable Borrower so to
replace, restore, repair or rebuild the property so long as no Default or Event
of Default shall have occurred and be continuing at the time of any requested
release of funds. If the lost, damaged or destroyed property is to be replaced,
repaired, restored or rebuilt, such replacement, repair, restoration or
rebuilding shall be done with materials and workmanship of substantially as
good a quality as existed before such loss, damage or destruction. The
applicable Borrower shall commence the work of replacement, repair, restoration
or rebuilding as soon as practicable and proceed diligently with it until
completion. Plans and specifications for any such repair or restoration shall
be reasonably satisfactory to the Agent and shall be submitted to the Agent and
the Lenders, prior to commencement of the work and shall be subject to the
reasonable approval of the Agent.
8.6 Condemnation. Each Borrower shall, immediately upon learning
of the institution of any proceeding for the condemnation or other taking of
any of its property, notify the Agent and the Lenders of the pendency of such
proceeding, and agrees that the Agent may participate in any such proceeding,
and such Borrower from time to time will deliver to the Agent all instruments
reasonably requested by the Agent to permit such participation. The Agent is
authorized to collect the proceeds of any condemnation claim or award and apply
them, at the direction of the Majority Lenders, to the reduction of the Loans
without premium or penalty or to any of the other Obligations then due;
provided, that (a) if the amount of any condemnation is less than $250,000, or
(b) if the condemnation is of Real Estate prior to the Triggering Date, the
Agent shall permit the applicable Borrower so to replace, restore, repair or
rebuild the property so long as no Default or Event of Default shall have
occurred and be continuing at the time of any requested release of funds. If
the condemned property is to be replaced, repaired, restored or rebuilt, such
replacement, repair, restoration or rebuilding shall be done with materials and
workmanship of substantially as good a quality as existed before such loss,
damage or destruction. The applicable Borrower shall commence the work of
replacement, repair, restoration or rebuilding as soon as practicable and
proceed diligently with it until completion. Plans and specifications for any
such repair or restoration shall be reasonably satisfactory to the Agent and
shall be submitted to the Agent and the Lenders, prior to commencement of the
work and shall be subject to the reasonable approval of the Agent.
8.7 Environmental Laws. Each Borrower shall conduct its business
in full compliance with all Environmental Laws applicable to it, including,
without limitation, those relating to the generation, handling, use, storage,
and disposal of hazardous and toxic wastes and substances. Each Borrower shall
take prompt and appropriate action to respond to any noncompliance with
Environmental Laws and shall regularly report to the Agent and the Lenders on
such response. Without limiting the generality of the foregoing, whenever a
Borrower gives notice to the Agent pursuant to Section 6.3(g), such Borrower
shall, at the request of the Agent and the Borrowers' expense (a) cause an
independent environmental engineer acceptable to the Agent to conduct such
tests of the site where the noncompliance or alleged noncompliance with
Environmental Laws has occurred and prepare and deliver to the Agent and the
Lenders a report setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (b) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the environmental problems, or
the response thereto or the estimated costs thereof, shall change.
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8.8 ERISA. (a) Each Borrower shall, and shall cause each of its
ERISA Affiliates to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Code, all regulations and
interpretations promulgated thereunder, and all other applicable laws and
regulations.
(b) No Borrower shall, and no Borrower shall permit any ERISA
Affiliate, to:
(1) Engage in any prohibited transaction described in Sections
406 of ERISA or 4975 of the Code for which a statutory or class
exemption is not available or a private exemption has not previously
been obtained from the DOL;
(2) Permit to exist any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code) whether
or not waived;
(3) Fail to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any
Benefit Plan;
(4) Terminate any Benefit Plan which would result in any
liability of such Borrower or an ERISA Affiliate under Title IV of
ERISA;
(5) Fail to make any contribution or payment to any
Multiemployer Plan which such Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(6) Fail to pay any required installment under section (m) of
Section 412 of the Code or any other payment required under Section
412 of the Code on or before the due date for such installment or
other payment; or
(7) Amend a Plan resulting in an increase in current liability
for the plan year such that such Borrower or any ERISA Affiliate is
required to provide security to such Plan under Section 401(a)(29) of
the Code.
8.9 Mergers, Consolidations or Sales. No Borrower shall enter into
any transaction of merger, reorganization, or consolidation, or transfer, sell,
assign, lease, or otherwise dispose of all or any material part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except (a) for sales of Inventory in the ordinary course of its
business, or (b) as otherwise expressly permitted hereby.
8.10 Distributions; Capital Change. No Borrower shall (a) directly
or indirectly declare or make, or incur any liability to make, any
Distribution, or (b) make any change in its capital structure which could
adversely affect the repayment of the Obligations. Notwithstanding the
foregoing, Distributions may be made to the Parent by RMC, RML, Hutch and
Willow (provided that at the time of any such Distribution and after giving
effect thereto no Default or Event of Default shall exist and be continuing and
that such Distributions shall be made in accordance with all applicable laws)
in accordance with the following:
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(1) RMC may make such Distributions to enable the Parent
to pay its normal cash operating expenses, in an aggregate amount not
to exceed $1,327,500 during any fiscal quarter.
(2) RML may make such Distributions to enable the Parent
to pay its normal cash operating expenses, in an aggregate amount not
to exceed $127,500 during any fiscal quarter.
(3) Hutch may make such Distributions to enable the
Parent to pay its normal cash operating expenses, in an aggregate
amount not to exceed $147,500 during any fiscal quarter.
(4) Willow may make such Distributions to enable the
Parent to pay its normal cash operating expenses, in an aggregate
amount not to exceed $147,500 during any fiscal quarter.
8.11 Transactions Affecting Collateral or Obligations. No Borrower
shall enter into any transaction which materially and adversely affects the
Collateral or such Borrower's ability to repay the Obligations.
8.12 Guaranties. No Borrower shall make, issue, or become liable on
any Guaranty, except (a) Guaranties in favor of the Agent, and (b) unsecured
Guaranties entered into by such Borrower pursuant to Section 6.7 of the
Agreement and Plan of Reorganization, to the extent required in order to
release Actava from certain of its guaranty obligations, which guaranty
obligations are set forth on Schedule 8.12.
8.13 Debt. No Borrower shall incur or maintain any Debt, other
than: (a) the Obligations; (b) trade payables and contractual obligations to
suppliers of goods or services and customers incurred in the ordinary course of
business; (c) obligations to fund any of such Borrower's pension or employee
benefit plans in the ordinary course of business; (d) liability for employees'
salaries incurred in the ordinary course of business; (e) tax liability
incurred in the ordinary course of business; (f) Debt incurred to finance the
purchase of fixed assets constituting Capital Expenditures permitted by Section
8.23, so long as the principal amount of Debt incurred for any such purchase of
Equipment does not exceed 100% of the purchase price of such Equipment (net of
transportation, installation and other incidental costs); (g) other Debt
existing on the Closing Date and reflected on Schedule 7.9, or refinancings
thereof upon terms fully disclosed to the Agent and the Lenders and which are
no less favorable to the applicable Borrower than those with respect to the
Debt being refinanced; (h) Permitted Rentals; (i) the Opelika Debt; and (j) the
Olney Trust Bank Debt.
8.14 Prepayment. No Borrower shall voluntarily prepay any Debt,
except (a) the Obligations in accordance with their terms; (b) trade payables
in the ordinary course of business; and (c) the Wisconsin Department of
Development Debt.
8.15 Payment of Debt to Affiliates. Except (a) as otherwise
permitted pursuant to Section 8.16, and (b) for the payment of a Borrower's
obligations to fund any of such Borrower's pension or employee benefit plans in
the ordinary course of its business, no Borrower shall make any payment with
respect to Debt owed to any Affiliate, except that RMC may, subject to the
terms of the Parent Subordination Agreement or DP Subordination Agreement, as
applicable:
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(1) pay interest on (A) the Subordinated Debt in the original
principal amount of $1,000,000 evidenced by that certain promissory
note dated August 31, 1988 executed by RMC in favor of the Parent, (B)
the Subordinated Debt in the original principal amount of $1,150,000
evidenced by that certain promissory note dated August 10, 1987
executed by RMC in favor of the Parent, (C) the Subordinated Debt in
the original principal amount of $33,000,000 evidenced by that certain
Third Subordinated Term Note dated September 30, 1993 executed by RMC
in favor of the Parent, and (D) the Debt in the original principal
amount of $6,000,000 evidenced by that certain Fourth Subordinated
Term Note dated November 30, 1993 executed by RMC in favor of the
Parent, in each such case provided for in this clause (1), in the
aggregate, to enable the Parent to pay interest which is then due and
payable on the Subordinated Debentures; provided, however, that the
payments described in this clause (1) may not be made in the event
that after giving effect thereto, (i) Availability would be less than
$7,500,000, or (ii) there would have occurred any Default or Event of
Default;
(2) pay interest on the Debt outstanding under the
Subordinated Revolver to enable the Parent to pay interest which is
then due and payable on the Senior Subordinated Notes; provided,
however, that the payments described in this clause (2) may not be
made in the event that after giving effect thereto, (i) Availability
would be less than $7,500,000, or (ii) there would have occurred any
Default or Event of Default; and
(3) pay principal on the DP Note to the extent required to
enable DP to pay its obligations and liabilities, as and when DP shall
be required to do so; provided, however, that the payments described
in this clause (3) may not be made in the event that after giving
effect thereto, there would have occurred any Default or Event of
Default.
