SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) JUNE 17, 1999
LOIS/USA INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-83894-NY 13-3441962
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
40 WEST 57TH STREET, NEW YORK, NY 10019
(Address of principal executive offices) Zip Code)
Registrant's Telephone Number, including area code: (212) 373-4700
------------------
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. OTHER EVENTS.
On June 17, 1999 ZYX Inc. (formerly Lois/USA West Inc.), Lois/USA
Chicago Inc., Lois/USA New York, Inc., Fogarty & Klein, Inc. and Year 2K
Communications, Inc. (collectively, the "Borrowers"), Green Tree Financial
Servicing Corporation, as agent and lender, and various other lenders entered
into a Loan and Security Agreement (the Loan and Security Agreement"). Each of
the Borrowers is a wholly-owned subsidiary of Lois/USA Inc. (the "Company").
The Loan and Security Agreement provides for a revolving credit
facility of up to $30,000,000 in the aggregate for the purpose of refinancing
existing indebtedness, making acquisitions and providing working capital for
each of the Borrowers. The obligations under the Loan and Security Agreement are
secured by a lien on all of the existing and after-acquired property of the
Borrowers, and are guaranteed by the Company. In addition, the Company has
pledged all of the stock of each of the Borrowers to secure the guaranty.
The Company used approximately $15,581,000 of the revolving credit
facility to refinance certain indebtedness of the Company and the Borrowers
under a promissory note between the Borrowers (excluding Year 2K Communications,
Inc.) and Fleet Business Credit Corporation, successor to Sanwa Business Credit
Corporation, as lender. The Company intends to use the remainder of the proceeds
of the revolving credit facility to finance future acquisitions and for general
working capital. There can be no assurances that such acquisitions will be
consummated.
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
10.1. Loan and Security Agreement, dated as of June 17, 1999, among
ZYX Inc. (formerly Lois/USA West Inc.), Lois/USA Chicago Inc., Lois/USA New York
Inc., Fogarty & Klein, Inc. and Year 2K Communications, Inc., as Borrowers, the
Lenders named therein, as Lenders, and Green Tree Financial Servicing
Corporation, as Agent and Lender.
<PAGE>
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 thereunto duly authorized.
LOIS/USA INC.
By: /s/ ROBERT K. STEWART
-------------------------------
Name: Robert K. Stewart
Title: Chief Financial Officer
Dated: June 21, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT
10.1 Loan and Security Agreement, dated as of June 17, 1999, among ZYX Inc.
(formerly Lois/USA West Inc.), Lois/USA Chicago Inc., Lois/USA New York Inc.,
Fogarty & Klein, Inc. and Year 2K Communications, Inc., as Borrowers, the
Lenders named therein, as Lenders, and Green Tree Financial Servicing
Corporation, as Agent and Lender.
Exhibit 10.1
W&S DRAFT
JUNE 14, 1999
LOAN AND SECURITY AGREEMENT
BY AND AMONG
ZYX INC. (formerly LOIS/USA WEST INC.),
LOIS/USA CHICAGO INC.,
LOIS/USA NEW YORK INC.
FOGARTY & KLEIN, INC.
AND
YEAR 2K COMMUNICATIONS, INC.
as Borrowers,
THE LENDERS NAMED HEREIN
as Lenders,
AND
GREEN TREE FINANCIAL SERVICING CORPORATION,
as Agent and Lender
Dated as of
June 17, 1999
<PAGE>
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT dated as of June 17, 1999, is among
ZYX INC. (formerly LOIS/USA WEST INC.), a Delaware corporation ("West"),
LOIS/USA CHICAGO INC., a Delaware corporation ("Chicago"), LOIS/USA NEW YORK
INC., a Delaware corporation ("New York"), FOGARTY & KLEIN, INC., a Texas
corporation ("FKP"), YEAR 2K COMMUNICATIONS, INC., a Delaware corporation
("Y2K") (West, Chicago, New York, FKP and Y2K are collectively referred to
herein as the "Borrowers" and individually as a "Borrower") and GREEN TREE
FINANCIAL SERVICING CORPORATION, for itself, as Lender, and as Agent for the
Lenders, and the other Lenders signatory hereto from time to time.
W I T N E S S E T H:
WHEREAS, Borrowers desire that Lenders extend a revolving credit
facility to Borrowers of up to Thirty Million Dollars ($30,000,000) in the
aggregate for the purpose of (a) refinancing Borrowers' existing senior
revolving Indebtedness with Sanwa Business Credit Corporation, (b) Permitted
Acquisitions, (c) working capital financing for Borrowers, and (d) providing
funds for other general business purposes of Borrowers; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth herein;
and
WHEREAS, Borrowers desire to secure all of their Obligations under the
Financing Agreements by granting to Agent, for the benefit of Agent and Lenders,
a security interest in and lien upon all of their existing and after-acquired
personal property and cross-guaranty the Obligations of the other Borrowers; and
WHEREAS, the Lois/USA Inc., a Delaware corporation and the parent of
the Borrowers ("Parent"), is willing to guaranty all of the obligations of
Borrowers to Lenders under the Financing Agreements and to pledge to Agent, for
the benefit of Agent and Lenders, all of the Stock of the Borrowers to secure
such guaranty.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers by the Agent and the Lenders, the
parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 GENERAL TERMS. When used herein, the following terms shall have
the following meanings:
"ACCOUNT DEBTOR" shall mean any Person who is or may become obligated
on or under an Account.
"ACCOUNTING CHANGES" shall mean (a) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions) or (b) changes in accounting principles concurred in by the
Borrowers' certified public accountants.
"ACCOUNTS" shall mean all presently existing and hereafter arising or
acquired accounts, accounts receivable, margin accounts, futures positions, book
debts, contracts, notes, drafts, acceptances, and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, Documents or
Instruments) now or hereafter owned or held by or payable to any Borrower
relating in any way to Inventory or arising from the sale of Inventory, the
rendering of services or the production of any form of advertising, marketing
and promotional materials or the procurement of television and radio on-air time
by any Borrower or howsoever otherwise arising, including the right to payment
of any interest or finance charges with respect thereto, together with all
merchandise represented by any of the Accounts; all such merchandise that may be
reclaimed or repossessed or returned to any Borrower; all of any Borrower's
rights as an unpaid vendor, including, without limitation, stoppage in transit,
reclamation, rescission, replevin, and sequestration; all pledged assets and all
letters of credit, guaranty claims, Liens held by or granted to any Borrower to
secure payment of any Accounts; all proceeds and products of all of the
foregoing described properties and interests in properties; and all proceeds of
insurance with respect thereto, including, without limitation, the proceeds of
any applicable casualty or credit insurance or fidelity bond, whether payable in
cash or in kind; and all customer lists, ledgers, books of account, records,
computer programs, computer disks or tape files (including, without limitation,
all microfilm), computer printouts, computer runs, and other computer prepared
information relating to any of the foregoing.
"ACCOUNTS TRIAL BALANCE" shall have the meaning ascribed thereto in
SUBSECTION 3.1.
"ACQUISITION" shall mean any transaction, or any series of related
transactions, consummated after the Closing Date by which any Borrower or any
Subsidiary (a) acquires, directly or indirectly, any business or all or
substantially all of the assets of any Person or portion thereof, whether
through purchase of assets, merger, licensing arrangement or otherwise or (b)
directly or indirectly acquires at least (i) a majority (in number of votes of
the securities or warrants, options or other rights to acquire such securities)
of a Person which have ordinary voting power for the election of directors or
(ii) a majority (by percentage of voting power) of the outstanding partnership
or other interests of a Person or (c) makes any Person a Subsidiary, or causes
any assets of such Person to be merged into any Borrower or such Subsidiary
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or issuance to the holders of such Person's then outstanding
securities or capital interests, in exchange for such securities, of cash or
securities of any Borrower or such Subsidiary, or any combination thereof.
"ACQUISITION PRO FORMA" shall have the meaning ascribed thereto in
SUBSECTION 8.3(b)(x)(B).
"ACQUISITION PROJECTIONS" shall have the meaning ascribed thereto in
SUBSECTION 8.3(b)(x)(C).
"ADJUSTED EBITDA" shall mean, for any fiscal period, determined for
the Parent and its Subsidiaries on a consolidated basis, EBITDA for such period,
MINUS (i) the unfinanced portion of Capital Expenditures for such period, MINUS
(ii) amounts paid in cash pursuant to clause (iii) of SUBSECTION 8.11 for such
period, MINUS (iii) income and franchise taxes paid in cash for such period, all
as determined in accordance with GAAP and in a manner consistent with the
Financial Statements.
"AFFILIATE" shall mean any Person (including any member of the
immediate family of any such natural person) (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with any Borrower or any Subsidiary, including, without
limitation, the officers and directors of any Borrower or such Subsidiary, (b)
that directly or beneficially owns or holds ten percent (10%) or more of any
equity interest in any Borrower or any Subsidiary, or (c) ten percent (10%) or
more of whose voting stock (or in the case of a Person which is not a
corporation, ten percent (10%) or more of any equity interest) is owned directly
or beneficially or held by any Borrower or any Subsidiary. Affiliate shall not
be deemed to include the Agent or any Lender. As used herein, the term "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of the power to direct the management or policies of a Person, whether through
ownership of securities, by contract or otherwise.
"AGENT" shall mean Green Tree Financial Servicing Corporation, a
Delaware corporation, in its capacity as agent for the Lenders and not in its
individual capacity as a Lender, and any successor in such capacity appointed
pursuant to SUBSECTION 12.11.
"AGREEMENT" shall mean this Loan and Security Agreement, as the same
may hereafter be restated, amended, modified or supplemented from time to time.
"AGGREGATE BORROWING BASE" shall mean, as of any date of
determination, an amount equal to the sum of the West Borrowing Base, the
Chicago Borrowing Base and the New York Borrowing Base and, following
consummation of any Permitted Acquisition in which the Target acquired therein
becomes a Borrower in accordance with the terms of this Agreement, the borrowing
base of such Person.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee and accepted by the Agent in
accordance with SUBSECTION 11.1 and in substantially the form of EXHIBIT 1.1(a).
"AUDIT AGENT" shall mean for so long as it is a Lender under this
Agreement, General Electric Capital Corporation, a New York corporation, in its
capacity as audit agent for the Lenders and not in its individual capacity as a
Lender, and any successor audit agent in such capacity appointed by the Lenders.
"BANKRUPTCY CODE" shall mean Title 11, United States Code, as amended
from time to time.
"BASE RATE" shall mean the fluctuating interest rate equal to the
Prime Rate from time to time in effect plus the Base Rate Margin from time to
time in effect.
"BASE RATE MARGIN" shall mean the Base Rate Margin set forth on the
performance based grid below to be adjusted quarterly based on the Senior
Leverage Ratio measured at the end of each Fiscal Quarter, commencing with the
first day of the first calendar month that occurs more than five (5) days after
the Agent's receipt of financial statements pursuant to this Agreement for the
Fiscal Quarter ending September 30, 2000:
SENIOR LEVERAGE RATIO BASE RATE MARGIN
*6.0x:1.0 2.00%
*5.0x:1.0**=6.0x:1.0 1.75%
*4.0x:1.0**=5.0x:1.0 1.50%
*3.0x:1.0**=4.0x:1.0 1.25%
*2.0x:1.0**=3.0x:1.0 1.00%
* = Greater Than
**= Less Than
Prior to the initial adjustment in the Base Rate Margin, the Base Rate
Margin will be the highest level set forth in the foregoing grid. All
adjustments in the Base Rate Margin after September 30, 2000 will be implemented
quarterly on a prospective basis, for each calendar month commencing at least
five (5) days after the date of delivery to the Agent of the quarterly financial
statements of Parent evidencing the need for an adjustment. Concurrently with
the delivery of those financial statements, the Borrower Representative shall
deliver to the Agent and the Lenders a certificate, signed by its chief
financial officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Base Rate Margin. Failure to timely
deliver such financial statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Base Rate Margin to
the highest level set forth in the forgoing grid, until the first day of the
first calendar month following the delivery of those financial statements
demonstrating that such an increase in not required. If a Default or Event of
Default shall have occurred or be continuing at the time any reduction in the
Base Rate Margin is to be implemented, that reduction shall be deferred until
the first day of the first calendar month following the date on which such
Default or Event of Default is waived or cured.
"BASE RATE LOANS" shall mean the Revolving Loan or portion thereof
bearing interest at the Base Rate.
"BLOCKED ACCOUNT AGREEMENTS" shall have the meaning ascribed thereto
in SUBSECTION 3.5.
"BLOCKED ACCOUNTS" shall have the meaning ascribed thereto in
SUBSECTION 3.5.
"BORROWER REPRESENTATIVE" shall mean LOIS/USA Inc. in its capacity as
Borrower Representative pursuant to the terms of SUBSECTION 2.1(b).
"BORROWER'S ACCOUNT" shall mean (i) as to West, Account No. 615-772781
maintained with Chase Manhattan Bank, (ii) as to Chicago, Account No. 615-541925
maintained with Chase Manhattan Bank, (iii) as to New York, Account No.
615-541917 maintained with Chase Manhattan Bank, (iv) as to FKP, Account No.
615-776574 maintained with Chase Manhattan Bank, and (v) as to Y2K, Account No.
615-777759 maintained with Chase Manhattan Bank, or such other account as a
Borrower and the Agent may from time to time hereafter designate in writing.
"BORROWING AVAILABILITY" shall have the meaning ascribed thereto in
SUBSECTION 2.1(a).
"BORROWING AVAILABILITY RESERVE" shall have the meaning ascribed
thereto in SUBSECTION 7.14.
"BORROWING BASE" shall mean, as the context may require, the West
Borrowing Base, the Chicago Borrowing Base, the New York Borrowing Base, the FKP
Borrowing Base and the Y2K Borrowing Base or any such Borrowing Base.
"BORROWING BASE CERTIFICATE" shall mean a certificate in substantially
the form of EXHIBIT 1.1(b), duly certified by the Borrower Representative.
"BORROWING NOTICE" shall have the meaning ascribed thereto in
SUBSECTION 2.5(e).
"BUSINESS DAY" shall mean (i) for all purposes other than as described
in clause (ii) below, any day other than a Saturday, Sunday or other day on
which banks in Chicago, Illinois and New York, New York are authorized or
required to be closed and (ii) with respect to all notices, determinations,
borrowings, rate selections and payments in connection with LIBOR Rate Loans,
any day that is a Business Day described in clause (i) above and that is also a
day on which dealings in U.S. dollar deposits are carried on in the London
interbank LIBOR market.
"CAPITAL EXPENDITURES" shall mean, for any fiscal period, without
duplication, all expenditures (whether made in the form of cash including,
without limitation, deposits or other Property) by any Borrower or any
Subsidiary during such period for, or contracts for expenditures with respect
to, any fixed assets or improvements, or for renewals, replacements,
substitutions or additions thereto, which have a useful life of more than one
(1) year including, without limitation, the direct or indirect acquisition of
such assets by way of increased product or service charges, offset items or
otherwise, and shall include capitalized lease payments.
"CASH EQUIVALENTS" shall mean (i) certificates of deposit with banks
organized under the laws of the United States or of any State thereof (x) which
do not have set-off rights against the foregoing, other than set-offs for
nominal service charges and similar fees incurred in the ordinary course of
business, and (y) which have combined capital and surplus in excess of
$1,000,000,000, (ii) commercial paper maturing within one (1) year from the date
issued and rated at least A-2 or the equivalent thereof by Standard & Poors
Corporation, or P-2 or the equivalent thereof by Moody's Investors Service,
Inc., (iii) obligations issued or directly and fully guaranteed by the United
States government or any agency thereof, and (iv) investments in money market
funds substantially all the assets of which are comprised of securities of the
types described in clauses (i) through (iii) above.
"CHANGE" means (a) any change after the date of this Agreement in the
Risk-Based Capital Guidelines, or (b) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or any corporation controlling any Lender.
"CHANGE OF CONTROL" shall mean (i) the failure of the Parent to own,
free and clear of all Liens (other than Liens in favor of the Agent for the
benefit of the Lenders), 100% of the outstanding capital stock of each Borrower
on a fully diluted basis, (ii) the failure of Lois and Veru (or, in the event of
the death of Lois or Veru, such Person's estate) or any trusts established and
controlled by Lois or Veru for the exclusive benefit of himself, his spouse or
lineal descendants to own in the aggregate, free and clear of all Liens, at all
times at least 60% of the outstanding capital stock of the Parent on a fully
diluted basis or the failure of such Persons to own at all times a sufficient
number of shares of capital stock of the Parent on a fully diluted basis to
elect a majority of the Parent's board of directors or (iii) the failure to
employ any Key Employee or any replacement reasonably acceptable to the Agent by
the Parent or any Borrower.
"CHARGES" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including, without limitation, taxes
owed to the PBGC at the time due and payable), duties, levies, assessments,
charges, liens, claims or encumbrances upon or relating to (i) the Collateral,
(ii) the Obligations, (iii) the employees, payroll, income or gross receipts of
any Borrower, (iv) the ownership or use of any Property of Parent or any
Borrower, or (v) any other aspect of Parent's or any Borrower's business.
"CHATTEL PAPER" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any Borrower, wherever
located.
"CHICAGO BORROWING BASE" shall mean, as of any date of determination
by the Agent, an amount equal to eighty five percent (85%) of the face amount
(less maximum discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of Chicago.
"CLOSING DATE" shall mean June 17, 1999.
"CODE" shall have the meaning ascribed thereto in SUBSECTION 1.3.
"COLLATERAL" shall mean all property and interests in property now
owned or hereafter acquired by any Borrower in or upon which a Lien is granted
to the Agent, for the benefit of the Lenders, by any Borrower, whether under
this Agreement or the other Financing Agreements or under any other documents,
instruments or writings executed by such Borrower and delivered to the Agent,
including, without limitation, Accounts, Chattel Paper Documents, General
Intangibles, Fixtures, Instruments, Inventory, Intellectual Property, Investment
Property and Equipment.
"COLLECTING BANKS" shall have the meaning ascribed thereto in
SUBSECTION 3.5.
"COMMITMENT" shall mean, with respect to each Lender, the commitment
of each Lender to make the Revolving Loan to the Borrowers pursuant to
SUBSECTION 2.1(a) (including without duplication and as a subset of the
commitment to make Revolving Loans, the Swingline Lender's commitment to make
the Swingline Loan to Borrowers pursuant to SUBSECTION 2.1 (d)), to purchase
participations in Lender Guaranties pursuant to SUBSECTION 2.1(c) and, without
duplication, to purchase participations in the Swingline Loan pursuant to
SUBSECTION 2.1(d), as of the Closing Date in the aggregate amount set forth on
SCHEDULE 1. SCHEDULE 1 shall be amended from time to time to give effect to the
addition of any new Lenders pursuant to SUBSECTION 11.1 or any modification or
reduction from time to time to any such amount pursuant to the terms of this
Agreement.
"COMMITMENT FEE" shall have the meaning ascribed thereto in SUBSECTION
2.9.
"CONVERSION/CONTINUATION NOTICE" shall have the meaning ascribed
thereto in SUBSECTION 2.5(f).
"DEFAULT" shall mean an event which through the passage of time or the
service of notice, or both, would mature into an Event of Default.
"DEFAULT RATE" shall mean (a) in the case of principal or interest on
the Revolving Loan, two percent (2%) per annum above the rates of interest
otherwise applicable hereunder, (b) in the case of all other Obligations (other
than Lender Guaranty Fees), two percent (2%) per annum above the rate of
interest otherwise applicable to Base Rate Loans hereunder and (c) in the case
of Lender Guaranty Fees, two percent (2%) above the Lender Guaranty Fee
otherwise applicable hereunder.
"DEPOSITORY ACCOUNT" shall have the meaning ascribed thereto in
SUBSECTION 3.5.
"DOCUMENTS" shall mean any "documents" as such term is defined in the
Code, now owned or hereafter acquired by any Borrower, wherever located.
"EBITDA" shall mean, without duplication, for any fiscal period,
determined for the Parent and its Subsidiaries on a consolidated basis, Net
Income for such period, PLUS to the extent deducted in determining Net Income,
interest expense and income and franchise taxes paid, PLUS to the extent
deducted in determining Net Income, amortization, depreciation and other similar
non-cash charges, PLUS to the extent deducted in determining Net Income,
extraordinary losses, MINUS to the extent added in determining Net Income,
extraordinary gains, all as determined in accordance with GAAP and in a manner
consistent with the Financial Statements.
"EJL SELLERS" shall mean Dennis Robert Coe, in his individual capacity
and as Trustee of The Coe Living Trust, and Phyllis Thalman Coe, as Trustee of
The Coe Living Trust, Michele de Maio, Bear Ferguson, Andrea Giambrone, Consuelo
Gomez, Anna S. Laws, as trustee of the Laws Family Trust, Dean Laws, Ric Militi,
Adrienne Powell, Anne Stuzin, Lisa Tucker, Paul Vernon and Michael Waterkotte.
"ELIGIBLE ACCOUNTS" shall have the meaning ascribed thereto in
SUBSECTION 3.2.
"ELIGIBLE ASSIGNEE" means: (i) a Lender; (ii) an affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$500,000,000; (iv) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000; (v) a commercial bank organized
under the laws of any other country that is a member of the OECD or has
concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or a political subdivision of
any such country, and having a combined capital and surplus of at least
$500,000,000, so long as such bank is acting through a branch or agency located
in the United States; (vi) a finance company, insurance company or other
financial institution, investment company or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having a combined capital and surplus of at least $50,000,000; (vii) any
"accredited investor" as defined in the regulations promulgated under the
Securities Act; and (viii) any other Person approved by the Agent and the
Borrower Representative; PROVIDED that neither a Borrower nor any Affiliate of a
Borrower shall qualify as an Eligible Assignee under this definition.
"ENVIRONMENTAL LAWS" shall mean and includes the following as now in
effect or hereafter amended: the Comprehensive Environmental Response
Compensation and Liability Act, ("CERCLA"), 42 U.S.C. Section 9601 ET. SEQ.; the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. Section 6901 ET. SEQ.; the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601, ET. SEQ.; the Clean Air Act, 42 U.S.C. Section
7401 ET. SEQ.; the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C. Section 1251 ET. SEQ.; the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. Section 11001 ET. SEQ.; the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 ET. SEQ.; the Atomic Energy Act, 42 U.S.C. Section
2011 ET. SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 300f ET. SEQ. and
the state law equivalents; any so-called "Superfund" or "Superlien" law; and any
statute, ordinance, code, rule, regulation, order, decree or requirement under
international, federal, state, regional, provincial or local law (including,
without limitation, administrative orders and consent decrees) in effect and as
amended regulating, relating to or imposing liability or standards of conduct
concerning public health and safety, protection of the environment, or any
pollutant or contaminant or hazardous, toxic or dangerous substance, waste,
chemical or material, as now or any time hereafter may be existing.
"ENVIRONMENTAL MATTERS" shall have the meaning ascribed thereto in
SUBSECTION 6.26(b).
"EQUIPMENT" shall mean all of any Borrower's machinery and equipment,
including, without limitation, processing equipment, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, attachments, accessories and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property, all
whether now owned or hereafter acquired, and wherever situated, together with
all appurtenances, additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and all rules and regulations promulgated
thereunder.
"ERISA AFFILIATE" shall mean any Subsidiary or any Person, trade or
business (whether or not incorporated) that, along with Parent, the Borrower or
any Subsidiary, are treated as a single employer for any purpose under SECTION
414 of the IRC.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one
or more of the following conditions or events:
(a) any Borrower (i) fails to pay any principal on the Revolving
Loan or any reimbursement obligation with respect to any Lender Guaranty
Liabilities or any other Obligations (other than interest on the Revolving Loan)
when due or declared due, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise, (ii) fails to pay
any interest on the Revolving Loan when due or declared due and such default in
payment shall continue for three (3) Business Days or (iii) fails to deliver any
Borrowing Base Certificate or Monthly Report as required by SECTION 3.1;
(b) any Borrower fails or neglects to perform, keep or observe
any of the covenants, conditions or agreements contained in any of the
subsections of this Agreement or in any of the other Financing Agreements to
which it is a party (other than occurrences referred to or embodied in other
provisions of this definition constituting Events of Default) for a period of
twenty (20) days after the earlier of (i) such Borrower's receipt of notice from
the Agent or (ii) actual knowledge of such breach by any Borrower;
(c) any warranty or representation now or hereafter made by
Parent or any Borrower or any Subsidiary in connection with this Agreement or
any of the other Financing Agreements to which it is a party shall be untrue or
incorrect in any material respect, or any schedule, certificate, statement,
report, financial data, notice or other writing furnished at any time by Parent
or any Borrower or any Subsidiary to the Agent or any Lender is untrue or
incorrect in any material respect, as of the date on which the warranty,
representation or the facts set forth therein are stated, certified or deemed
made;
(d) any Borrower fails to perform, keep or observe any of the
covenants contained in clause (iii) of SUBSECTION 7.8, in SUBSECTIONS 3.5, 7.5,
7.6, 7.11, 7.12, 7.13, 7.14, 7.15 or in SECTION 8;
(e) any of the Collateral or other Property of Parent or any
Borrower or any Subsidiary having a fair market value of more than $50,000 in
the aggregate is attached, seized, subjected to a writ or distress warrant, or
levied upon, or come within the possession or control of any judgment creditor
and on or before the thirtieth (30th) day thereafter such Collateral or Property
is not returned to such Person or such writ, distress warrant or levy is not
dismissed, vacated, stayed or lifted; PROVIDED that any such action taken by the
Borrowers will prevent the forfeiture or sale of any such Collateral or other
Property;
(f) Parent or any Borrower or any Subsidiary makes a general
assignment for the benefit of creditors; convenes a meeting of its creditors, or
any class thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; applies for, seeks, consents to, or acquiesces in the
appointment of a receiver, trustee or custodian to take possession of all or any
substantial portion of its Property; commences any bankruptcy, reorganization or
insolvency case or proceeding or other proceeding under any federal, state or
other law for relief of debtors; or Parent or such Borrower or such Subsidiary
proposes, authorizes or consents to the taking of any of the foregoing actions;
(g) Parent or any Borrower or any Subsidiary fails to obtain the
dismissal, within forty-five (45) days after the commencement thereof, of any
bankruptcy, reorganization or insolvency proceeding, or other proceeding under
any law for the relief of debtors instituted against it; fails actively to
oppose any such proceeding; or in any such proceeding, defaults or files an
answer admitting the material allegations upon which the proceeding was based or
states in any filing in such proceeding its willingness to have an order for
relief entered or its desire to seek liquidation, reorganization or adjustment
of any of its debts;
(h) without the application, approval or consent of Parent or any
Borrower or any Subsidiary, any receiver, trustee, examiner, liquidator,
custodian or similar official is appointed to take possession of all or any
substantial portion of the Property of Parent or such Borrower or such
Subsidiary;
(i) Parent or any Borrower or any Subsidiary voluntarily or
involuntarily dissolves or is dissolved, liquidates or is liquidated;
(j) Parent or any Borrower or any Subsidiary ceases to be Solvent
or admits in writing that it is not Solvent or fails to pay all or any material
portion (measured in numbers of debts or dollar amounts) of its debts as they
become due or admits in writing its present or prospective inability to pay its
debts as they become due;
(k) any Borrower or any Subsidiary is enjoined, restrained, or in
any way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business representing
fifteen percent (15%) or more of Parent and its Subsidiaries' business taken as
a whole (based upon gross revenues for the most recent twelve months ending on
the date of such occurrence);
(l) any default or breach under any agreement(s) evidencing
Indebtedness of Parent or any Borrower or any Subsidiary in an aggregate amount
in excess of Two Hundred Fifty Thousand Dollars ($250,000) shall occur and shall
continue after any applicable grace period specified in any such document if the
effect of such default or breach is to accelerate, or to permit the acceleration
of, the maturity of all or any part of any such Indebtedness, whether or not
such default or breach shall be waived by the holders or trustees (if any) for
such Indebtedness, or any such Indebtedness shall be declared to be due and
payable, or be required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;
(m) a breach by Parent or any Borrower or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect occurs under any
agreement, document or instrument (other than an agreement, document or
instrument evidencing Indebtedness), whether heretofore, now or hereafter
existing between Parent or such Borrower or such Subsidiary and any other
Person, and such breach continues for more than thirty (30) days after such
breach first occurs; PROVIDED that such grace period shall not apply, and such
breach shall constitute an Event of Default, if such breach may not, in the
determination of the Required Lenders, be cured by Parent or such Borrower or
such Subsidiary during such thirty (30) day grace period, and the failure to
have cured such breach could reasonably be expected to have a Material Adverse
Effect;
(n) the occurrence or existence of an event or condition which
results in a Material Adverse Effect;
(o) any material damage to, or loss, theft, or destruction of,
any of the Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty
which results in or causes cessation or substantial curtailment of production or
other revenue producing activities at any Facility generating more than fifteen
percent (15%) of any Borrowers' gross revenues for more than fifteen (15)
consecutive days; PROVIDED that such occurrence shall not constitute an Event of
Default if such occurrence is covered by any Borrower's business interruption
insurance in an amount which, in the judgment of the Required Lenders, is
reasonably expected to cover the period during which such revenue-producing
activities have ceased or are substantially curtailed;
(p) entry of a judgment or judgments in an aggregate amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) against Parent or any
Borrower or any Subsidiary which are not (i) stayed, bonded, vacated, paid or
discharged within thirty (30) days after entry or (ii) fully covered by
insurance (other than any amount constituting the deductible portion under the
applicable policy of such insurance carrier as permitted under SUBSECTION 7.5)
as to which the insurance carrier has acknowledged coverage to such Person in
writing;
(q) the loss, suspension, revocation or failure to obtain or
renew any license or permit now held or hereafter acquired by Parent or any
Borrower or any of its Subsidiaries, which loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect;
(r) any civil or criminal action, suit or proceeding is initiated
against Parent or any Borrower or any Subsidiary under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970, as amended) and is not dismissed within
thirty (30) days;
(s) a Change in Control occurs;
(t) any security interest created under any Financing Agreement
shall cease to be a valid and perfected first priority security interest or Lien
(subject to Permitted Liens) in any of the Collateral purported to be covered
thereby for any reason other than the failure of the Agent to take any action
within its control;
(u) any of the Financing Agreements shall cease for any reason to
be in full force and effect or is declared null and void or Parent or any
Borrower or any Subsidiary or any other Person (other than the Agent or any
Lender) shall disavow its respective obligations thereunder or shall deny that
it has any further obligations thereunder or shall contest or challenge the
validity or enforceability of any thereof, the legality or enforceability of any
of the Obligations or the perfection or priority of any Lien granted to the
Agent, or gives notice to such effect;
(v) Parent or any Subsidiary fails or neglects to perform, keep
or observe any of the covenants, conditions or agreements contained in any
Financing Agreement to which it is a party, which breach continues after any
applicable grace period specified in such Financing Agreement; or
(w) The Borrowers, on a consolidated basis, lose a customer
representing more than ten percent (10%) of their combined gross revenues.
The occurrence or existence of any of the foregoing events shall
constitute an immediate Event of Default unless notice by the Agent or a cure
period is specifically required by the description of such event before such
event matures into an Event of Default.
"EXCESS INTEREST" shall have the meaning ascribed thereto in
SUBSECTION 2.5(d).
"FACILITY" shall mean each of the facilities located at 40 West 57th
Street, New York, New York (LOIS/USA New York Inc.); 111 East Wacker Drive,
Chicago, Illinois, and 401 Michigan Avenue, Chicago, Illinois (LOIS/USA Chicago
Inc.); 5757 Wilshire Boulevard, Los Angeles, California (ZYX Inc., formerly
known as LOIS/USA West Inc.); 7155 Old Katy Road, Suite 100, Houston, Texas;
1150 Lakeway Drive, Suite 150, Austin, Texas; and 3232 McKinney Avenue, Dallas,
Texas (Fogarty & Klein, Inc.) and 5757 Wilshire Boulevard, Los Angeles,
California (Year 2K Communications, Inc.) and any other facility established by
a Borrower hereafter in accordance with the terms of this Agreement.
"FEE LETTER" shall mean the fee letter dated as of the Closing Date
among the Borrowers and the Agent, as amended, supplemented or otherwise
modified from time to time.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System only arranged by Federal Funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if such rate is not so
published, the rate then used by first class banks in extending overnight loans
to other first class banks.
"FINANCIAL STATEMENTS" shall mean the consolidated and consolidating
income statements, statements of cash flow and balance sheets of the Borrowers
delivered in accordance with SUBSECTION 7.1.
"FINANCING AGREEMENTS" shall mean, collectively, this Agreement, the
Revolving Notes, the Swingline Loan Note, Parent Guaranty, the Intellectual
Property Security Agreements (if any), the Parent Pledge Agreement, the Blocked
Account Agreements and all other agreements, instruments and documents,
including, without limitation, security agreements, loan agreements, notes,
guaranties, mortgages, deeds of trust, agreements, documents, instruments,
pledges, powers of attorney, consents, assignments, contracts, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of Parent or any Borrower, any Subsidiary or
any other Person and delivered to the Agent or any Lender in connection with
this Agreement, together with all agreements and documents between Parent or any
Borrower or any Subsidiary and the Agent or any Lender referred to therein or
contemplated thereby, as the same may hereafter be amended, modified or
supplemented from time to time.
"FISCAL MONTH" shall mean any of the twelve fiscal accounting periods
of a Fiscal Year of the Borrowers.
"FISCAL QUARTER" shall mean any of the quarterly fiscal periods of the
Borrowers.
"FISCAL YEAR" shall mean the fiscal year of the Borrowers ending on
December 31 of each calendar year.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any fiscal period, the
ratio of Adjusted EBITDA to Fixed Charges.
"FIXED CHARGES" shall mean, for any fiscal period, determined for the
Parent and its Subsidiaries on a consolidated basis, the aggregate sum of (i)
Interest Expense for the twelve month period ending on the date of determination
of Fixed Charges, PLUS (ii) scheduled current maturities of long term
Indebtedness (including, without limitation, Subordinated Debt and capitalized
lease payments) for the next twelve months beginning on the date of
determination of Fixed Charges, PLUS (iii) Restricted Payments paid in cash
pursuant to clause (v) of SUBSECTION 8.11, PLUS (iv) scheduled current
maturities of deferred purchase price payable with respect to any Permitted
Acquisition for the next twelve months beginning on the date of determination of
Fixed Charges, all as determined in accordance with GAAP and in a manner
consistent with the Financial Statements.
"FIXTURES" shall mean all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Borrower, wherever located.
"FKP ACQUISITION AGREEMENT" shall mean that certain Stock Purchase
Agreement, dated December 17, 1997, by and among the Parent and the FKP Sellers,
together with all schedules, exhibits, certificates, opinions of counsel, side
letters, bills of sale and other documents incorporated therein or delivered in
connection therewith.
"FKP BORROWING BASE" shall mean, as of any date of determination by
the Agent, an amount equal to eighty five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of FKP.
"FKP OBLIGATIONS" shall mean those certain unsecured contractual
monetary obligations of the Parent in favor of the FKP Sellers in an aggregate
principal amount of $4,375,000 (subject to adjustment) incurred by the Parent
under the FKP Acquisition Agreement, including, without limitation, those
arising under SECTIONS 2.3, 2.4, 2.6 and 10.4 thereof.
"FKP SELLERS" shall mean William H. Fogarty, Richard E. Klein, Thomas
F. Monroe, Roger Beckstead, William Penczak and Larry Kelley.
"FUNDING DATE" shall mean the date of each funding under the Revolving
Loan and each continuation or conversion of Base Rate Loans and LIBOR Rate Loans
or issuance of a Lender Guaranty, which date in all cases shall be a Business
Day.
"GENERAL INTANGIBLES" shall mean all of any Borrower's presently owned
or hereafter acquired general intangibles, including, without limitation,
goodwill, choses in action, causes of action, franchises, methods, sales
literature, drawings, specifications, descriptions, name plates, catalogs,
dealer contracts, supplier contracts, distributor agreements, customer lists,
contract rights, confidential information, consulting agreements, employment
agreements, engineering contracts, leasehold interests in real and personal
property, insurance policies (including business interruption insurance),
licenses, permits, and such other Property which uniquely reflect the goodwill
of the business of any Borrower; deposit accounts, letters of credit, and
General Intangibles relating to other items of Collateral, including, without
limitation, rights to refunds or indemnification; reversionary or other rights
of any Borrower to excess Plan assets upon termination or amendment thereof; and
proceeds of all of the foregoing, including without limitation, insurance
proceeds, including proceeds of business interruption insurance, income tax
refunds, and claims for tax or other refunds against any Governmental Authority.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" OR "GAAP" shall mean, as of
the date of any determination with respect thereto, generally accepted
accounting principles as used by the Financial Accounting Standards Board and/or
the American Institute of Certified Public Accountants, consistently applied and
maintained throughout the periods indicated.
"GOOD FAITH DEPOSIT" shall mean the Good Faith Deposit referred to in
the Proposal Letter.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government or any
other political subdivision thereof, any state or other political subdivision
thereof, and any agency, authority, court, central bank, instrumentality,
department or other law, regulation or rule making entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government.
"GTFSC" shall mean Green Tree Financial Servicing Corporation, a
Delaware corporation, in its individual capacity, and its successors.
"GUARANTY" of a Person shall mean any agreement by which such Person
guarantees, endorses or otherwise in any way becomes or is responsible for any
obligations of any other Person, or otherwise assures any creditor of such other
Person against loss, whether directly or indirectly, by agreement to purchase
the indebtedness of any other Person or commitments to purchase of goods,
supplies or services, to maintain working capital or other balance sheet
covenants or conditions, or by way of commitments to purchase securities, make
capital contributions, advances or loans for the purpose of paying or
discharging any indebtedness or obligation of such other Person. The amount of
any Guaranty shall be deemed to be an amount equal to the stated maximum of the
Guaranty or, if none, the stated or determinable amount of the primary
obligation in respect of which such Guaranty is made or, if there is no stated
or determinable amount of the primary obligation, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined in good faith by the Agent.
"HAZARDOUS MATERIALS" shall mean the following: hazardous substances;
hazardous wastes; polychlorinated biphenyls ("PCBs") or any substance or
compound containing PCBs; asbestos or any asbestos-containing materials in any
form or condition; radon; any other radioactive materials including any source,
special nuclear or by-product material; petroleum, crude oil or any fraction
thereof which is liquid at standard conditions of temperature and pressure (60
degrees Fahrenheit and 14.7 pounds per square inch absolute); and any other
pollutant or contaminant or hazardous, toxic or dangerous chemicals, materials
or substances, as all such terms are used in their broadest sense and defined by
Environmental Laws.
"INDEBTEDNESS" of a Person shall mean at a particular time (i)
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current accounts payable arising in the ordinary course
of business on terms customary in the trade) in respect of which such Person is
liable, contingently or otherwise, as guarantor, obligor or otherwise or any
commitment by which such Person assures a creditor against loss, including
contingent reimbursement obligations with respect to letters of credit, (ii)
indebtedness guaranteed in any manner by such Person, including guaranties in
the form of an agreement to repurchase or reimburse; PROVIDED that the amount of
indebtedness represented by any guaranty of limited recourse shall be the lesser
of the amount of indebtedness so guaranteed or the value of the asset to which
the recourse of such indebtedness is limited, (iii) obligations under leases
which shall have been or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases in respect of which
obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss, (iv) obligations under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with Generally
Accepted Accounting Principles, (v) any unfunded obligation of, or withdrawal
liability incurred but not paid by, such Person with respect to a Multiemployer
Plan, (vi) net liabilities under Rate Hedging Obligations and (vii) all accounts
payable of such Person, which are not being contested in good faith by
appropriate proceedings and which are more than one hundred twenty (120) days
past due.
"INSTRUMENT" shall mean any "instrument," as such term is defined in
the Code, now owned or hereafter acquired by any Borrower, wherever located,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"INTANGIBLE ASSETS" shall mean, for the Parent and its Subsidiaries on
a consolidated basis at any date, the aggregate amount of any intangible assets
of the Parent and its Subsidiaries, including, without limitation, goodwill,
franchises, licenses, patents, patent applications, trademarks, trade names,
copyrights, service marks, capitalized software development expense, unamortized
debt discount and expense reserves not already deducted from Total Assets.
"INTELLECTUAL PROPERTY" of a Person shall mean all of such Person's
present and future designs, patents, patent rights and applications therefor,
technology, trademarks and registrations or applications therefor, trade names,
inventions, copyrights and all applications and registrations therefor,
advertising matter, software or computer programs, license rights, trade
secrets, methods, processes, knowhow, drawings, specifications, descriptions,
and all memoranda, notes, and records with respect to any research and
development, whether now owned or hereafter acquired by such Person, and
proceeds of all of the foregoing, including, without limitation, proceeds of
insurance policies thereon.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" shall mean those certain
Continuing Security Interest and Conditional Assignment of Patents, Trademarks,
Copyrights and Licenses, dated as of the Closing Date, if any, duly executed and
delivered by the Borrowers in favor of the Agent, for the benefit of the
Lenders, with respect to Intellectual Property, as the same may hereafter be
amended, modified or supplemented from time to time.
"INTERCOMPANY NOTES" shall have the meaning ascribed thereto in
SUBSECTION 8.20.
"INTEREST COVERAGE RATIO" shall mean, for any period, the ratio of
EBITDA to Interest Expense.
"INTEREST EXPENSE" shall mean, for any fiscal period, determined for
the Parent and its Subsidiaries on a consolidated basis, the aggregate of all
interest paid in cash, imputed or accrued during such period including, without
limitation, interest payable with respect to the Obligations and the interest
portion of any capitalized lease obligations but excluding interest on any
intercompany Indebtedness permitted by SUBSECTION 8.20, all as determined in
accordance with GAAP and in a manner consistent with the Financial Statements.
"INTEREST PAYMENT DATE" shall have the meaning ascribed thereto in
SUBSECTION 2.14.
"INTEREST PERIOD" shall mean, with respect to a LIBOR Rate Loan, a
period of one, two or three months, as available, commencing on a Business Day,
selected by the Borrower Representative pursuant to SUBSECTION 2.5. Such
Interest Period shall end on the day in the relevant succeeding calendar month
which corresponds numerically to the beginning day of such Interest Period;
PROVIDED that if there is no such numerically corresponding day in such next,
second or third succeeding month, such Interest Period shall end on the last
Business Day of such next, second or third succeeding month. If an Interest
Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day; PROVIDED that if such next
succeeding Business Day falls in a new month, such Interest Period shall end on
the immediately preceding Business Day. In the case of immediately succeeding
Interest Periods, each successive Interest Period shall commence on the day on
which the immediately preceding Interest Period expires. Notwithstanding any of
the foregoing, no Interest Period shall extend beyond the Revolving Loan
Maturity Date.
"INVENTORY" shall mean all of the inventory of any Borrower of every
kind and description, now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of any Borrower, wherever located,
including, without limitation, all merchandise, raw materials, parts, supplies,
work-in-process and finished goods intended for sale, together with all the
containers, packing, packaging, shipping and similar materials related thereto,
and including such inventory as is temporarily out of any Borrower's custody or
possession, including inventory on the premises of other Persons and items in
transit, and including any goods reclaimed, returned or repossessed upon any
Accounts, Documents, Instruments or Chattel Paper relating to or arising from
the sale of inventory, and all substitutions and replacements therefor, and all
additions and accessions thereto, and all ledgers, books of account, records,
computer printouts, computer runs, microfilm, microfiche and other
computer-prepared information relating to any of the foregoing, and any and all
proceeds of any of the foregoing, including, without limitation, proceeds of
insurance policies thereon.
"INVESTMENT" of a Person shall mean any loan, advance, extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or contribution of
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the Stock, notes or debentures of any other Person made by
such Person. The amount of any Investment shall be the original cost of such
Investment PLUS the costs of all additions thereto.
"INVESTMENT PROPERTY" of a Person shall have the meaning ascribed
thereto in SECTION 9-115 of the Uniform Commercial Code in those jurisdictions
in which such definition has been adopted and shall include (i) all securities,
whether certificated or uncertificated, including stocks, bonds, interests in
limited liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (ii) all securities entitlements of such
Person, including the rights of such Person to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by such Person;
(iv) all commodity contracts held by such Person; and (v) all commodity accounts
held by such Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and all rules and regulations promulgated thereunder.
"ISSUING BANK" shall mean any bank or financial institution which is
approved by the Borrower Representative and the Agent and which issues Letters
of Credit for the account of any Borrower pursuant to SUBSECTION 2.1.
"KEY EMPLOYEE" shall mean each of those employees identified on
EXHIBIT 1.1(c).
"LEASE LETTERS OF CREDIT" shall mean the letters of credit issued on
behalf of one or more of the Borrowers by Bank of America in the aggregate face
amount of Four Hundred Fifty Thousand Dollars ($450,000) at December 31, 1998.
"LENDER GUARANTIES" and "LENDER GUARANTY" shall have the respective
meanings ascribed thereto in SUBSECTION 2.1(c).
"LENDER GUARANTY FEES" shall have the meaning ascribed thereto in
SUBSECTION 2.15.
"LENDER GUARANTY LIABILITY" means, as to each Lender Guaranty, all
liabilities of the Lenders with respect to the transaction for which such Lender
Guaranty was issued, whether contingent or otherwise, including: (a) the amount
available to be drawn or which may become available to be drawn; (b) all amounts
which have been paid or made available by the Issuing Bank or the Lenders to the
extent not reimbursed by any Borrower; and (c) all unpaid interest, fees and
expenses with respect thereto.
"LENDER GUARANTY RESERVE" means, at any date of determination, a
reserve in an amount equal to (a) the aggregate amount of Lender Guaranty
Liability with respect to Lender Guaranties outstanding at such time, PLUS (b)
the aggregate amount theretofore paid by the Lenders under the Lender Guaranties
for which the Lenders have not been reimbursed by any Borrower or which has not
been debited to the Loan Account pursuant to SUBSECTION 2.1(c)(iii).
"LENDERS" shall mean the financial institutions signatory hereto and,
subject to the terms and conditions hereof, their respective successors and
assigns.
"LETTER OF CREDIT" shall mean a standby letter of credit or bankers
acceptance issued by an Issuing Bank at the request and for the account of any
Borrower and for which the Lenders incur Lender Guaranties.
"LIABILITIES" shall mean liabilities (including, without limitation,
Indebtedness) of any Borrower and its Subsidiaries on a consolidated basis which
are or should be reflected on a balance sheet of such Person, all as determined
in accordance with GAAP and in a manner consistent with the Financial
Statements.
"LIBOR MARGIN" shall mean the LIBOR Margin set forth on the
performance based grid below to be adjusted quarterly based on the Senior
Leverage Ratio measured at the end of each Fiscal Quarter, commencing with the
first day of the first calendar month that occurs more than five (5) days after
the Agent's receipt of financial statements pursuant to this Agreement for the
Fiscal Quarter ending September 30, 2000:
SENIOR LEVERAGE RATIO LIBOR MARGIN
*6.0x:1.0 4.00%
*5.0x:1.0**=6.0x:1.0 3.75%
*4.0x:1.0**=5.0x:1.0 3.50%
*3.0x:1.0**=4.0x:1.0 3.25%
*2.0x:1.0**=3.0x:1.0 3.00%
* = Greater Than
**= Less Than
Prior to the initial adjustment in the LIBOR Margin, the LIBOR Margin will be
the highest level set forth in the foregoing grid. All adjustments in the LIBOR
Margin after September 30, 2000 will be implemented quarterly on a prospective
basis, for each calendar month commencing at least five (5) days after the date
of delivery to the Agent of the quarterly financial statements of Parent
evidencing the need for an adjustment. Concurrently with the delivery of those
financial statements, the Borrower Representative shall deliver to the Agent and
the Lenders a certificate, signed by its chief financial officer, setting forth
in reasonable detail the basis for the continuance of, or any change in, the
LIBOR Margin. Failure to timely deliver such financial statements shall, in
addition to any other remedy provided for in this Agreement, result in an
increase in the LIBOR Margin to the highest level set forth in the forgoing
grid, until the first day of the first calendar month following the delivery of
those financial statements demonstrating that such an increase in not required.
If a Default or Event of Default shall have occurred or be continuing at the
time any reduction in the LIBOR Margin is to be implemented, that reduction
shall be deferred until the first day of the first calendar month following the
date on which such Default or Event of Default is waived or cured.
"LIBOR RATE" shall mean, for each Interest Period, a rate of interest
equal to the sum of:
(a) the quotient of (i) the rate of interest determined by Agent
to be the rate at which deposits in U.S. Dollars for the relevant
Interest Period are offered based on information presented on the
Telerate Screen as of 11:00 a.m. (London time) on the applicable LIBOR
Rate Determination Date in the approximate amount of the LIBOR Rate
Loan and having a maturity approximately equal to such Interest
Period; provided that if at least two such offered rates appear on the
Telerate Screen in respect of such Interest Period, the arithmetic
mean of all such rates (as determined by Agent) will be the rate used;
provided further, that if the Telerate System ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined
by Agent at which deposits in U.S. Dollars are offered for the
relevant Interest Period by Bank of America (or its successor) to
banks with combined capital and surplus in excess of $500,000,000 in
the London interbank market as of 11:00 a.m. (London time) on the
applicable LIBOR Rate Determination Date in the approximate amount of
the LIBOR Rate Loan and having a maturity approximately equal to such
Interest Period, divided by
(ii) one MINUS the rate (expressed as a decimal) of reserve
requirements in effect on the LIBOR Rate Determination Date
(including, without limitation, all basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D) which are required to be
maintained by a member bank of the Federal Reserve System; PLUS
(b) the LIBOR Margin from time to time in effect.
The LIBOR Rate shall be adjusted to the nearest one-sixteenth percent (1/16%)
or, if there is no nearest one-sixteenth percent (1/16%), to the next higher
one-sixteenth percent (1/16%).
"LIBOR RATE DETERMINATION DATE" shall mean each date for calculating
the LIBOR Rate for purposes of determining the interest rate applicable to any
LIBOR Rate Loan made pursuant to SUBSECTION 2.6. The LIBOR Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Rate Loan.
"LIBOR RATE LOANS" shall mean the Revolving Loan or portion thereof
bearing interest at the LIBOR Rate.
"LIEN" shall mean, with respect to the Property of any Person, any
statutory or contractual lien, security interest, mortgage, pledge, claim,
encumbrance, charge, hypothecation, assignment, deposit arrangement, filing of,
or agreement to give, any financing statement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, whether voluntary or involuntary (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention agreement), in, of or on any of the
Property of such Person in favor of any other Person.
"LITIGATION" shall have the meaning ascribed thereto in SUBSECTION
6.14.
"LOAN" or "LOANS" shall mean an advance or advances under the
Commitment.
"LOAN ACCOUNT" shall have the meaning ascribed thereto in SUBSECTION
2.12.
"LOAN YEAR" shall mean the period of twelve (12) consecutive months
commencing on the Closing Date and each succeeding period of twelve (12)
consecutive months commencing on each anniversary of the Closing Date during the
term of this Agreement.
"LOIS" shall mean George Lois, an individual.
"MATERIAL ADVERSE EFFECT" shall mean, as determined by the Agent in
its reasonable business judgment, a material adverse effect upon (a) the Agent's
Lien priority in, or the value of, the Collateral, or (b) the business,
properties, operations or condition (financial or otherwise) or business
prospects of any Borrower or the Parent and its Subsidiaries taken as a whole as
a result of the occurrence or existence of any single event or condition or
series of events or conditions in the aggregate, or (c) the ability of any
Borrower or the Parent to perform its obligations under the Financing
Agreements, or (d) the validity or enforceability of any of the Financing
Agreements or the rights, powers and remedies of the Agent or any Lender to
enforce or collect the Obligations. In determining whether any individual event
would result in a Material Adverse Effect, notwithstanding that such event does
not of itself have such effect, a Material Adverse Effect shall be deemed to
have occurred if the cumulative effect of such event and all other then existing
events would result in a Material Adverse Effect.
"MAXIMUM SWINGLINE LOAN AMOUNT" means at any time the lesser of (i)
$2,000,000, (ii) the Commitment of the Swingline Lender to make the Swingline
Loan to Borrowers at such time or (iii) that amount which is the Borrowing Base
at such time LESS the sum of (x) the Revolving Loan at such time, (y) the
Swingline Loan at such time and (z) the Lender Guaranty Reserve at such time.
"MONTHLY REPORT" shall have the meaning ascribed thereto in SUBSECTION
3.1.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan within the
meaning of SECTION 4001(A)(3) of ERISA to which any Borrower or any ERISA
Affiliate contributes, is obligated to contribute or was required to contribute
within the immediately preceding six (6) years.
"NET INCOME" shall mean, for any fiscal period, determined for the
Parent and its Subsidiaries on a consolidated basis, the audited consolidated
net income after income and franchise taxes for such period; PROVIDED that there
shall be specifically excluded therefrom tax-adjusted (i) gains or losses from
the sale of capital assets, (ii) net income of any Person in which Parent or any
Subsidiary has an ownership interest, unless received by Parent or such
Subsidiary in a cash distribution, and (iii) any gains or losses arising from
extraordinary items, as defined by Generally Accepted Accounting Principles.
"NEW YORK BORROWING BASE" shall mean, as of any date of determination
by the Agent, an amount equal to eighty five percent (85%) of the face amount
(less maximum discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of New York.
"NOTE" or "NOTES" shall mean one or more of the Revolving Loan Notes
and the Swingline Loan Note.
"OBLIGATIONS" shall mean all of the Borrowers' obligations,
liabilities, indemnities and indebtedness for the performance of covenants and
the payment of monetary amounts to the Agent and the Lenders and/or to any
affiliate of the Agent or the Lenders of any and every kind and nature, whether
heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired, or owing, whether primary, secondary,
direct, indirect, contingent, fixed or otherwise (including, without limitation,
obligations of performance) and whether arising or existing under written
agreement, oral agreement or operation of law including, without limitation, all
of the Borrowers' indebtedness, liabilities, indemnities and obligations to the
Agent and the Lenders or any Participant under this Agreement and the other
Financing Agreements.
"PARENT GUARANTY" shall mean that certain Guaranty, dated as of the
Closing Date, by the Parent in favor of the Agent, for the benefit of the
Lenders, as the same may hereafter be amended, restated, modified or
supplemented from time to time.
"PARENT PLEDGE AGREEMENT" shall mean the Pledge Agreement, dated as of
the Closing Date, executed by the Parent in favor of the Agent, as the same may
be amended, restated, modified or otherwise supplemented from time to time.
"PARTICIPANT" shall mean any Person now or from time to time hereafter
participating with any Lender in the Revolving Loan made by such Lender pursuant
to SUBSECTION 11.2 of this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" shall mean any Plan that is or was a defined benefit
plan (other than a Multiemployer Plan) defined in SECTION 3(35) of ERISA.
"PERMITTED ACQUISITION" shall have the meaning ascribed thereto in
SUBSECTION 8.3(b).
"PERMITTED INVESTMENTS" shall have the meaning ascribed thereto in
SUBSECTION 8.4.
"PERMITTED LIENS" shall have the meaning ascribed thereto in
SUBSECTION 8.1.
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, limited liability company, limited liability partnership,
unincorporated organization, association, corporation, institution, entity,
party, or government (whether national, federal, state, provincial, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"PLAN" shall mean any employee benefit plan within the meaning of
SECTION 3(3) of ERISA (other than any Multiemployer Plan) under which any
Borrower or any ERISA Affiliate contributes, is obligated to contribute or was
required to contribute within the immediately preceding six (6) years.
"PREBILLED ACCOUNTS" shall mean an Account for which an invoice has
been issued but the underlying advertisement (e.g., commercial or print
advertisement) has not yet run or been issued in the applicable media.
"PREFERRED STOCK" shall mean the Class A Preferred Stock of Parent
issued and outstanding on the Closing Date.
"PRIME RATE" shall mean the highest "prime rate" of interest reported,
from time to time, by THE WALL STREET JOURNAL; PROVIDED, HOWEVER, that in the
event that THE WALL STREET JOURNAL ceases reporting a "prime rate", "Prime Rate"
shall mean the per annum rate of interest reported as the "Bank Prime Loan" rate
for the most recent weekday for which such rate is reported in Statistical
Release H.15 (519) published from time to time by the Board of Governors of the
Federal Reserve System; PROVIDED FURTHER that in the event that both of the
aforesaid indices cease to be published or to report rates of the aforesaid
types, the "Prime Rate" shall be determined from a comparable index chosen by
the Agent in good faith. The "Prime Rate" shall change effective on the date of
the publication of any change in the applicable index by which such "Prime Rate"
is determined.
"PRO FORMA" shall have the meaning ascribed thereto in SUBSECTION
6.4(a).
"PROJECTIONS" shall mean the projected balance sheets, profit and loss
statements, and cash flow statements of the Borrowers and their Subsidiaries on
a consolidated and consolidating basis, prepared in accordance with Generally
Accepted Accounting Principles, together with appropriate supporting details and
a statement of underlying assumptions, which have been and will be delivered to
the Agent and the Lenders in accordance with the terms hereof by each Borrower.
"PROPOSAL LETTER" shall mean that certain proposal letter dated as of
February 23, 1999 and acknowledged as of February 24, 1999 between the Agent and
LOIS/USA Inc.
"PROPERTY" of a Person shall mean any and all assets or property,
whether real, personal, tangible, intangible, or mixed, of such Person, or other
assets or property leased or operated by such Person.
"PRO RATA SHARE" shall mean the percentage obtained by dividing (a)
the Commitments of a Lender by (b) the aggregate Commitments of all Lenders. The
Commitments of each Lender with respect to the Revolving Loan (including the
Swingline Loan as a subset of the Swingline Lender's Revolving Loan) as of the
Closing Date are set forth on SCHEDULE 1. The sum of the Pro Rata Shares of all
Lenders at any date of determination shall equal one hundred percent (100%).
"RATE HEDGING OBLIGATIONS" of a Person shall mean any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all agreements, devices or arrangements designed to protect at least one of
the parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's Property, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"RATE OPTION" shall mean the Base Rate or the LIBOR Rate, as
applicable.
"REAL ESTATE" of a Person shall mean the real property, mineral
rights, leasehold or other interests in real property together with any purchase
options and other rights related to such leaseholds or other interests owned,
leased, used or operated now or hereafter by such Person, all Fixtures and
personal property used in conjunction therewith and such Person's rights to
leases, rents and profits with respect thereto.
"REQUIRED LENDERS" shall mean (i) Lenders having in the aggregate at
least seventy-five percent (75%) of the Revolving Loan Facility (including the
commitment of the Swingline Lender to make the Swingline Loan as a subset of the
Swingline Lender's portion of the Revolving Loan), or (ii) if the Revolving Loan
Facility has been terminated, Lenders having in the aggregate at least
seventy-five percent (75%) of the aggregate outstanding amount of the Revolving
Loan (including the Swingline Loan as a subset of the Swingline Lender's
Revolving Loan).
"RESTRICTED PAYMENT" of a Person shall mean: (a) the declaration or
payment of any dividend or other distribution, direct or indirect, on account of
any shares of any class of Stock of such Person now or hereafter outstanding;
(b) any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or other acquisition for value direct or indirect of any
shares of any class of Stock of such Person now or hereafter outstanding; (c)
any payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, any redemption, conversion, exchange,
purchase, retirement, defeasance, sinking fund or similar payment with respect
to Subordinated Debt of such Person; (d) any payment made to retire, redeem,
purchase, repurchase or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of Stock, including the
Preferred Stock, of such Person now or hereafter outstanding; (e) any payment of
a claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Person's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution or other transfer of funds or other property to any holder of Stock
of such Person; or (g) any payment by such Person of any management fees,
advisor fees or similar fees whether pursuant to a management agreement or
otherwise to any Affiliate of such Person.
"REVOLVING LOAN" shall have the meaning ascribed thereto in SUBSECTION
2.1.
"REVOLVING LOAN FACILITY" shall mean Thirty Million Dollars
($30,000,000), as such amount may be reduced, if at all, from time to time in
accordance with the terms of this Agreement.
"REVOLVING LOAN MATURITY DATE" shall mean the earlier of (i) ninety
(90) days prior to required cash redemption date of the Preferred Stock unless
the Borrowers have delivered to the Agent an agreement from all of the holders
of the Preferred Stock pursuant to in SUBSECTION 7.16, in which case clause (ii)
shall apply and (ii) June 17, 2002.
"REVOLVING LOAN NOTES" shall have the meaning ascribed thereto in
SUBSECTION 2.3.
"RISK-BASED CAPITAL GUIDELINES" means (a) the risk-based capital
guidelines in effect in the United States on the date of this Agreement and (b)
the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices entitled
"International Convergence of Capital Measurements and Capital Standards" and
any amendments to such regulations adopted prior to the date of this Agreement.
"S&C PURCHASE AGREEMENT" shall mean that certain Asset Purchase
Agreement, dated May 15, 1998, by and among the Parent and the S&C Sellers, as
in effect as of May 15, 1998, together with all schedules, exhibits,
certificates, opinions of counsel, side letters, bills of sale and other
documents incorporated therein or delivered in connection therewith.
"S&C OBLIGATIONS" shall mean those certain unsecured contractual
monetary obligations incurred or assumed by the Parent in favor of the S&C
Sellers in an aggregate principal amount of $300,000 (subject to adjustment)
under the S&C Purchase Agreement, including, without limitation, those arising
under SECTION 3 thereof.
"S&C SELLERS" shall mean Scaros & Casselman, Inc., a Connecticut
corporation.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR DEBT" shall mean, for the Parent and its Subsidiaries on a
consolidated basis as at any date, all Indebtedness of the Parent and its
Subsidiaries, excluding Subordinated Debt.
"SENIOR LEVERAGE RATIO" shall mean, at any date, the ratio of Senior
Debt to EBITDA for the prior trailing twelve (12) month period of the Parent and
its Subsidiaries on a consolidated basis.
"SELLER OBLIGATIONS" shall mean, collectively, those certain unsecured
contractual obligations of Parent in favor of the EJL Sellers in an aggregate
principal amount of $3,700,000, which obligations shall be subordinated to the
Obligations in form and substance satisfactory to the Agent in its sole
discretion.
"SERVICE" shall mean the Internal Revenue Service and any successor
thereof.
"SOLVENCY AFFIDAVIT" shall mean the Affidavit of Solvency dated as of
the Closing Date executed and delivered by the Borrower Representative on behalf
of each Borrower in favor of the Agent, for the benefit of the Lenders.
"SOLVENT" shall mean, when used with respect to any Person on any date
of determination, that (i) the fair saleable value of such Person's Property is
in excess of the total amount of the present value of its Liabilities (including
for purposes of this definition all liabilities, whether or not reflected on a
balance sheet prepared in accordance with Generally Accepted Accounting
Principles, and whether direct or indirect, fixed or contingent, liquidated or
unliquidated, secured or unsecured, disputed or undisputed), (ii) such Person is
able to pay its debts or obligations in the ordinary course as they mature, and
(iii) such Person has capital sufficient to carry on its business as conducted
and as proposed to be conducted. In computing the amount of contingent,
unliquidated or disputed liabilities at any time, such liabilities will be
computed at the amount which, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability. "SOLVENCY" shall have a correlative
meaning.
"STOCK" shall mean (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests, (e) any other interest or participation that confers on a Person the
right to receive a share of the profits or losses of, or distribution of assets
of, the issuing Person (other than payments or distributions under employment
agreements), and (f) all warrants, options, convertible debentures, other debt
or equity security, and all other agreements, instruments and documents
exchangeable or exercisable for or convertible into, in whole or in part, any
one or more of the foregoing, in each case whether voting or non-voting.
"SUBORDINATED DEBT" shall mean (a) the Seller Obligations, (b) the FKP
Obligations and (c) any other Indebtedness owed to any Person by the Parent, its
Subsidiaries or any Borrower (i) the payment of which is subordinated to the
payment of the Obligations according to the Subordination Agreements and (ii)
which is incurred pursuant to terms, conditions and documentation in form and
substance satisfactory to the Required Lenders.
"SUBORDINATION AGREEMENT" shall mean (a) that certain Subordination
Agreement (or an amendment thereto, including any reaffirmation thereof) dated
as of the Closing Date between the Agent and the EJL Sellers, (b) that certain
Subordination Agreement dated as of the Closing Date between the Agent and the
FKP Sellers and (c) any subordination agreement between the Agent and any other
Person executed in connection with a Permitted Acquisition, in each case in form
and substance satisfactory to the Agent and as the same may be amended,
restated, modified or otherwise supplemented from time to time.
"SUBSIDIARY" of a Person shall mean (i) any corporation of which more
than fifty percent (50%) of the outstanding securities having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions is at any time of determination, directly or indirectly, owned
or controlled by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, trust, grantor trust, joint venture or similar
business organization more than fifty percent (50%) of the equity or interests
having ordinary voting power or power of direction of which shall at any time of
determination be so owned or controlled. Unless otherwise expressly provided or
the context requires otherwise, all references herein to a "Subsidiary" shall
mean a Subsidiary of a Borrower.
"SWINGLINE LENDER" shall mean GTFSC, or if GTFSC shall resign as the
Swingline Lender, another Lender selected by the Agent and reasonably acceptable
to the Borrowers.
"SWINGLINE LOAN" shall mean the outstanding balance of all advances
made by the Swingline Lender pursuant to SUBSECTION 2.1(D) and any amounts added
to the principal balance of the Swingline Loan pursuant to this Agreement.
"SWINGLINE LOAN NOTE" shall have the meaning ascribed thereto in
SUBSECTION 2.3.
"TARGET" shall have the meaning ascribed thereto in SUBSECTION 8.3(b).
"TAXES" shall mean taxes, liens, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto imposed by any
Governmental Authority (together with any fines, interest, penalties or other
additions thereto), excluding (i) income taxes and franchise taxes imposed on or
measured by the overall net income of the Agent or any Lender by the United
States of America or by any Governmental Authority of the jurisdiction where the
Agent or such Lender is incorporated or has its principal office and (ii) any
transfer taxes imposed as a result of the transfer of any Notes.
"TELERATE SCREEN" shall mean the display designated as Screen 3750 on
the Telerate System or such other screen on the Telerate System as shall display
the London interbank offered rates for deposits in U.S. dollars quoted by
selected banks.
"TERMINATION DATE" shall mean the earliest of (i) the Revolving Loan
Maturity Date then in effect, (ii) the date of termination of the Lenders'
obligation to make advances under the Revolving Loan, the Swingline Loan and/or
incur Lender Guaranty Liabilities or permit the existing Revolving Loan and/or
Swingline Loan to remain outstanding pursuant to SUBSECTION 9.1, and (iii) the
date of indefeasible payment in full in cash by the Borrowers of the Revolving
Loan and the Swingline Loan and the cancellation or cash collateralization of
all Lender Guaranty Liabilities pursuant to SUBSECTION 2.8(a) and the
termination in whole of the Commitments.
"TERMINATION EVENT" shall mean: (a) the tax disqualification of a Plan
under Section 401(a) of the IRC; (b) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder unless the thirty (30) day
notice to the PBGC has been waived for the event; (c) the withdrawal of any
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was
deemed such under Section 4062(e) of ERISA; (d) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041(e) of
ERISA; (e) the institution of proceedings to terminate a Pension Plan by the
PBGC; (f) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (g) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan; (h) the imposition of
a Lien pursuant to Section 412 of the IRC or Section 302 of ERISA; (i) any event
or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or
(j) any event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings
to terminate a Multiemployer Plan under Section 4042 of ERISA.
"THIRD PARTY INTERACTIVES" shall mean all Persons with whom any
Borrower exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"TOTAL ACQUISITION PRICE" shall mean the sum of all cash, notes, the
fair market value of stock, earnout incentives, assumed debt and any other
consideration paid to the seller in connection with any Acquisition.
"UNUSED LINE FEE" shall have the meaning ascribed thereto in
SUBSECTION 2.10.