8.16 Transactions with Affiliates. Except as set forth below or
otherwise permitted by this Agreement, no Borrower shall sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), except actual expenses incurred and approved
in advance in writing by the Majority Lenders, to any Affiliate or employee
thereof, or lend or advance money or property to any Affiliate or employee
thereof, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate or
employee thereof, or become liable on any Guaranty of the indebtedness,
dividends, or other obligations of any Affiliate or employee thereof.
Notwithstanding the foregoing, any Borrower may (a) pay compensation to
employees of such Borrower who are Affiliates, (b) if no Event of Default has
occurred and is continuing, engage in transactions with Affiliates in the
normal course of business, in amounts and upon terms fully disclosed to the
Agent and the Lenders and which are no less favorable to the applicable
Borrower than would be obtained in a comparable arm's length transaction with a
Person not an Affiliate, and (c) sell Inventory to RML.
8.17 Investment Banking and Finder's Fees. No Borrower shall pay or
agree to pay, or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's fee, or broker's
fee to any Person in connection with this Agreement, other than as set forth on
Schedule 7.26. Each Borrower shall defend and indemnify the Agent and the
Lenders against and hold them harmless from all claims of any Person for any
such fees, and all
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costs and expenses (including without limitation, attorneys' fees) incurred by
the Agent and/or any Lender in connection therewith.
8.18 Business Conducted. No Borrower shall engage, directly or
indirectly, in any line of business other than the businesses in which such
Borrower is engaged on the Closing Date.
8.19 Liens. No Borrower shall create, incur, assume, or permit to
exist any Lien on any property now owned or hereafter acquired by any of them,
except Permitted Liens.
8.20 Sale and Leaseback Transactions. No Borrower shall, directly
or indirectly, enter into any arrangement with any Person providing for such
Borrower to lease or rent property that such Borrower has sold or otherwise
transferred, or will sell or otherwise transfer to such Person.
8.21 New Subsidiaries. No Borrower shall, directly or indirectly,
organize or acquire any Subsidiary.
8.22 Restricted Investments. No Borrower shall make any Restricted
Investment.
8.23 Capital Expenditures. (a) RMC shall not make or incur any
Capital Expenditure if, after giving effect thereto, the aggregate amount of
all Capital Expenditures by RMC would exceed (1) $2,750,000 during the period
commencing on the Closing Date and ending on December 31, 1996, (2) $8,000,000
during Fiscal Year 1997, or (3) $9,000,000 during each Fiscal Year thereafter.
(b) RML shall not make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all Capital Expenditures
by RML would exceed (1) $50,000 during the period commencing on the Closing
Date and ending on December 31, 1996, or (2) $100,000 during each Fiscal Year
thereafter.
(c) Willow shall not make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all Capital Expenditures
by Willow would exceed (1) $50,000 during the period commencing on the Closing
Date and ending on December 31, 1996, or (2) $100,000 during each Fiscal Year
thereafter.
(d) Hutch shall not make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all Capital Expenditures
by Hutch would exceed (1) $500,000 during the period commencing on the Closing
Date and ending on December 31, 1996, or (2) $1,000,000 during each Fiscal Year
thereafter.
(e) No Borrower shall make or incur any Capital Expenditure
if, after giving effect thereto, the aggregate amount of all Capital
Expenditures by all Borrowers would exceed (1) $3,000,000 during the period
commencing on the Closing Date and ending on December 31, 1996, (2) $8,500,000
during Fiscal Year 1997, or (3) $9,500,000 during each Fiscal Year thereafter.
Each amount set forth in clauses (a) through (d) of this Section 8.23 for any
fiscal period shall hereinafter be referred to as a "Base Amount." In the event
that a Borrower shall, during any applicable fiscal period, make or incur
Capital Expenditures in an aggregate amount less than the
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Base Amount for such fiscal period, an amount (a "Carry-Over Amount") equal to
the lesser of (1) one-half of such Base Amount, and (2) such Base Amount minus
the aggregate amount of such Capital Expenditures actually made or incurred,
shall be added to the Base Amount for the then next succeeding fiscal period.
No Carry-Over Amount shall be added to any Base Amount other than the Base
Amount for the then next succeeding fiscal period. For purposes of making the
calculations contemplated by this paragraph, any Capital Expenditures made or
incurred during any fiscal period shall be deemed to reduce, first, the Base
Amount for such fiscal period, and second, the Carry-Over Amount, if any, added
to the Base Amount for such fiscal period.
8.24 Operating Lease Obligations. (a) RMC shall not enter into any
lease of real or personal property as lessee or sublessee (other than Capital
Leases), if, after giving effect thereto and excluding any permitted
intercompany lease payments, the aggregate amount of Rentals payable by RMC in
any Fiscal Year in respect of such lease and all such other leases would exceed
$6,000,000.
(b) RML shall not enter into any lease of real or personal
property as lessee or sublessee (other than Capital Leases), if, after giving
effect thereto and excluding any permitted intercompany lease payments, the
aggregate amount of Rentals payable by RML in any Fiscal Year in respect of
such lease and all such other leases would exceed $300,000.
(c) Willow shall not enter into any lease of real or personal
property as lessee or sublessee (other than Capital Leases), if, after giving
effect thereto and excluding any permitted intercompany lease payments, the
aggregate amount of Rentals payable by Willow in any Fiscal Year in respect of
such lease and all such other leases would exceed $300,000.
(d) Hutch shall not enter into any lease of real or personal
property as lessee or sublessee (other than Capital Leases), if, after giving
effect thereto and excluding any permitted intercompany lease payments, the
aggregate amount of Rentals payable by Hutch in any Fiscal Year in respect of
such lease and all such other leases would exceed $200,000.
8.25 Interest Coverage. (a) RMC will not permit the ratio of RMC's
and its consolidated Subsidiaries' (other than Diversified Trucking's) (1)
Adjusted Net Earnings from Operations plus, to the extent deducted in computing
such Adjusted Net Earnings from Operations, (A) cash interest expense, (B) any
provision for income taxes, (C) depreciation, and (D) amortization, to (2) cash
interest expense, to be less than (i) 3.25 to 1.0 as of December 31, 1996 for
the period commencing on the Closing Date and ending on December 31, 1996, (ii)
2.0 to 1.0 as of March 31, 1997 for the period commencing on the Closing Date
and ending on March 31, 1997, (iii) 1.75 to 1.0 as of June 30, 1997 for the
period commencing on the Closing Date and ending on June 30, 1997, and (iv)
1.25 to 1.0 as of the last day of each fiscal quarter thereafter, calculated
for the four (4) consecutive fiscal quarters ending on such date. For purposes
of this Section 8.25(a), Adjusted Net Earnings from Operations of RMC and its
consolidated Subsidiaries, other than Diversified Trucking, for any fiscal
quarter shall be deemed to include the principal amount of any Debt of RMC
incurred during such fiscal quarter and subordinated to the Obligations on a
basis satisfactory in form and substance to the Majority Lenders; provided, no
such amounts in excess of $5,000,000 in the aggregate during the term of this
Agreement shall be so included in Adjusted Net Earnings from Operations of RMC
and its consolidated Subsidiaries other than Diversified Trucking.
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(b) RML will not permit the ratio of RML's (1) Adjusted Net
Earnings from Operations plus, to the extent deducted in computing such
Adjusted Net Earnings from Operations, (A) cash interest expense, (B) any
provision for income taxes, (C) depreciation, and (D) amortization, to (2) cash
interest expense, to be less than (i) 5.0 to 1.0 as of December 31, 1996 for
the period commencing on the Closing Date and ending on December 31, 1996, (ii)
4.0 to 1.0 as of March 31, 1997 for the period commencing on the Closing Date
and ending on March 31, 1997, (iii) 3.0 to 1.0 as of June 30, 1997 for the
period commencing on the Closing Date and ending on June 30, 1997, and (iv) 2.5
to 1.0 as of the last day of each fiscal quarter thereafter, calculated for the
four (4) consecutive fiscal quarters ending on such date.
(c) Willow will not permit the ratio of Willow's (1) Adjusted
Net Earnings from Operations plus, to the extent deducted in computing such
Adjusted Net Earnings from Operations, (A) cash interest expense, (B) any
provision for income taxes, (C) depreciation, and (D) amortization, to (2) cash
interest expense, to be less than (i) 2.75 to 1.0 as of December 31, 1996 for
the period commencing on the Closing Date and ending on December 31, 1996, (ii)
2.25 to 1.0 as of March 31, 1997 for the period commencing on the Closing Date
and ending on March 31, 1997, (iii) 2.25 to 1.0 as of June 30, 1997 for the
period commencing on the Closing Date and ending on June 30, 1997, and (iv)
2.25 to 1.0 as of the last day of each fiscal quarter thereafter, calculated
for the four (4) consecutive fiscal quarters ending on such date.