"VERU" shall mean Theodore Veru, an individual.
"WEST BORROWING BASE" shall mean, as of any date of determination by
the Agent, an amount equal to eighty-five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of West.
"YEAR 2000 ASSESSMENT" shall mean a comprehensive written assessment
of the nature and extent of each Borrow's Year 2000 Problems and Year 2000
Date-Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"YEAR 2000 CORRECTIVE ACTIONS" shall mean, as to each Borrower, all
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"YEAR 2000 CORRECTIVE PLAN" shall mean, with respect to each Borrower,
a comprehensive plan to eliminate all of its Year 2000 Problems on or before
October 31, 1999, including without limitation (i) computer code enhancements or
revisions, (ii) upgrades or replacements of Year 2000 Date-Sensitive
Systems/Components, (iii) test and validation procedures, (iv) an implementation
time line and budget and (v) designation of specific employees who will be
responsible for planning, coordinating and implementing each phase or subpart of
the Year 2000 Corrective Plan.
"YEAR 2000 DATE-SENSITIVE SYSTEM/COMPONENT" shall mean, as to any
Person, any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"YEAR 2000 IMPLEMENTATION TESTING" shall mean, as to each Borrower,
(i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a systemwide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Borrowers' Year 2000 Date-Sensitive Systems/Components and data exchanges with
Third Party Interactives, and (iii) the design and implementation of additional
Year 2000 Corrective Actions, the need for which has been demonstrated by test
and validation procedures.
"YEAR 2000 PROBLEMS" shall mean, with respect to each Borrower,
limitations on the capacity or readiness of any such Borrower's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Borrowers and exchanges of information among the
Borrowers and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
"Y2K BORROWING BASE" shall mean, as of any date of determination by
the Agent, an amount equal to eighty-five percent (85%) of the face amount (less
maximum discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding of existing
Eligible Accounts of Y2K.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings customarily
given them in accordance with Generally Accepted Accounting Principles. All
determinations of the book value of Inventory contemplated hereby shall be at
the lower of cost (on an average cost basis) or market.
1.3 OTHER TERMS DEFINED IN ILLINOIS UNIFORM COMMERCIAL CODE. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided in the Uniform Commercial Code
of the State of Illinois or the laws of any other state which are required to be
applied in connection with the issue of perfection or non-perfection of Liens on
the Collateral (the "Code") to the extent the same are used or defined therein.
1.4 EFFECTIVE DATE. All references to "the date hereof," "the date of
this Agreement," "the effective date hereof," "effective as of the date hereof"
or "of even date herewith" contained herein or in the other Financing Agreements
shall be deemed to refer to the Closing Date of this Agreement.
1.5 REFERENCES. The foregoing definitions shall be equally applicable
to both the singular and plural forms of the defined terms. Unless otherwise
expressly provided or unless the context requires otherwise, all references in
this Agreement to Sections, subsections, Schedules and Exhibits shall mean and
refer to Sections, subsections, Schedules and Exhibits of this Agreement.
References to Persons include their respective permitted successors and assigns
or, in the case of a governmental authority, Persons succeeding to the relevant
functions of such Persons. All references to statutes shall include all related
rules and regulations and shall include all amendments of same and any successor
or replacement statutes and regulations. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation".
Whenever any provision in any Financing Agreement refers to the knowledge of the
Borrower or any of its Affiliates, such word is intended to signify that such
Person has actual knowledge or awareness of a particular fact or circumstance or
that such Person, if it had exercised reasonable diligence, would have known or
been aware of such fact or circumstance.
2. CREDIT.
2.1 REVOLVING CREDIT FACILITY.
(a) REVOLVING LOAN. Provided there does not then exist a Default or an
Event of Default, and subject to the terms and conditions herein set forth, each
Lender agrees severally (and not jointly) to make available from time to time
until the Termination Date its Pro Rata Share of advances to the Borrowers, on a
revolving credit basis (the "Revolving Loan"), in an aggregate amount
outstanding at any one time not in excess of the lesser of (i) the Revolving
Loan Facility or (ii) the Aggregate Borrowing Base, in each case less the
aggregate Revolving Loan, Swingline Loan and Lender Guaranty Reserve outstanding
at such time ("Borrowing Availability"). Although the Borrower Representative
may request advances under the Revolving Loan, the Swingline Loan or the
incurrence of Lender Guaranty Liabilities pursuant to the terms of this
Agreement, the aggregate advances under the Revolving Loan, the Swingline Loan
and Lender Guaranty Liabilities outstanding to each Borrower shall not exceed at
any time the Borrowing Base of such Borrower.
The Agent and the Audit Agent reserve the right in their credit
judgment, upon prior written notice to the Borrower Representative (i) to adjust
any eligibility criteria or establish new eligibility criteria, (ii) modify the
advance rates against Eligible Accounts, and (iii) establish reserves against
Borrowing Availability; PROVIDED that upon the occurrence and during the
continuance of a Default or an Event of Default no prior notice shall be
required to be given to the Borrower Representative.
The Borrowers hereby acknowledge and agree that determinations with
respect to (i) the adjustment of eligibility criteria or establishment of new
eligibility criteria, (ii) the modification of advance rates against Eligible
Accounts, and (iii) the establishment of reserves against Borrowing Availability
is being made by both Agent and Audit Agent, and that both such parties are
acting independently and have the right to make such determinations. The Agent,
the Audit Agent, and each Borrower hereby agree that if, as a result of any
collateral audit conducted by the Audit Agent, the Audit Agent provides written
recommendations to the Agent with respect to any of such determinations that
have the cumulative effect of reducing Borrowing Availability by $1.5 million or
less, such recommendations shall be binding, absent manifest error. If the Audit
Agent's recommendations, however, have the cumulative effect of reducing
Borrowing Availability by more than $1.5 million, the Agent shall have the
option, within five (5) Business Days after receipt of the Audit Agent's
recommendations of (i) accepting the Audit Agent's recommendations or (ii)
submitting a revised proposal in writing to the Audit Agent. If the Audit Agent
does not accept any revised proposal submitted by the Agent or the Agent and the
Audit Agent are unable to agree upon an alternative compromise within five (5)
Business Days of receipt of such revised proposal, then the Agent shall have the
right to designate an independent public accounting firm of recognized national
standing and reasonably acceptable to the Audit Agent to review the
recommendations of the Audit Agent and the revised proposal of the Agent and
make a final determination with respect thereto. Absent manifest error, the
determination of such independent public accounting firm shall be final and
binding upon the Agent, the Audit Agent and the Borrowers. The Borrowers shall
be responsible for the cost of any such independent review.
(b) ADVANCES. Until all amounts outstanding in respect of the
Revolving Loan shall become due and payable on the Termination Date, within the
foregoing limits and subject to the terms, provisions and limitations set forth
herein, the Borrowers may from time to time borrow, repay and reborrow under
this SUBSECTION 2.1. Each Borrower hereby designates the Borrower Representative
as its representative and agent on its behalf for the purposes of issuing
Borrowing Notices and Conversion/Continuation Notices giving instructions with
respect to the disbursement of the proceeds of the Revolving Loan, selecting
interest rate options, requesting Letters of Credit, giving and receiving all
other notices and consents hereunder or under any of the other Financing
Agreements and taking all other actions on behalf of any Borrower or Borrowers
under the Financing Agreements. Borrower Representative hereby accepts such
appointment. The Agent and each Lender may regard any notice or other
communication pursuant to any Financing Agreements from the Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or
Borrowers hereunder to the Borrower Representative on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by the Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower. The Agent
shall be entitled to rely upon, and shall be fully protected under this
Agreement from any liability to any Person in relying upon, any such notice
believed by the Agent to be genuine and to assume that each Person executing and
delivering the same was duly authorized by any Borrower. Each advance to a
Borrower shall, on the day of such advance, be deposited, in immediately
available funds, into the applicable Borrower's Account, unless otherwise
requested by the Borrower Representative in writing.
(c) LENDER GUARANTY.
(i) Subject to the terms and conditions of this Agreement, as
part of the Revolving Loan Facility and in addition to advances under
the Revolving Loan, upon the request of the Borrower Representative,
GTFSC, on behalf of each Lender according to such Lender's Pro Rata
Share, may issue or arrange for the issuance of Letters of Credit for
the account of any Borrower and/or guaranty payment to the Issuing
Banks which issue Letters of Credit for the account of any Borrower
(all such Letters of Credit issued by GTFSC are collectively referred
to herein as "Lender Guaranties" and individually as a "Lender
Guaranty"); PROVIDED that GTFSC shall not be under any obligation to
issue any Lender Guaranty if any order, judgment or decree of any
government authority or other regulatory body shall purport by its
terms to enjoin or restrain GTFSC or any Lender from issuing such
Lender Guaranty, or any law or governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) from
any governmental authority or other regulatory body with jurisdiction
over GTFSC or any Lender shall prohibit, or request that GTFSC or such
Lender refrain from, the issuance of Lender Guaranties in particular
or shall impose upon GTFSC or any Lender with respect to such Lender
Guaranties any restriction or reserve or capital requirement (for
which GTFSC or such Lender is not otherwise compensated) or any
unreimbursed loss, cost or expense which GTFSC or any Lender in good
faith deems material to it. In no event shall GTFSC issue or otherwise
become obligated with respect to a Letter of Credit (including,
without limitation, Letters of Credit issued with an automatic
"evergreen" provision) having an expiration date, or a date for
payment of any draft presented thereunder (as originally issued or
extended), later than the earlier of (x) twelve (12) months from the
date of issuance or (y) thirty (30) days prior to the Revolving Loan
Maturity Date. Such issuance and obligations with respect to a Letter
of Credit pursuant to this SUBSECTION 2.1(c) shall be deemed to be a
Revolving Loan for purposes of requiring the satisfaction of the
applicable conditions set forth in SECTION 4. Additions to the Lender
Guaranty Reserve shall be established concurrently with the issuance
of each Lender Guaranty. Immediately upon the issuance of any Lender
Guaranty in accordance with this SUBSECTION 2.1(c), each Lender shall
be deemed to have irrevocably and unconditionally purchased and
received from GTFSC, without recourse, representation or warranty, an
individual participation interest equal to its Pro Rata Share of the
principal amount of such Lender Guaranty and each draw paid by the
Issuing Bank under the Letter of Credit issued in connection
therewith. Each Lender's obligation to pay its Pro Rata Share of all
draws under the Letters of Credit issued in connection with such
Lender Guaranties shall be absolute, unconditional and irrevocable and
in each case shall be made without counterclaim or set-off by such
Lender.
(ii) The aggregate face amount of Letters of Credit with respect
to Lender Guaranties outstanding at any one time shall not exceed
$2,000,000.
(iii) Each Borrower shall be irrevocably and unconditionally
obligated forthwith upon demand without presentment, demand, protest
or other formalities of any kind, to reimburse the Agent, on behalf of
the Lenders, for any amounts paid by the Lenders with respect to each
Lender Guaranty including, without limitation, all amounts paid by the
Lenders upon any draw with respect to a Letter of Credit, any guaranty
or reimbursement obligation paid by the Lenders to any Person upon any
draw upon a Letter of Credit and all fees, costs and expenses paid by
the Lenders to any Issuing Bank. All such reimbursement obligations
shall be due and payable on demand. If not paid within one (1)
Business Day following demand, or, if an Event of Default shall have
occurred and be continuing, on the date such reimbursement obligations
arise, each Borrower hereby authorizes and directs the Agent, at the
Agent's option, to debit the Loan Account (by increasing the principal
balance of the Revolving Loan), in the amount of any payment made by
the Lenders with respect to any Lender Guaranty and, in connection
therewith, the Lender Guaranty Reserve then in effect shall be reduced
by the amount of such debit. All amounts paid by the Lenders with
respect to any Lender Guaranty that are not immediately repaid by any
Borrower with the proceeds of the Revolving Loan or otherwise shall
bear interest at the interest rate applicable to Base Rate Loans under
the Revolving Loan. If GTFSC makes a payment on account of any Lender
Guaranty and is not concurrently reimbursed therefor by the Borrowers
and if for any reason an advance under the Revolving Loan may not be
made as stated in this SUBSECTION 2.1(c), then as promptly as
practical during normal banking hours on the date of its receipt of
such notice or, if not practicable on such date, not later than 12:00
noon (Chicago time) on the Business Day immediately succeeding such
date of notification, each Lender shall deliver to the Agent for the
account of the Issuing Bank, in immediately available funds, the
purchase price for such Lender's interest in such unreimbursed Lender
Guaranty, which shall be an amount equal to such Lender's Pro Rata
Share of such payment. Each Lender acknowledges and agrees that its
obligation to reimburse the Agent pursuant to this SUBSECTION
2.1(c)(iii) with respect to Lender Guaranty Liabilities is absolute
and unconditional and shall not be affected by any circumstance
whatsoever including, without limitation, the occurrence or
continuance of a Default or an Event of Default, and further
acknowledges and agrees that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(iv) In addition to all other terms and conditions set forth in
this Agreement, the issuance by the Lenders of any Lender Guaranty
shall be subject to the conditions precedent that the Issuing Bank be
satisfactory to the Agent and that the Letter of Credit for which any
Borrower requests a Lender Guaranty be in such form as is reasonably
satisfactory to the Agent. Each Borrower shall comply with all such
terms and conditions imposed on any Borrower by any Issuing Bank or by
the Agent with respect to the issuance of any Letter of Credit,
whether such terms and conditions are imposed in the application for
such Letter of Credit, the Lenders' guaranty of such letter of credit
or otherwise.
(v) Prior to the issuance of a Lender Guaranty and as a condition
to such issuance, any Borrower Representative shall give the Agent
prior written notice specifying the date a Lender Guaranty is to be
issued, identifying the beneficiary of the guaranty and describing the
nature of the transactions proposed to be supported thereby and
specifying whether the Borrower Representative is requesting a Lender
Guaranty in the form of a Letter of Credit issued by a Lender acting
as the Issuing Bank or a guaranty of a Letter of Credit issued by
another Issuing Bank. In the case of a Letter of Credit to be issued
by an Issuing Bank other than a Lender, the notice shall be
accompanied by the form of the Letter of Credit. Subject to the terms
hereof, the Agent shall issue the requested Lender Guaranty as soon as
practicable and not more than five (5) Business Days following the
date of the applicable notice; PROVIDED that the Lender Guaranty shall
not be issued until the Agent and the Issuing Bank have mutually
agreed upon the form of such Lender Guaranty.
(vi) Each Borrower hereby agrees to indemnify, pay and hold the
Agent and each Lender harmless from and against any and all pending or
threatened claims, litigation, damages, losses and liabilities
incurred by the Agent or any Lender (or which may be claimed against
the Agent or any Lender by any Person whatsoever) and costs and
expenses incurred in defending or responding to pending or threatened
claims or litigation by reason of or in connection with the execution,
delivery or transfer of, or payment or failure to pay under, any
Lender Guaranty including, without limitation, any action taken or
omitted by any Issuing Bank; PROVIDED that the Borrowers shall not be
required to indemnify or hold harmless the Agent or any Lender for any
such claims, litigation, losses or liabilities arising solely from
such Person's willful misconduct or gross negligence. Each Borrower's
unconditional obligations to the Agent and the Lenders hereunder shall
not be modified or diminished for any reason or in any manner
whatsoever. Each Borrower agrees that any charges made to the Agent or
the Lenders for any Borrower's account by any Issuing Bank shall be
conclusive as between such Persons and the Borrowers and may be
charged to the Loan Account hereunder.
(d) SWINGLINE LOAN.
(i) The Agent may convert any request by the Borrower
Representative for a Loan advance into a request for an advance under
the Swingline Loan (and any remaining portion of such requested
advance shall continue to constitute an advance requested under the
Revolving Loan). The Swingline Loan shall be a Base Rate Loan and
shall not exceed in the aggregate at any time outstanding the Maximum
Swingline Loan Amount. In the event that on any Business Day, the
Swingline Lender desires that all or any portion of the Swingline Loan
should be reduced in whole or in part, the Swingline Lender shall
promptly notify the Agent to that effect and indicate the portion of
the Swingline Loan to be reduced. The Agent agrees to promptly
transmit to the Lenders the information contained in each notice
received by the Agent from the Swingline Lender and shall concurrently
notify the Lenders of each Lender's Pro Rata Share of the obligation
to make a Revolving Loan advance to repay the Swingline Loan (or
portion thereof).
(ii) Each of the Lenders hereby unconditionally and irrevocably
agrees to fund to the Agent for the benefit of the Swingline Lender,
in lawful money of the United States and in same day funds, not later
than 1:00 p.m. Chicago time on the Business Day immediately following
the Business Day of such Lender's receipt of such notice (which shall
be provided not less frequently than weekly, or in the case of any
Swingline Loan in excess of $1.5 million, daily) from the Agent (
PROVIDED that if any Lender shall receive such notice at or prior to
11:00 a.m. Chicago time on a Business Day, such funding shall be made
by such Lender on such Business Day), such Lender's Pro Rata Share of
a Revolving Loan advance (which Revolving Loan advance shall be a Base
Rate Loan and shall be deemed to be requested by the Borrower
Representative) in the principal amount of such portion of the
Swingline Loan which is required to be paid to the Swingline Lender
under this SUBSECTION 2.1(d) (regardless of whether the conditions
precedent thereto set forth in SECTION 4 are then satisfied and
whether or not the Borrower has provided a Borrowing Notice under
SUBSECTION 2.1(b) and whether or not any Default or Event of Default
exists or all or any of the Loans have been accelerated, but subject
to the other provisions of this SUBSECTION 2.1(d)). The proceeds of
any such Revolving Loan advance shall be immediately paid over to the
Agent for the benefit of the Swingline Lender for application to the
Swingline Loan.
(iii) In the event that an Event of Default shall occur and
either (i) such Event of Default is of the type described in clauses
(f), (g), (h) or (i) of the definition of the term "Event of Default"
in SUBSECTION 1.1 or (ii) no further Revolving Loan advances are being
made under this Agreement, then so long as any such Event of Default
is continuing, each of the Lenders (other than the Swingline Lender)
shall be deemed to have irrevocably, unconditionally and immediately
purchased from the Swingline Lender such Lender's Pro Rata Share of
the Swingline Loan outstanding as of the date of the occurrence of
such Event of Default. Each Lender shall effect such purchase by
making available an amount equal to its participation on the date of
such purchase in Dollars in immediately available funds to the Agent
for the benefit of the Swingline Lender as specified in SUBSECTION
2.6. In the event any Lender fails to make available to the Swingline
Lender when due the amount of such Lender's participation in the
Swingline Loan, the Swingline Lender shall be entitled to recover such
amount on demand from such Lender together with interest at the
Federal Funds Rate. Each such purchase by a Lender shall be made
without recourse to the Swingline Lender, without representation or
warranty of any kind, and shall be effected and evidenced pursuant to
documents reasonably acceptable to the Swingline Lender. The
obligations of the Lenders under this SUBSECTION 2.1(D) shall be
absolute, irrevocable and unconditional, shall be made under all
circumstances and shall not be affected, reduced or impaired for any
reason whatsoever.
2.2 MAXIMUM PRINCIPAL BALANCE OF REVOLVING LOAN. If at any time the
principal balance of the Revolving Loan advances, Lender Guaranty Liabilities
and Swingline Loan advances shall exceed the Borrowing Availability, the
Borrowers shall immediately (i) repay the outstanding advances under the
Swingline Loan and, thereafter, under the Revolving Loan to the extent necessary
to eliminate such excess and (ii) if any excess remains after payment in full of
the outstanding advances under the Revolving Loan and the Swingline Loan, cash
collateralize the Lender Guaranty Liabilities in accordance with SUBSECTION 2.8
to the extent necessary to eliminate such remaining excess.
2.3 EVIDENCE OF REVOLVING LOAN AND SWINGLINE INDEBTEDNESS. The
advances by each Lender constituting the Revolving Loan shall be evidenced by a
promissory note executed by each Borrower and payable to the order of such
Lender (collectively, the "Revolving Loan Notes") in the amount of its Revolving
Loan Commitment dated the Closing Date in the form attached as EXHIBIT 2.3(a).
The advances by the Swingline Lender constituting Swingline Loans shall be
evidenced by a promissory note executed by each Borrower and payable to the
order of the Swingline Lender (the "Swingline Loan Note") in the amount of
$2,000,000 dated the Closing Date in the form attached as EXHIBIT 2.3(b). All
Revolving Loan and Swingline Loan Obligations to the Lenders hereunder shall be
payable by the Borrowers by application of the proceeds of all Accounts and
other Collateral in accordance with SUBSECTION 3.5, and shall be payable in full
upon the Termination Date, and the principal amount of such Revolving Loan and
Swingline Loan Obligations shall bear interest as hereinafter provided. Each
advance by the Lenders and each repayment of principal applicable to such
advance shall be reflected in the Borrower's Loan Account.
2.4 NOTIFICATION OF ADVANCES, INTEREST RATES AND PREPAYMENT. The Agent
will notify each Lender of the contents of each Borrowing Notice,
Conversion/Continuation Notice and prepayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each LIBOR
Rate Loan promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Base Rate.
2.5 INTEREST AND APPLICABLE MARGINS.
(a) Subject to the terms and conditions of this Agreement, advances
under the Revolving Loan may be divided into Base Rate Loans or LIBOR Rate
Loans, or a combination thereof, selected by the Borrower Representative in
accordance with SUBSECTIONS 2.5(e) and 2.5(f); PROVIDED that the Revolving Loan
shall not have more than three (3) Interest Periods outstanding at any one time.
So long as no Event of Default has occurred and is continuing, the Borrower
shall pay to the Agent, for the benefit of the Lenders, interest on the
outstanding principal balance of the Revolving Loan at the Base Rate or the
LIBOR Rate, as applicable, in accordance with SECTION 2.14. The Swingline Loan
shall bear interest at the Base Rate and shall be payable as provided in SECTION
2.14.
(b) Interest and all fees (other than prepayment fees) shall be
computed (on a daily basis) on the basis of a 360-day year for the actual number
of days elapsed. In computing interest on the Revolving Loan, the date of
funding an advance under the Revolving Loan or the first day of an Interest
Period applicable to an advance under the Revolving Loan or, with respect to a
Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion of
such LIBOR Rate Loan to such Base Rate Loan, shall be included and the date of
payment of the Revolving Loan or the expiration date of an Interest Period
applicable to the Revolving Loan or, with respect to a Base Rate Loan being
converted to a LIBOR Rate Loan, the date of conversion of such Base Rate Loan to
such LIBOR Rate Loan, shall be excluded; PROVIDED that if an advance under the
Revolving Loan is repaid on the same day on which it is made, one day's interest
shall be paid on such advance. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) So long as an Event of Default shall have occurred and be
continuing, the Borrowers shall pay to the Lenders interest from the date of
such Event of Default to and including the date of cure of such Event of Default
on the Obligations at the Default Rate applicable to such Obligations; PROVIDED
that in the case of LIBOR Rate Loans, upon the expiration of the Interest Period
in effect at the time any Event of Default shall have occurred and be
continuing, such LIBOR Rate Loans shall automatically become Base Rate Loans and
thereafter bear interest at the Default Rate applicable to Base Rate Loans.
(d) (i) Interest shall be due at the Base Rate, the LIBOR Rate or the
Default Rate, as provided herein, after as well as before demand, default and
judgment notwithstanding any judgment rate of interest provided for in any
statute. If any interest payment or other charge or fee payable hereunder
exceeds the maximum amount then permitted by applicable law, then to the extent
permitted by law and subject to the provisions of subparagraph (ii) of this
SUBSECTION 2.5(d), the Borrowers shall be obligated to pay the maximum amount
then permitted by applicable law and the Borrowers shall continue to pay the
maximum amount from time to time permitted by applicable law until all such
interest payments and other charges and fees otherwise due hereunder (in the
absence of such restraint imposed by applicable law) have been paid in full.
(ii) It is the intention of the Agent, the Lenders and the Borrowers
to comply with the laws of the State of Illinois, and notwithstanding any
provision to the contrary contained herein or in the other Financing Agreements,
the Borrowers shall not be required to pay and the Lenders shall not be
permitted to collect any amount in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess Interest is provided for or
determined to have been provided for by a court of competent jurisdiction in
this Agreement or in any of the other Financing Agreements, then in such event:
(A) the provisions of this SUBSECTION 2.5(d)(ii) shall govern and control; (B)
neither any Borrower nor any guarantor or endorser shall be obligated to pay any
Excess Interest; (c) any Excess Interest that any Lender may have received
hereunder shall be, at such Lender's option (1) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid interest
(not to exceed the maximum amount permitted by law), (2) refunded to the payor
thereof, or (3) any combination of the foregoing; (D) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed under applicable law, and this Agreement and the other Financing
Agreements shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction; and (E) neither any Borrower nor any guarantor or
endorser shall have any action against any Lender for any damages arising out of
the payment or collection of any Excess Interest.
(e) Subject to the terms of this Agreement, the Borrower
Representative shall select Rate Options and, in the case of LIBOR Rate Loans,
the Interest Period applicable to each LIBOR Rate Loan from time to time by
giving the Agent irrevocable notice (a "Borrowing Notice") in the form of
EXHIBIT 2.5-1 hereto not later than 12:00 noon (Chicago time) (i) on the Funding
Date of any Base Rate Loan, and (ii) three (3) Business Days before the Funding
Date for each LIBOR Rate Loan, specifying:
(i) the Funding Date;
(ii) the aggregate amount of such advance under the Revolving
Loan (and, if such Borrowing Notice refers to more than one Rate
Option, the amount of each Base Rate Loan and LIBOR Rate Loan which
will become part of the Revolving Loan);
(iii) the Rate Option(s) selected for such advance under the
Revolving Loan; and
(iv) in the case of each LIBOR Rate Loan, the Interest Period
applicable thereto;
PROVIDED that no advance under the Revolving Loan may be made as a LIBOR Rate
Loan if any Default or Event of Default has occurred and is continuing.
The Borrower Representative shall select Interest Periods so that it
is not necessary to repay any portion of a LIBOR Rate Loan prior to the last day
of the applicable Interest Period in order to make a payment or prepayment of
principal on the Revolving Loan required by the terms hereof including, without
limitation, prepayments pursuant to SUBSECTION 2.8.
(f) Base Rate Loans shall continue as Base Rate Loans unless and until
such Base Rate Loans (other than Swingline Loans) are converted by the Borrower
Representative into LIBOR Rate Loans in accordance with this SUBSECTION 2.5(f).
Each LIBOR Rate Loan shall continue as a LIBOR Rate Loan until the end of the
then applicable Interest Period, at which time such LIBOR Rate Loan shall be
automatically converted into a Base Rate Loan unless the Borrower Representative
shall have given the Agent an irrevocable notice (a "Conversion/Continuation
Notice") in the form of EXHIBIT 2.5-2 requesting that, at the end of such
Interest Period, such LIBOR Rate Loan continue as a LIBOR Rate Loan for the same
or another Interest Period; PROVIDED that no outstanding advance under the
Revolving Loan may be continued as, or be converted into, a LIBOR Rate Loan if
any Default or Event of Default has occurred and is continuing. Subject to the
terms of this Agreement, the Borrower Representative may elect from time to time
to convert all or any part of the Revolving Loan of any Rate Option into any
other Rate Option; PROVIDED that any conversion of a LIBOR Rate Loan shall be
made on, and only on, the last day of the Interest Period applicable thereto.
The Borrower Representative shall give the Agent a Conversion/Continuation
Notice of each conversion or continuation of a Base Rate Loan or LIBOR Rate
Loan, as the case may be, not later than 12:00 noon (Chicago time) (i) on the
Funding Date, in the case of a conversion into a Base Rate Loan, and (ii) at
least three (3) Business Days before the Funding Date of the requested
conversion or continuation of a LIBOR Rate Loan, specifying:
(i) the Funding Date of such conversion or continuation;
(ii) the aggregate amount and Rate Option(s) of the advance under
the Revolving Loan which is to be converted or continued; and
(iii) the amount of the LIBOR Rate Loans into which such advance
under the Revolving Loan is to be converted or continued and the
duration of the Interest Period applicable thereto.
(g) In lieu of delivering a Borrowing Notice or a
Conversion/Continuation Notice, the Borrower Representative may give the Agent
notice by telephone or telecopy by the required time of any proposed borrowing
or conversion/continuation under this SUBSECTION 2.5; PROVIDED that such notice
shall be promptly confirmed in writing by delivery of a Borrowing Notice or a
Conversion/Continuation Notice, as the case may be, to the Agent on or before
the proposed Funding Date. Neither the Agent nor any Lender shall incur any
liability to any Borrower in acting upon any such notice by telephone that the
Agent believes in good faith to have been given by the Borrower Representative
or for otherwise acting in good faith under this SUBSECTION 2.5 and, upon the
funding or conversion/continuation, as the case may be, by the Agent in
accordance with this Agreement pursuant to any such notice, any Borrower shall
have effected such funding, conversion or continuation, as the case may be,
hereunder. A Borrowing Notice or a Conversion/Continuation Notice for the
funding of, or conversion to, or continuation of, a LIBOR Rate Loan (or notice
by telephone or telecopy in lieu thereof) shall be irrevocable once given, and
the Borrowers shall be bound to convert or continue in accordance therewith.
(h) Each LIBOR Rate Loan (whether resulting from a Borrowing Notice or
a Conversion/Continuation Notice) shall be in the minimum amount of Five Hundred
Thousand Dollars ($500,000) and in integral multiples of One Hundred Thousand
Dollars ($100,000) if in excess thereof.
2.6 METHOD OF BORROWING; MANNER AND METHOD OF MAKING INTEREST AND
OTHER PAYMENTS. (a) Not later than 12:00 noon (Chicago time) on each Funding
Date, each Lender shall make available its Pro Rata Share of the advances under
the Revolving Loan (except for advances made pursuant to a
Conversion/Continuation Notice, in which case each Lender shall be deemed to
have made its advances) in funds immediately available in Chicago, Illinois to
the Agent at its address specified pursuant to SUBSECTION 10.12. The Agent will
make the funds so received from the Lenders available to the Borrower
Representative in accordance with SUBSECTION 2.1(b). Notwithstanding the
foregoing provisions of this SUBSECTION 2.6(a), to the extent that an advance
under the Revolving Loan or portion thereof made by a Lender matures or is to be
repaid on the Funding Date of a requested advance under the Revolving Loan, such
Lender shall first apply the proceeds of the advance it is then making to the
repayment of the maturing advance under the Revolving Loan or portion thereof.
(b) All payments by the Borrowers of the Obligations shall be made
without deduction, defense, setoff or counterclaim and in same day funds. In its
sole discretion, the Agent may deem interest to be paid and other payments
(other than the principal balance of the Revolving Loan) to be paid by causing
such amounts to be added to the principal balance of the Revolving Loan, all as
set forth on the Agent's books and records. Each Borrower hereby authorizes and
directs the Lenders, at the option of the Required Lenders, to make advances in
the Revolving Loan by appropriate debits to the Loan Account for all such
payments under the Financing Agreements. Unless otherwise directed by the Agent,
all payments to the Lenders hereunder shall be made by delivery thereof to the
Agent at its address set forth in SUBSECTION 10.12 or by delivery to the Agent
for deposit in the Blocked Accounts of all proceeds of Accounts or other
Collateral in accordance with SUBSECTION 3.5. If the Agent elects to bill the
Borrowers for any amount due hereunder, such amount shall be immediately due and
payable with interest thereon as provided herein. Solely for the purpose of
calculating interest earned by each Lender with respect to the Revolving Loan,
any check, draft or similar item of payment by or for the account of any
Borrower delivered to the Agent or deposited in a Blocked Account in accordance
with SUBSECTION 3.5 shall be applied by the Agent on account of such Borrower's
Revolving Loan Obligations on the Business Day the Agent has received
immediately available funds as a result of the deposit thereof in accordance
with SUBSECTION 3.5. Immediately available funds received by the Agent after
2:00 p.m., (Chicago time), shall be deemed to have been received on the
following Business Day.
(c) (i) Unless the Borrower Representative or a Lender, as the case
may be, notifies the Agent prior to the date on which it is scheduled to make
payment to the Agent of (A) in the case of a Lender, such Lender's Pro Rata
Share of the proceeds of an advance under the Revolving Loan or Swingline Loan
or (B) in the case of the Borrowers, a payment of principal, interest, fees or
other Obligations to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
the Borrowers or such Lender, as the case may be, have not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Rate for such day (as determined by the Agent) or (y) in the case
of payment by the Borrowers, the interest rate applicable to the relevant
advance under the Revolving Loan.
(ii) Nothing contained in this SUBSECTION 2.6(c) will be deemed
to relieve a Lender of its obligation to fulfill its Commitments or to
prejudice any rights the Agent or the Borrowers may have against such
Lender as a result of any default by such Lender under this Agreement.
(iii) If the Agent determines at any time that any amount
received by the Agent under this Agreement must be returned to the
Borrowers or paid to any other Person pursuant to any insolvency law
or otherwise, then, notwithstanding any other term or condition of
this Agreement, the Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to
the Agent on demand any portion of such amount that the Agent has
distributed to such Lender.
(iv) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving
Loan made after any acceleration of the Revolving Loan with respect to
any draw on a Letter of Credit or Lender Guaranty therefor.
2.7 TERM OF THIS AGREEMENT. This Agreement shall be effective from the
Closing Date until the Termination Date. Upon the Termination Date, all of the
Obligations shall become immediately due and payable without notice or demand
notwithstanding any terms contained herein or in any Note to the contrary.
Notwithstanding any termination of this Agreement, until (i) all of the
Obligations except unmatured contingent obligations (other than those
Obligations described in clauses (ii) and (iii) below) for which no claim has
been asserted shall have been paid in full in cash, (ii) the Lender Guaranties
shall have been terminated or payment thereof shall have been secured in
accordance with SUBSECTION 2.8 and (iii) the Borrowers shall have provided to
the Agent for the benefit of the Lenders security on terms satisfactory to the
Agent with respect to any pending or overtly threatened action against any
Person which could result in a claim against the Borrowers by any Indemnitee for
indemnification under SUBSECTION 7.10, the Borrowers shall remain bound by the
terms of this Agreement and the Lenders shall be entitled to retain their Liens
on the Collateral.
2.8 PREPAYMENTS. Subject to the provisions of SUBSECTION 2.19, upon
not less than thirty (30) days' prior written notice to the Agent specifying the
date of prepayment (which date shall be a Business Day), the Borrowers may
prepay in full, but not in part, all of the Obligations (excluding outstanding
Lender Guaranties) and terminate the Commitments. Upon prepayment in full and
termination of the Commitments, the Borrowers (i) shall cause the Agent and each
Lender to be released from all liability under any Lender Guaranties or (ii)
shall (x) cause to be issued to and for the benefit of the Agent and the Lenders
a letter of credit in form and substance acceptable to the Agent issued by a
bank or other financial institution acceptable to the Agent to secure such
Lender Guaranties, or (y) deposit cash collateral with the Agent, for the
benefit of the Agent and the Lenders pursuant to a cash collateral agreement in
form and substance satisfactory to the Agent, in either case, in an amount equal
to one hundred ten percent (110%) of the aggregate Lender Guaranty Liability
with respect to the Lender Guaranties that will remain outstanding after
prepayment in full of all other Obligations.
2.9 COMMITMENT FEE AND FEE LETTER. The Borrower shall pay to the
Agent, for the ratable benefit of the Lenders, a commitment fee (the "Commitment
Fee") in an amount equal to 2.0% of the Revolving Loan Facility LESS, the
remaining portion of the Good Faith Deposit (after application of amounts
against the Good Faith Deposit pursuant to the Proposal Letter and the Fee
Letter), such Commitment Fee to be payable on the Closing Date. The Borrower
shall also pay to the Agent the other fees referred to in the Fee Letter in the
amounts, and on the dates for payment, set forth therein.
2.10 UNUSED LINE FEE. From and after the Closing Date, the Borrowers
shall pay to the Agent, for the ratable benefit of the Lenders, a fee (the
"Unused Line Fee") in an amount equal to the Revolving Loan Facility LESS the
sum of the average daily closing balance of the Revolving Loan plus the average
daily closing balance of the Swingline Loan plus Lender Guaranty Liabilities
outstanding during the preceding month (or shorter period with respect to the
period commencing with the Closing Date or the period ending with the
Termination Date) MULTIPLIED by one-half of one percent (.50%) per annum. The
Unused Line Fee shall be payable quarterly in arrears on the first day of each
February, May, August and November following the Closing Date, commencing August
1, 1999, and on the Termination Date.
2.11 OTHER FEES, COSTS AND EXPENSES. Each Borrower shall pay to the
Agent and the Audit Agent on demand all fees, costs and expenses incurred by the
Agent and the Audit Agent (for purposes of CLAUSES (i) and (v) below only, and
only to the extent incurred in the performance of its obligations as the Audit
Agent hereunder) in connection with any matters contemplated by or arising out
of this Agreement or any other Financing Agreement (which fees, costs and
expenses shall be part of the Obligations and secured by the Collateral)
including, without limitation: (i) following the occurrence of an Event of
Default in verifying or inspecting the Accounts or the Inventory or the
Borrower's records with respect thereto; (ii) in connection with opening and
maintaining the Blocked Accounts and depositing for collection any check or item
of payment received by and/or delivered to any Collecting Bank or the Agent or
any Lender on account of the Obligations; (iii) arising out of the Agent's
indemnification of any Collecting Bank against damages incurred by such
Collecting Bank in the operation of a Blocked Account; (iv) in connection with
the Agent's forwarding to any Borrower the proceeds of loans or advances
hereunder including, without limitation, transfer fees; (v) arising from
photocopying and other mechanical or electronic reproduction in connection with
the rights of inspection under SUBSECTION 7.2; (vi) in connection with the
negotiation, preparation, review, execution, delivery and ongoing administration
of the Financing Agreements and all amendments, modifications and waivers with
respect hereto or with respect to the other Financing Agreements including,
without limitation, search fees, appraisal fees and expenses, title insurance
policy fees, costs and expenses; filing and recording fees; reasonable fees,
costs and expenses of the Agent's attorneys and paralegals and all Taxes payable
in connection with this Agreement or the other Financing Agreements, whether
such fees, costs and expenses are incurred prior to, on or after the Closing
Date; (vii) in connection with any documentation, negotiation, review or closing
with respect to any Subordinated Debt, including, without limitation, the fees,
costs and expenses of the Agent's attorneys and paralegals; (viii) arising from
the Agent's employment of counsel or otherwise in connection with protecting,
perfecting or preserving the Agent's Liens in the Collateral and (ix) in
connection with any refinancing or restructuring of the credit arrangements
provided under the Financing Agreements, whether in the nature of a "workout" or
in connection with any insolvency or bankruptcy proceedings, or in connection
with any other matters contemplated by or arising out of this Agreement or the
other Financing Agreements.
The Borrowers shall reimburse the Agent and the Lenders for all out of
pocket fees, costs and expenses incurred by the Agent or any Lender (which fees,
costs and expenses shall be part of the Obligations and secured by the
Collateral) in connection with (i) any litigation, contest, dispute, suit,
proceeding or action in any way relating to the Collateral, any of the Financing
Agreements or any other agreement to be executed or delivered in connection
therewith or herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against Parent or
any Borrower or any Subsidiary that may be obligated to the Agent or any Lender
by virtue of the Financing Agreements (including any such litigation, contest,
dispute, suit, proceeding or action arising in connection with any work-out or
restructuring of the Loans during the pendency of one or more Events of Default
or in connection with any insolvency or bankruptcy case or proceeding); PROVIDED
that the Borrower shall have no obligation hereunder with respect to such fees,
costs and expenses to the extent that a court of competent jurisdiction shall
render a judgment, final and not subject to review on appeal, that such fees,
costs and expenses arise from the gross negligence or willful misconduct of such
Person; and (ii) the collection, lease, sale, taking of possession of, or
liquidation of any of the Collateral or the enforcement (or attempted
enforcement) of any Lien on any of the Collateral or the enforcement of any
rights of the Agent or any Lender to collect any of the Obligations, including
any such enforcement in the course of any work-out or restructuring of the
Obligations during the pendency of one or more Events of Default or in
connection with any insolvency or bankruptcy case or proceedings, in each case
including, without limitation, reasonable fees, costs and expenses of the
respective attorneys and paralegals of the Agent and the Lenders and the
out-of-pocket costs and per diem charges for the examiners and agents of such
Persons at their then applicable rates. Any portion of the foregoing fees, costs
and expenses which remains unpaid ten (10) days following the Agent's statement
and request for payment thereof shall bear interest from the date of such
statement and request for payment at the Default Rate applicable to Base Rate
Loans.
2.12 LOAN ACCOUNT. The Agent shall maintain a loan account ("Loan
Account") on its books in which shall be recorded (i) all advances under the
Revolving Loan and advances made to the Borrowers pursuant to this Agreement,
(ii) the issuance of all Lender Guaranties, (iii) all payments made by the
Borrower on the Revolving Loan and advances and (iv) all other appropriate
debits and credits as provided in this Agreement including, without limitation,
all fees, charges, expenses and interest. All entries in the Loan Account shall
be made in accordance with the Agent's customary accounting practices as in
effect from time to time. The Borrowers shall pay the Obligations reflected as
owing under the Loan Account and all other Obligations hereunder as such amounts
become due or are declared due pursuant to the terms of this Agreement. So long
as an Event of Default shall have occurred and be continuing, each Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times thereafter received by the Agent or any Lender from or on
behalf of each Borrower, and each Borrower does hereby irrevocably agree that
each Lender shall have the continuing exclusive right to apply and to reapply
any and all payments received at any time or times hereafter against the
Obligations in such manner as such Lender may deem advisable notwithstanding any
previous entry by the Agent upon the Loan Account or by the Agent or such Lender
on any other books and records.
2.13 STATEMENTS. All advances to the Borrowers, and all other debits
and credits provided for in this Agreement, shall be evidenced by entries made
by the Agent in the Loan Account and in the Agent's books and records showing
the date, amount and reason for each such debit or credit. Until such time as
the Agent shall have rendered to the Borrower Representative written statements
of account as provided herein, the balance in the Loan Account, as set forth on
the Agent's most recent printout or other written statement, shall be rebuttably
presumptive evidence of the amounts due and owing to each Lender by the
Borrowers; PROVIDED that any failure to so record or any error in so recording
shall not limit or otherwise affect the Borrower's obligations to pay the
Obligations. Not more than twenty (20) days after the last day of each calendar
month, the Agent shall render to the Borrower Representative a statement setting
forth the principal balance of the Loan Account and the calculation of interest
due thereon. Each such statement shall be subject to subsequent adjustment by
the Agent but shall, absent manifest errors or omissions, be presumed correct
and binding upon the Borrowers, and shall constitute an account stated unless,
within thirty (30) days after receipt of any statement from the Agent, the
Borrower Representative shall deliver to the Agent in accordance with SUBSECTION
10.12 written objection thereto specifying the error or errors, if any,
contained in such statement. In the absence of a written objection delivered to
the Agent as set forth in this SUBSECTION 2.15, the Agent's statement of the
Loan Account shall be conclusive evidence of the amount of the Obligations.
2.14 PAYMENT DATES. Interest shall be payable (i) on Base Rate Loans
in arrears on the first day of each calendar quarter for all periods ending
prior to such month for which such Base Rate Loans are or, in the case of a Base
Rate Loan converted to a LIBOR Rate Loan during the prior month, were
outstanding, and (ii) on LIBOR Rate Loans on the last day of each Interest
Period relating to such Loan, commencing with the first of such dates to occur
after the date of such Loan (each such date herein referred to as an "Interest
Payment Date"); PROVIDED that, in addition to the foregoing, the Termination
Date shall be deemed to be an "Interest Payment Date" with respect to any
interest which is then accrued under this Agreement. After maturity, accrued
interest on the Revolving Loan shall be payable on demand. Subject to the
definition of Interest Period, any payment due hereunder on any day other than a
Business Day shall be due on the next succeeding Business Day, and if such
payment shall bear interest in accordance herewith, interest shall accrue to the
date of payment.
2.15 LENDER GUARANTY FEES. The Borrowers shall pay to the Agent, for
the benefit of the Lenders, fees for any Lender Guaranty ("Lender Guaranty
Fees") for the period from and including the date of issuance of such Lender
Guaranty to and excluding the date of expiration or termination of such Lender
Guaranty, equal to the daily average face amount of Letters of Credit with
respect to Lender Guaranties multiplied by two and one-half percent (2.5%) per
annum. Lender Guaranty Fees shall be payable monthly in arrears on the first day
of the month following the date of issuance of any such Lender Guaranty and the
first day of each month thereafter during which such Lender Guaranty shall
remain outstanding and on the Termination Date. The Borrowers shall also
reimburse the Agent and each Lender for any and all fees and expenses paid to
the Issuing Bank.
2.16 OTHER LENDER GUARANTY PROVISIONS.
(a) The obligation of the Borrowers to reimburse the Agent and each
Lender for payments made under any Lender Guaranty shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Lender Guaranty
or any other agreement;
(ii) the existence of any claim, set-off, defense or other right
which any Borrower, any of its Affiliates or the Agent or any Lender
may have at any time against a beneficiary or any transferee of any
Lender Guaranty (or any Persons for whom any such transferee may be
acting), the Agent, any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including, without limitation, any
underlying transaction between any Borrower or any of their Affiliates
and the beneficiary for which such Lender Guaranty was procured);
(iii) any draft, demand, certificate or any other document
presented under any Lender Guaranty proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by the Agent or any Lender under any Lender Guaranty
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Lender Guaranty;
PROVIDED that, in the case of any payment by the Agent or any Lender
under such Lender Guaranty, such Person has not acted with gross
negligence or willful misconduct as determined by a final judgment,
not subject to review on appeal, of a court of competent jurisdiction
in determining that the demand for payment under any Lender Guaranty
complies on its face with any applicable requirements for a demand for
payment under such Lender Guaranty;
(v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(b) In addition to amounts payable as elsewhere provided in this
Agreement, each Borrower hereby agrees to protect, indemnify, pay and hold the
Agent and each Lender harmless from and against any and all claims, suits,
demands, liabilities, damages, losses, costs, charges and expenses (including,
without limitation, reasonable attorneys' fees) which the Agent or any Lender
may incur or be subject to as a consequence, direct or indirect, of (1) the
issuance of any Lender Guaranty other than as a result of the gross negligence
or willful misconduct of such Person as determined by a final order, not subject
to review on appeal, of a court of competent jurisdiction, or (2) the failure of
the Agent or any Lender to honor a demand for payment under any Lender Guaranty
as a result of any act or omission, whether rightful or wrongful, of any
Governmental Authority.
As among the Agent, the Lenders and the Borrowers, the Borrowers
assume all risks of the acts and omissions of, or misuse of any Lender Guaranty
by, beneficiaries thereof. In furtherance and not in limitation of the
foregoing, neither the Agent nor any Lender shall be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document by any Person in connection with the application for and issuance of
any Lender Guaranty, even if it should in fact prove to be in any and all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Lender Guaranty or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any Lender Guaranty to comply fully with conditions required in order to demand
payment under such Lender Guaranty; PROVIDED that, in the case of any payment by
the Agent or any Lender under any Lender Guaranty, such Person has not acted
with gross negligence or willful misconduct, as determined by a final judgment,
not subject to review on appeal, of a court of competent jurisdiction, in
determining that the demand for payment under any Lender Guaranty complies on
its face with any applicable requirements for a demand for payment under such
Lender Guaranty; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph or
otherwise; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a payment under any Lender Guaranty or of the proceeds thereof; (vii)
for the credit of the proceeds of any drawing under any Lender Guaranty; and
(viii) for any consequences arising from causes beyond the control of the Agent
or the Lenders, including, without limitation, any act or omission, whether
rightful or wrongful, of any Governmental Authority. None of the above shall
affect, impair, or prevent the vesting of any of the Agent's or any Lender's
rights or powers hereunder.
In furtherance and extension of, and not in limitation of, the
specific provisions hereinabove set forth, each Borrower hereby agrees that any
action taken or omitted by the Agent or any Lender under or in connection with
any Lender Guaranty or any related certificates, or the Collateral relating
thereto, if taken or omitted in good faith, or any action taken by any Issuing
Bank, shall be binding on the Borrowers and shall not impose any resulting
liability on the Agent or any Lender to the Borrowers or relieve the Borrowers
of any of their obligations hereunder to any such Person.
2.17 TAXES; CHANGES IN LAW.
(a) Any and all payments or reimbursements made hereunder or under the
Notes shall be made free and clear of and without deduction for any and all
present and future Taxes. Subject to SUBSECTION 2.17(d), if any Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Agent or any Lender, then (i) the sum payable hereunder shall
be increased as may be necessary so that, after making all required deductions,
the Agent or such Lender receives an amount equal to the sum it would have
received had no such deductions been made and (ii) such Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Each Borrower hereby indemnifies and agrees to hold the
Agent and each Lender harmless from and against all Taxes imposed upon the Agent
or any Lender as a result of or arising in connection with the transactions
contemplated hereby.
(b) In the event that, subsequent to the Closing Date, or, in the case
of a Participant assigned an interest in or sold a participation in the
Revolving Loan pursuant to SUBSECTION 11.1, subsequent to the date of such
assignment or sale, (a) any change in any existing law, regulation, rule,
policy, guideline, treaty or directive or in the interpretation or application
thereof (whether or not having the force of law) including, without limitation,
any change resulting from the implementation of risk-based capital guidelines,
(b) any new law, regulation, rule, guideline, treaty or directive enacted or any
interpretation or application thereof or (c) compliance by any Lender with any
request or directive (whether or not having the force of law and including by
way of withdrawal or termination of any previously available exemption) from any
central bank, governmental authority, agency or instrumentality (including,
without limitation, any request or directive regarding capital adequacy)
(i) does or shall subject any Lender or such Participant to any
Taxes with respect to this Agreement, the other Financing Agreements
or any Loans made hereunder, or change the basis of taxation of
payments to any Lender or such Participant of principal, commitment,
fees, interest or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income or changes which
do not increase the aggregate amount of the overall net income of such
Lender or such Participant imposed by the jurisdiction in which such
Lender is incorporated or has its principal place of business); or
(ii) does or shall impose on any Lender or such Participant any
other condition or increased cost (other than Taxes) in connection
with the transactions contemplated hereby or participation herein; or
(iii) affects the amount of any reserve, special deposit, capital
adequacy, assessment or similar charge (other than reserves and
assessments taken into account in determining the LIBOR Rate) required
or expected to be maintained by any Lender or such Participant or any
corporation controlling such Lender or such Participant and such
Lender or such Participant determines that such amount required or
expected is increased by or based upon the existence of this Agreement
or its advances under the Revolving Loan hereunder,
and the result of any of the foregoing is to increase the cost to such Lender or
such Participant of making, funding, maintaining or continuing any advances
under the Revolving Loan hereunder or issuing Lender Guaranties or selling any
participation therein or assigning its Commitment to make the Revolving Loan
hereunder, as the case may be, or to reduce any amount receivable by such Lender
or such Participant in connection with any advances under the Revolving Loan or
Lender Guaranties, or to require any Lender or Participant to make any payment
calculated by reference to the amount of advances under the Revolving Loan or
Lender Guaranties issued or participated in or interest received by it, then, in
any such case, within five (5) days after written demand, the Borrowers shall
pay to such Lender or such Participant any additional amounts which are
necessary to compensate such Lender or such Participant for such additional cost
or reduced amount receivable which such Lender or such Participant reasonably
deems to be material as determined by such Lender or such Participant with
respect to this Agreement, the other Financing Agreements or the Loans made
hereunder. If such Lender or Participant becomes entitled to claim any
additional amounts pursuant to this SUBSECTION 2.17, it shall promptly notify
the Borrower Representative in writing of the event by reason of which such
Lender or Participant has become so entitled. A certificate as to any additional
amounts payable pursuant to this SUBSECTION 2.17 submitted by such Lender or
Participant to the Borrower Representative shall be presumed correct in the
absence of manifest error.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall declare that it is unlawful, for any Lender to
agree to make or to make or to continue to fund or maintain any LIBOR Rate Loan,
then, on notice thereof and demand therefor by the Agent to the Borrower
Representative, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Rate Loans shall terminate and (ii) the
Borrowers shall forthwith prepay in full all outstanding LIBOR Rate Loans,
together with interest accrued thereon, of such Lender UNLESS the Borrower
Representative, within five (5) Business Days after the delivery of such notice
and demand, converts all such LIBOR Rate Loans into Base Rate Loans.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Lender on the Closing Date, and on the date
of the Assignment and Acceptance pursuant to which it became a Lender in the
case of each other Lender, and from time to time thereafter if requested in
writing by the Borrower Representative or the Agent, provide the Agent and the
Borrower Representative with Internal Revenue Service form 1001 or 4224 or any
successor form, as appropriate, or other applicable form, certificate or
document, or any successor form prescribed by the Service properly completed and
duly executed by such Lender, certifying that such Lender is exempt from or is
entitled to a reduced rate of United States withholding tax on payments under
this Agreement or the Notes or certifying that the income receivable by such
Lender under this Agreement or the Notes is effectively connected with the
conduct of a trade or business of such Lender in the United States. If the form
provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender provides the appropriate form certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; PROVIDED that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
becomes a party to this Agreement, the Lender assignor was entitled to payments
or indemnification under SUBSECTION 2.17(a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the assignee on such
date. If any form or document referred to in this SUBSECTION 2.17(d) requires
the disclosure of information, other than information necessary to compute the
tax payable and information required on the date hereof by Internal Revenue
Service form 1001 or 4224 or any successor form, that the Lender reasonably
considers to be confidential, the Lender shall give notice thereof to the
Borrower Representative and shall not be obligated to include in such form or
document such confidential information.
2.18 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, or
any corporation controlling such Lender is increased as a result of a Change,
then, within five (5) days of demand by such Lender, the Borrowers shall pay
such Lender the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender determines is
attributable to this Agreement, its advances under the Revolving Loan, its
interest in the Lender Guaranties or its obligation to make advances under the
Revolving Loan or participate in or issue Lender Guaranties hereunder (after
taking into account such Lender's policies as to capital adequacy). A
certificate as to any additional amounts payable pursuant to this SUBSECTION
2.18 submitted by such Lender to the Borrower Representative shall be presumed
correct in the absence of manifest error.
2.19 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS. Notwithstanding
any other provision of this Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Rate Loans as to the matters covered:
(a) As soon as practicable after 11:00 a.m. (Chicago time) on each
LIBOR Rate Determination Date, the Agent shall determine (which determination
shall, absent manifest error, be final, conclusive and binding upon all parties)
the interest rate that shall apply to the LIBOR Rate Loans for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower Representative and each Lender.
(b) If the Agent determines (which determination shall be final and
conclusive and binding upon all parties) that:
(i) adequate and fair means do not exist for ascertaining the
applicable interest rate by reference to the LIBOR Rate with respect
to the LIBOR Rate Loans as to which an interest rate determination is
then being made; or
(ii) the LIBOR Rate does not accurately or fairly reflect the
cost of making or maintaining LIBOR Rate Loans; or
(iii) deposits of a type and maturity appropriate to match fund
LIBOR Rate Loans are not available; or
(iv) maintenance of LIBOR Rate Loans would violate any applicable
law, rule, regulation or directive, whether or not having the force of
law;
then, and in any such event, promptly after being notified of a borrowing,
conversion or continuation, the Agent shall give notice (in writing or by
telephone confirmed in writing) to the Borrower Representative (which notice the
Agent shall promptly transmit to each other Lender) of such determination, and
the Agent shall suspend the availability of LIBOR Rate Loans until such
circumstance no longer exists and require any LIBOR Rate Loans to be repaid and
Borrower shall repay or prepay the LIBOR Rate Loans, together with all interest
accrued thereon.
(c) The Borrowers shall indemnify the Agent and each Lender, upon
written request (which request shall set forth in reasonable detail the basis
for requesting such amounts and which shall, absent manifest error, be presumed
correct and binding upon all parties hereto), for losses, expenses and
liabilities (including, without limitation, any loss (including interest paid)
sustained by it in connection with the liquidation or re-employment of funds
acquired to fund or maintain LIBOR Rate Loans), that such Person may sustain:
(i) if for any reason (other than a default by the Lenders) a borrowing of any
LIBOR Rate Loan does not occur on a date specified therefor in a Borrowing
Notice, a Conversion/Continuation Notice or a request by telephone or telecopy
for borrowing or conversion/continuation or a successive Interest Period does
not commence after notice therefor is given pursuant to SUBSECTION 2.5(e) OR
2.5(f); (ii) if any prepayment of any of its LIBOR Rate Loans occurs on a date
that is not the last day of the Interest Period applicable to that Loan whether
because of acceleration, prepayment or otherwise (unless such prepayment is
required pursuant to the provisions of SUBSECTION 2.19(b)); (iii) if any of its
LIBOR Rate Loans are not paid on any date specified in a notice of prepayment
given by the Borrower Representative; or (iv) as a consequence of any other
default by the Borrowers to repay its LIBOR Rate Loans when required by the
terms of this Agreement; PROVIDED that during the period while any such amounts
have not been paid, the Lenders shall reserve an equal amount from amounts
otherwise available to be borrowed under the Revolving Loan. Unless otherwise
provided herein, the amount specified in the written statement of any Lender
shall be payable by the Borrowers on demand after receipt by the Borrower
representative thereof.
(d) Any Lender may make, carry or transfer LIBOR Rate Loans at, to, or
for the account of, any of its domestic or foreign branch offices or the office
of an affiliate of such Lender.
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(e) Calculation of all amounts payable to a Lender under SUBSECTION
2.19(b) or 2.19(c) shall be made as though each Lender had actually funded its
relevant LIBOR Rate Loan through the purchase of a LIBOR deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of such LIBOR Rate
Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office to a domestic
office in the United States of America; PROVIDED that each Lender may fund each
of its LIBOR Rate Loans in any manner it sees fit and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
SUBSECTION 2.19.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
3.1 MONTHLY REPORTS AND BORROWING BASE CERTIFICATES. The Borrowers
shall submit to each Lender, not later than thirty (30) days after the end of
each Fiscal Month, a report ("Monthly Report"), accompanied by a certificate in
the form attached as EXHIBIT 3.1, which shall be signed by the chief executive
officer or the chief financial officer of the Borrower Representative. The
Monthly Report shall be in form and substance satisfactory to the Agent and
shall include, as of the last Business Day of such Fiscal Month (and with
respect to the initial Monthly Report attached as EXHIBIT 3.1-1, as of a date
not more than two (2) Business Days prior to the Closing Date): (i) copies of
all consolidated and consolidating operating statements for such Fiscal Month
prepared for each Borrower for its internal use and other similar data as the
Agent may reasonably request, (ii) an aged trial balance of Accounts of each
Borrower ("Accounts Trial Balance") indicating which Accounts are current, up to
30, 30 to 60, 60 to 90, 90 to 120 and 120 days or more past the original invoice
date and listing the names and addresses of all applicable Account Debtors, and
(iii) a summary of accounts payable of each Borrower showing which accounts
payable are current, up to 30, 30 to 60, 60 to 90 and 90 days or more past due
and listing the names and addresses of applicable creditors. In addition, each
Borrower shall deliver a Borrowing Base Certificate to the Agent and each Lender
not later than the 3rd Business Day of each week for the preceding week (or such
shorter period as the Agent may require). Each Borrower shall furnish copies of
any other reports or information, in a form and with such specificity as is
satisfactory to the Agent, concerning Accounts included, described or referred
to in its Borrowing Base Certificates and any other documents in connection
therewith requested by the Agent including, without limitation, but only if
specifically requested by the Required Lenders, copies of all invoices prepared
in connection with such Accounts and all credit memoranda issued by such
Borrower (each Borrower shall issue such credit memoranda in accordance with its
current practice and without delay, but in any event within three (3) Business
Days of receipt of notice of a dispute with respect to an Account).
3.2 ELIGIBLE ACCOUNTS. "Eligible Accounts" shall mean all Accounts of
each of the Borrowers other than the following: (i) Accounts which remain unpaid
as of ninety (90) days after the date of the original invoice with respect
thereto; (ii) all Accounts owing by a single Account Debtor, including a
currently scheduled Account, if fifty percent (50%) or more of the balance owing
by such Account Debtor is ineligible by reason of the criterion set forth in
this SUBSECTION 3.2, except CLAUSES (XII) and (XVIII); (iii) Accounts with
respect to which the Account Debtor is an Affiliate of any Borrower or a
director, officer or employee of any Borrower or its Affiliates; (iv) Accounts
with respect to which the Account Debtor is a Governmental Authority or prime
contractor thereof unless such Borrower has complied in a manner satisfactory to
the Agent with the Federal Assignment of Claims Act of 1940, as amended, or
similar law or statute of the relevant state, province, municipality or other
jurisdiction and any amendments thereto, relative to the assignment of such
Accounts; (v) Accounts with respect to which the Account Debtor is not a
resident of the United States unless the Account is payable in United States
dollars and (A) the Account Debtor has supplied such Borrower with an
irrevocable letter of credit, issued by a financial institution satisfactory to
the Required Lenders in an amount sufficient to cover such Account and in form
and substance satisfactory to the Required Lenders and without right of setoff
or (B) the Agent in its reasonable discretion has approved in writing such
Account Debtor; (vi) Prebilled Accounts and other Accounts arising with respect
to goods which have not been shipped and delivered to and accepted as
satisfactory by the Account Debtor or arising with respect to services which
have not been fully performed and accepted as satisfactory by the Account
Debtor; (vii) Accounts for which the prospect of payment in full or performance
of services in a timely manner by any Borrower or third party service provider
is or is likely to become impaired as determined by the Agent in the reasonable
exercise of its discretion; (viii) Accounts which are not invoiced (and dated as
of the date of such invoice) and sent to the Account Debtor within thirty (30)
days after delivery of the underlying goods to or performance of the underlying
services for the Account Debtor; (ix) Accounts with respect to which the Agent,
on behalf of the Lenders, does not have a first and valid fully perfected Lien
free and clear of any other Lien whatsoever; (x) Accounts with respect to which
the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding or has made an assignment for the benefit of creditors or whose
assets have been conveyed to a receiver or trustee; (xi) Accounts with respect
to which the Account Debtor's obligation to pay the Account is conditional upon
the Account Debtor's approval or is otherwise subject to any repurchase
obligation or credit or offset right, as with services performed on a guaranteed
service, service-or-return, demonstration, service performed on approval or
other terms by reason of which the payment by the Account Debtor is or may be
conditional or consignment basis; (xii) Accounts to the extent that the Account
Debtor's indebtedness to the Borrowers exceeds a credit limit determined by the
Agent in the Agent's discretion following prior written notice of such credit
limit from the Agent to the Borrower Representative; (xiii Accounts with respect
to which any disclosure is required in accordance with SUBSECTION 3.3; (xiv)
contra Accounts to the extent of the amount of the accounts payable owed by the
Borrowers to the Account Debtor; (xv) Accounts with respect to which the Account
Debtor is located in any state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or other similar filing unless
such Borrower has either qualified as a foreign corporation authorized to
transact business in such state or has filed a Notice of Business Activities
Report or similar filing with the applicable Governmental Authority in such
state for the then current year; (xvi) Accounts evidenced by Chattel Paper or
any Instrument of any kind, to the extent possession of such Chattel Paper or
Instrument is not granted to the Agent, for the benefit of the Lenders; (xvii)
Accounts which the Agent determines in good faith to be unacceptable; (xviii)
the amount of any Accounts that exceed thirty-five percent (35%) of any
individual Borrowing Base or twenty percent (20%) of the combined total
Borrowing Base; and (xix) an amount equal to 3.1% of the Chicago Borrowing Base
and 1.0% of the FKP Borrowing Base to account for such Borrower's lag in the
processing and issuing of credit memos to Account Debtors, such percentage to be
subject to adjustment from time to time. In the event that a previously
scheduled Eligible Account ceases to be an Eligible Account under the above
described criteria (other than any determination made by the Agent), the
Borrower Representative shall notify the Agent thereof as soon as practicable.
3.3 ACCOUNT WARRANTIES. With respect to Accounts scheduled, listed or
referred to on the initial Accounts Trial Balance included in the initial
Monthly Report or on any subsequent Accounts Trial Balance or Borrowing Base
Certificate, each Borrower represents and warrants to the Agent and each Lender
that, except as disclosed in the applicable Accounts Trial Balance or Borrowing
Base Certificate: (i) the Accounts represent bona fide sales of Inventory or the
provision of services to customers in the ordinary course of business completed
in accordance with the terms and provisions contained in the documents available
to the Agent and each Lender with respect thereto and are not evidenced by a
judgment or by an Instrument or Chattel Paper; (ii) the amounts shown on the
applicable Accounts Trial Balance and on each Borrower's books and records and
all invoices and statements which may be delivered to the Agent or any Lender
with respect thereto are actually and absolutely owing to each Borrower and are
not in any way contingent; (iii) no payments have been or shall be made thereon
except payments immediately delivered to a Blocked Account pursuant to this
Agreement; (iv) there are no setoffs, claims or disputes existing or asserted
with respect thereto and any Borrower has made any agreement with any Account
Debtor for any deduction therefrom except a discount or allowance allowed by
such Borrower in the ordinary course of its business for prompt payment and
which discount and allowance is reflected in the calculation of the face amount
of each invoice related to such Account; (v) to the best of each Borrower's
knowledge, there are no facts, events or occurrences which in any way impair the
validity or enforcement thereof or tend to reduce the amount payable thereunder
as shown on the respective Accounts Trial Balances or Borrowing Base
Certificates, any Borrower's books and records and all invoices and statements
delivered to the Agent or any Lender with respect thereto; (vi) to the best of
each Borrower's knowledge, all Account Debtors have the capacity to contract and
are solvent; (vii) no Borrower has received any notice of proceedings or actions
which are threatened or pending against any Account Debtor which could
reasonably be expected to result in any material adverse change in such Account
Debtor's financial condition; (viii) no Borrower has any knowledge that any
Account Debtor is unable generally to pay its debts as they become due; (ix) the
Accounts do not arise from the sale of Inventory produced in violation of the
Fair Labor Standards Act so as to be subject to the so-called "hot goods"
provision contained in Title 29 U.S.C., SECTION 215(A)(1); (x) the services
furnished and/or Inventory sold giving rise to the Account are not, and will not
be at the time of sale thereof, subject to any Lien except that of the Agent,
for the benefit of the Lenders; (xi) the Accounts have not been pledged or sold
to any Person or otherwise encumbered and each Borrower is the owner of its
Accounts free and clear of any Lien except that of the Agent, for the benefit of
the Lenders; and (xii) with respect to Accounts for which its Account Debtor is
located in any state denying creditors access to its courts in the absence of a
Notice of Business Activities Report or other similar filing, such Borrower has
either qualified as a foreign corporation authorized to transact business in
such state or has filed all required Notice of Business Activities Reports or
comparable filings with the applicable Governmental Authority.
3.4 VERIFICATION OF ACCOUNTS. The Agent shall have the right, at any
time or times hereafter, in the name of the applicable Borrower or a nominee of
the Agent, or during the pendency of an Event of Default, in the Agent's name,
to verify with Account Debtors the validity, amount or any other matter relating
to any Account, by mail, telephone, or in person.