(d) Hutch will not permit the ratio of Hutch's (1) Adjusted
Net Earnings from Operations plus, to the extent deducted in computing such
Adjusted Net Earnings from Operations, (A) cash interest expense, (B) any
provision for income taxes, (C) depreciation, and (D) amortization, to (2) cash
interest expense, to be less than (i) 1.75 to 1.0 as of December 31, 1996 for
the period commencing on the Closing Date and ending on December 31, 1996, (ii)
1.75 to 1.0 as of March 31, 1997 for the period commencing on the Closing Date
and ending on March 31, 1997, (iii) 2.0 to 1.0 as of June 30, 1997 for the
period commencing on the Closing Date and ending on June 30, 1997, and (iv)
2.25 to 1.0 as of the last day of each fiscal quarter thereafter, calculated
for the four (4) consecutive fiscal quarters ending on such date.
8.26 Adjusted Tangible Net Worth. (a) RMC and its consolidated
Subsidiaries other than Diversified Trucking will have Adjusted Tangible Net
Worth of not less than (1) $62,500,000 as of December 31, 1996, and (2)
$65,000,000 as of the last day of each fiscal quarter thereafter.
(b) RML will have Adjusted Tangible Net Worth of not less than
(1) $3,750,000 as of December 31, 1996, and (2) $4,000,000 as of the last day
of each fiscal quarter thereafter.
(c) Willow will have Adjusted Tangible Net Worth of not less
than (1) $3,000,000 as of December 31, 1996, and (2) $3,250,000 as of the last
day of each fiscal quarter thereafter.
(d) Hutch will have Adjusted Tangible Net Worth of not less
than (1) $4,000,000 as of December 31, 1996, and (2) $4,250,000 as of the last
day of each fiscal quarter thereafter.
8.27 Availability. The Borrowers shall maintain Availability of not
less than $7,000,000 at all times, and RMC shall maintain Individual
Availability of not less than $5,000,000 at all times.
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8.28 Fiscal Year. No Borrower will change its Fiscal Year from a
calendar year.
8.29 Further Assurances. Each Borrower shall execute and deliver,
or cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent may, from time to time, request to carry out the terms and conditions
of this Agreement and the other Loan Documents.
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the Closing Date.
The obligation of the Lenders to make the initial Loans on the Closing Date,
and the obligation of the Agent on the Closing Date to cause to be issued any
Letter of Credit or created any Acceptance, or to provide L/C Credit Support
for any Letter of Credit or Acceptance Credit Support with respect to any
Acceptance, and the obligation of the Lenders on the Closing Date to
participate in any Letter of Credit, Acceptance, L/C Credit Support or
Acceptance Credit Support, are subject to the following conditions precedent
having been satisfied in a manner satisfactory to the Agent and the Lenders:
(a) Each Borrower shall have performed and complied with all
covenants, agreements and conditions contained herein which are
required to be performed or complied with by such Borrower before or
on the Closing Date.
(b) The Agent and the Lenders shall have received certificates
dated the Closing Date and signed by the vice president administration
- treasurer of RMC, Hutch and Willow, and treasurer and secretary of
RML, certifying that the condition specified in Section 9.1(a) has
been fulfilled, and setting forth in detail each component of such
Borrower's Individual Borrowing Base, Individual Maximum Revolver
Amount and Aggregate Revolver Outstandings in order to demonstrate
that after making the Revolving Loans on the Closing Date,
Availability would be at least $17,500,000, and the amount of
Individual Availability for each Borrower would be at least ten
percent (10.0%) of the Individual Borrowing Base with respect to such
Borrower.
(c) The Agent and the Lenders shall have received all items on
the List of Closing Documents attached hereto as Exhibit D which are
not elsewhere identified in this Article 9, such items to be in form
and substance satisfactory to the Agent and the Lenders, and to be
executed by all parties thereto when the nature of such items so
requires.
(d) The Borrowers shall have paid to the Agent, for its
benefit and/or for the benefit of the Lenders, as applicable, the
Closing Fee and all fees, costs, and expenses (including, without
limitation, attorneys and paralegals fees and disbursements) incurred
by the Agent and the Lenders in connection with the negotiation,
preparation, and consummation of this Agreement, the other Loan
Agreements and the transactions contemplated thereby.
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(e) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be satisfactory to the Agent and the Lenders.
The Agent shall have received copies of such documents and papers as
the Agent and the Lenders may reasonably request in connection
therewith, all in form and substance satisfactory to the Agent and the
Lenders.
The acceptance by a Borrower of any Loans made on the Closing Date shall be
deemed to be a representation and warranty made by such Borrower to the effect
that all of the conditions to the making of such Loans set forth in this
Section 9.1 have been satisfied, with the same effect as delivery to the Agent
and the Lenders of a certificate signed by the president and chief financial
officer or treasurer of such Borrower, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart to this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent contained in this Section 9.1 have been fulfilled to the satisfaction
of such Lender, and (ii) the decision of such Lender to execute and deliver to
the Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the
satisfaction of any condition precedent set forth in this Section 9.1.
9.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Loans on the Closing Date, and
the obligation of the Agent to cause to be issued any Letter of Credit or
created any Acceptance, or to provide L/C Credit Support for any Letter of
Credit or Acceptance Credit Support with respect to any Acceptance, including
any Letter of Credit issued or Acceptance created on the Closing Date, and the
obligation of the Lenders to participate in any Letter of Credit, Acceptance,
L/C Credit Support or Acceptance Credit Support, shall be subject to the
further conditions precedent that on the date of any such extension of credit;
(a) the following statements shall be true, and the acceptance
by a Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (1) and (2), with the
same effect as the delivery to the Agent and the Lenders of a
certificate signed by the president and chief financial officer or
treasurer of such Borrower, dated the date of such extension of
credit, stating that:
(1) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of
credit as though made on and as of such date, other than any
such representation or warranty which relates to a specified
prior date, except to the extent the Agent and the Lenders
have been notified by a Borrower that any representation or
warranty is not correct and the Majority Lenders have
explicitly waived in writing compliance with such
representation or warranty; and
(2) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a
Default or an Event of Default;
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(b) the Agent and the Lenders shall have received such other
approvals, opinions or documents as they may reasonably request;
(c) no order, judgment or decree of any Public Authority and
no law, rule or regulation applicable to the Agent or any Lender shall
purport by its terms to enjoin, restrain or otherwise prohibit the
making of such Loan; and
(d) since April 30, 1996, no material adverse change shall
have occurred with respect to the business, operations, assets,
financial condition or prospects of any Borrower;
provided, however, that the foregoing conditions precedent are not conditions
to each Lender participating in or reimbursing BABC or the Agent for such
Lender's Pro Rata Share of any BABC Loan or Agent Advance as provided in
Sections 2.3(g), (h) and (i).
ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure to pay the principal of or interest or premium
on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made by any Borrower in
this Agreement, any of the other Loan Documents, any Financial
Statement, or any certificate furnished by any Borrower at any time to
the Agent or any Lender shall prove to be untrue or misleading in any
material respect as of the date on which made;
(c) any failure by any Borrower to comply with any of the
covenants set forth in Article 8 or Section 5.9;
(d) any failure by any Borrower to comply with any of the
other covenants and agreements contained in this Agreement, the
Mortgages or any of the other Loan Documents, for more than (1) twenty
(20) days after notice of such failure by the Agent to the applicable
Borrower, (2) thirty (30) days after the date that the applicable
Borrower discovers, or reasonably should have discovered, such
failure, or (3) if such failure shall have existed for more than
forty-five (45) days, five (5) days after the earlier of (A) written
notice thereof from the Agent to the applicable Borrower or (B) the
applicable Borrower's discovery of such failure; provided, however,
that no such grace period shall apply, and an Event of Default shall
exist promptly upon such failure to comply, if such failure to comply
may not, in the reasonable determination of the Majority Lenders, be
cured by the applicable Borrower during such grace period; or if any
such Loan Document shall terminate
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(other than in accordance with its terms or the terms hereof or with
the written consent of the Majority Lenders) or become void or
unenforceable without the written consent of the Majority Lenders;
(e) default shall occur with respect to the Subordinated
Debentures or the Senior Subordinated Notes, or default shall occur
with respect to any Debt for borrowed money (other than the
Obligations and the Wisconsin Department of Development Debt) in an
outstanding principal amount in excess of $200,000 or under any
agreement or instrument under or pursuant to which any such Debt or
indebtedness may have been issued, created, assumed, or guaranteed by
any Borrower, and any such default shall continue for more than the
period of grace, if any, therein specified, if the effect thereof
(with or without the giving of notice or further lapse of time or
both) is to accelerate, or to permit the holders of any such Debt or
indebtedness to accelerate, the maturity of any such Debt or
indebtedness; or any Debt (including the Wisconsin Department of
Development Debt) or indebtedness shall be declared due and payable or
be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;
(f) the Parent, DP, International, any Borrower, or any
Subsidiary of any Borrower, shall (1) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, action or
proceeding; (2) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, sequestrator, custodian, trustee or
similar officer for it or for all or any part of its property; (3)
make an assignment for the benefit of creditors; or (4) be unable
generally to pay its debts as they become due;
(g) an involuntary petition shall be filed or an action or
proceeding otherwise commenced against any Borrower, or any Subsidiary
of any Borrower, seeking reorganization, arrangement or readjustment
of the debts of such Borrower or Subsidiary or for any other relief
under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or
hereafter existing, and either (1) such petition, action or proceeding
shall remain undismissed or unvacated for a period of sixty (60) days,
or (2) an order for relief shall be entered with respect thereto;
(h) a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for any Borrower, or any Subsidiary of any
Borrower, or for all or any material part of their property shall be
appointed; or a warrant of attachment, execution or similar process
shall be issued against any material part of the property of any
Borrower;
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(i) any Borrower, or any Subsidiary of any Borrower, shall
file a certificate of dissolution under applicable state or provincial
law or shall be liquidated, dissolved or wound-up or shall commence or
have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any corporate action in
furtherance thereof;
(j) all or any material part of the property of any Borrower,
or any Subsidiary of any Borrower, shall be nationalized, expropriated
or condemned, seized or otherwise appropriated, or custody or control
of such property or of any Borrower or any Subsidiary of any Borrower
shall be assumed by any Public Authority or any court of competent
jurisdiction at the instance of any Public Authority, except where
contested in good faith by proper proceedings diligently pursued where
a stay of enforcement is in effect;
(k) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Liens created
in favor of the Agent pursuant to the Loan Documents, any Loan
Document ceases to be in full force and effect or any Lien with
respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to
all other Liens (other than Permitted Liens) or is terminated, revoked
or declared void;
(l) one or more final judgments for the payment of money
aggregating in excess of $50,000 (whether or not covered by insurance)
shall be rendered against any Borrower, or any Subsidiary of any
Borrower, which is not discharged in full or stayed within thirty (30)
days from the date of entry thereof;
(m) any loss, theft, damage or destruction of any item or
items of Collateral occurs which (1) materially and adversely affects
the operation of any Borrower's business; or (2) is material in amount
and is not adequately covered by insurance;
(n) there occurs any material adverse change in any Borrower's
property, business, operations, financial condition or prospects;
(o) Any Termination Event occurs which the Majority Lenders
reasonably believe could subject any Borrower or any ERISA Affiliate
of any Borrower to a liability in excess of $25,000;
(p) The plan administrator of any Plan applies under Section
412(d) of the Code for a waiver of the minimum funding standards of
Section 412(a) of the Code and the Majority Lenders reasonably believe
that the substantial business hardship upon which the application for
such waiver is based could subject any Borrower or any ERISA Affiliate
of any Borrower to a liability in excess of $25,000;
(q) there is filed against any Borrower, or any Subsidiary of
any Borrower, any civil or criminal action, suit or proceeding under
any federal or state racketeering statute (including, without
limitation, the Racketeer Influenced and Corrupt
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Organization Act of 1970), which action, suit or proceeding (1) is not
dismissed within one hundred eighty (180) days, and (2) could result
in the confiscation or forfeiture of any material portion of the
Collateral or the other assets of any Borrower or the assets of any
Subsidiary of any Borrower;
(r) the Parent shall cease to own one hundred percent (100%)
of the capital stock of RMC, Hutch, Willow, International, DP or NWR,
International shall cease to own one hundred percent (100%) of the
capital stock of RML, Hutch shall cease to own one hundred percent
(100%) of the capital stock of T.Q., or RMC shall cease to own one
hundred percent (100%) of the capital stock of Diversified Trucking;
or
(s) any default shall occur under the Parent Guaranty or any
Affiliate Guaranty, or the Parent Guaranty or any Affiliate Guaranty
shall be terminated, revoked or declared void or invalid.
10.2 Remedies. (a) If a Default or an Event of Default exists, the
Agent may, in its discretion, or, at the direction of the Majority Lenders,
shall, without notice to or demand on any Borrower, do one or more of the
following at any time or times and in any order: (1) reduce the Maximum
Revolver Amount, the Individual Maximum Revolver Amount with respect to any or
all Borrowers, or the amount of the Revolver Facility or the advance rates
against Eligible Accounts and/or Eligible Inventory used in computing the
Maximum Revolver Amount and Individual Maximum Revolver Amount with respect to
any or all Borrowers, or reduce or increase one or more of the other elements
used in computing the Maximum Revolver Amount and Individual Maximum Revolver
Amount with respect to any or all Borrowers; and (2) restrict the amount of or
refuse to make Revolving Loans and restrict or refuse to arrange for or provide
Letters of Credit, Acceptances, L/C Credit Support or Acceptance Credit
Support. If an Event of Default exists, the Agent may, in its discretion, or
shall, at the direction of the Majority Lenders, without notice to or demand on
any Borrower, except as otherwise provided herein, do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order: (A) terminate the Commitments and this
Agreement and (B) upon notice to the Borrowers, declare any or all Obligations
to be immediately due and payable (provided however that upon the occurrence of
any Event of Default described in Sections 10.1(f), 10.1(h), or 10.1(i), the
Commitments shall automatically and immediately expire and all Obligations
shall automatically become immediately due and payable without notice or demand
of any kind); and pursue its other rights and remedies under the Loan Documents
and applicable law. Notwithstanding anything contained in this Agreement, no
Lender shall have any obligation to make Loans hereunder during the existence
of any Event of Default; provided, that the foregoing sentence shall not limit
the provisions contained in this Agreement with respect to each Lender
participating in or reimbursing BABC or the Agent for such Lender's Pro Rata
Share of any BABC Loan or Agent Advance as provided in Sections 2.3(g), (h) and
(i).
(b) If an Event of Default exists: (1) the Agent shall have,
in addition to all other rights, the rights and remedies of a secured party
under the UCC and the PPSA; (2) the Agent may, at any time, take possession of
the Collateral and keep it on the applicable Borrower's premises, at no cost to
the Agent or any Lender, or remove any part of it to such other place or places
as the Agent may desire, or the Borrowers shall, upon the Agent's demand, at
the Borrowers' cost,
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assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (3) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale. Without
in any way requiring notice to be given in the following manner, the Borrowers
agree that any notice by the Agent of sale, disposition or other intended
action hereunder or in connection herewith, whether required by the UCC, the
PPSA or otherwise, shall constitute reasonable notice to the Borrowers if such
notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least five (5)
days prior to such action (or at least fifteen (15) days prior to such action
in the case of any action with respect to Collateral of RML located in the
Province of Ontario, Canada) to the Borrowers' address specified pursuant to
Section 14.7. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to any Borrower. In the
event the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Borrower irrevocably waives: (A) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. Each Borrower agrees that the Agent has no obligation to
preserve rights to the Collateral or marshall any Collateral for the benefit of
any Person. The Agent is hereby granted a license or other right to use,
without charge, each Borrower's labels, patents, copyrights, name, trade
secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and each Borrower's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit. The proceeds of sale shall be applied first
to all expenses of sale, including attorneys' fees, and second, in whatever
order the Majority Lenders shall elect, to all Obligations (in accordance with
each Lender's Pro Rata Share therein, as applicable). The Agent will return any
excess to the applicable Borrower or such other Person as shall be legally
entitled thereto and the Borrowers shall remain liable for any deficiency.
(c) If an Event of Default occurs, except as otherwise
specifically provided herein, each Borrower hereby waives all rights to notice
and hearing prior to the exercise by the Agent of the Agent's rights to
repossess the Collateral without judicial process or to replevy, attach or levy
upon the Collateral without notice or hearing.
(d) If the Agent, in its discretion or at the direction of the
Majority Lenders, shall terminate this Agreement upon an Event of Default, the
Borrowers shall pay the Agent, for the account of the Lenders, immediately upon
termination, an early termination penalty equal to the early termination fee
that would have been payable under Section 3.9 if this Agreement had been
terminated on that date pursuant to the Borrowers' election.
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ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination. The term of this Agreement shall end on
the Stated Termination Date. The Majority Lenders may terminate this Agreement
without notice upon the occurrence of an Event of Default. Upon the effective
date of termination of this Agreement for any reason whatsoever, all
Obligations (including, without limitation, all unpaid principal, accrued
interest, and any early termination or prepayment fees or penalties), shall
become immediately due and payable and the Borrowers shall cause the
termination of any outstanding Letters of Credit and Acceptances.
Notwithstanding the termination of this Agreement, until all Obligations are
paid and performed in full, the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the security
interest of the Agent, for the ratable benefit of the Agent and the Lenders, in
and all rights and remedies with respect to all then existing and after-arising
Collateral).
ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers. No act, failure or delay by the Agent or
the Lenders shall constitute a waiver of any of their rights and remedies. No
single or partial waiver by the Agent or the Lenders of any provision of this
Agreement or any other Loan Document, or of breach or default hereunder or
thereunder, or of any right or remedy which the Agent or the Lenders may have,
shall operate as a waiver of any other provision, breach, default, right or
remedy or of the same provisions, breach, default, right or remedy on a future
occasion. No waiver by the Agent or the Lenders shall affect their rights to
require strict performance of this Agreement.
12.2 Amendments and Waivers. No amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Majority Lenders and the Borrowers, and no termination or waiver of any
provision of this Agreement, or consent to any departure by a Borrower
therefrom, shall in any event be effective without the written concurrence of
the Majority Lenders, which concurrence the Majority Lenders shall have the
right to grant or withhold at their sole discretion. Notwithstanding the
immediately preceding sentence, any amendment, modification or waiver (a) of
any provision of Articles 2, 3 or 4, which amendment, modification or waiver
provides for any increase in the Commitments or face amount of any Letter of
Credit, extension of the scheduled final maturity of the Loans or of the
expiration date of any Letter of Credit or Acceptance, or reduction of the
interest rates applicable to any Loans or the amount of fees payable hereunder,
the postponement of the due date for the payment of interest, principal or fees
hereunder, or the forgiveness of any of the Obligations, (b) effectuating the
discharge of any guarantor or release of any Guaranty of any of the
Obligations, the discharge of any Borrower, or the subordination of the Agent's
Liens pursuant to this Agreement, or (c) of the definitions of "Majority
Lenders," "Pro Rata Share," "Maximum Revolver Amount," "Individual Maximum
Revolver Amount," "Borrowing Base" or "Individual Borrowing Base" (or any term
affecting the calculation of the Maximum Revolver Amount or Individual Maximum
Revolver
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Amount in any material respect), or the provisions contained in this Section
12.2, or in Section 13.8(a) with respect to the release of the Agent's Liens,
shall be effective if, and only if, evidenced by a writing agreed to and signed
by all Lenders. No amendment, modification, termination, or waiver of any
provision of Article 13 or any other provision referring to the Agent shall be
effective without the written concurrence of the Agent. The Agent may, but
shall have no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of such
Lender. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand on
a Borrower in any case shall entitle any Borrower to any other or further
notice or demand in similar or other circumstances. Any amendment,
modification, waiver or consent effected in accordance with this Section 12.2
shall be binding on the Agent and each Lender, and, if signed by the Borrowers,
on the Borrowers.
12.3 Assignments; Participations.
(a) Each Lender shall have the right, with the Agent's consent
and after consultation with the Borrowers regarding the prospective assignee,
at any time to assign to one or more commercial banks or other financial
institutions all or a portion of its Commitment, the Loans owing to it and its
rights and obligations with respect to Letters of Credit, Acceptances, L/C
Credit Support and Acceptance Credit Support; provided, however, that the Agent
shall not withhold its consent to any such assignment made in compliance with
this Section 12.3 to any of the financial institutions set forth on Schedule
12.3; and provided, further, that (1) each such assignment shall be of a
constant, and not a varying percentage of all of the assigning Lender's
corresponding rights and obligations under this Agreement and the assignment
shall apply the same percentage to such Lender's Commitment and Loans, (2) the
aggregate amount of the outstanding Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance entered into with respect to such assignment by the
assigning Lender and the assignee, and accepted by the Agent, in substantially
the form of Exhibit E ("Assignment and Acceptance")) shall in no event be less
than $15,000,000 and integral multiples of $5,000,000 in excess of that amount,
except that such limitation shall not apply to an assignment by any Lender of
all of its rights and obligations under this Agreement or to an assignment by
an original signatory to this Agreement to another such signatory, (3) except
in the case of an assignment in whole of a Lender's rights and obligations
under this Agreement or an assignment by an original signatory to this
Agreement to another such signatory, immediately after giving effect to any
assignment the aggregate amount of the outstanding Commitment still held by the
assigning Lender in its own name shall in no event be less than $5,000,000, and
(4) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of $5,000. Notwithstanding the
immediately preceding sentence, no Lender other than BABC shall be permitted to
make any assignment of any of its Commitment, Loans or rights and obligations
with respect to Letters of Credit and Acceptances to any commercial bank or
other financial institution other than BABC, unless BABC shall have declined to
purchase such Commitment, Loans and rights and obligations pursuant to an
assignment transaction having substantially identical terms. Upon execution,
delivery, acceptance and recording of any Assignment and Acceptance, from and
after the effective date specified therein, which effective date shall be at
least two (2) Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have
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the rights and obligations (including, but not limited to, the obligation to
participate in Letters of Credit, Acceptances, L/C Credit Support or Acceptance
Credit Support pursuant to Section 2.4(f)) of a Lender hereunder and (B) the
assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) other than
as provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (5) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (6) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address specified pursuant
to Section 14.7 a copy of each Assignment and Acceptance delivered to and
accepted by it and books and records, including computer records, in which it
shall record the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall constitute rebuttably
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein, and the Borrowers, the Agent and the Lenders may treat each
Person the name of which is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrowers or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit E,
(1) accept such Assignment and Acceptance, (2) record the information contained
therein in the Register, and (3) give prompt notice thereof to the Borrowers.
(e) Each Lender may sell participations in all or any part of
its rights and obligations under this Agreement (including, without limitation,
all or any part of its Commitment, the Loans
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or its rights in connection with Letters of Credit and Acceptances, as
applicable), in minimum amounts of $10,000,000 and integral multiples of
$5,000,000 in excess of that amount, to one or more other Persons; provided,
however, that (1) such Lender's obligations under this Agreement shall remain
unchanged, (2) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (3) the Agent, the
Borrowers and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. No Participating Lender may be given any rights to require the
Lender granting such Participating Lender's participation to vote against any
matters, other than (A) the release of all or substantially all of the
Collateral, or (B) any amendment, modification or waiver of any provision of
Articles 2, 3 or 4 relating to the principal amount of the Loans, Letters of
Credit or Acceptances, the maturity dates of the Loans, the interest rates
borne by the Loans and the amounts of any fees payable to such Lender under
Sections 3.3 through 3.6 and 3.9. No Participating Lender shall be a "Lender"
for any purpose under this Agreement; provided, however, that any Participating
Lender may be given the rights and obligations of a Lender (including any right
to receive payment) under Sections 3.3 through 3.6, 3.9, 4.2, 4.7, 13.9 and
14.8, provided, further, that all requests for any such payments shall be made
by any Participating Lender through the Lender granting such participation. The
right of each Participating Lender to receive payment pursuant to the
immediately preceding sentence shall be limited to the lesser of (i) the
amounts actually incurred by such Participating Lender for which payment is
provided under such Sections and (ii) the amounts that would have been payable
under such Sections to the Lender granting the participation had such
participation not been granted. It is expressly agreed that, in connection with
prospective offers for the sale and transfer of any participation pursuant to
this Section 12.3(e), any Lender may provide to any prospective Participating
Lender such information pertaining to the Borrowers as such Lender may deem
appropriate.
(f) If a Participating Lender shall at any time with the
Borrowers' knowledge participate with any Lender in the Loans, each Borrower
hereby grants to such Participating Lender, and such Participating Lender shall
have and is hereby given, for the its benefit and that of the Agent and the
Lenders, a continuing Lien on and security interest in any money, Securities
and other property of such Borrower in the custody or possession of such
Participating Lender, including the right of set-off, to the extent of the
total amount of the Obligations, and such Participating Lender shall be deemed
to have the same right of set-off to the extent of the Participating Lender's
participation in the Obligations under this Agreement as it would have if it
were a direct lender.
(g) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement, in favor of any
Federal Reserve Bank, in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
12.4 Binding Effect; Assignment; Disclosure. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
representatives, successors and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by any Borrower without the
prior written consent of the Agent and the Lenders. With respect to a
Borrower, successors and assigns shall include, without limitation, any
receiver, trustee or debtor-in-possession of or for such Borrower. The rights
and benefits of any Lender hereunder shall, if such Lender so agrees, inure
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to any party acquiring any interest in the Obligations or any part thereof,
subject to the provisions of Section 12.3. Each Borrower agrees that the Agent
and any Lender may use such Borrower's name in advertising and promotional
materials and in conjunction therewith disclose the general terms of this
Agreement.
ARTICLE 13
THE AGENT
13.1 Appointment. Each Lender hereby designates and appoints
BankAmerica Business Credit, Inc. as its Agent under this Agreement and the
other Loan Documents, and each Lender hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
The Agent agrees to act as such on the express conditions contained in this
Article 13. The provisions of this Article 13 are solely for the benefit of the
Agent and the Lenders, and no Borrower shall have any rights as a third party
beneficiary of any of the provisions hereof (other than as expressly set forth
in Section 13.7). In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Borrower. The Agent may perform any of its
duties under this Agreement, or under the other Loan Documents, by or through
its agents or employees.