3.5 COLLECTION OF ACCOUNTS AND PAYMENTS. On or prior to the Closing
Date, the Borrowers shall establish lock box accounts (the "Blocked Accounts")
in the applicable Borrower's name with such banks as are acceptable to the Agent
("Collecting Banks") and enter into blocked account agreements (or amendments to
existing blocked account agreements) in form and substance satisfactory to the
Agent among such Borrower, the Agent and each Collecting Bank (the "Blocked
Account Agreements"). All Account Debtors shall directly remit all payments on
Accounts into a Blocked Account and each Borrower will immediately deposit all
cash payments made for Inventory or the provision of services or other cash
payments constituting proceeds of Collateral received by it into a Blocked
Account in the identical form in which such payment was made, whether by cash or
check. On or prior to the Closing Date, each Borrower shall notify in writing
each of its existing Account Debtors of the name and address of the Blocked
Account to which each such Account Debtor shall be directed to remit all
payments on its Accounts. In addition, the Agent shall, on or prior to the
Closing Date, establish a depository account at each Collecting Bank or at a
centrally located bank (the "Depository Account"). Each Blocked Account
Agreement shall provide, among other things, that (i) all items of payment
deposited in each Blocked Account are held by such Collecting Bank as agent and
bailee-in-possession for the Agent, (ii) the Collecting Bank has no rights of
setoff or recoupment or any other claim against such Blocked Account, other than
for payment of its service fees or other charges directly related to the
administration of such Blocked Account and for returned checks or other items of
payment, and (iii) such Collecting Bank agrees to immediately forward all
amounts received in such Blocked Account to the Depository Account through daily
sweeps from the Blocked Account into the Depository Account in accordance with
the terms of the applicable Blocked Account Agreement. Each Borrower hereby
agrees that all payments received by the Agent, whether by cash, check, wire
transfer or any other instrument, made to such Blocked Accounts or otherwise
received by the Agent and whether on the Accounts or as proceeds of other
Collateral or otherwise will be held as Collateral by the Agent, for the benefit
of the Lenders, for application to the Obligations. Each Borrower shall
irrevocably instruct each of its Collecting Banks that such Collecting Bank
shall promptly transfer all payments or deposits to the Blocked Accounts into
the Agent's Depository Account in accordance with the terms of the applicable
Blocked Account Agreement. Each Borrower, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with such Borrower, shall,
acting as trustee for the Agent, receive, as the sole and exclusive property of
the Agent, for the benefit of the Lenders, any monies, checks, notes, drafts or
any other payments relating to and/or proceeds of Accounts or other Collateral
which come into the possession or under the control of such Borrower or any
Affiliates, employees, agents or other Persons acting for or in concert with
such Borrower, and immediately upon receipt thereof, such Borrower or such
Persons shall remit the same or cause the same to be deposited, in kind, into a
Blocked Account or, at the direction of the Agent, shall remit the same, or
cause the same to be remitted, in kind, to the Agent at the Agent's address set
forth in SUBSECTION 10.12. So long as no Default or Event of Default has
occurred and is continuing, a Borrower may add or replace a Blocked Account;
PROVIDED that (i) the Agent shall have consented in advance to the opening of
such account with the relevant bank and (ii) prior to the time of opening of
such account (or such later dated as the Agent shall consent to in writing),
such Borrower and such bank shall have executed and delivered to the Agent a
Blocked Account Agreement in form and substance satisfactory to the Agent.
3.6 APPOINTMENT OF THE AGENT AS BORROWER'S ATTORNEY-IN-FACT. Each
Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent) such Borrower's true and lawful
agent and attorney-in-fact (which appointment shall for all purposes be deemed
to be coupled with an interest and shall be irrevocable for so long as any
Obligations are outstanding), and authorizes the Agent, in any Borrower's or the
Agent's name, without notice to any Borrower, to: (A) upon the occurrence and
during the continuance of an Event of Default (i) demand payment of Accounts,
(ii) enforce payment of Accounts by legal proceedings or otherwise, (iii)
exercise all of any Borrower's rights and remedies with respect to the
collection of the Collateral or any legal proceedings brought to collect an
Account, (iv) sell or assign any Collateral upon such terms, for such amount and
at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew any Collateral, (vi) discharge and release any
Account, (vii) prepare, file and sign any Borrower's name on any proof of claim
in bankruptcy or other similar document against an Account Debtor or on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral, (viii) notify the postal authorities of
any change of the address for delivery of any Borrower's mail to an address
designated by the Agent, and receive, open and dispose of all mail addressed to
any Borrower and (ix) do all acts and things which are necessary in the Agent's
sole discretion to fulfill the Obligations under the Financing Agreements; and
(B) at any time, to (i) have access to any lockbox or postal box into which any
Borrower's mail is deposited, (ii) endorse any Borrower's name upon any Chattel
Paper, Document, Instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to any Account or any goods pertaining thereto,
(iii) execute in any Borrower's name and on any Borrower's behalf any financing
statements or amendments thereto, (iv) endorse any Borrower's name on any
verification of Accounts and notices thereof to Account Debtors, (v) use the
information recorded or contained in any data processing equipment and computer
hardware and software relating to the Accounts and any other Collateral, (vi)
take control in any manner of any item of payment or proceeds of any Account,
(vii) endorse any Borrower's name upon any items of payment or proceeds thereof
and deposit the same in the Agent's account on account of any Borrower's
Obligations, and (viii) communicate with any Borrower's independent certified
public accountants (with a representative of the Borrower Representative present
unless an Event of Default shall have occurred and be continuing).
3.7 ACCOUNT RECORDS. Each Borrower shall at all times hereafter
maintain a record of Accounts, keeping correct and accurate records itemizing
and describing the names and addresses of Account Debtors, relevant invoice
numbers, shipping dates and due dates, collection histories, and Accounts
agings, all of which records shall be available during such Borrower's usual
business hours at the request of any of the Agent's officers, employees or
agents. Each Borrower shall cooperate fully with the Agent and its agents who
shall have the right at any time or times to inspect its Accounts and the
records with respect thereto. Each Borrower shall conduct a review of its bad
debt reserves and collection histories at least one each year and promptly
following such review shall supply the Agent with a report in form and substance
reasonably satisfactory to the Agent concerning such review of the Accounts.
3.8 INSTRUMENTS AND CHATTEL PAPER. All Chattel Paper shall be marked
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of Green Tree Financial
Servicing Corporation, as agent." Upon the request of the Agent and at all times
upon the occurrence and during the continuance of a Default or Event of Default,
immediately upon any Borrower's receipt thereof, such Borrower shall deliver or
cause to be delivered to the Agent, with appropriate endorsement and assignment
to vest title, with full recourse to such Borrower, and possession in the Agent,
on behalf of the Lenders, all Instruments and Chattel Paper which such Borrower
now owns or may at any time or times hereafter acquire.
3.9 NOTICE TO ACCOUNT DEBTORS. The Agent may, in its sole discretion,
at any time or times, upon the occurrence and during the continuance of an Event
of Default and without prior notice to any Borrower, notify any or all Account
Debtors that the Accounts have been assigned to the Agent, for the benefit of
the Lenders, and that the Agent has a Lien therein. Upon the occurrence and
during the continuance of an Event of Default, the Agent may direct or, at the
request of the Agent, each Borrower shall direct, any or all of its Account
Debtors to make all payments upon the Accounts directly to the Agent. The Agent
shall furnish the Borrower Representative with a copy of any such notice.
3.10 EQUIPMENT WARRANTIES. With respect to the Equipment, each
Borrower represents and warrants to the Agent and the Lenders that: (i) such
Borrower has good, indefeasible and merchantable title to its Equipment; (ii)
its Equipment is located only on the premises listed on EXHIBIT 8.6; (iii) its
Equipment is not subject to any Lien whatsoever except for Permitted Liens; (iv)
its Equipment is in good condition and repair (ordinary wear and tear excepted)
and is currently used or usable in such Borrower's business; and (v) except as
described in EXHIBIT 3.10, none of the Equipment used in the conduct of such
Borrower's business is leased.
3.11 EQUIPMENT RECORDS. Each Borrower shall at all times hereafter
keep complete and accurate records itemizing and describing the kind, type, age
and condition of its Equipment, and such Borrower's cost therefor and
accumulated depreciation thereon and acquisitions, retirements, sales, or other
dispositions thereof, all of which records shall be available during such
Borrower's usual business hours on demand to any of the Agent's officers,
employees or agents.
3.12 MAINTENANCE OF EQUIPMENT. 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 and renewals thereto
so that the value and operating efficiency thereof shall at all times be
maintained and preserved. Each Borrower shall not permit any item of its
Equipment to become a Fixture to real property or an accession to other personal
property. Each Borrower shall not permit the Equipment to be operated or
maintained in violation of any applicable law, statute, rule or regulation. In
addition, with respect to all items of leased equipment, each Borrower shall
keep, maintain, repair, replace and operate such leased equipment in accordance
with the terms of the applicable lease.
3.13 REAL ESTATE. EXHIBIT 3.13 describes all Real Estate or interests
in Real Estate owned or leased or otherwise occupied by any Borrower. Each
Borrower represents and warrants to the Agent and the Lenders that each Borrower
has good and merchantable title to and ownership of, or a valid leasehold
interest in, each parcel of its Real Estate described in EXHIBIT 3.13, free and
clear of all Liens, except Liens in favor of the Agent, for the benefit of the
Lenders, and the Permitted Liens. Each Borrower further represents and warrants
to the Agent and the Lenders that no parcel of its Real Estate is subject to any
known boundary or encroachment dispute, special assessment, condemnation or
eminent domain proceeding, restrictive covenant, zoning or building code
violation or any other known dispute, assessment, claim or violation of law
which might restrict or interfere with such Borrower's use of such parcel of
Real Estate in the ordinary course of such Borrower's business or which could
reasonably be expected to have a Material Adverse Effect.
3.14 MAINTENANCE OF REAL ESTATE. Each Borrower shall keep and maintain
its Real Estate and all improvements thereon in good condition and repair
(ordinary wear and tear excepted) and shall maintain the value and utility
thereof and shall maintain such Real Estate in conformity with all applicable
building and zoning codes and other applicable laws, statutes, rules and
regulations. Each Borrower shall maintain its leased real property in the same
manner as its owned Real Estate, and comply with the terms of its leases of Real
Estate, in accordance with the applicable leases.
3.15 INTELLECTUAL PROPERTY AND GENERAL INTANGIBLES. Each Borrower is
the owner of all the Intellectual Property and General Intangibles free and
clear of all Liens other than Liens in favor of the Agent, for the benefit of
the Lenders. Each Borrower shall maintain complete and accurate records with
respect to its Intellectual Property and General Intangibles and shall defend
such Intellectual Property and General Intangibles against infringement,
interference, opposition or similar actions or challenges and shall maintain and
preserve all of its rights with respect thereto.
4. CONDITIONS TO ADVANCES.
4.1 CONDITIONS TO ALL ADVANCES. In addition to those conditions set
forth in SUBSECTION 4.2 regarding the initial advance of funds, the issuance of
a Lender Guaranty under the Revolving Loan and the funding of advances under the
Revolving Loan and the funding of advances under the Swingline Loan shall be
conditioned upon the matters set forth in this SUBSECTION 4.1:
(a) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrowers contained herein or in any other Financing Agreement
shall be true and correct in all material respects on and as of the date of such
advance as if made on such date, except to the extent that any such
representation or warranty expressly relates to an earlier date.
(b) BORROWERS' REQUEST. The Agent shall receive (i) Borrowing Notice
on or prior to the date required by SUBSECTION 2.5 of this Agreement with
respect to any advance under the Revolving Loan, (ii) at least five (5) Business
Days' prior notice of the issuance of a Lender Guaranty, (iii) a Monthly Report
from the Borrowers dated no more than thirty-one (31) days prior to the date of
such advance, and (iv) a Borrowing Base Certificate delivered in accordance with
SUBSECTION 3.1 and all other documents required by the terms of this Agreement
to have been delivered to the Agent hereunder prior to such date.
(c) FINANCIAL CONDITION. As determined by the Required Lenders in
their reasonable discretion, no Material Adverse Effect shall have occurred at
any time or times subsequent to the most recent annual financial statements
provided pursuant to SUBSECTION 7.1(III).
(d) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing or will result from such advance.
(e) NO LITIGATION. (i) No Litigation shall be pending or threatened
against Parent or any Borrower or any officer, director, or executive of Parent
or any Borrower (A) in connection with this Agreement or the other Financing
Agreements or (B) which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect; and (ii) no injunction, writ, restraining
order or other order of any nature materially adverse to Parent or any Borrower
shall have been issued or threatened by any Governmental Authority.
(f) OTHER REQUIREMENTS. The Agent shall have received, in form and
substance satisfactory to the Agent, all certificates, orders, authorizations,
consents, affidavits, schedules, instruments, security agreements, financing
statements, mortgages and other documents which are provided for hereunder, or
which the Agent may at any time reasonably request.
Each request by the Borrower Representative and acceptance by the
Borrowers of the proceeds of any advance under the Revolving Loan and the
request by the Borrower Representative for the incurrence by the Lenders of any
Lender Guaranty Liability shall constitute a representation and warranty by the
Borrowers that the conditions contained in SUBSECTIONS 4.1(A), 4.1(D), and
4.1(E) have been satisfied. All legal matters incident to the making of the
advance of funds or the issuance of the Lender Guaranty shall be satisfactory to
the Agent and its counsel.
4.2 CONDITIONS TO INITIAL ADVANCE. In addition to those conditions set
forth in SUBSECTION 4.1, the obligations of the Lenders to make an advance under
the Revolving Loan or the Swingline Loan or to issue Lender Guaranties shall be
conditioned upon the satisfaction on or before the Closing Date of the
conditions set forth in this SUBSECTION 4.2 and the delivery on or before the
Closing Date of the following documents to each Lender, in form and substance
satisfactory to each Lender, and consummation of all of the transactions or the
satisfaction of each condition contemplated by each such document in a manner
satisfactory to each Lender and its counsel.
(a) FINANCING AGREEMENTS; NOTES. Duly executed copies of this
Agreement, the other Financing Agreements and one (1) duly executed copy of each
of the Revolving Loan Notes conforming to the requirements hereof, together with
all Schedules, Exhibits, certificates, instruments, documents and financial
statements required to be delivered pursuant hereto and thereto.
(b) LEGAL OPINION. The legal opinion of Parent's counsel in form and
substance satisfactory to the Lenders and their counsel.
(c) UCC. Evidence of the proper filing of UCC financing statements
perfecting Liens in favor of the Agent in the Collateral and copies of searches
of financing statements filed under the Code, together with tax lien and
judgment searches with respect to the Property of the Parent and each Borrower,
in such jurisdictions as the Agent may request.
(d) OFFICER'S CERTIFICATE. A certificate executed by the Borrower
Representative stating that (i) no Default or Event of Default has occurred and
is continuing, (ii) since December 31, 1998, no material and adverse change has
occurred in the business, prospects, assets, liabilities, operations or
condition (financial or other) of such Borrower or of such Borrower and its
Subsidiaries taken as a whole, (iii) no litigation, investigation or proceeding,
or injunction, writ or restraining order of the type described in SUBSECTION
4.1(e) is pending or threatened, (iv) each of the conditions precedent to the
consummation of the Loans contemplated hereby has been met or satisfied other
than any such conditions precedent requiring (i) the satisfaction of the Agent
or any Lender or (ii) any other action to be taken by the Agent or any Lender,
and (v) the representations and warranties of such Borrower contained in the
Financing Agreements are correct and complete in all material respects on and as
of the Closing Date.
(e) INSURANCE POLICIES AND ENDORSEMENTS. Copies of policies of
insurance required hereby together with lender loss payable and additional
insured endorsements in form and substance satisfactory to the Agent, duly
executed, and evidence of the payment of the first year's premium therefor and
an assignment of the keyman life insurance on Lois and Veru in form and
substance satisfactory to the Agent.
(f) INITIAL MONTHLY REPORT AND OTHER EXHIBITS. Copies of the initial
Monthly Report, initial Borrowing Base Certificate, the Solvency Affidavit, the
initial Projections and other EXHIBITS and SCHEDULES required hereby.
(g) FEES. The Fees payable as of the Closing Date pursuant to the Fee
Letter have been paid.
(h) ORGANIZATION DOCUMENTS. A copy of the Parent's and each Borrower's
articles of incorporation, certified by the appropriate Governmental Authority
in its respective jurisdiction of incorporation as of a date not more than
twenty (20) days prior to the Closing Date and a copy of the bylaws of the
Parent and each Borrower and any amendments thereto certified by the Secretary
or Assistant Secretary of such Person.
(i) GOOD STANDING CERTIFICATES. Good Standing Certificates for the
Parent and each Borrower from the appropriate Governmental Authority in its
respective jurisdiction of incorporation and from each other state in which such
Person is required to be qualified to transact business as a foreign
corporation.
(j) BOARD RESOLUTIONS. Certified copies of resolutions of the board of
directors of the Parent and each Borrower authorizing the execution and delivery
of and the consummation of the transactions contemplated by this Agreement, the
other Financing Agreements to which it is a party and all other documents or
instruments to be executed and delivered in conjunction herewith and therewith
and the performance of its obligations hereunder and thereunder. Such
resolutions shall also authorize the Borrower Representative to act in its
capacity as set forth in this Agreement.
(k) INCUMBENCY CERTIFICATES. Incumbency certificates with respect to
the officers of the Parent and each Borrower executing the documents referred to
in item (j) above, certified as of the Closing Date by such Person's Secretary
or Assistant Secretary as being true and correct.
(l) WAIVERS. Landlord waivers, bailee letters and mortgagee agreements
(or amendments to such existing agreements) in form and substance satisfactory
to Agent, in each case as required pursuant to SUBSECTION 7.9.
(m) ACCOUNTANTS' LETTERS. A letter from the Borrowers authorizing the
Borrowers' independent certified public accountants to communicate with the
Agent and the Lenders in accordance with SUBSECTION 7.1 and a letter from such
accountants acknowledging the Agent's and each Lender's reliance on annual
audited financial statements delivered to the Agent and the Lenders pursuant to
SUBSECTION 7.1.
(n) POWER OF ATTORNEY. A power of attorney in favor of the Agent with
respect to the matters set forth in SUBSECTIONS 3.6, 5.2 and 7.6 in the form
attached as EXHIBIT 4.2(n).
(o) AGENT FOR SERVICE. An acknowledgment by CT Corporation System that
it has been appointed as each Borrower's agent to accept service of process in
Illinois.
(p) LETTER OF DIRECTION. A letter of direction from the Borrowers with
respect to the disbursement of the proceeds of the initial advance of funds
under the Revolving Loan.
(q) SUBORDINATION AGREEMENTS. Four (4) executed copies of each
Subordination Agreement and a certified copy of each agreement evidencing,
respectively, the Seller Obligations, the FKP Obligations and the S&C
Obligations.
(r) NO MATERIAL ADVERSE CHANGE. No material and adverse change in the
business, operations or condition (financial or other) or prospects of any
Borrower or of Parent and its Subsidiaries taken as a whole shall have occurred
since December 31, 1998.
(s) NO MATERIAL TRANSACTIONS. Except as permitted by this Agreement,
neither the Parent nor any Borrower shall have entered into any material
commitment or material transaction since December 31, 1998 including, without
limitation, transactions for borrowings and capital expenditures, which are not
in the ordinary course of such Person's business.
(t) NO ACCOUNTING CHANGES. Neither the Parent nor any Borrower shall
have made any material change in its accounting methods or principles since
December 31, 1998.
(u) BLOCKED ACCOUNT AGREEMENTS. Executed copies of each of the Blocked
Account Agreements.
(v) NO TERMINATION OF CONTRACTS. No materially advantageous agreement
now in effect between any Borrower and any other Person shall have been
terminated, modified or declared to be in default since December 31, 1998.
(w) CONSENTS. On the Closing Date, the Agent shall have received
evidence satisfactory to the Agent that the Parent and the Borrowers have
obtained consents and acknowledgments of all Persons whose consent or
acknowledgment may be required including, without limitation, all requisite
Governmental Authorities to the execution and delivery of the Financing
Agreements and performance of the obligations thereunder.
(x) TERMINATION STATEMENTS; RELEASES. A letter from Sanwa Business
Credit Corporation in form and substance satisfactory to the Agent itemizing
amounts of principal, interest, fees and expenses or other amounts payable to
it; UCC-3 termination statements, mortgage releases and all other instruments
and documents necessary to terminate all Liens on the Collateral except
Permitted Liens; and all releases and other instruments necessary to terminate
all Liens on any Borrower's and its Subsidiaries' Intellectual Property except
Permitted Liens.
(y) ENVIRONMENTAL MATTERS. The Agent shall have received such
environmental review and audit reports with respect to the properties of the
Borrowers as the Agent shall have requested and the Agent shall be satisfied, in
its sole discretion, with the contents of all such environmental reports.
(z) FORM W-9. A copy of IRS Form W-9, Taxpayer Identification Number
and Certification.
(aa) CLOSING DATE AVAILABILITY. On the Closing Date, the Borrowers
shall have Borrowing Availability (with trade payables being paid currently and
expenses and liabilities being paid in the ordinary course of business and
without acceleration of sales) of at least $5,000,000 (less the $988,040.48 cash
collateral securing the letters of credit referred to in SUBSECTION 8.1(ix))
after taking into account the payment of all fees and expenses to be paid on the
Closing Date. Such Borrowing Availability shall be evidenced by a Borrowing Base
Certificate delivered to the Agent on the Closing Date.
(bb) MERGER. Evidence of the merger of Fogarty & Klein Yellow Pages,
Inc., a Texas corporation, and Southwest Information Resources, Inc., a Texas
corporation, with and into FKP.
(cc) PRE-FUNDING AUDIT. The pre-funding audit conducted by the Audit
Agent shall be satisfactory to the Agent and the Audit Agent and reveal no
deterioration in the aging or any dilution of Borrowers' Accounts.
(dd) OTHER DOCUMENTS. All corporate and legal proceedings,
organizational structure, capital structure, other debt instruments, material
contracts and licenses, governing documents, and all agreements in connection
with the transactions contemplated by this Agreement and the other Financing
Agreements shall be satisfactory to the Agent, and the Agent shall have received
all information and copies of all documents including, without limitation,
records of corporate existence, authority and proceedings and governmental
approvals, if any, which the Agent reasonably may have requested in connection
therewith, and such documents, where appropriate, shall be certified by proper
corporate or Governmental Authorities.
5. COLLATERAL.
5.1 SECURITY INTEREST. All of the Borrowers' Obligations constitute
one (1) loan secured by the Agent's Liens on the Collateral now or from time to
time hereafter granted by any Borrower to the Agent. To secure timely payment
and performance in full of the Obligations, each Borrower hereby sells, assigns,
conveys, mortgages, pledges, hypothecates and transfers and hereby grants to the
Agent, for the benefit of the Lenders, a right of setoff against and a
continuing Lien upon all of such Borrower's right, title and interest in and to
the following property and interests in property, whether now owned or hereafter
acquired by such Borrower and wheresoever located: (i) Accounts; (ii) General
Intangibles; (iii) Fixtures; (iv) Inventory; (v) Equipment; (vi) Intellectual
Property; (vii) Investment Property; (viii) all of such Borrower's deposit
accounts (general or special) with any financial institution with which such
Borrower maintains deposits; (ix) all of such Borrower's now owned or hereafter
acquired monies, and any and all other property and interests in property of
such Borrower now or hereafter coming into the actual possession, custody or
control of the Agent or any Lender or any agent or affiliate of the Agent or any
Lender in any way or for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise); (x) Documents, Instruments and
Chattel Paper of such Borrower; (xi) all insurance policies relating to any of
the foregoing, including without limitation business interruption insurance;
(xii) all of such Borrower's books and records relating to any of the foregoing;
(xiii) all accessions and additions to, substitutions for, and replacements of
any of the foregoing; and (xiv) all cash collections from, and all other cash
and non-cash proceeds of, any of the foregoing including, without limitation,
proceeds of and unearned premiums with respect to insurance policies insuring
any of the Collateral and claims against any Person for loss of, damage to, or
destruction of, any or all of the Collateral.
5.2 PRESERVATION OF COLLATERAL AND PERFECTION OF LIENS THEREON. Prior
to the execution of this Agreement, each Borrower shall have executed and
delivered to the Agent, and at any time or times hereafter at the request of the
Agent, each Borrower shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the Agent
may reasonably deem desirable to obtain the full benefits of this Agreement and
of the rights and powers herein granted including, without limitation, all
financing statements, security agreements, pledge agreements, bailee letters,
amendments thereto, or other documents (and pay the cost of filing or recording
the same in all public offices deemed necessary by the Agent), as the Agent may
request, in a form satisfactory to the Agent, to perfect and maintain the Liens
on the Collateral granted by any Borrower to the Agent or to otherwise protect
and preserve the Collateral and the Liens thereon or to enforce the Agent's
Liens on the Collateral. Should any Borrower fail to do so, the Agent is
authorized to sign any such financing statements or other documents as such
Borrower's agent. Each Borrower further agrees that a carbon, photocopy or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.
6. REPRESENTATIONS AND WARRANTIES.
The Borrowers, jointly and severally, represent and warrant that as of
the Closing Date and continuing so long as any Obligations remain outstanding,
and (even if there shall be no Obligations outstanding) so long as this
Agreement remains in effect:
6.1 EXISTENCE. (a) Each Borrower and each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified to transact business
as a foreign corporation in, and is in good standing under the laws of, all
states in which such Person is required by applicable law to maintain such
qualification and good standing except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect. All such jurisdictions
are listed on EXHIBIT 6.1-1.
(b) All shares of Stock of each Borrower and each Subsidiary have been
duly authorized and validly issued and are fully paid and non-assessable. Except
as disclosed on EXHIBIT 6.1-2 and as otherwise permitted by this Agreement (i)
no authorized but unissued Stock of any Borrower or any Subsidiary is subject to
any option, warrant, right to call or commitment of any kind or character, (ii)
no Borrower or any Subsidiary has any outstanding Stock or securities
convertible into or exchangeable for any Stock, or any rights issued to any
Person (either preemptive or other) to subscribe for or to purchase, or any
options or warrants for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to any of its Stock or any Stock or securities
convertible into or exchangeable for any of its Stock, and (iii) no Borrower or
any Subsidiary is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its Stock or any convertible
securities, rights, warrants or options of the type described in the clause (ii)
above.
6.2 AUTHORITY. Each Borrower and each Subsidiary has full power,
authority and legal right to enter into this Agreement and the other Financing
Agreements to which such Person is a party. The execution and delivery by each
Borrower and each Subsidiary of the Financing Agreements to which it is a party:
(i) have been duly authorized by all necessary action on its part; (ii) are not
in contravention of the terms of its articles of incorporation or bylaws or of
any indenture, agreement or undertaking to which it is a party or by which it or
any of its Property is bound; (iii) do not and will not require any registration
with, or approval or the consent or approval of, any Governmental Authority or
of any other Person that has not been obtained; (iv) do not and will not
contravene any contractual or governmental restriction to which it or any of its
Property is subject; and (v) do not and will not, except as contemplated herein,
result in the imposition of any Lien upon any Property of it under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which it is a party or by which it or any of its
Property may be bound or affected. Each Borrower and each Subsidiary has the
full corporate power and authority and legal right to own, operate, pledge,
mortgage or otherwise encumber its Property, to lease the Property it now
operates under lease and conduct its business as now, heretofore and proposed to
be conducted, and has all material licenses, permits, consents and approvals
from or by, and has made all material filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct.
6.3 BINDING EFFECT. This Agreement and the other Financing Agreements
have been duly executed and delivered by the Borrowers, are the legal, valid and
binding obligations of the Borrowers and are enforceable against the Borrowers
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the rights of creditors
generally or by application of general principles of equity.
6.4 FINANCIAL DATA. (a) The Borrowers have provided to the Agent and
each Lender (i) audited statements of income and cash flow and balance sheets
for the Parent and its Subsidiaries on a consolidated and consolidating basis
for each of the three (3) most recent Fiscal Years and (ii) unaudited statements
of income and cash flow and balance sheets for the Parent and its Subsidiaries
on a consolidated and consolidating basis as of February 28, 1999 and for the
two (2) months then ended (collectively the "Financial Statements"). The
Financial Statements fairly present the financial condition and results of
operations of the Parent and its Subsidiaries for the periods indicated therein,
in accordance with Generally Accepted Accounting Principles, consistently
applied (subject to normal year-end adjustment). As of the Closing Date, the
Financial Statements are complete and accurate and fairly represents the assets,
liabilities, financial condition and results of operations of Parent and its
Subsidiaries in accordance with Generally Accepted Accounting Principles,
consistently applied, but taking into account the transactions contemplated by
this Agreement. There are no omissions from the Financial Statements or other
facts and circumstances not reflected in the Financial Statements which are or
may be material. Except as contemplated hereby, since December 31, 1998, neither
the Parent nor any Borrower has: (i) incurred any debts, obligations, or
liabilities (absolute, accrued, or contingent and whether due or to become due)
except current liabilities incurred in the ordinary course of business which
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect; (ii) paid any obligation or liability other than
current liabilities in the ordinary course of business, or discharged or
satisfied any Liens other than those securing current liabilities, in each case
in the ordinary course of business; (iii) declared or made any Restricted
Payment or obligated itself to do so; (iv) mortgaged, pledged, or subjected to
any Lien any of its Property except Permitted Liens; (v) except as permitted by
SUBSECTION 8.7, sold, transferred, or leased any of its Property; (vi) suffered
any physical damage, destruction, or loss (whether or not covered by insurance)
which could reasonably be expected to have a Material Adverse Effect; (vii)
entered into any transaction other than in the usual and ordinary course of
business and other than as contemplated hereby; (viii) encountered any labor
difficulties or labor union organizing activities; (ix) issued or sold any
shares of capital stock or other securities or granted any options or similar
rights with respect thereto; or (x) agreed to do any of the foregoing other than
pursuant hereto. Since December 31, 1998, there has been no material adverse
change in the business, properties, operations or condition (financial or
otherwise) or business prospects of the Parent and its Subsidiaries taken as a
whole.
(b) Each Borrower has also furnished to the Agent and each Lender
initial Projections dated as of the Closing Date and attached as EXHIBIT 6.4.
The initial Projections have been prepared, and all Projections hereafter
delivered in accordance with clause (iv) of SUBSECTION 7.1 shall be prepared on
the basis of the assumptions set forth therein and do represent, and in the
future will represent, the good faith estimate of the Borrowers' management
regarding the course of business of Borrowers and their Subsidiaries for the
periods covered thereby. The assumptions set forth in the initial Projections
are, and the assumptions set forth in the future Projections delivered hereafter
shall be, reasonable and realistic based on then current economic conditions.
The Projections represent the good faith belief of the Borrowers as to
reasonably achievable results and no Borrower has any knowledge of any reason
(other than unexpected adverse general economic conditions) that would cause the
Projections not to be achieved.
6.5 COLLATERAL. Except for the Permitted Liens, all of the Collateral
is and will continue to be owned by the Borrowers free and clear of all Liens.
From and after the making of the first advance under the Revolving Loan and
after the making of all necessary filings, the provisions of SECTION 5 will be
effective to create and will give the Agent, for the benefit of the Lenders, as
security for the repayment of the Obligations, a legal, valid, perfected and
enforceable Lien (which priority is subject only to Permitted Liens) upon all
right, title and interest of the Borrowers in any and all of the Collateral
(including, without limitation, the Lien in the items and amounts deposited in
the Blocked Accounts). Upon the acknowledgment of the Agent's security interest
in the Blocked Accounts by the banks or other financial institutions at which
such Blocked Accounts are maintained, this Agreement will be effective to create
and will give the Agent, for the benefit of the Lenders, as security for the
repayment of the Obligations, a legal, valid, perfected and enforceable first
priority Lien on all deposits or other items in the Blocked Accounts.
6.6 SOLVENCY. Each Borrower is Solvent and will continue to be Solvent
following the consummation of the transactions contemplated by this Agreement
and the payment of all fees, costs and expenses payable by the Borrowers with
respect thereto.
6.7 PLACES OF BUSINESS. As of the Closing Date, the principal place of
business and chief executive office of each Borrower is set forth on EXHIBIT
6.7. The books and records of each Borrower and all Chattel Paper, Instruments
and all records of account are located and hereafter shall continue to be
located at the principal place of business and chief executive office of each
Borrower.
6.8 OTHER NAMES. The business conducted by any Borrower has not been
and will not be conducted under any corporate, limited liability company, trade
or fictitious name within the last five years other than those names disclosed
on EXHIBIT 6.8.
6.9 TAX OBLIGATIONS. Each Borrower and each Subsidiary has filed
complete and correct federal, state and local tax reports and returns required
to be filed by it, prepared in accordance with applicable laws or regulations,
and, except for extensions duly obtained, has either duly paid all Charges owed
by it, or made adequate provision for the payment thereof. There are no material
unresolved questions or claims concerning any tax liability of any Borrower or
any Subsidiary except those for which the validity, amount or imposition of such
Charges are being contested in good faith by an appropriate proceeding promptly
initiated and diligently conducted and as to which (i) such proceeding, during
the pendency, will prevent the forfeiture or sale of any Property of any
Borrower or such Subsidiary and no Lien which will have priority over the
Agent's Liens granted hereunder with respect to the Collateral is filed of
record, (ii) adequate reserves have been provided in accordance with Generally
Accepted Accounting Principles and (iii) such proceeding could not reasonably be
expected to have a Material Adverse Effect. No tax Liens have been filed and no
claims are being asserted with respect to any such Charges which could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of each Borrower and each Subsidiary are adequate for
all open years and for the current Fiscal Year. No Borrower or any Subsidiary
has consented to any extension of, or otherwise waived, any statute of
limitation with respect to any such Charges. No Borrower or any Subsidiary is a
party to any tax indemnity, tax sharing or tax allocation agreement with any
other Person. Proper and accurate amounts have been withheld by each Borrower
and each Subsidiary from its employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities.
6.10 INDEBTEDNESS AND LIABILITIES. Neither the Borrowers nor any
Subsidiary has Indebtedness other than Indebtedness reflected on the Financial
Statements and Indebtedness permitted hereunder. Except for the Indebtedness
referred to above, and Liabilities reflected on the Financial Statements neither
the Borrowers nor any Subsidiary has any Liabilities required to be reflected on
a balance sheet prepared in accordance with GAAP other than those Liabilities
incurred in the ordinary course of a Borrower's business.
6.11 USE OF PROCEEDS AND MARGIN SECURITY. The Borrowers shall use the
proceeds of the Revolving Loan on the Closing Date solely for (i) refinancing of
existing Indebtedness and (ii) for the financing of Borrowers' ordinary working
capital and general company needs. The Borrowers shall use the proceeds of the
Revolving Loan after the Closing Date solely for (i) Permitted Acquisitions and
(ii) the ordinary working capital and general company requirements of the
Borrowers and shall use all advances and loans hereunder for proper business
purposes, consistent with all applicable laws, statutes, rules and regulations.
No Borrower owns any margin security and none of the proceeds of the Revolving
Loan advanced or funded hereunder will be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation U of the Board of Governors of
the Federal Reserve System.
6.12 GOVERNMENT CONTRACTS. Except as disclosed on EXHIBIT 6.12, no
Borrower is a party to or bound by any supply agreements with the federal
government or any state or local government or any agency thereof.
6.13 INVESTMENTS. Except as disclosed on EXHIBIT 8.4, as of the
Closing Date, no Borrower or any Subsidiary has any Investment in any Person
other than Permitted Investments and is not engaged in any joint venture or
partnership with any other Person.
6.14 LITIGATION AND PROCEEDINGS. No judgments are outstanding against
any Borrower or any Subsidiary or binding upon any of its Property, nor, except
as disclosed on EXHIBIT 6.14, is there now pending or, to any Borrower's
knowledge, threatened, any litigation, claim, arbitration, investigation,
administrative proceeding or other governmental proceeding ("Litigation") by or
against any Borrower or any Subsidiary, and to the best of any Borrower's
knowledge, there are no presently existing facts or circumstances likely to give
rise to any such Litigation. There is no Litigation pending or threatened
against any Borrower or any Subsidiary, which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. None of the Litigation
will prevent, enjoin or delay the consummation of the transactions contemplated
by the Financing Agreements.
6.15 OTHER AGREEMENTS AND DELIVERIES. (a) Except as disclosed on
EXHIBIT 6.15, no Borrower or any Subsidiary is in default under any indenture,
loan agreement, mortgage, deed of trust or similar document relating to the
borrowing of monies or any other material contract, lease, or commitment to
which it is a party or by which it is bound. There is no dispute regarding any
contract, lease, or commitment which could reasonably be expected to have a
Material Adverse Effect.
(b) On or prior to the Closing Date, the Borrowers have provided or
made available to the Agent or its counsel accurate and complete copies of all
of the following agreements or documents to which any Borrower is subject as of
the Closing Date:
(i) each Plan and other compensation or nonqualified benefit plan
arrangement which any Borrower or any ERISA Affiliate sponsors or is
committed to contribute to as of the Closing Date and, where
applicable, each Plan's most recent summary plan description,
actuarial report, determination letter from the Service and Forms 5500
for the previous five (5) years filed in respect of each such Plan;
(ii) supply agreements not terminable within sixty (60) days
following written notice issued by any Borrower;
(iii) purchase agreements not terminable within ninety (90) days
following written notice issued by any Borrower;
(iv) leases of real property;
(v) leases of Equipment having a remaining term of two (2) years
or longer and requiring aggregate rental and other payments in excess
of Ten Thousand Dollars ($10,000) per annum;
(vi) licenses and permits with respect to Environmental Matters;
(vii) licenses and permits necessary for the conduct of any
Borrower's business;
(viii) all management and employment agreements between any
Borrower and any other Person;
(ix) collective bargaining agreements or other labor contracts;
(x) contracts or agreements between any Borrower and Parent or
its other Affiliates requiring or providing for payments in excess of
Ten Thousand Dollars ($10,000) per annum; and
(xi) instruments and agreements evidencing the issuance of any
Stock of any Borrower.
6.16 LABOR MATTERS. Except as disclosed on EXHIBIT 6.16, there are no
strikes, work stoppages, labor disputes, decertification petitions, union
organizing efforts or grievances pending or, to the best of any Borrower's
knowledge threatened, between any Borrower or any Subsidiary and any of its
employees, other than employee grievances arising in the ordinary course of
business which, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. All collective bargaining agreements, labor agreements
or other contracts with or affecting any employee of any Borrower or any
Subsidiary necessary to continue to conduct the business operations of any
Borrower or such Subsidiary are in full force and effect. Except as disclosed on
EXHIBIT 6.16, no Borrower or any Subsidiary has any obligation under any
collective bargaining agreement or any employment agreement. Except as disclosed
on EXHIBIT 6.16, to the best of the Borrowers' knowledge, there is no organizing
activity pending or threatened by any labor union or group of employees that
could reasonably be expected to have a Material Adverse Effect. Except as
disclosed on EXHIBIT 6.16, there are no representation proceedings pending or,
to any Borrower's knowledge, threatened with the National Labor Relations Board
or other applicable Governmental Authority, and no labor organization or group
of employees has made a pending demand for recognition. Except as disclosed on
EXHIBIT 6.16, there are no complaints or charges pending or, to any Borrower's
knowledge, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by any Borrower of any individual which
reasonably could be expected to have a Material Adverse Effect.
6.17 COMPLIANCE WITH LAWS AND REGULATIONS. The execution and delivery
by each Borrower of this Agreement and the other Financing Agreements to which
it is a party and the performance of such Borrower's obligations hereunder and
thereunder are not in contravention of any order applicable to such Borrower or,
to such Borrower's best knowledge, any federal, foreign, state or local laws,
regulations or ordinances. Each Borrower and each Subsidiary are in compliance
with all laws, orders, regulations and ordinances of all federal, foreign, state
and local governmental authorities relating to the business operations and the
Property of such Borrower or any Subsidiary except for laws, orders, regulations
and ordinances the non-compliance or violation of which, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
6.18 PATENTS, TRADEMARKS AND LICENSES. Except as disclosed on EXHIBIT
6.18, each Borrower owns or possesses rights to use all licenses, patents,
patent applications, copyrights, service marks, logos, names, trademarks and
tradenames required to continue to conduct its business as heretofore conducted;
all such licenses, patents, patent applications, copyrights, service marks,
trademarks and tradenames are disclosed on EXHIBIT 6.18; and no such license,
patent or trademark has been declared invalid, been limited by order of any
Governmental Authority or by agreement, or is the subject of any infringement,
interference or similar proceeding or challenge.
6.19 ERISA. (a) No Borrower or any ERISA Affiliate has sponsored or
contributed to, or has had any obligation (contingent or otherwise) under, any
Plan or Multiemployer Plan other than those disclosed on EXHIBIT 6.19(A).
(b) With respect to all Plans, each Borrower and each ERISA Affiliate
is in compliance with the applicable provisions of ERISA and the IRC in all
material respects. Each Plan that is intended to be qualified under Section
401(a) of the IRC has been determined by the Service to be so qualified, and
each trust related to each such Plan has been determined to be exempt from
federal income tax under Section 501(a) of the IRC. No liability has been
incurred by any Borrower or any ERISA Affiliate which remains unsatisfied for
any taxes or penalties with respect to any Plan or any Multiemployer Plan.
(c) The present value of all benefit liabilities under each Pension
Plan does not exceed the present value of the assets of such Plan. No Pension
Plan has been terminated, nor has any accumulated funding deficiency (as defined
in Section 412 of the IRC) been incurred (without regard to any waiver granted
under Section 412 of the IRC), nor has any funding waiver from the Internal
Revenue Service been received or requested with respect to any Pension Plan, nor
has any Borrower or any ERISA Affiliate failed to make any contributions or to
pay any amounts due and owing as required by Section 412 of the IRC, Section 302
of ERISA or the terms of any Pension Plan by the applicable due dates, nor has
there been any event requiring any disclosure under Section 4041(c)(3)(C), or
4062(e) or 4063(a) of ERISA with respect to any Pension Plan.
(d) No Borrower or any ERISA Affiliate has: (i) engaged in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
IRC; (ii) incurred any liability to the PBGC which remains outstanding other
than the payment of premiums and there are no premium payments which are due and
unpaid; (iii) failed to make a required contribution or payment to a
Multiemployer Plan; or (iv) engaged in any transaction which could subject it to
liability under Section 4069 or 4212(c) of ERISA.
(e) No Termination Event has occurred and no Termination Event is
reasonably expected to occur which could result in a liability to any Borrower
or any ERISA Affiliate.
(f) No Borrower or any ERISA Affiliate has any contingent liability
with respect to any post-retirement benefit under any Plan which is a welfare
plan (as defined in Section 3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I of ERISA.
6.20 PROPERTY. Each Borrower and each Subsidiary owns, possesses, or
has the unrestricted right to use all Property and exercise all rights necessary
for the conduct of such Borrower's business as heretofore conducted. Except as
disclosed on EXHIBIT 6.20, there are no actual, threatened or alleged defaults
with respect to any agreements relating to, or evidencing, any Property. Except
as disclosed on EXHIBIT 6.20, no consent, approval, license, authorization or
other action in respect of any Person is required, except as have been obtained,
in connection with the right to use any Property. None of the items disclosed on
EXHIBIT 6.20 could reasonably be expected to have a Material Adverse Effect.
6.21 ADVERSE CONTRACTS. No Borrower or any Subsidiary is a party to,
nor is any Borrower or any of its Property subject to or bound by, any long term
lease, forward purchase contract or futures contract, covenant not to compete,
or other agreement which restricts its ability to conduct its business, or could
reasonably be expected to have a Material Adverse Effect.
6.22 PURCHASE OR OTHER COMMITMENTS AND OUTSTANDING BIDS. No material
purchase or other commitment of any Borrower or any Subsidiary is in excess of
the normal, ordinary, and usual requirements of its business, or was made at any
price in excess of the then current market price, or contains terms and
conditions more onerous than those usual and customary in the applicable
industry. There is no outstanding bid, sales proposal, contract, or unfilled
order of any Borrower or any Subsidiary which (i) will, or could if accepted,
require such Borrower to supply goods or services at a cost to such Borrower in
excess of the revenues to be received therefor, or (ii) quotes prices which do
not include a mark-up over reasonably estimated costs consistent with past
mark-ups on similar business or market conditions current at that time.
6.23 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. No
Borrower is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended. No
Borrower is a "holding company" or a "subsidiary company" or a "holding company"
or an "affiliate" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.24 BROKER'S FEES. Neither the Agent or any Lender nor any Borrower
or any Subsidiary is or will become obligated to any Person with respect to any
finder's or brokerage or similar fee or commission in connection with the
transactions contemplated hereby.
6.25 LICENSES AND PERMITS. Each Borrower and each Subsidiary has been
and is current and in good standing with respect to all governmental approvals,
permits, certificates, licenses, inspections, consents and franchises
(collectively, the "Licenses") necessary to continue to conduct its business and
to own or lease and operate, its properties as heretofore conducted, owned,
leased or operated including any and all Licenses with respect to Environmental
Laws.
6.26 ENVIRONMENTAL COMPLIANCE.
(a) The operations of each Borrower and each Subsidiary comply in all
material respects with all applicable Environmental Laws.
(b) Except as disclosed on EXHIBIT 6.26, there are no claims,
investigations, litigation, administrative proceedings, whether pending or, to
any Borrower's best knowledge, threatened, or judgments or orders, relating to
any Hazardous Materials or alleging the violation of any Environmental Laws
(collectively "Environmental Matters") relating in any way to any operations of
any Borrower or any Subsidiary on any real property leased or owned by any
Borrower or any Subsidiary or to the operations of any Borrower or any
Subsidiary.
(c) Except as disclosed on EXHIBIT 6.26, to Borrowers' knowledge, no
Hazardous Materials are presently stored or otherwise located on, in or under
any real property leased, owned or operated by any Borrower or any Subsidiary
except in material compliance with all applicable Environmental Laws, and, no
part of any real property leased, owned or operated by any Borrower or any
Subsidiary or to any Borrower's best knowledge, adjacent parcels, including the
groundwater located thereon, is presently contaminated by any such Hazardous
Material.
(d) Except as disclosed on EXHIBIT 6.26, no Borrower or any Subsidiary
has filed any notice under any international, federal, state, regional,
provincial or local law indicating past or present treatment, storage or
disposal of a Hazardous Material or reporting a spill or release of a Hazardous
Material into the environment.
(e) Except as disclosed on EXHIBIT 6.26, no Borrower or any Subsidiary
has any known material liability, contingent or otherwise, in connection with
any release of any Hazardous Material into the environment.
(f) So long as any Obligations are outstanding, no Hazardous Materials
may be used, generated, treated, stored or disposed of by any Person for any
purpose upon any real property leased, owned or operated by any Borrower or any
Subsidiary except in material compliance with all applicable Environmental Laws.
(g) Each Borrower hereby indemnifies the Agent and each Lender and
agrees to hold the Agent and each Lender harmless from and against any and all
losses, liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and reasonable
attorneys' fees and legal expenses) which at any time or from time to time may
be paid, incurred or suffered by, or asserted against, the Agent or any Lender
arising directly or indirectly from the violation of any Environmental Law with
respect to any Real Estate of any Borrower; or with respect to, or as a direct
or indirect result of the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, properties utilized, owned or
operated by any Borrower or any Subsidiary in the conduct of its business into
or upon any land, the atmosphere, or any watercourse, body of water or wetland,
of any Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); PROVIDED that to the extent that any Borrower or
any Subsidiary is strictly liable under any Environmental Laws, the Borrowers'
obligations to indemnify the Agent and each Lender under this SUBSECTION 6.26(g)
shall likewise be without regard to fault on the part of such Borrower or any
Subsidiary and with respect to the violation of law which results in liability
to such Borrower or any Subsidiary; PROVIDED FURTHER that this SUBSECTION
6.26(g) shall not apply with respect to any liability, release, violation or
other matter that arises solely from the Agent's or any Lender's gross
negligence or wilful misconduct after any such Borrower or Subsidiary loses
possession of any property due to foreclosure or other exercises of remedies by
the Agent or any Lender. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this SUBSECTION 6.26(g) may be unenforceable
because it is violative of any law or public policy, each Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnifications set forth
in this SUBSECTION 6.26(g).
(h) So long as any Obligations are outstanding, if the Agent or any
Lender, at any time, has a reasonable basis to believe that any Borrower may be
in violation of Environmental Law or that any real property leased or owned by
any Borrower or any Subsidiary, or real property adjacent to such real property,
has or may become contaminated or subject to a clean up order or decree by an
agency having jurisdiction over such Borrower or such Subsidiary; then the
Borrowers agree, upon request from the Agent, to provide the Agent and each
Lender with such reports, certificates, engineering studies or other written
material or data as the Agent or such Lender, in its reasonable discretion, may
require from them so as to satisfy the Agent or such Lender that such Borrower
is in compliance with all applicable Environmental Laws and that the
marketability and value of the real property is adequately maintained; PROVIDED
that with respect to real property adjacent to real property owned by or leased
to any Borrower or any Subsidiary, such reports, certificates, studies and other
material or data shall not be required to be provided by the Borrowers if (i)
they are not otherwise required to be created or provided pursuant to statute,
regulation, order or otherwise, and (ii) such contamination is not attributable
to the acts or omissions of any Borrower or any Subsidiary or any Affiliate or
predecessor of any of them or any previous owner, lessee, lessor or other user
of such real property.
(i) The materiality standard used in this SUBSECTION 6.26 shall be
exceeded if the facts giving rise to a breach or breaches of the representations
or warranties contained herein might result in liability or potential liability
in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate.
(j) None of the items disclosed on EXHIBIT 6.26 could reasonably be
expected to have a Material Adverse Effect.
6.27 FULL DISCLOSURE. This Agreement, the other Financing Agreements,
the financial statements delivered in connection herewith, the representations
and warranties of any Borrower contained in this Agreement, the other Financing
Agreements or in any other document, certificate or written statement by or on
behalf of any Borrower delivered or to be delivered to the Agent or any Lender,
do not and will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading. There is
no material fact which any Borrower has not disclosed to the Agent in writing
which has had or, so far as any Borrower can now foresee, could reasonably be
expected to have a Material Adverse Effect.
6.28 INSURANCE POLICIES. EXHIBIT 7.5 lists all liability insurance,
property insurance and other insurance of any nature maintained for current
occurrences by each Borrower, as well as a summary of the terms of such
insurance.
6.29 CORPORATE AND CONTRACTUAL RESTRICTIONS. No Borrower is a party or
subject to any contract, agreement or charter or other corporate restriction
which materially and adversely affects its business or the use or ownership of
any of its Property. No Borrower has agreed or consented to cause or permit in
the future upon the happening of a contingency or otherwise any of its Property,
whether now owned or hereafter acquired, to be subject to a Lien that is not a
Permitted Lien. No Borrower is a party to or bound by any indenture, contract,
instrument, charter or other corporate restriction or other agreement which
prohibits the creation, incurrence or sufferance to exist of any Lien upon its
Property except the Financing Agreements.
6.30 SUBSIDIARIES. Except as set forth on EXHIBIT 6.30, no Borrower
has any Subsidiaries. EXHIBIT 6.30 contains an accurate list of all Subsidiaries
of the Borrowers, setting forth their respective jurisdictions of incorporation
and the percentages of their Stock owned by the Borrowers or other Subsidiaries.
6.31 DEPOSIT AND DISBURSEMENT ACCOUNTS. As of the Closing Date,
EXHIBIT 6.31 lists all banks and other financial institutions at which any
Borrower maintains deposits and/or other accounts, including any disbursement
accounts. EXHIBIT 6.31 correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.
6.32 SUBORDINATED DEBT. The Borrowers have the corporate power and
authority to incur any Indebtedness evidenced by Subordinated Debt. No Borrower
has any knowledge that the subordination provisions of any Subordinated Debt and
the Subordination Agreement related thereto will not be enforceable against the
holders of such Subordinated Debt by the holder of the Obligations. All
Obligations constitute senior Indebtedness entitled to the benefits of
subordination created by any Subordinated Debt and the Subordination Agreement
related thereto. The principal of and interest on the Obligations and all other
Obligations will constitute "Senior Debt" as that or any similar term is or may
be used in any Subordination Agreement and in any other instrument or agreement
evidencing or applicable to any Subordinated Debt. Each Borrower acknowledges
that the Lender is entering into this Agreement and is extending credit
hereunder in reliance upon the subordination provisions of the Seller
Obligations and the Subordination Agreement related thereto and this SUBSECTION
6.32.
6.33 YEAR 2000 COMPLIANCE. Each Borrower has completed a Year 2000
Assessment and a Year 2000 Corrective Plan, copies of which have been delivered
to Agent; each Borrower has completed all Year 2000 Corrective Actions and
completed Year 2000 Implementation Testing. Each Borrower has eliminated all
Year 2000 Problems, except where the failure to correct the same could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.
7. AFFIRMATIVE COVENANTS.
The Borrowers, jointly and severally, covenant and agree that, so long
as any Obligations remain outstanding, and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in effect:
7.1 FINANCIAL STATEMENTS. Each Borrower shall keep proper books of
record and account with respect to its business activities in which full and
true entries will be made of all dealings or transactions in respect of or in
relation to the business and affairs of such Borrower, in accordance with
Generally Accepted Accounting Principles consistently applied, and the Borrowers
shall furnish or cause to be furnished to the Agent and each Lender: (i) as soon
as practicable and in any event within thirty (30) days after the end of each
Fiscal Month, statements of net income and cash flow of the Parent and its
Subsidiaries on a consolidated and consolidating basis for such Fiscal Month and
for the period from the beginning of the then current Fiscal Year to the end of
such Fiscal Month and a balance sheet of the Parent and its Subsidiaries on a
consolidated and consolidating basis as of the end of such Fiscal Month, setting
forth in each case, in comparative form, figures for the corresponding periods
in the preceding Fiscal Year and as of a date one (1) year earlier, all in
reasonable detail and certified as accurate by the Borrower Representative on
behalf of each Borrower (subject to normal year-end adjustments but excluding
footnotes); (ii) as soon as practicable and in any event within forty-five (45)
days after the end of each Fiscal Quarter, statements of net income and cash
flow of the Parent and its Subsidiaries on a consolidated and consolidating
basis for such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter and a balance sheet of the
Parent and its Subsidiaries on a consolidated and consolidating basis as of the
end of such Fiscal Quarter, setting forth in each case, in comparative form,
figures for the corresponding periods in the preceding Fiscal Year and as of a
date one (1) year earlier, all in reasonable detail and certified as accurate by
the Borrower Representative (subject to changes resulting from normal year-end
adjustments); (iii) as soon as practicable and in any event within ninety (90)
days after the end of each Fiscal Year, statements of net income and cash flow
of Parent and its Subsidiaries on a consolidated and consolidating basis for
such Fiscal Year, and a balance sheet of Parent and its Subsidiaries, on a
consolidated and consolidating basis as of the end of such Fiscal Year setting
forth in each case, in comparative form, corresponding figures for the period
covered by the preceding annual audit and as of the end of the preceding Fiscal
Year, all in reasonable detail and satisfactory in scope to the Required Lenders
and examined and certified by Arthur Andersen & Co. or any other independent
public accountants of recognized national standing selected by Parent and
reasonably acceptable to the Agent, which certification shall be unqualified;
(iv) not later than thirty (30) days prior to the end of each Fiscal Year,
Projections approved by the board of directors of the Parent prepared in the
same manner as the Projections attached as EXHIBIT 6.4, including projected
balance sheets for the forthcoming Fiscal Year, Fiscal Month-by-Fiscal
Month-Accounting Period; projected cash flow statements (including proposed
Capital Expenditures and forecasted unused Borrowing Availability under the
Revolving Loan) for the forthcoming Fiscal Year, Fiscal Month-by-Fiscal Month;
projected profit and loss statements for the forthcoming Fiscal Year, Fiscal
Month-by-Fiscal Month, together with appropriate supporting details as requested
by the Agent, all for Parent and its Subsidiaries on a consolidated and
consolidating basis and within thirty (30) days after the close of each Fiscal
Month, a statement in which the actual results of such Fiscal Month are compared
with the most recent Projections for such Fiscal Month; (v) concurrently with
the preparation of the financial statements, the Borrowers shall send a letter
to such accountants with a copy to the Agent and each Lender, 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 and such accountants shall deliver a letter addressed
to the Agent and the Lenders acknowledging the Agent's and the Lenders' reliance
thereon in form and substance satisfactory to the Agent; (vi) as soon as
practicable and in any event within ten (10) days of delivery to any Borrower, a
copy of any letter issued by such Borrower's independent public accountants or
other management consultants with respect to such Borrower's financial or
accounting systems or controls, including all so-called "management letters";
(vii) in conjunction with the delivery of the annual financial statements
referred to in clause (iii) above, the Borrowers shall deliver to the Lender a
written report which shall describe and analyze, in detail, all material trends,
changes and developments reflected in such financial statements; (viii) promptly
following the filing or furnishing thereof, copies of all regular and periodic
reports, and other material filed by Parent or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any other
governmental or private regulatory authority or distributed to the holders of
Stock of any such Person and all press releases and other statements made
available by Parent or any of its Subsidiaries to the public concerning material
adverse changes or developments in the business of any such Person; (ix) as soon
as practicable and in any event within ninety (90) days after the consummation
of any Permitted Acquisition, a balance sheet for the Parent and its
Subsidiaries (including the acquired Target) on a consolidated and consolidating
basis, as of the date of consummation of such Permitted Acquisition
demonstrating the Solvency of the Parent and each Borrower; and (x) with
reasonable promptness, such other business or financial data as the Required
Lenders may reasonably request. Each Borrower shall conduct a review of its bad
debt reserves and collection histories at least once each year and promptly
following such review shall supply the Agent with a report in a form and with
such specificity as may be satisfactory to the Agent concerning such review of
the Accounts.
All financial statements delivered to the Agent or any Lender pursuant
to the requirements of this subsection (except where otherwise expressly
indicated) shall be prepared in accordance with Generally Accepted Accounting
Principles consistently applied on a consolidated and consolidating basis for
Parent and its Subsidiaries. All financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. In the event that any Accounting Changes occur and such changes
result in a change in the calculation of the financial covenants, standards,
advance rates or terms used in this Agreement or any other Financing Agreement,
then Borrowers, the Agent and the Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made; PROVIDED that the agreement of
the Required Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. In the event that the Agent, Borrowers and the
Required Lenders shall have agreed upon the required amendments, then after such
agreement has been evidenced in writing and the underlying Accounting Changes
with respect thereto has been implemented, any reference to GAAP contained in
this Agreement or in any other Financing Agreement shall, only to the extent of
such Accounting Changes, refer to GAAP, consistently applied after giving effect
to the implementation of such Accounting Changes. If the Agent, each Borrower
and the Required Lenders cannot agree upon the required amendments within thirty
(30) days following the date of implementation of any Accounting Change, then
all financial statements delivered and all calculations of financial covenants
and other standards, advance rates and terms in accordance with this Agreement
and the other Financing Agreements shall be prepared, delivered and made without
regard to any underlying Accounting Change. Together with each delivery of
financial statements required by SUBSECTION 7.1(i), the Borrowers shall deliver
to the Agent a current list of outstanding intercompany loans made pursuant to
SUBSECTION 8.20. Together with each delivery of financial statements required by
SUBSECTIONS 7.1(ii) and 7.1(iii), the Borrowers shall deliver to the Agent and
the Lenders a certificate of the Borrower Representative (i) certifying that no
Default or Event of Default exists, or, if any Default or Event of Default
exists, specifying the nature thereof, the period of existence thereof and what
action the Borrowers propose to take with respect thereto and (ii) setting forth
computations in reasonable detail satisfactory to the Agent demonstrating
compliance with the covenant contained in SUBSECTIONS 7.11 through 7.13 and
SUBSECTION 8.8. Together with each delivery of financial statements required by
SUBSECTION 7.1(iii), the Borrowers shall deliver to the Agent and the Lenders a
certificate of the accountants who performed the audit in connection with such
statements stating that in making the audit necessary to the issuance of a
report on such financial statements, they have obtained no knowledge of any
Default or Event of Default, or, if such accountants have obtained knowledge of
a Default or Event of Default, specifying the nature and period of existence
thereof. Such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default or Event of Default which would not be disclosed in the
ordinary course of an audit. The Agent and each Lender shall exercise reasonable
efforts to keep such information, and all information acquired as a result of
any inspection conducted in accordance with SUBSECTION 7.2, confidential;
PROVIDED that the Agent or any Lender may communicate such information (a) to
any other Person in accordance with the customary practices of commercial
lenders relating to routine trade inquiries, (b) to any regulatory authority
having or claiming to have jurisdiction over the Agent or such Lender, (c) to
any other Person in connection with the Agent's or such Lender's proposed or
actual assignment of, or sale of any participations in, the Obligations, (d) to
any other Person in connection with the exercise of the Agent's or such Lender's
rights hereunder or under any of the other Financing Agreements, (e) as may be
required in response to any subpoena or in connection with any litigation, (f)
to the extent necessary to comply with any law, order or ruling of any
Governmental Authority applicable to such Person, and (g) as has become
generally available to the public. Each Borrower authorizes the Agent and each
Lender to discuss the financial condition of any Borrower with such Borrower's
independent public accountants and agrees that such discussion or communication
shall be without liability to either the Agent, the Lenders or such independent
public accountants. Borrower shall deliver a letter addressed to such
accountants authorizing them to comply with the provisions of this SUBSECTION
7.1.
7.2 INSPECTIONS AND AUDITS. The Agent hereby appoints General Electric
Capital Corporation as the Audit Agent. The Audit Agent, shall have the right,
from time to time hereafter, to call at a Borrower's place or places of business
(or any other place where the Collateral or any information relating thereto is
kept or located) during normal business hours, and, without hindrance or delay
(i) to inspect, audit, check and make copies of and extracts from such
Borrower's books, records, journals, orders, receipts and any correspondence and
other data relating to such Borrower's or any Subsidiary's business or to any
transactions between the parties hereto, (ii) to make such verification
concerning the Collateral as the Audit Agent may consider reasonable under the
circumstances, (iii) to discuss the affairs, finances and business of such
Borrower with any officers, employees or directors of such Borrower and (iv) to
review all relevant books and records and other information (financial or
otherwise) necessary to enable the Lenders to complete their business and legal
due diligence with respect to any proposed Permitted Acquisition. All
out-of-pocket costs and expenses incurred by the Audit Agent in connection with
the Audit Agent's field audits permitted under this SUBSECTION 7.2 shall be
reimbursed by the Borrowers on demand plus a fee of $750 per day per individual
for (A) each field audit of Borrowers conducted by Audit Agent after the Closing
Date pursuant to this SUBSECTION 7.2; PROVIDED that so long as no Default or
Event of Default shall have occurred and be continuing, Borrowers shall not be
liable for reimbursing Audit Agent for the costs and expenses of more than four
(4) such field audits (other than in connection with any proposed Permitted
Acquisition) in any Fiscal Year, plus (B) additional field audits after the
Closing Date by Audit Agent or its agents (x) in connection with any proposed
Permitted Acquisition and (y) following the occurrence and during the
continuance of a Default or an Event of Default.
7.3 CONDUCT OF BUSINESS; COMPLIANCE WITH LAWS. Each Borrower shall,
and shall cause each Subsidiary to (i) maintain its corporate existence and good
standing in its respective state of incorporation and qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is required, (ii) maintain in full force and effect all licenses,
bonds, franchises, leases, patents, contracts and other rights necessary or
desirable to the profitable conduct of its business, (iii) comply with all
applicable federal, state, local and foreign laws, rules, regulations and orders
of any Governmental Authority, except for such laws, rules and regulations the
violation of which, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (iv) conduct its business substantially as now
conducted or as otherwise permitted herein and (v) transact business only in its
corporate name and such trade names as are set forth on EXHIBIT 6.8.
7.4 CLAIMS AND TAXES. DEFINED. (a) Each Borrower shall, and shall
cause Parent and each of such Borrower's Subsidiaries to, file all tax and
information returns and reports required by and prepared in accordance with
applicable law and shall pay or cause to be paid all license fees, bonding
premiums and related taxes and charges, and shall pay or cause to be paid all
Charges assessed against or payable by, such Borrower, Parent or such
Subsidiary, at such times and in such manner as to prevent any penalty from
accruing or any Lien from attaching to Property of such Borrower, Parent or such
Subsidiary; PROVIDED that such Borrower, Parent and such Subsidiary shall have
the right to contest in good faith, by an appropriate lawful proceeding promptly
initiated and diligently conducted, the validity, amount or imposition of any
such Charge, and upon such good faith contest to delay or refuse payment thereof
so long as (i) no Lien which will have priority over the Agent's Lien granted
hereunder with respect to any Collateral is filed or recorded with respect
thereto, (ii) the execution or other enforcement of such Lien is and continues
to be effectively stayed, (iii) such proceeding will prevent the forfeiture or
sale of any Property of such Borrower, Parent or such Subsidiary, (iv) adequate
reserves have been provided therefor in accordance with GAAP, (v) such contest
could not reasonably be expected to have a Material Adverse Effect and (vi) if
such contest is abandoned or determined adversely to such Borrower, Parent or
such Subsidiary, such Person pays, or causes to be paid, all such taxes and
other charges and any penalties and interest payable in connection therewith.
(b) Each Borrower shall notify the Agent and each Lender promptly (and
in no event later than ten (10) days) after becoming aware of the intent of the
Service to assert a deficiency with respect to any of such Borrower or Parent or
any Subsidiary, and shall promptly (and in no event later than five (5) days
after receipt) send the Agent and each Lender copies of any notices of proposed
deficiency and any notices of deficiency received from the Service.
7.5 BORROWER'S LIABILITY INSURANCE. The Borrowers shall, and shall
cause each Subsidiary to, maintain, at their expense, such product liability
insurance, general public liability and third party property damage insurance
with financially sound and reputable insurance companies reasonably satisfactory
to the Agent in such amounts and covering such risks and with such deductibles
as are acceptable to the Required Lenders naming the Agent as an additional
insured. The policy or policies shall further provide for thirty (30) days'
written notice to the Agent prior to cancellation or any material change in
coverage. The Borrowers shall deliver to the Agent evidence of insurance in the
form attached hereto as EXHIBIT 7.5 and, upon renewal thereof, a binder
evidencing such renewal, and evidence of payment of all premiums therefor.
7.6 BORROWER'S PROPERTY INSURANCE. The Borrowers shall, and shall
cause each Subsidiary to, at their expense, keep and maintain its assets insured
against loss or damage by fire, theft, explosion, spoilage and all other hazards
and risks ordinarily insured against by other owners or users of such properties
in similar businesses in an amount at least equal to the full replacement value
thereof (including at least six (6) months business interruption insurance in an
amount not less than $7,050,000). All such policies of insurance shall contain a
breach or violation of warranties, declarations or conditions endorsement in
favor of the Agent, shall provide that the Agent shall receive 30 days' written
notice prior to cancellation or any material change in coverage and shall
otherwise be in form and substance satisfactory to the Agent. The Borrowers
shall deliver to the Agent evidence of insurance in the form attached hereto as
EXHIBIT 7.5 and, upon the renewal thereof, a binder evidencing such renewal, and
evidence of payment of all premiums therefor. Such policies of insurance shall
contain an endorsement, substantially in the form of EXHIBIT 7.6, naming the
Agent, on behalf of the Lenders, as the lender loss payee and additional
insured. The Borrowers hereby direct all insurers under such policies of
insurance to pay all proceeds of such insurance policies directly to the Agent.
All proceeds paid to the Agent under this SUBSECTION 7.6 shall be applied to
Revolving Loan Obligations without premium or penalty, except as provided in
SUBSECTION 2.19, with such proceeds to be applied first to Base Rate Loans until
paid in full and thereafter to LIBOR Rate Loans. Upon the occurrence and during
the continuation of an Event of Default, each Borrower irrevocably makes,
constitutes and appoints the Agent (and all officers, employees or agents
designated by the Agent) as such Borrower's true and lawful attorney-in-fact for
the purpose of making, settling and adjusting claims under all such policies of
insurance, endorsing the name of such Borrower on any check, draft, instrument
or other item of payment received by such Borrower or the Agent pursuant to any
such policies of insurance and for making all determinations and decisions with
respect to such policies of insurance. If any Borrower or any Subsidiary, at any
time or times hereafter, shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any Obligation, Default or
Event of Default by the Borrowers hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Agent deems advisable.