13.2 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including, without
limitation, (a) subject to the limitations upon the Agent's discretion
described in the definitions of Eligible Accounts and Eligible Inventory, the
determination of the applicability of ineligibility criteria with respect to
the calculation of the Maximum Revolver Amount and Individual Maximum Revolver
Amounts, (b) the making of Agent Advances pursuant to Section 2.3(h), and (c)
the exercise of remedies pursuant to Section 10.2, and any action so taken or
not taken shall be deemed consented to by the Lenders. The Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the other Loan Documents, express or
implied, is intended to or shall be construed to impose upon the Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein. Each Lender shall make its own
independent investigation of the financial condition and affairs of the
Borrowers in connection with the making and the continuance of the Loans
hereunder, and shall make its own appraisal of the creditworthiness of the
Borrowers, and the Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
date of this Agreement or at any time or times thereafter, other than written
reports provided by the Borrowers to the Agent pursuant to this Agreement. If
the Agent seeks the consent or approval of the Majority Lenders to the taking
or refraining from
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taking any action hereunder, the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender (1) any time that the Agent
becomes aware that an Event of Default has occurred and is continuing and (2)
any time that the Majority Lenders have instructed the Agent to act or refrain
from acting pursuant hereto. The Agent may employ agents, co-agents and
attorneys-in-fact and shall not be responsible to the Lenders or the Borrowers,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care.
13.3 Rights, Exculpation, Etc. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by it or any of them under this Agreement or under any
of the other Loan Documents, or in connection herewith or therewith, except
that (a) the Agent shall be obligated on the terms set forth herein for
performance of its express obligations under this Agreement; (b) the Agent
shall not be entitled to exercise any of the powers granted to it under this
Agreement or the other Loan Documents in any way inconsistent with its express
obligations to the Lenders under this Agreement; and (c) no Person shall be
relieved of any liability imposed by law for gross negligence or for willful
misconduct or any other intentional tort. The Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant to
Section 4.5, and if any such apportionment or distribution is subsequently
determined to have been made in error, the sole recourse of any Lender to whom
payment was due but not made shall be to recover from the other Lenders any
payment in excess of the amount to which they are determined to have been
entitled. The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties contained in this Agreement or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the other Loan
Documents or any of the transactions contemplated thereby, or for the financial
condition of any Borrower. The Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the other Loan Documents or the
financial condition of any Borrower, or the existence or possible existence of
any Default or Event of Default. The Agent may at any time request instructions
from the Lenders or Majority Lenders with respect to any actions or approvals
which by the terms of this Agreement or of any of the other Loan Documents the
Agent is permitted or required to take or to grant, and if such instructions
are promptly requested, the Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Lenders or Majority Lenders, as applicable.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of the Lenders or Majority Lenders, as applicable.
13.4 Reliance. The Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
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13.5 Indemnification of the Agent by the Lenders. To the extent
that the Agent is not reimbursed and indemnified by the Borrowers, the Lenders
will reimburse and indemnify the Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or any of the other Loan Documents or any
action taken or omitted by the Agent under this Agreement or any of the other
Loan Documents, in proportion to each Lender's Pro Rata Share, including,
without limitation, Agent Advances; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from the Agent's recklessness, willful misconduct or
gross negligence. The obligations of the Lenders under this Section 13.5 shall
survive the resignation of an Agent pursuant to Section 13.7, the payment in
full of the Loans and reimbursement obligations with respect to Letters of
Credit, the termination of all outstanding Letters of Credit and Acceptances
and the termination of this Agreement.
13.6 Agent in Individual Capacity. BABC and its affiliates may make
loans to, issue letters of credit for the account of, create Acceptances for
the account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Borrowers and any of their respective Subsidiaries and
Affiliates as though BABC were not the Agent hereunder, and without notice to
or the consent of the other Lenders. The Lenders acknowledge that, pursuant to
such activities, BABC or its affiliates may receive information regarding the
Borrowers or their respective Subsidiaries or Affiliates (including information
that may be subject to confidentiality obligations in favor of the applicable
Borrower or any such Subsidiary or Affiliate) and acknowledge that the Agent
shall be under no obligation to provide such information to them. With respect
to its Commitment and the Loans made by it and the L/C Credit Support and
Acceptance Credit Support in which it has purchased a participation interest,
BABC shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent.
13.7 Successor Agent.
(a) The Agent may resign from the performance of all of its
functions and duties under this Agreement at any time by giving at least sixty
(60) Business Days' prior written notice to the Borrowers and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (b) or (c) below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent who shall be reasonably satisfactory to the
Borrowers; provided, that any such Agent which shall be a Lender hereunder
shall be deemed to be reasonably satisfactory to the Borrowers.
(c) If the Majority Lenders agree on a successor Agent within
such sixty (60) Business Day period, but the Borrowers unreasonably object to
such successor Agent, then such successor shall be appointed as Agent hereunder
notwithstanding such objection. If a successor Agent shall not have been so
appointed within such sixty (60) Business Day period because the Majority
Lenders have not agreed on such successor, or because the Borrowers shall
reasonably
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object to such successor Agent, the retiring Agent shall then appoint a
successor Agent who shall serve as Agent until such time, if any, as a
successor Agent shall be appointed as provided above.
13.8 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any Agent's Lien upon any Collateral
(1) upon the termination of the Commitments, payment and satisfaction of all
Loans and reimbursement obligations in respect of Letters of Credit,
Acceptances, L/C Credit Support and Acceptance Credit Support, and the
termination of all outstanding Letters of Credit and Acceptances (whether or
not any of such obligations are due) and all other Obligations which have
matured and which the Agent has been notified in writing are then due and
payable; (2) constituting property being sold or disposed of if the applicable
Borrower certifies to the Agent that the sale or disposition is made in
compliance with Section 5.11 or 8.9 (and the Agent may rely conclusively on any
such certificate, without further inquiry); (3) constituting property in which
the applicable Borrower owned no interest at the time the Lien was granted or
at any time thereafter; (4) constituting property leased to the applicable
Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or which will expire imminently and which has
not been, and is not intended by such Borrower to be, renewed or extended; or
(5) in any instance not covered by clauses (1) through (4), with a value, when
aggregated with other Collateral with respect to which a Lien has been released
pursuant to this clause (5) during the term of this Agreement, of less than
$5,000,000 (provided, that from and after the occurrence of any Event of
Default, such amount shall be deemed to be reduced to $2,500,000). Except as
provided above, the Agent will not release any of the Agent's Liens without the
prior authorization of all of the Lenders. Upon request by the Agent or the
Borrowers at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items of
Collateral pursuant to this Section 13.8.
(b) The Agent is hereby irrevocably authorized by the Lenders
to execute such documents as may be necessary to evidence the release of the
Agent's Liens upon Collateral authorized to be released pursuant to Section
13.8(a); provided, however, that (1) the Agent shall not be required to execute
any such document on terms which, in the Agent's opinion, would expose the
Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (2) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
any Borrower in respect of) all interests retained by any Borrower, including
(without limitation) the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the applicable
Borrower or is cared for, protected or insured or has been encumbered, or,
other than a duty to act without willful misconduct or gross negligence, that
the Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent pursuant to this
Section 13.8 or pursuant to any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem
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appropriate, in its sole discretion, given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no duty or liability whatsoever to any Lender as to any of the foregoing.
(d) The Agent shall have no obligation whatsoever to any of
the Lenders to determine whether, in the case of a Letter of Credit supporting
the purchase of Inventory, such Inventory would be excluded from Eligible
Inventory as a result of the application of any of the eligibility criteria set
forth in the definition of Eligible Inventory or otherwise, for the purpose of
establishing the percentage of the face amount of such Letter of Credit that
would be included in the calculation of Aggregate Revolver Outstandings, or for
any other purpose.
13.9 Restrictions on Actions by Lenders; Sharing of Payments. (a)
Each of the Lenders agrees that it shall not, without the express consent of
all of the Lenders, and that it shall, to the extent it is lawfully entitled to
do so, upon the request of all of the Lenders, set-off against the Obligations,
any amounts owing by such Lender to any Borrower or any accounts of any
Borrower now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by the
Agent, take or cause to be taken any action to enforce its rights under this
Agreement or against any Borrower, including, without limitation, the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any of the Collateral.
(b) Subject to Section 4.5, if, at any time or times any
Lender shall receive (1) by payment, foreclosure, set-off or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations of any
Borrower to such Lender arising under, or relating to, this Agreement or the
other Loan Documents, except for any such proceeds or payments received by such
Lender from the Agent pursuant to the terms of this Agreement, or (2) payments
from the Agent in excess of such Lender's ratable portion of all such
distributions by the Agent, such Lender shall promptly (A) turn the same over
to the Agent, in kind, and with such endorsements as may be required to
negotiate the same to the Agent, or in same day funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received
shall be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to
such purchasing party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the recovery of
the excess payment.
13.10 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC, can be perfected only by
possession. Should any Lender (other than BABC at such time as it shall also
act as the Agent) obtain possession of any such Collateral, such Lender shall
notify the Agent thereof, and, promptly upon the Agent's request therefor shall
deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
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13.11 Payments by Agent to Lenders. All payments to be made by the
Agent to the Lenders on or in respect of the Obligations under this Agreement
shall be made by bank wire transfer or internal transfer of immediately
available funds pursuant to the instructions set forth on Schedule 13.11, or
pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Loans or otherwise.