7.7 PENSION PLANS.(a) Each Borrower shall (i) maintain all Plans which
are presently in existence or may, from time to time, come into existence, in
compliance with ERISA, the IRC and all other applicable laws in all material
respects and (ii) make or cause to be made contributions to all of the Pension
Plans in a timely manner and in a sufficient amount to comply with the
requirements of Section 302 of ERISA and Section 412 of the IRC.
(b) Each Borrower shall promptly deliver written notice of any of the
following to the Agent and each Lender, but in no event later than thirty (30)
days after such event or occurrence:
(1) such Borrower or any ERISA Affiliate knows or has reason to know
that a Termination Event has occurred, with such notice setting
forth the details of such event;
(2) the filing of a request for a funding waiver by such Borrower or
any ERISA Affiliate with respect to any Pension Plan, a copy of
such request and all correspondence received by Borrower or any
ERISA Affiliate with respect to such request;
(3) such Borrower or any ERISA Affiliate fails to make a required
installment or payment under Section 302 of ERISA or Section 412
of the IRC by the applicable due date;
(4) such Borrower or any ERISA Affiliate knows or has reason to know
that a prohibited transaction (as defined in Section 406 of ERISA
or Section 4975 of the IRC) which could reasonably be expected to
have a Material Adverse Effect has occurred with respect to any
Plan with a statement describing such transaction and the action
or response taken with respect thereto;
(5) any increase in the benefits of any existing Pension Plan or
contribution rate to a Multiemployer Plan or the establishment of
any new Pension Plan or the commencement of contributions to any
Pension Plan or Multiemployer Plan to which any Borrower or any
ERISA Affiliate had not been contributing;
(6) receipt by such Borrower or any ERISA Affiliate of any adverse
ruling from the Service regarding the qualification of a Pension
Plan under Section 401(a) of the IRC, with a copy of such ruling;
and
(7) any other report such as an annual report on Form 5500 or
actuarial report which any Lender may request from time to time.
7.8 NOTICE OF CERTAIN MATTERS. Each Borrower shall, as soon as
possible, and in any event within five (5) days after such Borrower learns of
the following, give written notice to the Agent and each Lender of (i) any
material Litigation being instituted or threatened to be instituted by or
against such Borrower or any Subsidiary of such Borrower in any federal, state,
local or foreign court or before any Governmental Authority including, without
limitation, any and all material pending or threatened proceedings with respect
to Environmental Matters, (ii) any labor dispute to which such Borrower or any
Subsidiary of such Borrower may become a party and which has had or could
reasonably be expected to have a Material Adverse Effect, any strikes or
walkouts relating to any of its Facilities, the expiration of any labor contract
to which it is a party or by which it is bound or any organizing activity
pending or, to any Borrower's knowledge, threatened by any labor union or group
of employees, (iii) any Default or Event of Default, (iv) any judgment rendered
against such Borrower or any Subsidiary of such Borrower and (v) any other event
or occurrence which could reasonably be expected to have a Material Adverse
Effect. The Borrowers shall supplement in writing and deliver to the Agent each
EXHIBIT required in accordance with this Agreement and any representation herein
with respect to any matter hereafter arising which, if existing or occurring on
the Closing Date, would have been required to be set forth or described on such
Exhibit or as an exception to such representation so that the representations
and warranties subject to such supplemental disclosure shall continue to be true
and accurate in all material respects; PROVIDED that the furnishing of such
supplemental disclosure shall not constitute a cure or waiver of any Default or
Event of Default resulting from the matters disclosed therein or otherwise then
existing, except as consented to by the Required Lenders in writing.
7.9 LANDLORD AGREEMENTS. The Borrowers shall provide the Agent and
each Lender with copies of all agreements between any Borrower and any landlord
or bailee which owns any premises at which any Collateral may, from time to
time, be located. The Borrowers shall deliver to the Agent a bailee letter or
landlord's waiver, as applicable, in form and substance acceptable to the Agent
with respect to any location leased after the Closing Date where Collateral is
located. Subject to the following sentence, the Borrowers shall deliver to the
Agent on or before thirty (30) Business Days after the Closing Date a landlord's
waiver (or an amendment thereto) or bailee letter (or an amendment thereto), as
applicable, in each case in form and substance reasonably acceptable to the
Agent, with respect to each leased property being used as of the Closing Date by
any Borrower or any Subsidiary where Collateral is located. With respect to
leased locations leased on the Closing Date, if the Borrowers are unable to
deliver such a landlord waiver or bailee letter within the timeframe set forth
in this SUBSECTION 7.9, the Collateral at such location shall be subject to a
reserve determined by the Agent in the exercise of its credit judgment for
purposes of calculating Borrowing Availability. Each Borrower shall timely and
fully pay and perform its obligations under all leases and other agreements with
respect to each leased location or warehouse where any Collateral is or may be
located. Each Borrower shall promptly deliver to the Agent copies of (i) any and
all default notices received by it under or with respect to any of its leased
location or other locations, and (ii) such other notices or documents as the
Agent may request in its reasonable discretion.
7.10 INDEMNITY. (a) Each Borrower shall jointly and severally
indemnify, pay and hold harmless the Agent, the Audit Agent and each Lender and
the officers, directors, employees, agents, affiliates, representatives and
attorneys of the Agent, the Audit Agent and such Lender (collectively called the
"Indemnitees") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, proceedings, judgments, suits, claims, demands,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, all reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or instituted
or asserted against any Indemnitee in any manner in connection with or relating
to or arising out of this Agreement or the other Financing Agreements or any
other transaction contemplated hereby or thereby, the statements contained in
the commitment letters delivered by the Agent, the Agent and the Lenders'
agreement to make the Revolving Loan hereunder, the direct or indirect
application or proposed application of the proceeds of the Revolving Loan or the
exercise of any right, power or remedy hereunder or under any other Financing
Agreement or relating to or arising out of the possession, use, operation or
control of any Borrower's or any Subsidiary's Property (the "Indemnified
Liabilities"); PROVIDED that the Borrowers shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities if a court of
competent jurisdiction shall render a judgment, final and not subject to review
on appeal, that such Indemnified Liabilities arise solely from the gross
negligence or willful misconduct of that Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrowers shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
(b) In any suit, proceeding or action brought against any Person by
the Agent relating to any Account, Chattel Paper, contract, General Intangible,
Instrument or Document for any sum owing thereunder, or to enforce any provision
of any Account, Chattel Paper, Instrument or Document, the Borrowers shall
jointly and severally save, indemnify and keep the Agent, the Audit Agent and
the Lenders harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of
liability by the Borrowers of any obligation thereunder arising out of a breach
by any Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to, or in favor of, such
obligor or its successors from any Borrower. All such obligations of the
Borrowers shall be and remain enforceable against, and only against, the
Borrowers and shall not be enforceable against the Agent, the Audit Agent or any
Lender.
7.11 INTEREST COVERAGE RATIO. The Borrowers shall maintain an Interest
Coverage Ratio as of the end of each Fiscal Quarter set forth below calculated
for the two Fiscal Quarters then ended with respect to the calculation to be
made as of June 30, 1999, for the three Fiscal Quarters then ended with respect
to the calculation to be made as of September 30, 1999 and for the four Fiscal
Quarters then ended with respect to the calculation to be made as of the end of
each Fiscal Quarter thereafter of not less than the amount set forth below
opposite such period:
FISCAL QUARTER RATIO
Fiscal Quarter ended June 30, 1999 1.10:1
Fiscal Quarter ended September 30, 1999 1.20:1
Fiscal Quarter ended December 31, 1999 1.30:1
Fiscal Quarter ended March 31, 2000 1.30:1
Fiscal Quarter ended June 30, 2000 1.50:1
Fiscal Quarter ended September 30, 2000 1.60:1
Fiscal Quarter ended December 31, 2000 1.70:1
Fiscal Quarter ended March 31, 2001 1.70:1
Fiscal Quarter ended June 30, 2001 1.80:1
Fiscal Quarter ended September 30, 2001 2.00:1
Fiscal Quarter ended December 31, 2001 2.10:1
and thereafter.
7.12 EBITDA. As of the end of each Fiscal Quarter set forth below
calculated for the two Fiscal Quarters then ended with respect to the
calculation to be made as of June 30, 1999, for the three Fiscal Quarters then
ended with respect to the calculation to be made as of September 30, 1999 and
for the four Fiscal Quarters then ended with respect to the calculation to be
made as of the end of each Fiscal Quarter thereafter, EBITDA shall not be less
the amount set forth below opposite such period:
FISCAL QUARTER EBITDA
Fiscal Quarter ended June 30, 1999 $1,000,000
Fiscal Quarter ended September 30, 1999 $1,250,000
Fiscal Quarter ended December 31, 1999 $2,300,000
Fiscal Quarter ended March 31, 2000 $2,450,000
Fiscal Quarter ended June 30, 2000 $2,600,000
Fiscal Quarter ended September 30, 2000 $2,800,000
Fiscal Quarter ended December 31, 2000 $3,200,000
Fiscal Quarter ended March 31, 2001 $3,400,000
Fiscal Quarter ended June 30, 2001 $3,550,000
Fiscal Quarter ended September 30, 2001 $3,650,000
Fiscal Quarter ended December 31, 2001 $3,800,000
and thereafter.
7.13 FIXED CHARGE COVERAGE RATIO. The Borrowers shall maintain a Fixed
Charge Coverage Ratio as of the end of each Fiscal Quarter set forth below
calculated for the two Fiscal Quarters then ended with respect to the
calculation to be made as of June 30, 1999, for the three Fiscal Quarters then
ended with respect to the calculation to be made as of September 30, 1999 and
for the four Fiscal Quarters then ended with respect to the calculation to be
made as of the end of each Fiscal Quarter thereafter of not less than the amount
set forth below opposite such period:
FISCAL QUARTER RATIO
Fiscal Quarter ended June 30, 1999 1.00:1
Fiscal Quarter ended September 30, 1999 1.15:1
Fiscal Quarter ended December 31, 1999 1.20:1
Fiscal Quarter ended March 31, 2000 1.25:1
Fiscal Quarter ended June 30, 2000 1.30:1
Fiscal Quarter ended September 30, 2000 1.35:1
Fiscal Quarter ended December 31, 2000 1.40:1
and thereafter.
7.14 BORROWING AVAILABILITY RESERVE. For a period of twelve months
beginning on the Closing Date and ending on the date one day prior to the first
anniversary of the Closing Date, the Borrowers shall maintain Borrowing
Availability (with trade payables being paid currently and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least $3,000,000 (the "Borrowing Availability
Reserve").
7.15 ACCOUNTING SYSTEMS PLAN. Within one hundred twenty (120) days
after the Closing Date, the Borrowers shall have integrated the accounting
systems of all of the Borrowers and shall have implemented improvements to such
accounting systems to enable the Borrowers to generate such financial reports in
form, scope and substance satisfactory to the Agent, including, without
limitation, accounts payable agings and credit memo reports.
7.16 PREFERRED STOCK AGREEMENTS. Within thirty (30) days after the
Closing Date, the Borrowers shall deliver to the Agent agreements from the
holders of not less than fifty percent (50%) of the issued and outstanding
Preferred Stock, that in the event the Obligation have not been refinanced by
May 19, 2002, such holders agree to receive in lieu of such cash payment
Subordinated Debt and to enter into a Subordination Agreement with respect
thereto. The Borrowers agree to use their best efforts to obtain similar
agreements from the remaining holders of Preferred Stock within such thirty (30)
day period.
8. NEGATIVE COVENANTS.
Any Borrower covenants and agrees that so long as any of the
Obligations remain outstanding and (even if there shall be no Obligations
outstanding) so long as this Agreement remains in effect (unless the Required
Lenders shall give their prior written consent thereto):
8.1 ENCUMBRANCES. No Borrower shall, nor shall it permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any nature
whatsoever on any of its Property, including, without limitation, the
Collateral, other than the following "Permitted Liens": (i) Liens (other than
Liens relating to Environmental Laws or ERISA) securing the payment of Charges
not yet due and payable; (ii) pledges or deposits under workmen's compensation,
unemployment insurance, old age pensions, 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 statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business; (iii) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen or other similar Liens imposed by law,
which are incurred in the ordinary course of business for sums not more than 30
days delinquent; (iv) the Liens in favor of the Agent, for the benefit of the
Lenders; (v) purchase money Liens (including capitalized leases and other forms
of installment purchase financing) granted to the Person financing a purchase of
Equipment so long as the Lien granted is limited to the specific Equipment so
acquired, the debt secured by the Lien is not more than the lesser of the
acquisition cost or the fair market value of the specific item of Equipment on
which the Lien is granted, the aggregate amount of Indebtedness secured by such
Liens as a result of purchases shall not exceed One Million Dollars ($1,000,000)
at any time during the term hereof, and the transaction does not violate any
other provision of this Agreement (notification of such purchase money Lien to
be provided to the Agent and each Lender within ten (10) days of acquisition of
such Equipment); (vi) Liens permitted in accordance with SUBSECTION 7.4(A);
(vii) other Liens on Real Estate, which do not, in the Agent's sole
determination, (a) materially impair the use of such property, or (b) materially
lessen the value of such property for the purposes for which the same is held by
a Borrower or such Subsidiary, (viii) Liens existing on the Closing Date and
disclosed on EXHIBIT 8.1 and (ix) for a period not to exceed five (5) Business
Days after the Closing Date, Liens with respect the cash collateral in the
amount of $988,040.48 pledged to Fleet Business Credit Corporation to secure its
obligations to Bank of America with respect to (A) irrevocable standby letter of
credit number 7400947 dated December 23, 1998 issued by Bank of America to SM
Brell, L.P., as beneficiary, in the face amount of $748,218.62 and (B)
irrevocable standby letter of credit number C7338575 dated November 3, 1997
issued by Bank of America to Letrak SBN Associates, as beneficiary, in the face
amount of $150,000.
8.2 INDEBTEDNESS AND LIABILITIES. No Borrower shall, nor shall it
permit any of its Subsidiaries to, incur, create, assume, become or be liable in
any manner with respect to, or suffer to exist, any Indebtedness, except for (i)
the Obligations, (ii) Indebtedness existing on the Closing Date and disclosed on
EXHIBIT 8.2, (iii) Indebtedness secured by purchase money Liens permitted by
SUBSECTION 8.1(IV), (iv) Indebtedness permitted by SUBSECTION 8.5 and SUBSECTION
8.20, (v) the Lease Letters of Credit and (vi) Indebtedness relating to the
Liens set forth in SUBSECTION 8.1(IX), but not in excess of the amount set forth
in such subsection. Except for the Indebtedness permitted in the preceding
sentence, no Borrower shall, nor shall it permit any of its Subsidiaries to,
incur any Liabilities except for trade obligations and normal accruals in the
ordinary course of business not yet due and payable, or with respect to which a
Borrower or such Subsidiary is contesting in good faith the amount or validity
thereof by appropriate proceedings, and then only to the extent that such
Borrower or such Subsidiary has set aside on its books adequate reserves
therefor, if appropriate under Generally Accepted Accounting Principles. No
Borrower shall, nor shall it permit any of its Subsidiaries to, voluntarily
prepay, defease, purchase, redeem, retire or otherwise acquire any Indebtedness
other than the Obligations.
8.3 MERGERS, CONSOLIDATIONS, ACQUISITIONS. (a) No Borrower shall, nor
shall it permit any of its Subsidiaries to, merge or consolidate with another
entity; PROVIDED that any Subsidiary may merge or consolidate with or into any
other Subsidiary or with or into any Borrower (provided that such Borrower is
the surviving entity). The Borrowers shall not, and shall not permit any
Subsidiary to, dissolve, terminate, enter into any joint venture or become a
partner in any partnership. The Borrowers shall not sell, assign, encumber,
pledge, transfer or otherwise dispose of any interest in the Borrowers or any
Subsidiary or transfer any Property to any Affiliate except as otherwise
expressly permitted hereby.
(b) No Borrower shall, nor shall it permit any of its Subsidiaries to,
make an Acquisition, other than an Acquisition of all of the Stock or all or
substantially all of the assets of any Person (the "Target") (in each case, a
"Permitted Acquisition") subject to satisfaction of the following conditions:
(i) the Agent shall receive at least thirty (30) Business Days'
prior written notice of such proposed Permitted Acquisition, which
notice shall include a reasonably detailed description of such
proposed Permitted Acquisition, and, in the event the Total
Acquisition Price exceeds $2,500,000 or six (6) times the Target's
actual unadjusted positive EBITDA for the trailing twelve (12) month
period immediately prior to the proposed acquisition date, such
Permitted Acquisition shall require the written approval of the
Required Lenders;
(ii) such Permitted Acquisition shall only involve assets or
stock of a domestic Target comprising a business, or those assets of a
business, of the type engaged in by Borrowers as of the Closing Date
or a similar related business, and which business would not subject
the Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this
Agreement or any other Financing Agreement other than approvals
applicable to the exercise of such rights and remedies with respect to
Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and shall
have been approved by the Target's board of directors and/or
shareholders;
(iv) no additional Indebtedness, Guaranties, earnout incentives,
contingent obligations or other liabilities shall be incurred, assumed
or otherwise be reflected on a consolidated balance sheet of the
Parent and its Subsidiaries (including the Target) after giving effect
to such Permitted Acquisition, except (A) the advance under the
Revolving Loan to fund such Permitted Acquisition, (B) ordinary course
trade payables and accrued expenses of the Target to the extent no
Default or Event of Default shall have occurred and be continuing or
would result after giving effect to such Permitted Acquisition and (c)
Subordinated Debt;
(v) Target shall not be past due with respect to any payment on
its trade payables and normal recurring operating expenses;
(vi) such Permitted Acquisition shall be structured as an
acquisition of one hundred percent (100%) of the capital stock of the
Target directly by the Parent or one of the Borrowers or as an asset
acquisition by a Subsidiary of the Parent; PROVIDED that such
Subsidiary shall become a guarantor of the Obligations of the
Borrowers and PROVIDED, FURTHER, that in the case of an Acquisition of
the capital stock of any Target by any Borrower, immediately after
such Acquisition the Target shall be merged with and into such
Borrower;
(vii) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Liens) and Target shall have no material outstanding litigation;
(viii) at or prior to the closing of any Permitted Acquisition,
as further security for the Obligations, the Agent, for the benefit of
the Lenders, will be granted a first priority perfected Lien (subject
to Permitted Liens) on (A) in the case of an asset acquisition, all
assets of the Target acquired pursuant thereto, or (B) in the case of
an acquisition of the capital stock of the Target, the assets of the
Target and one hundred percent (100%) of the capital stock of the
Target acquired by the Parent, and the Parent, the Borrowers and the
Target shall have executed such documents and taken such other actions
as may be required by the Agent in connection therewith including, in
the case of a Permitted Acquisition in which the Target becomes a
Subsidiary of the Parent, such documents and actions as may be
required by the Agent to make the Target a party under the Financing
Agreements (as a Borrower or Guarantor, as applicable);
(ix) the Lenders shall have completed all business (including
field audits) and legal due diligence with respect to the Target and
the proposed Acquisition with results satisfactory to the Lenders
including the capital structure, corporate structure, governing
documents and material agreements (including contracts with suppliers
and customers) of the Parent, the Borrowers and the Target and their
respective Subsidiaries after giving effect to the proposed
Acquisition, and the legal and tax effects resulting from such
proposed Acquisition;
(x) the Agent shall have received satisfactory evidence that the
Parent and the Borrowers have obtained all required consents, waivers,
acknowledgments, orders, authorizations and approvals of all Persons
including all requisite Governmental Authorities, to the consummation
of the proposed Acquisition;
(xi) as soon as possible after delivery of the notice referred to
in clause (i) above but in no event later than ten (10) Business Days
after delivery of such notice, Borrowers shall have delivered to the
Agent, in form and substance satisfactory to Lender:
(A) the most recent audited (unless the Required Lenders
shall otherwise agree) annual for the last three fiscal years and
unaudited quarterly for the most recent quarters ended during the
current fiscal year financial statements of the Target;
(B) a pro forma consolidated balance sheet of the Parent and
its Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial data, which shall be complete and shall accurately and
fairly represent the assets, liabilities, financial condition and
results of operations of the Parent and its Subsidiaries in
accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of the
Revolving Loan, and the assumption of liabilities permitted to be
assumed pursuant to clause (iv) above in connection therewith,
and such Acquisition Pro Forma shall reflect that on a pro forma
basis, (x) the financial covenants set forth in SECTION 7 (or
financial covenants revised by the Agent in its reasonable credit
judgment to reflect the proposed Permitted Acquisition) will be
met, and (y) no Event of Default shall have occurred and be
continuing or would result after giving effect to such Permitted
Acquisition;
(C) updated versions of the most recently delivered
Projections covering a period to include the year of the
Revolving Loan Maturity Date and otherwise prepared in accordance
(and consistent with respect to GAAP) with the Projections
delivered on the Closing Date (the "Acquisition Projections"),
taking into account such Permitted Acquisition;
(D) a certificate of the Chief Financial Officer of the
Parent and each Borrower to the effect that: (v) each Borrower
will be Solvent upon the consummation of the Permitted
Acquisition; (w) after giving effect to the Permitted
Acquisition, the Borrowers will have Borrowing Availability of
not less than $5,000,000 (inclusive of the Borrowing Availability
Reserves); (x) the Acquisition Pro Forma fairly presents the
financial condition of the Parent and its Subsidiaries on a
consolidated basis as of the date thereof after giving effect to
the Permitted Acquisition; (y) the Acquisition Projections are
reasonable estimates of the future financial performance of the
Borrowers subsequent to the date thereof based upon the
historical performance of the Borrowers and the Target and
management's reasonable expectations for future performance; and
(z) the Parent or the applicable Borrower has substantially
completed its due diligence investigation with respect to the
Target and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and the
results of which investigation were delivered to the Agent; and
(E) a copy of the due diligence materials received by the
Parent or applicable Borrower and any reports, memoranda or
summaries thereof;
(xii) the Target shall have had a positive EBITDA for the
trailing twelve (12) month period immediately prior to the proposed
Acquisition date; PROVIDED that the Lenders in their reasonable
discretion may exclude nonrecurring items in determining compliance
with this condition;
(xiii) the aggregate advance under the Revolving Loan made to
fund the Permitted Acquisition shall not exceed four (4) times the
Target's EBITDA for the trailing twelve (12) month period immediately
prior to the proposed acquisition date;
(xiv) if requested by the Lenders, the Lenders shall have
received such environmental review and audit reports with respect to
the real property of the Target and the Lenders shall be satisfied
with the contents and scope of all such environmental reports;
(xv) on or prior to the date of such Permitted Acquisition, the
Lenders shall have received, in form and substance satisfactory to the
Lenders, all Acquisition documents related thereto (including, if
applicable, employment agreements and/or noncompete agreements with
the key owners and/or managers of the Target having a term which
expires no earlier than the Revolving Loan Maturity Date), legal
opinions, evidence of solvency, certificates, lien search results,
amendments to the Financing Agreements and execution of additional
Financing Agreements and other documentation as may be requested by
the Lenders to reflect the Permitted Acquisition, and other matters
related to the Permitted Acquisition, which collectively shall confirm
to the Lenders' satisfaction that the conditions set forth herein have
been satisfied; and
(xvi) at the time of such Permitted Acquisition and after giving
effect thereto, no Default or Event of Default shall have occurred and
be continuing.
Notwithstanding the foregoing, the Accounts of the Target shall not be
included in Eligible Accounts without the prior written consent of the Lenders
and shall not be included in the Borrowing Base in any event until completion by
the Audit Agent of a collateral audit examination of the Target. If the Accounts
of the Target which is to become a Subsidiary of the Parent are included in
Eligible Accounts pursuant to the preceding sentence, then such Person shall
become a Borrower under this Agreement.
8.4 INVESTMENTS. No Borrower shall, nor shall it permit any of its
Subsidiaries to, make or permit to exist Investments in, or commitments
therefor, or create any Subsidiary other than the following "Permitted
Investments": (i) loans made in accordance with SUBSECTIONS 8.9 and 8.20, (ii)
Investments in Subsidiaries, (iii) Investments existing on the Closing Date and
disclosed on EXHIBIT 8.4, (iv) so long as no Default or Event of Default shall
have occurred and is continuing, Investments in Cash Equivalents; PROVIDED that
if any Obligations shall be outstanding, Investments in Cash Equivalents shall
not exceed $100,000 in the aggregate, (v) Investments in the Stock of any other
Person as payment for any trade receivables, the value of which shall not exceed
in the aggregate at any time one percent (1%) of the consolidated revenues of
the Parent and its Subsidiaries for the most recent Fiscal Year, (vi) so long as
no Default or Event of Default shall have occurred and is continuing at the time
of making such Investment, additional Investments in other Persons not to exceed
$100,000 in the aggregate at any one time, and (vii) demand deposit accounts
maintained in the ordinary course of business.
8.5 GUARANTIES. No Borrower shall, nor shall it permit any of its
Subsidiaries to, make or suffer to exist any Guaranty, except (i) endorsements
of negotiable instruments or items of payment for collection in the ordinary
course of business and (ii) Guaranties existing on the Closing Date and
disclosed on EXHIBIT 8.5.
8.6 COLLATERAL LOCATIONS. Neither the location of the principal place
of business and chief executive office of any Borrower as set forth on EXHIBIT
6.7, the locations of Collateral as set forth on EXHIBIT 8.6 nor the corporate
name or mailing address of any Borrower shall be changed, nor shall there be
established additional places of business or additional locations at which
Collateral is stored, kept or processed unless (i) the applicable Borrower shall
have given the Agent not less than 30 days prior written notice thereof, (ii)
the Agent shall have determined that, after giving effect to any such change of
name, address or location, the Agent shall have a first perfected Lien in the
Collateral except for Permitted Liens, (iii) in the case of Collateral
locations, the applicable Borrower shall have delivered a landlord waiver or
bailee letter, as applicable, in form and substance satisfactory to the Agent
with respect to such location, and (iv) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are promptly delivered to
the Agent. Prior to making any such change or establishing such new location,
the Borrowers shall execute any additional financing statements or other
documents or notices required by the Agent. All Collateral located at any such
new location shall automatically be deemed ineligible without further action by
the Agent or any Lender to constitute Eligible Accounts until the Borrowers
shall have complied with the requirements of this SUBSECTION 8.6 and SUBSECTION
7.9.
8.7 DISPOSAL OF PROPERTY. No Borrower shall, nor shall it permit any
of its Subsidiaries to, sell, lease, assign, transfer or otherwise dispose of
any of their Property, assets and rights to any Person except for (i) bona fide
sales of Inventory to customers for fair value in the ordinary course of
business and (ii) sales of Equipment which is obsolete, worn-out or otherwise
not useable in the applicable Borrower's business in an aggregate amount in any
Fiscal Year not to exceed One Hundred Thousand Dollars ($100,000). In the event
any Equipment of any Borrower is sold, transferred or otherwise disposed of as
permitted by this SUBSECTION 8.7 or with the Required Lenders' consent, and (i)
such sale, transfer or disposition is effected without replacement of the
Equipment so sold, transferred or disposed of or such Equipment is replaced by
Equipment leased by such Borrower, such Borrower shall promptly (but in any
event within three (3) Business Days of the receipt thereof) deliver all of the
cash proceeds of any such sale, transfer or disposition to the Agent, or (ii)
such sale, transfer or disposition is made in connection with the purchase by
such Borrower of replacement Equipment, such Borrower shall use the proceeds of
such sale, transfer or disposition to finance the purchase by such Borrower of
replacement Equipment and shall deliver to the Agent written evidence of the use
of the proceeds for such purchase. Except as permitted by SUBSECTION 8.1, all
replacement Equipment purchased by any Borrower shall be free and clear of all
Liens, except for Liens in favor the Agent, for the benefit of the Lenders. All
proceeds delivered to the Agent under this SUBSECTION 8.7 shall be applied to
the Revolving Loan Obligations (without permanent reduction of the Revolving
Loan Facility), without premium or penalty, except as provided in SUBSECTION
2.19, with such proceeds to be applied first to Base Rate Loans until paid in
full and thereafter to LIBOR Rate Loans.
8.8 CAPITAL EXPENDITURES LIMITATIONS. The Borrowers and their
Subsidiaries on a consolidated basis shall not make or commit to make Capital
Expenditures in any Fiscal Year in the aggregate in excess of Two Hundred Fifty
Thousand Dollars ($250,000).
8.9 EMPLOYEE LOANS. Except for (i) employee loans listed on EXHIBIT
8.9, (ii) advances for travel and related expenses by the Borrowers or their
Subsidiaries to their respective employees in the ordinary course of business in
an amount not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate
at any one time and (iii) commission advances by the Borrowers or their
Subsidiaries to their respective employees in an amount not to exceed One
Hundred Thousand Dollars ($100,000) in the aggregate at any one time, the
Borrowers shall not, and shall not permit any Subsidiary to, make any loans or
other advances to any Person.
8.10 PLANS. No Borrower shall, nor shall it permit any ERISA Affiliate
to:
(i) assume or incur or be subject to any Liability under any Plan
other than those Plans existing on the Closing Date and disclosed on
Exhibit 6.19(a);
(ii) permit the amendment of any Pension Plan which could
reasonably be expected to have a Material Adverse Effect;
(iii) commence participation or permit an ERISA Affiliate to
participate in a Multiemployer Plan which could reasonably be expected
to have a Material Adverse Effect;
(iv) permit the termination of any Pension Plan if such
termination might result in liability to any Borrower or any ERISA
Affiliate;
(v) permit the occurrence of an accumulated funding deficiency
(as defined in Section 302 of ERISA or Section 412 of the IRC) as to
any Plan;
(vi) engage, or permit any ERISA Affiliate to engage, in any
non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the IRC which could reasonably be expected to have a
Material Adverse Effect;
(vii) permit the amendment of any existing Plan or the
establishment, adoption, or assumption of any additional Plan to
provide for post-retirement welfare benefits; or
(viii) permit the occurrence of a Termination Event if such
occurrence could reasonably be expected to have a Material Adverse
Effect.
8.11 RESTRICTED PAYMENTS. No Borrower shall, nor shall it permit any
of its Subsidiaries to, directly or indirectly declare, pay, order, make or set
apart any Restricted Payment; PROVIDED that (i) any Subsidiary may declare and
pay dividends to any Subsidiary owning its capital stock, (ii) the Borrowers may
make Restricted Payments consisting of Stock of any class to the holders of that
class, (iii) the Borrowers may make Restricted Payments to Parent to satisfy the
aggregate amount of Federal, state and local income tax obligations payable by
Parent to the extent such obligations are the result of the net consolidated
income of the Borrowers and their Subsidiaries; PROVIDED FURTHER, that each
Borrower's contribution shall not be greater than or paid sooner than its
ratable share of such income taxes then due and payable by the Parent; PROVIDED
FURTHER, that if any Borrower pays more to the Parent than its ratable share of
income taxes paid in cash by the Parent for any Fiscal Year, as finally
determined, it shall either demand and obtain reimbursement from the Parent or
set off the amount of such overpayment against other amounts owing by such
Borrower to the Parent, (iv) so long as no Default or Event of Default shall
have occurred and be continuing (or will result therefrom), the Borrowers may
make Restricted Payments to Parent (x) to pay when due and owing the necessary
fees and expenses to maintain its corporate existence and good standing and to
pay the reasonable costs of its directors' and officers' insurance and (y) to
pay when due and owing third party legal, management, consulting and accounting
fees, insurance premiums, audit fees, salaries and employee benefits of
employees of the Parent (subject to SUBSECTION 8.9) and other customary business
expenses of the Parent incurred in the ordinary course of its business, in each
case to the extent such fees, salaries, expenses or other amounts relate to
services provided by entities which are not the Affiliates of the Borrowers
(other than salaries and employment costs of the Parent) and which services are
directly related to the Borrowers or their Subsidiaries, (v) so long as no
Default or Event of Default shall have occurred and be continuing (or will
result therefrom), the Borrowers may make Restricted Payments consisting of cash
to Parent in an amount not to exceed $216,000 in any Fiscal Year with respect to
dividends payable on the Preferred Stock and (vi) the Borrowers may make the
Restricted Payments permitted by SUBSECTIONS 8.9 and 8.21 (Borrowers will
provide their calculation of current and pro forma compliance with SUBSECTION
7.13 prior to making such payments).
8.12 SECURITIES. Except as permitted by SUBSECTION 8.11, no Borrower
shall, nor shall it permit any of its Subsidiaries to, issue or distribute or
redeem, prepay, repurchase or acquire any of its capital Stock of any
description for consideration or otherwise except (i) for replacements of then
outstanding shares of Stock, (ii) for stock splits, stock dividends and similar
issuances and (iii) to qualify directors to the extent required by applicable
law.
8.13 CHANGES IN CHARTER, BYLAWS OR FISCAL YEAR. No Borrower shall, nor
shall it permit any of its Subsidiaries to, (i) amend its certificate of
incorporation or bylaws other than any amendment that is not, in the reasonable
judgment of the Agent, adverse in any material respect to the value of the
interests or rights of the Agent or the Lenders thereunder or to the rights or
interests of the Agent or the Lenders or (ii) change its Fiscal Year.
8.14 LEASE LIMITATIONS. The annual financial obligations of the Parent
and its Subsidiaries, whether for rental payments, principal payments, interest
payments, service charges or otherwise, under all operating leases and other
similar agreements shall not exceed in any Fiscal Year an amount equal to the
sum of (a) Four Million Dollars ($4,000,000) PLUS (b) twenty percent (20%) of
the aggregate gross revenues of the Parent and its Subsidiaries for such Fiscal
Year in excess of Thirty Million Dollars ($30,000,000).
8.15 TRANSACTIONS WITH AFFILIATES. Except (i) as set forth on EXHIBIT
8.15, (ii) as permitted by SUBSECTIONS 8.9 and 8.20, (iii) employment
arrangements entered into in the ordinary course of business with its officers
and (iv) customary fees paid to members of its board of directors, no Borrower
shall, nor shall it permit any of its Subsidiaries to, enter into any
transaction including, without limitation, the purchase, sale, lease or exchange
of property or the rendering or purchase of any service to or from any Affiliate
except in the ordinary course of and pursuant to the reasonable requirements of
such Borrower's or such Subsidiary's business and upon fair and reasonable terms
that are fully disclosed to the Agent and the Lenders in advance and are no less
favorable to such Borrower or such Subsidiary than such Borrower or such
Subsidiary would obtain in a comparable arm's length transaction with an
unaffiliated Person.