13.12 Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Agent and the Lenders. Each Lender agrees that any action taken by the Agent or
Majority Lenders in accordance with the terms of this Agreement or the other
Loan Documents relating to the Collateral, and the exercise by the Agent or the
Majority Lenders of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall
be authorized by and binding upon all of the Lenders.
13.13 Field Audit Reports; Disclaimers by Lenders. By its execution
and delivery of this Agreement, each Lender
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field
audit report (each, a "Report" and collectively, "Reports") prepared
by the Agent pursuant to Section 5.6;
(b) expressly agrees and acknowledges that neither BABC nor
the Agent (1) makes any representation or warranty as to the accuracy
of any Report, or (2) shall be liable for any information contained in
any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits, that the Agent or other party performing any
audit will inspect only specific information regarding the Borrowers
and will rely significantly upon the Borrowers' books and records, as
well as on representations of the Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and agrees not to distribute or use any Report in
any other manner; and
(e) without limiting the generality of any other
indemnification provisions contained in this Agreement, agrees (1) to
hold BABC and the Agent harmless from any action such Lender may take
based upon, or the consequences of any conclusion such Lender may
reach as a result of, the information contained in any Report, in
connection with any Loan or other credit accommodations that such
Lender has made or shall make to any Borrower, or in which such Lender
may purchase a participation interest, and (2) to pay, protect,
indemnify, defend and hold BABC and the Agent harmless from and
against, any claims, actions, proceedings, damages, costs, expenses
and other amounts (including, without limitation, reasonable
attorneys' fees) incurred by BABC and/or the Agent as the direct or
indirect result of the actions of any third parties which might obtain
all or part of any Report through such Lender.
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13.1 Relations among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in the case of the Agent) authorized to
act for, any other Lender.
ARTICLE 14
MISCELLANEOUS
14.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC, the PPSA or other applicable law. The Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of one
right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, proceed
directly against any or all Borrowers to collect the Obligations without any
prior recourse to the Collateral.
14.2 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
14.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED THAT PERFECTION ISSUES
WITH RESPECT TO ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE MAY GIVE EFFECT TO
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE
UNIFORM COMMERCIAL CODE) OF THE STATE OF ILLINOIS.
(b) SUBJECT ONLY TO THE EXCEPTION IN THE NEXT SENTENCE, THE
BORROWERS, THE AGENT AND THE LENDERS HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL COURT OF THE NORTHERN DISTRICT OF ILLINOIS AND THE STATE COURTS
OF ILLINOIS LOCATED IN COOK COUNTY, ILLINOIS AND WAIVE ANY OBJECTION BASED ON
VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN,
AND AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP AMONG THE BORROWERS, THE
LENDERS AND THE AGENT OR THE CONDUCT OF ANY PARTY IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE
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PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS
ADDRESS SPECIFIED PURSUANT TO SECTION 14.7 AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN
THE U.S. MAILS, OR, AT THE AGENT'S AND/OR THE LENDERS' OPTION, BY SERVICE UPON
DAVID E. SCHAPER, ROADMASTER CORPORATION, 10275 WEST HIGGINS ROAD, SUITE 540 -
LEGAL GROUP, ROSEMONT, ILLINOIS 60018, WHICH EACH BORROWER IRREVOCABLY APPOINTS
AS SUCH BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN
THE STATE OF ILLINOIS, OR SUCH SUBSTITUTE AGENT FOR SUCH PURPOSE OF WHICH THE
BORROWERS SHALL NOTIFY THE AGENT IN WRITING. IN ADDITION, THE AGENT AND THE
LENDERS AGREE TO PROMPTLY FORWARD BY REGISTERED MAIL ANY PROCESS SO SERVED UPON
SAID AGENT TO THE APPLICABLE BORROWER AT ITS ADDRESS SPECIFIED PURSUANT TO
SECTION 14.7. EACH BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) THE BORROWERS, THE AGENT AND THE LENDERS EACH HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR EITHER OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED, IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE
BORROWERS, THE AGENT AND THE LENDERS HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY SUCH PARTY MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 14.3 SHALL AFFECT THE RIGHT OF THE
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
(f) EACH BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST
THE AGENT OR ANY LENDER ANY CLAIM FOR CONSEQUENTIAL, INCIDENTAL,
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SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.4 Survival of Representations and Warranties. All of the
Borrowers' respective representations and warranties contained in this
Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
14.5 Other Security and Guaranties. Without affecting the
Borrowers' respective obligations hereunder, the Agent may from time to time:
(a) take from any Person and hold collateral (other than the Collateral) for
the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or
any part of the Obligations, or any other Person in any way obligated to pay
all or any part of the Obligations.
14.6 Fees and Expenses. The Borrowers shall pay to the Agent, for
its benefit, on demand, all costs and expenses that the Agent pays or incurs in
connection with the negotiation, preparation, consummation, administration,
enforcement, and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) attorneys' and paralegals' fees (including
allocated internal counsel fees) and disbursements of counsel to the Agent; (b)
costs and expenses (including attorneys' and paralegals' fees (including
allocated internal counsel fees) and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents or Mortgages and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees and
other charges for recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent's
Liens; (e) sums paid or incurred to pay any amount or take any action required
of any Borrower under the Loan Documents that such Borrower fails to pay or
take; (f) costs of appraisals, inspections, and verifications of the
Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and the Borrowers' respective operations by the
Agent's agents, subject to the terms of Sections 3.7 and 5.6; (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts; and (h) costs and
expenses of preserving and protecting the Collateral. The Borrowers shall pay
on demand all costs and expenses (including attorneys' and paralegals' fees
(including allocated internal counsel fees) and disbursements) paid or incurred
by the Agent to obtain payment of the Obligations, enforce the Agent's Liens,
sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or threatened
against the Agent or any Lender arising out of the transactions contemplated
hereby (including without limitation, preparations for and consultations
concerning any such matters). None of the foregoing shall be construed to limit
any other provisions of the Loan Documents regarding costs and expenses to be
paid by any Borrower. All of the foregoing costs and expenses shall be charged
to the applicable Borrower's loan account as Revolving Loans as described in
Section 4.4. All references in this Agreement or the other Loan Documents to
"attorney's fees" or words of
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similar import shall be deemed, in connection with fees payable to any Canadian
counsel, to refer to solicitor's fees on a "solicitor and his own client"
basis.
14.7 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, or (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified at the address
set forth on Schedule 14.7 or to such other address as each party may designate
for itself by like notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
14.8 Indemnity of the Agent and the Lenders by the Borrowers. Each
Borrower agrees to (a) reimburse the Agent and the Lenders for any costs and
expenses (including, without limitation, attorneys' and paralegals' fees and
expenses, including allocated in-house counsel fees) incurred by the Agent or
any Lender in defending any suit brought against it by any Borrower or any
other Person in connection with the transactions contemplated by this
Agreement, and (b) indemnify and hold the Agent and the Lenders and their
respective officers, directors, employees, attorneys and agents (collectively,
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever incurred by the
Indemnitees, whether direct, indirect or consequential, as a result of or
arising from or relating to any proceeding by any Person, whether threatened or
initiated, asserting any claim for legal or equitable remedy against any Person
under any statute or regulation (including, without limitation, any federal or
state securities or commercial laws or under any common law or equitable cause
or otherwise, including any liability and costs under Environmental Laws or
common law principles arising from or in connection with the past, present or
future operations of any Borrower or its predecessors in interest, or the past,
present or future environmental condition of such Borrower's property, the
presence of asbestos-containing materials at or on such property, or the
Release or threatened Release of any Contaminant from such property), in any
way arising from or in connection with the negotiation, preparation, execution,
delivery, enforcement, performance and administration of this Agreement or any
other document executed in connection herewith, provided that no Borrower shall
have any obligation hereunder with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of any Indemnitee seeking such
indemnification. To the extent that the indemnity set forth in this Section may
be unenforceable because it is violative of any law or public policy, each
Borrower shall pay the maximum portion which it is permitted to pay under
applicable law. Any Indemnitee will promptly notify the Borrowers of the
commencement of any legal proceeding which may give rise to any indemnified
liability under the foregoing indemnity and shall permit the Borrowers to
participate in the defense of such Indemnitee in any such proceeding. The
foregoing indemnity shall survive the resignation of an Agent pursuant to
Section 13.7, the payment of the Obligations and the termination of this
Agreement. All of the foregoing fees, costs and expenses shall be part of the
Obligations, payable upon demand, and secured by the Collateral.
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14.9 Limitation of Liability. No claim may be made by any Borrower,
any Lender or any other Person against the Agent, any Lender, or the
affiliates, directors, officers, employees, or agents of any of them, for any
special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
each Borrower and each Lender hereby waives, releases and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
14.10 Waiver of Notices. Unless otherwise expressly provided herein,
each Borrower waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, as well as any and all other notices to which it
might otherwise be entitled. No notice to or demand on a Borrower which the
Agent or any Lender may elect to give shall entitle such Borrower to any or
further notice or demand in the same, similar or other circumstances.
14.11 Final Agreement. This Agreement is intended by the Borrowers,
the Agent and the Lenders to be the final, complete, and exclusive expression
of the agreement among them. This Agreement supersedes any and all prior oral
or written agreements relating to the subject matter hereof.
14.12 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
14.13 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not
be construed to modify, enlarge, or restrict any provision.
14.14 Right of Set-Off. Whenever an Event of Default exists, the
Agent and each Lender are hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Agent or such Lender or
any affiliate of the Agent or such Lender to or for the credit or the account
of any Borrower against any and all of the Obligations, whether or not then due
and payable, any such amounts to be applied in accordance with the terms of
Section 4.5. The Agent and each Lender agree promptly to notify the applicable
Borrower after any such set-off and application made by the Agent or such
Lender, as applicable, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
14.15 Taxes.
(a) Any and all payments by a Borrower hereunder shall be made
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
United States of America or any Public Authority under the laws of which such
Lender or the Agent (as the case may
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be) is organized or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If a Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
or the Agent, (1) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 14.15) such Lender or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (2) such Borrower shall make such deductions and
(3) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents (hereinafter referred to as "Other
Taxes").
(c) Each Borrower will indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 14.15) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the
date such Lender or the Agent (as the case may be) makes written demand
therefor. Each Lender shall, at the time of any written demand for
indemnification under this subsection (c), provide to the applicable Borrower a
receipt for, or other evidence of the payment of, the Taxes or Other Taxes for
which indemnification is sought.
(d) Within 30 days after the date of any payment of Taxes, the
applicable Borrower will furnish to the Agent, at its address specified
pursuant to Section 14.7, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of any payment
hereunder with respect to which a claim for indemnity has been made hereunder,
the applicable Borrower will furnish to the Agent, at such address, a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Agent, in either case stating that such payment is exempt
from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreement
of any Borrower hereunder, the agreements and obligations of the Borrowers
contained in this Section 14.15 shall survive the payment in full of principal
and interest hereunder.
14.16 Joint and Several Liability. (a) The liability of the
Borrowers for all amounts due to the Agent or any Lender under this Agreement
shall be joint and several regardless of which Borrower actually receives Loans
or other extensions of credit hereunder or the amount of such Loans received or
the manner in which the Agent or such Lender accounts for such Loans or other
extensions of credit on its books and records. Each Borrower's Obligations with
respect to Loans made to it, and each Borrower's Obligations arising as a
result of the joint and several liability of the Borrowers hereunder, with
respect to Loans made to any other Borrower hereunder, shall be separate and
distinct obligations, but all such Obligations shall be primary obligations of
each Borrower.
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(b) Each Borrower's Obligations arising as a result of the
joint and several liability of the Borrowers hereunder with respect to Loans or
other extensions of credit made to any other Borrower hereunder shall, to the
fullest extent permitted by law, be unconditional irrespective of (1) the
validity or enforceability, avoidance or subordination of the Obligations of
such other Borrower or of any promissory note or other document evidencing all
or any part of the Obligations of such other Borrower, (2) the absence of any
attempt to collect the Obligations from such other Borrower, any other
guarantor, or any other security therefor, or the absence of any other action
to enforce the same, (3) the waiver, consent, extension, forbearance or
granting of any indulgence by the Agent or any Lender with respect to any
provision of any instrument evidencing the Obligations of such other Borrower,
or any part thereof, or any other agreement now or hereafter executed by such
other Borrower and delivered to the Agent or any Lender, (4) the failure by the
Agent or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of such other Borrower, (5) the Agent's or any Lender's election,
in any proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, (6) any borrowing or grant of a
security interest by such other Borrower, as debtor-in-possession under Section
364 of the Bankruptcy Code, (7) the disallowance of all or any portion of the
Agent's or any Lender's claim(s) for the repayment of the Obligations of such
other Borrower under Section 502 of the Bankruptcy Code, or (8) any other
circumstances which might constitute a legal or equitable discharge or defense
of a guarantor or of such other Borrower. With respect to each Borrower's
Obligations arising as a result of the joint and several liability of the
Borrowers hereunder with respect to Loans or other extensions of credit made to
any of the other Borrowers hereunder, such Borrower waives, until the
Obligations shall have been paid in full and the Loan Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which
the Agent or any Lender now or may hereafter have against any Borrower, any
endorser or any guarantor of all or any part of the Obligations, and any
benefit of, and any right to participate in, any security or collateral given
to the Agent or any Lender to secure payment of the Obligations or any other
liability of the Borrowers to the Agent or any Lender.
(c) Upon any Event of Default, the Agent may proceed directly
and at once, without notice, against any Borrower to collect and recover the
full amount, or any portion of the Obligations, without first proceeding
against any other Borrower or any other Person, or against any security or
collateral for the Obligations. Each Borrower consents and agrees that the
Agent shall be under no obligation to marshall any assets in favor of such
Borrower or against or in payment of any or all of the Obligations.
14.17 Contribution and Indemnification among the Borrowers. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that a Borrower shall, under this Agreement
as a joint and several obligor, repay any of the Obligations constituting Loans
made to any other Borrower hereunder or other Obligations incurred directly and
primarily by any other Borrower (an "Accommodation Payment"), then the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum
of the Allocable Amounts of all of the Borrowers. As of any date of
determination, the "Allocable Amount" of each Borrower shall be equal to the
maximum amount of liability for Accommodation
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Payments which could be asserted against such Borrower hereunder without (a)
rendering such Borrower "insolvent" within the meaning of Section 101(31) of
the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (the
"UFTA") or Section 2 of the Uniform Fraudulent Conveyance Act (the "UFCA"), (b)
leaving such Borrower with unreasonably small capital or assets, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or
Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its debts as
they become due within the meaning of Section 548 of the Bankruptcy Code or
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this Section 14.17 shall
be subordinate in right of payment to the prior payment in full of the
Obligations. The provisions of this section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
ROADMASTER CORPORATION
By:________________________________
Title:
ROADMASTER LEISURE INC.
By:________________________________
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
WILLOW HOSIERY COMPANY, INC.
By:________________________________
Title:
HUTCH SPORTS USA INC.
By:________________________________
Title:
BANKAMERICA BUSINESS CREDIT, INC., as
the Agent
By:________________________________
Vice President
Commitment: $ 65,000,000 BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:________________________________
Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Commitment: $ 35,000,000 CONGRESS FINANCIAL CORPORATION, as a
Lender
By:________________________________
Vice President
Commitment: $ 15,000,000 FIRST BANK NATIONAL ASSOCIATION, as
a Lender
By:________________________________
Vice President
Commitment: $ 15,000,000 LASALLE NATIONAL BANK, as a Lender
By:________________________________
Vice President
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The undersigned hereby designates the "Obligations" (as such term is defined in
the foregoing Loan and Security Agreement dated as of __________, 1996 among
Roadmaster Corporation, Roadmaster Leisure Inc., Willow Hosiery Company, Inc.
and Hutch Sports USA Inc., the "Lenders" (as such term is defined therein) and
BankAmerica Business Credit, Inc., as "Agent" for the Lenders) as "Designated
Senior Indebtedness" (as such term is defined in that certain Indenture dated
as of December 15, 1993 between the undersigned and LaSalle National Bank, as
Trustee).
__________, 1996 ROADMASTER INDUSTRIES, INC.
By:_________________________
Title:______________________
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EXHIBIT 99.1
<PAGE> 2
Richard Foote/Jeffrey Volk
E-Mail: [email protected]
Company Contact: Henry Fong
ROADMASTER INDUSTRIES, INC.
250 Spring Street, NW 3S
Atlanta, Ga. 30303
(404) 586-9000
ROADMASTER INDUSTRIES, INC. COMPLETES
SALE OF BICYCLE DIVISION
ATLANTA, GEORGIA, SEPTEMBER 6, 1996 - ROADMASTER INDUSTRIES, INC.
(NYSE:RDM) today announced the completion of the sale of its Bicycle Division,
including the Flexible Flyer line of sleds and wagons, to Brunswick Corporation
(NYSE:BC).
The company will use the net proceeds to reduce its outstanding
indebtedness and make additional funds available for reinvestment in the
company's remaining toy and fitness-related businesses, or for general
corporate purposes. As part of reducing its indebtedness, the company
successfully completed its tender offer to repurchase its 11.75% Senior
Subordinated Notes due 2002.
Under the terms of the agreement, Roadmaster will sell the Roadmaster
trademark to Brunswick and adopt a new corporate name at its next shareholders'
meeting. The remaining Roadmaster Sporting Goods Group will retain the Flexibly
Flyer and other trademarks for use in the company's toy and fitness categories.
Roadmaster is a leading producer of fitness equipment, and is a
leading producer and distributor of toys and team sport equipment. The
trademarks or brand names under which Roadmaster sells its products include
Flexible Flyer, Vitamaster, MacGregory, DP, Hutch, Reach and Forster.
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