8.16 CAPITAL STRUCTURE; OTHER BUSINESS. No Borrower shall, nor shall
it permit any of its Subsidiaries to (i) change its capital structure, (ii)
engage in any business unrelated to its current businesses, (iii) engage in any
transaction out of the ordinary course of business, or (iv) engage in any other
transaction which could reasonably be expected to have a Material Adverse
Effect.
8.17 SALE AND LEASEBACK. No Borrower shall, nor shall it permit any of
its Subsidiaries to, sell or transfer any of its Property in order to
concurrently or subsequently lease as lessee such or similar Property unless (i)
any such sale is made for the fair market value of the Property, (ii) the sale
consideration received is cash, (iii) the sale is upon fair and reasonable terms
in an arm's length transaction, and (iv) all proceeds of any sale are used to
prepay the Obligations in the priority set forth in SUBSECTION 8.7.
8.18 IMPAIRMENT AGREEMENTS. No Borrower shall, nor shall it permit any
of its Subsidiaries to, enter into or assume any agreement, instrument,
indenture or other obligation (other than the Financing Agreements) which (i)
contains a negative pledge provision which would require a sharing of any
interest in the Collateral, (ii) prohibits or limits the creation or assumption
of any Lien upon its Property, whether now owned or hereafter acquired, or (iii)
restricts, prohibits or requires the consent of any Person with respect to the
payment of Restricted Payments.
8.19 CORPORATE ACCOUNTS. No Borrower shall maintain corporate deposit
accounts jointly with any Affiliate or other Borrower or commingle any of its
funds with funds of any Affiliate or other Borrower.
8.20 INTERCOMPANY LOANS. (a) Each Borrower may make loans to the other
Borrower (and such Borrower may incur the Indebtedness related thereto and repay
such Indebtedness) subject to the following terms and conditions:
(i) such loans shall be unsecured and be payable on demand;
(ii) at the time any such intercompany loan is made by any
Borrower to any other Borrower and after giving effect to such loan,
both the Borrower making the loan and the Borrower receiving the loan
shall be Solvent;
(iii) the obligor of such loan shall use the proceeds thereof
solely for its own working capital requirements arising in the
ordinary course of business;
(iv) each Borrower shall have executed and delivered to each
other Borrower, on the Closing Date, a demand promissory note (an
"Intercompany Note") to evidence any such intercompany Indebtedness
owing at any time by such Borrower to such other Borrowers which
Intercompany Notes shall be in form and substance satisfactory to the
Agent and pledged to the Agent for the benefit of the Lenders;
(v) each Borrower shall record all intercompany transactions on
its books and records in a manner satisfactory to the Agent;
(vi) the obligations of each Borrower under any such Intercompany
Notes shall be subordinated to the Obligations of such Borrower
hereunder in a manner satisfactory to the Agent;
(vii) no Default or Event of Default would occur and be
continuing after giving effect to the incurrence of any such proposed
intercompany loan; and
(viii) after giving effect to each such loan, the Borrower making
the loan shall have unused Borrowing Availability of not less than ten
percent (10%) of its Borrowing Base.
Each Borrower hereby agrees that, until all of the Obligations have
been indefeasibly repaid in full in cash, all loans made by it to the other
Borrower shall be subordinated in all respects to the Obligations of such
Borrower and subject in right of payment to the prior payment of the Obligations
of such Borrower in full in cash.
(b) Each Borrower may make loans to the Parent to permit the Parent to
make a Permitted Acquisition (including, current payments of deferred purchase
price payable with respect to a Permitted Acquisition, but subject to the
subordination provisions set forth in this Agreement), all subject to
satisfaction of the conditions set forth in SUBSECTION 8.3(B) and the following
conditions:
(i) such loans shall be unsecured and be payable on demand;
(ii) at the time any such loan is made by any Borrower to the
Parent and after giving effect to such loan, both the Borrower and the
Parent shall be Solvent;
(iii) the Parent shall use the proceeds thereof solely for a
Permitted Acquisition;
(iv) the Parent shall have executed and delivered to such
Borrower a demand promissory note to evidence any such Indebtedness,
which promissory note shall be in form and substance satisfactory to
the Agent and pledged to the Agent for the benefit of the Lenders;
(v) such Borrower shall record such loan transaction on its books
and records in a manner satisfactory to the Agent;
(vi) the obligations of the Parent under any such promissory note
shall be subordinated in a manner satisfactory to the Agent; and
(vii) after giving effect to each such loan, such Borrower shall
have unused Borrowing Availability of not less than ten percent (10%)
of its Borrowing Base.
8.21 SUBORDINATED DEBT. The Borrowers shall not (i) make any payment
of principal or premium, if any, or interest on, fees with respect to,
redemption, prepayment, conversion, exchange, purchase, repurchase, retirement,
defeasance, sinking fund or other similar payment with respect to any
Subordinated Debt, (ii) violate any of the subordination provisions of any
Subordination Agreement or (iii) amend, waive or otherwise modify any provision
of any Subordinated Debt or waive any cause of action arising therefrom or
related thereto; PROVIDED that, so long as no Default or Event of Default shall
have occurred and be continuing or would result after giving effect thereto
(Borrowers will provide their calculation of current and pro forma compliance
with SUBSECTION 7.13 prior to making such payments), the Borrowers may make
payments to the Parent to enable the Parent to make regularly scheduled payments
of Subordinated Debt in accordance with the terms thereof and the related
Subordination Agreement.
8.22 BANK ACCOUNTS. No Borrower shall, nor shall it permit any of its
Subsidiaries to, maintain deposits in any bank accounts not subject to a Blocked
Account Agreement except (i) in the case of payroll accounts, in an amount
sufficient to make payment of each payroll, (ii) in the case of zero-balance
disbursement accounts, in an amount sufficient to make each payments necessary
to operate the business of the Borrowers in the ordinary course as permitted by
the terms of this Agreement and (iii) in the case of the petty cash accounts, in
an amount not to exceed $100,000 in the aggregate outstanding at any time.
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.
9.1 OBLIGATIONS. If a Default or an Event of Default shall have
occurred and be continuing, the Required Lenders (or the Agent with the consent
of the Required Lenders) may elect to do one or more of the following at any
time or times and in any order: (i) reduce the Revolving Loan Facility, (ii)
restrict the amount of, or suspend its obligations to make, Revolving Loans and,
in the case of the Swingline Lender, Swingline Loans, (iii) restrict or suspend
the issuance of Lender Guaranties or (iv) demand that the Borrowers immediately
deposit with the Agent an amount equal to one hundred ten percent (110%) of the
Lender Guaranty Liabilities to enable the Agent to make payments under the
Lender Guaranties when required and such amount shall become immediately due and
payable. If an Event of Default shall have occurred and be continuing, in
addition to the actions described in the preceding sentence, the Required
Lenders (or the Agent with the consent of the Required Lenders) may elect to do
one or more of the following at any time or times: (a) terminate this Agreement
whereupon the Commitments to make the Revolving Loan and the Swingline Loan
shall terminate immediately and any Unused Line Fee shall become due and payable
without any other notice of any kind, (b) declare any or all Obligations to be
immediately due and payable; PROVIDED that upon the occurrence of any Event of
Default referred to in clauses (f), (g) or (h) within the definition of "Event
of Default," the Commitments shall automatically and immediately terminate and
all Obligations shall automatically become immediately due and payable without
notice, demand or other actions of any kind by any Person, or (c) pursue its
other rights and remedies under the Financing Agreements and applicable law.
9.2 RIGHTS AND REMEDIES GENERALLY. Upon acceleration of the
Obligations, the Agent, on behalf of the Lenders, shall have, in addition to any
other rights and remedies contained in this Agreement or in any of the other
Financing Agreements, all of the rights and remedies of a secured party under
the Code or other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In addition to all
such rights and remedies, the Agent shall have the right to sell, lease or
otherwise dispose of all or any part of the Collateral and the sale, lease or
other disposition of the Collateral, or any part thereof, by the Agent after an
Event of Default may be for cash, credit or any combination thereof, and the
Agent or any Lender may purchase all or any part of the Collateral at public or,
if permitted by law, private sale, and in lieu of actual payment of such
purchase price, may set-off the amount of such purchase price against the
Obligations then owing. Any sales of the Collateral may be adjourned from time
to time with or without notice. The Agent shall have the right to conduct such
sales on the Borrowers' premises, at the Borrowers' expense, or elsewhere, on
such occasion or occasions as the Agent may see fit.
9.3 ENTRY UPON PREMISES AND ACCESS TO INFORMATION. Upon acceleration
of the Obligations, the Agent shall have the right (i) to cause the Collateral
to remain on any Borrower's premises, without any obligation to pay rent, (ii)
to enter upon the premises of any Borrower where the Collateral is located or
any other place or places where the Collateral is believed to be located and
kept, without any obligation to pay rent, to render the Collateral useable or
saleable, or to remove the Collateral therefrom to the premises of the Agent or
any agent of the Agent, at the Borrowers' expense, for such time as the Agent
may desire in order effectively to collect or liquidate the Collateral, and
(iii) to require the Borrowers to assemble the Collateral and make it available
to the Agent at a place or places to be designated by the Agent. Upon
acceleration of the Obligations, the Agent shall have the right to take
possession of each Borrower's original books and records, to obtain access to
Borrower's data processing equipment, computer hardware and software relating to
the Collateral and to use all of the foregoing and the information contained
therein in any manner the Agent deems appropriate; and the Agent shall have the
right to notify postal authorities to change the address for delivery of each
Borrower's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to the Borrowers and to take possession of all
checks or other original remittances contained in such mail.
9.4 SALE OR OTHER DISPOSITION OF COLLATERAL BY THE AGENT. Any notice
required to be given by the Agent of a sale, lease or other disposition or other
intended action by the Agent with respect to any of the Collateral which is
given to the Borrower Representative as specified in SUBSECTION 10.12, at least
ten (10) days prior to such proposed action, shall constitute fair and
reasonable notice to the Borrowers of any such action. The net proceeds realized
by the Agent upon any such sale or other disposition, after deduction for the
expenses of retaking, holding, storing, transporting, preparing for sale,
selling or otherwise disposing of the Collateral incurred by the Agent in
connection therewith, shall be applied toward satisfaction of the Obligations in
such manner as the Agent may deem advisable. The Agent shall account to the
Borrowers for any surplus realized upon such sale or other disposition, and the
Borrowers shall remain liable for any deficiency. The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's Liens on the Collateral until the
Obligations are fully paid.
9.5 GRANT OF LICENSE. For the purpose of enabling the Agent to
exercise its rights, powers and remedies under this SECTION 9 (including,
without limitation, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose of the
Collateral) at such time as the Agent shall be entitled to exercise such rights
and remedies, each Borrower hereby grants to the Agent a license, lease and
right to use (exercisable without payment of royalty or other compensation) such
Borrower's General Intangibles, Intellectual Property, Equipment, Fixtures, Real
Estate, whether part of the Collateral or not including, without limitation, any
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any other Property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale or lease and selling or leasing any Inventory or other
Collateral and each Borrower's rights under all licenses, leases and franchise
agreements shall inure to the Agent's benefit until all Obligations are paid in
full.
9.6 WAIVER OF DEMAND. EXCEPT FOR DEMANDS EXPRESSLY PROVIDED FOR IN
THIS AGREEMENT, DEMAND, PRESENTMENT, PROTEST AND NOTICE OF DEMAND, PRESENTMENT,
PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND ACCELERATION ARE HEREBY WAIVED BY
THE BORROWER. THE BORROWER ALSO WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL
AND EXEMPTION LAWS.
9.7 WAIVER OF NOTICE. EXCEPT AS PROVIDED IN SUBSECTION 9.4, UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE BORROWER
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE
BY THE AGENT OF ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS
OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS
CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS AGREEMENT.
10. OTHER RIGHTS AND OBLIGATIONS.
10.1 WAIVER. The failure of the Agent or any Lender, at any time or
times hereafter, to require strict performance by any Borrower of any provision
of this Agreement shall not waive, affect or diminish any right of any such
Person thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Lenders or Required Lenders, as applicable, of a
Default or an Event of Default under this Agreement or any of the other
Financing Agreements shall not suspend, waive or affect any other Default or
Event of Default under this Agreement or any of the other Financing Agreements,
whether the same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements, warranties,
covenants and representations of the Borrowers contained in this Agreement or
any of the other Financing Agreements and no Default or Event of Default by the
Borrowers under this Agreement or any of the other Financing Agreements shall be
deemed to have been suspended or waived by the Lenders or Required Lenders, as
applicable, unless such suspension or waiver is in writing and signed by an
officer of each of the Lenders or Required Lenders, as applicable, and directed
to the Borrowers specifying such suspension or waiver. Neither this Agreement
nor the other Financing Agreements may be modified or amended except in a
written agreement signed by the Borrowers, the Agent and the Lenders.
10.2 SEVERAL OBLIGATIONS; NATURE OF LENDER'S RIGHTS. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the Agent is authorized to act as such). No provision contained herein or in any
other Financing Agreement and no course of dealing between the parties shall be
deemed to create any fiduciary relationship between the Agent or any Lender and
the Borrowers. The indebtedness of the Borrowers incurred under each of the
Notes shall be a separate obligation owing to the holder thereof; PROVIDED that
each Lender hereby agrees that it shall have no individual right to seek to
enforce its rights under its Revolving Note or this Agreement, or to realize
upon the Collateral, it being understood and agreed that such rights and
remedies may be exercised solely by the Agent for the benefit of the Lenders at
the direction of the Required Lenders in accordance with the terms of this
Agreement.
10.3 EXPENDITURES BY THE AGENT AND THE LENDERS. In the event the
Borrowers shall fail to pay Charges, insurance, assessments, costs or expenses
which the Borrowers are, under any of the terms hereof, required to pay, or
shall fail to keep the Collateral free from Liens, except Permitted Liens, or
shall fail to maintain, replace or repair the Collateral as required hereby, the
Agent or any Lender may, in its sole discretion, make expenditures for any or
all of such purposes and acquire or accept an assignment of any Lien against the
Collateral, and the amount so expended (including, without limitation,
reasonable attorneys' fees and expenses, court costs, filing fees and other
charges), together with interest thereon at the Base Rate or the Default Rate
then applicable to the Revolving Loan shall be part of the Obligations, payable
on demand and secured by the Collateral.
10.4 CUSTODY AND PRESERVATION OF COLLATERAL. Except as expressly
provided in the Code, the Agent shall have no duty with respect to any
Collateral in its possession or control (or in the possession or control of any
agent or bailee) or with respect to any income thereon. The Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral in its possession if it takes such action for that purpose as
any Borrower shall request in writing, and no failure by the Agent to comply
with any such request shall of itself be deemed a failure to exercise reasonable
care, but failure by the Agent to preserve or protect any right with respect to
such Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Borrowers, shall not of
itself be deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral. The Agent shall not be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the Agent in
good faith.
10.5 RELIANCE BY THE AGENT AND LENDERS. All covenants, agreements,
representations and warranties made herein or in any of the other Financing
Agreements by the Borrowers shall, notwithstanding any investigation by the
Agent or any Lender, be deemed to be material to and to have been relied upon by
the Agent and each Lender.
10.6 PARTIES AND ASSIGNMENT. This Agreement and the other Financing
Agreements shall be binding upon and inure to the benefit of the Agent, the
Lenders, the Borrowers and their respective successors and assigns. Each
Borrower's successors and assigns shall include, without limitation, any
trustee, receiver or debtor in possession of or for such Borrower.
Notwithstanding the foregoing, no Borrower may sell, assign or transfer this
Agreement, or the other Financing Agreements or any portion thereof including,
without limitation, its rights, titles, interests, remedies, powers and/or
duties hereunder or thereunder.
10.7 APPLICABLE LAW; SEVERABILITY. This Agreement and the other
Financing Agreements have been submitted to the Agent and GTFSC at its office in
Illinois, and this Agreement and the other Financing Agreements, shall not be
binding upon the Agent or any Lender or effective until accepted by the Agent
and each Lender and shall be construed in all respects in accordance with, and
governed by, all of the provisions of the Code and by the other internal laws
(as opposed to conflicts of law provisions) of the State of Illinois, except for
the perfection and enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. THE
BORROWERS, THE AGENT AND EACH LENDER HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF
ILLINOIS, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE OTHER FINANCING AGREEMENTS SHALL BE LITIGATED IN SUCH COURTS,
AND THE BORROWERS, THE AGENT AND EACH LENDER EACH WAIVE ANY OBJECTION WHICH IT
MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL
OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 10.12 AND
THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH PERSON'S
ADDRESS. THE BORROWERS DESIGNATE AND APPOINT CT CORPORATION SYSTEM, 208 SOUTH
LASALLE STREET, CHICAGO, ILLINOIS 60604 AND SUCH OTHER PERSON AS MAY HEREAFTER
BE SELECTED BY THE BORROWERS WHICH IRREVOCABLY AGREES IN WRITING TO SO SERVE AS
THEIR AGENT TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE
BORROWERS TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY
SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE BORROWERS AT
THE ADDRESS PROVIDED IN SUBSECTION 10.12, EXCEPT THAT UNLESS OTHERWISE PROVIDED
BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY
OF SERVICES OF PROCESS. IF ANY AGENT APPOINTED BY THE BORROWERS REFUSE TO ACCEPT
SERVICE, THE BORROWERS HEREBY AGREE THAT SERVICE UPON IT BY MAIL OR OTHERWISE IN
ACCORDANCE WITH SUBSECTION 10.12 SHALL CONSTITUTE SUFFICIENT NOTICE. THE AGENT,
EACH LENDER AND THE BORROWERS ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY
WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF THE AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SUBSECTION 10.8 SHALL
AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
ANY ACTION OR PROCEEDING AGAINST THE BORROWERS OR THEIR RESPECTIVE PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS
LIENS AGAINST PROPERTY LOCATED IN SUCH JURISDICTIONS. THE BORROWERS WAIVE ANY
RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO ABOVE ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES.
10.9 MARSHALLING. The Agent shall be under no obligation to marshall
any assets in favor of the Borrowers or any other Person or against or in
payment of any or all of the Obligations.
10.10 SECTION TITLES. The section titles contained in this Agreement
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties.
10.11 INCORPORATION BY REFERENCE. The provisions of the other
Financing Agreements are incorporated in this Agreement by this reference.
Except as otherwise provided in this Agreement and except as otherwise provided
in the other Financing Agreements by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provisions in the other Financing
Agreements, the provision contained in this Agreement shall govern and control.
10.12 NOTICES. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
(a) if delivered in person, when delivered, (b) if delivered by telecopy, telex
or similar electronic medium on the date of confirmed transmission, (c) if
delivered by overnight courier, one day after delivery to such courier properly
addressed or (d) if by U.S. Mail, three (3) days after deposit in the United
States mails (by certified mail, return receipt requested), with proper postage
prepaid to the following addresses:
(i) If to the Agent, at:
GREEN TREE FINANCIAL SERVICING CORPORATION
100 North Point Center East
Suite 200
Alpharetta, Georgia 30022
Attn: Commercial Finance Division
Telecopy No.: (770) 772-3786
With a copy to:
WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Ronald H. Jacobson
Richard E. Morgan
Telecopy No.: (312) 558-5700
(ii) If to a Lender, at the address set forth
opposite its name on Schedule 1 hereto
(iii) If to the Borrowers, at:
LOIS/USA Inc.
40 West 57th Street
New York, New York 10019
Attn: Chief Financial Officer
Telecopy No.: (212) 373-4783
With a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Hillel M. Bennett
Telecopy No.: (212) 806-6006
or to such other address as each Person designates to the other in the manner
herein prescribed.
Each of the Borrowers hereby acknowledges and agrees that,
notwithstanding any provision to the contrary contained in this Agreement, any
notice required to be delivered hereunder by the Agent or any Lender to any
Borrower shall be deemed binding on each Borrower upon delivery of such notice
pursuant to this SUBSECTION 10.12.
10.13 WAIVERS WITH RESPECT TO OTHER INSTRUMENTS. Each Borrower waives
presentment, demand and protest and notice of presentment, demand protest,
default, nonpayment, maturity, release, compromise, settlement, extension, or
renewal of any or all commercial paper, Accounts, contract rights, documents,
Instruments, Chattel Paper and guaranties at any time held by the Agent on which
such Borrower may in any way be liable and hereby ratifies and confirms whatever
the Agent may do regarding the enforcement, collection, compromise, or release
thereof.
10.14 RETENTION OF THE BORROWERS' DOCUMENTS. The Agent or any Lender
may destroy or otherwise dispose of all documents, schedules, invoices or other
papers delivered to such Person in accordance with its customary practices
unless the Borrowers request in writing that same be returned. Upon the
Borrowers' request and at the Borrowers' expense, such Person shall return such
papers when such Person's actual or anticipated need for same has terminated.
10.15 ENTIRE AGREEMENT. This Agreement, including all Exhibits,
Schedules and other documents attached hereto or incorporated by reference
herein, constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all other negotiations, understandings and
representations, oral or written, with respect to the subject matter hereof,
including, without limitation, that certain Proposal Letter dated as of February
24, 1999 between the Parent and GTFSC.
10.16 EQUITABLE RELIEF. The Borrowers recognize that, in the event the
Borrowers fail to perform, observe or discharge any of its Obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the Agent
or any Lender; therefore, the Borrowers agree that the Agent or any Lender, if
such Person so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
10.17 SURVIVAL OF WARRANTIES. All representations and warranties of
Borrowers contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and the other
Financing Agreements and the making of the Revolving Loan. Notwithstanding
anything contained in this Agreement to the contrary, the provisions of, and the
undertakings, indemnifications and agreements of the Borrowers set forth in
SUBSECTIONS 2.1(c)(vi), 2.11, 2.16(b), 2.17, 2.18, 2.19(c), 6.26(g), 7.10 and
10.22 and the agreements of the Lenders set forth in SUBSECTIONS 12.8 and 14.2
shall survive payment of the Obligations and termination of this Agreement.
10.18 COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same agreement.
10.19 SEVERAL OBLIGATIONS; NATURE OF LENDERS' RIGHTS. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the Agent is authorized to act as such). No provision contained herein or in any
other Financing Agreement and no course of dealing between the parties shall be
deemed to create any fiduciary relationship between the Agent or any Lender and
any Borrower. The Indebtedness of the Borrowers incurred under each of the Notes
shall be a separate obligation owing to the holder thereof; PROVIDED that each
Lender hereby agrees that it shall have no individual right to seek to enforce
its rights under its Note, or to realize upon the Collateral, it being
understood and agreed that such rights and remedies may be exercised solely by
the Agent for the benefit of the Lenders at the direction of the Required
Lenders in accordance with the terms of this Agreement.
10.20 EXCEPTIONS TO COVENANTS. No Borrower shall be deemed to be
permitted to take any action or omit to take any action which is permitted as an
exception to any of the terms, provisions or covenants contained in any of the
Financing Agreements if such action or omission would result in a Default or
Event of Default or the breach of any term, provision or covenant contained in
any Financing Agreement.
10.21 CONSTRUCTION. The Borrowers acknowledge that they and their
counsel have approved the Financing Agreements and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Financing Agreements.
10.22 REINSTATEMENT. This Agreement shall remain in full force and
effect and continue to be effective or to be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
10.23 ACKNOWLEDGMENT. THE BORROWERS ACKNOWLEDGE THAT THEY HAVE BEEN
ADVISED BY COUNSEL OF THEIR CHOICE WITH RESPECT TO THIS LOAN AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND THE BORROWERS ACKNOWLEDGE AND AGREE THAT
(i) EACH OF THE WAIVERS SET FORTH HEREIN, INCLUDING, WITHOUT LIMITATION, THOSE
WAIVERS SET FORTH IN SUBSECTIONS 9.5, 9.6 AND 10.8 WERE KNOWINGLY AND
VOLUNTARILY MADE, (ii) THE OBLIGATIONS OF THE AGENT AND EACH LENDER HEREUNDER,
INCLUDING THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE BORROWERS IN
ACCORDANCE HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE EXPRESSLY SUBJECT
TO THE BORROWERS' COMPLIANCE IN ALL RESPECTS WITH THE TERMS AND CONDITIONS
HEREIN SET FORTH, AND (iii) NO REPRESENTATIVE OF THE AGENT OR ANY LENDER HAS
WAIVED OR MODIFIED ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF
AND NO SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE EFFECTIVE
UNLESS MADE IN ACCORDANCE WITH SUBSECTION 10.1.
11. ASSIGNMENT AND PARTICIPATION.
11.1 ASSIGNMENTS. Each Lender may, in the ordinary course of its
business and in accordance with applicable law, assign all or any part of its
rights and obligations under the Financing Agreements (including, without
limitation, all or any part of its Commitment, the Revolving Loan owing to it
and the Revolving Note held by it); PROVIDED that (i) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or an affiliate of a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of any assignment shall in no event
be less than $5,000,000 and shall be in an integral multiple of $1,000,000 if in
excess thereof, (ii) each such assignment shall be to an Eligible Assignee,
(iii) the written consent of the Agent shall be required prior to an assignment
becoming effective with respect to an assignee that is not, immediately prior to
such assignment, a Lender or an affiliate thereof and (iv) the parties to each
such assignment shall execute and deliver to the Agent an Assignment and
Acceptance, together with its Revolving Note. Upon such execution, delivery and
acceptance, from and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the 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).
11.2 PARTICIPATIONS. Each Lender shall have the right to sell or
assign to a Participant or Participants participating interests in the
Obligations hereunder in such amounts as such Lender shall determine; provided
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitment) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of its Revolving
Note for all purposes of this Agreement, (iv) the Borrowers, the Agent 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 and
(v) no Participant under any such participation shall become a "Lender" or,
except as specifically provided in this Agreement, have any rights of "Lender"
under this Agreement, or shall have any right to approve any amendment or waiver
of any provision of any Financing Agreement, or any consent to any departure
therefrom, except to the extent that any such amendment, waiver or consent would
(a) extend the Revolving Loan Maturity Date or the maturity date of any other
Loan, (b) reduce the principal amount of the Notes or reduce or extend the time
of payment of interest or fees thereon, (c) release all or substantially all of
the Collateral or (d) permit any assignment by the Borrowers of the Obligations
or its rights under this Agreement.
12. AGENT.
12.1 APPOINTMENT. GTFSC is hereby appointed Agent hereunder and under
each other Financing Agreements, and each of the Lenders authorizes the Agent to
act as the Agent of such Lender. The Agent agrees to act as such upon the
express conditions contained in this SECTION 12. Neither the Agent nor the Audit
Agent shall have a fiduciary relationship in respect of any Borrower or any
Lender by reason of this Agreement.
12.2 POWERS. The Agent shall have and may exercise such powers under
the Financing Agreements as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto.
Neither the Agent nor the Audit Agent shall have any implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder, except
any action specifically provided by the Financing Agreements to be taken by the
Agent or the Audit Agent, as applicable.
12.3 GENERAL IMMUNITY. Neither the Agent, the Audit Agent, nor any of
their respective directors, officers, agents or employees shall be liable to any
Borrower or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Financing Agreements or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct as
determined by a final order, not subject to review, of a court of competent
jurisdiction.
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent,
the Audit Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Financing
Agreements or any borrowing hereunder, (b) the performance or observance of any
of the covenants or agreements of any obligor under any Financing Agreements,
(c) the satisfaction of any condition specified in SECTION 4, except receipt of
items required to be delivered to the Agent and not waived at closing, or (d)
the validity, effectiveness or genuineness of any Financing Agreements or any
other instrument or writing furnished in connection therewith.
12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Financing Agreements in accordance with written instructions signed by
the Required Lenders (or to the extent required by SECTION 13, all Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Financing Agreements unless it shall first be indemnified to its
satisfaction by the Lenders pro-rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of
its duties as Agent hereunder and under any other Financing Agreements by or
through employees, agents and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Financing Agreements.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify the Agent and the Audit Agent ratably in proportion to
their respective Commitments (a) for any amounts not reimbursed by the Borrowers
for which the Agent or the Audit Agent is entitled to reimbursement by the
Borrowers under the Financing Agreements, (b) for any other expenses incurred by
the Agent or the Audit Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the
Financing Agreements, and (c) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent or the Audit Agent in any way relating to or arising out of
the Financing Agreements or any other document delivered in connection therewith
or the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents; PROVIDED that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent or the Audit Agent as determined by a final
order, not subject to appeal, of a court of competent jurisdiction. The
obligations of the Lenders under this SUBSECTION 12.8 shall survive payment of
the Obligations and termination of this Agreement.
12.9 RIGHTS AS A LENDER. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Financing
Agreements as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Financing
Agreements, with any Borrower or any of its Subsidiaries in which such Borrower
or such Subsidiary is not restricted hereby from engaging with any other Person.
12.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Audit Agent or any other
Lender and based on the financial statements prepared by Parent and the
Borrowers and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and the
other Financing Agreements. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, the Audit Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements.
12.11 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Borrowers and the Lenders, a successor Agent. If no successor Agent shall
have been so appointed and shall have accepted such appointment within thirty
days after the retiring Agent's giving notice of resignation or within thirty
days after the removal of such Agent, then the retiring Agent shall use
reasonable efforts to appoint, on behalf of the Borrowers and the Lenders, a
successor Agent. Such successor Agent shall be a financial institution having
capital and retained earnings of at least One Hundred Fifty Million Dollars
($150,000,000). Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Financing Agreements. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this SECTION 12
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and under
the other Financing Agreements.
12.12 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or a Borrower
referring to this Agreement describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. Subject to the provisions of SUBSECTION 12.5, the Agent shall take any
action of the type specified in this Agreement with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so required by SECTION 13, by all Lenders); PROVIDED that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as the Agent shall determine is in the best
interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
Subject to the provisions of this SECTION 13, the Required Lenders (or
the Agent with the consent in writing of the Required Lenders) and the Borrowers
may enter into agreements supplemental hereto for the purpose of adding,
terminating or modifying any provisions to the Financing Agreements or changing
in any manner the rights of the Lenders or the Borrowers hereunder or waiving
any Default or Event of Default hereunder; PROVIDED that no such supplemental
agreement shall, without the consent of each Lender:
(a) extend the final maturity of the Revolving Loan or Revolving Note,
the Swingline Loan or Swingline Loan Note or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest or fees
thereon;
(b) reduce the percentage specified in the definition of Required
Lenders;
(c) reduce the amount or extend the payment date for the mandatory
payments required hereunder, or increase the amount of the Revolving Credit
Commitment of any Lender hereunder (other than an increase in the Revolving
Credit Commitment of any Lender as a result of an assignment consummated between
such Lender and another Lender pursuant to SUBSECTION 11.1);
(d) extend the Revolving Loan Maturity Date or permit any Letter of
Credit or Lender Guaranty to have an expiry date beyond the Revolving Loan
Maturity Date;
(e) amend this SECTION 13;
(f) except as otherwise provided in the Financing Agreements, release
all or any substantial portion of the Collateral;
(g) permit any assignment by any Borrower of its Obligations or its
rights hereunder; or
(h) amend the definition of the term "Commitment".
No amendment, modification, termination or waiver affecting the rights
or duties of the Agent under any Financing Agreement shall be effective without
the written consent of the Agent, and no amendment, modification, termination or
waiver affecting the rights or duties of the Swingline Lender under any
Financing Agreement shall be effective without the written consent of the
Swingline Lender.
Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
the Agent to take additional Collateral pursuant to any Financing Agreement. No
notice to or demand on the Borrowers not required by the terms hereof in any
case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this SECTION 13 shall be binding upon
each holder of the Notes at the time outstanding, each future holder of the
Notes and the Borrowers.
Notwithstanding anything to the contrary contained herein, the Agent
may, at its sole discretion, release or compromise Collateral and the proceeds
thereof to the extent of asset dispositions permitted by the terms hereof.
14. SET OFF AND SHARING OF PAYMENTS.
14.1 SETOFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by the Borrowers at any time or from time to time, with
reasonably prompt subsequent notice to the Borrowers Representative or to any
other Person (any prior or contemporaneous notice being hereby expressly waived)
to set off and to appropriate and to apply any and all (a) balances (including,
without limitation, all account balances, whether provisional or final and
whether or not collected or available) held or owing by such Lender at any of
its offices to or for the credit or account of any Borrower (regardless of
whether such balances are then due to such Borrower) and (b) other property held
or owing by such Lender to or for the credit or the account of any Borrower,
toward the payment of the Obligations owing to such Lender, whether or not the
Obligations, or any part hereof, shall then be due.
14.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SUBSECTIONS 2.17(b), 2.18 and 2.19) in a greater proportion than its Pro Rata
Share of such Loans, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Revolving Loan. In case any such
payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made. If an amount to be setoff is to be applied to
Indebtedness of any Borrower to a Lender, other than Indebtedness evidenced by
any of the Notes held by such Lender, such amount shall be applied ratably to
such other Indebtedness and to the Indebtedness evidenced by such Notes. The
Borrower agrees, to the fullest extent permitted by law, that (x) any Lender may
exercise its right to set off with respect to amounts in excess of its Pro Rata
Share of the Obligations and may sell participation in such excess to other
Lenders, and (y) any Lender so purchasing a participation in the Loans made or
other Obligations held by other Lenders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender were a direct holder of Loans and other Obligations
in the amount of such participation.
15. CROSS-GUARANTY
15.1 CROSS-GUARANTY. Each Borrower hereby acknowledges and agrees that
such Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to each other Borrower, and to the Agent and the
Lenders the full and prompt payment of, all Obligations owed or hereafter owing
to the Agent and the Lenders by each other Borrower. Each Borrower further
agrees to pay all costs and expenses including, without limitation, all court
costs and reasonable attorneys' and paralegals' fees and expenses, paid or
incurred by the Agent and the Lenders in endeavoring to collect all or any part
of the Obligations from, or in prosecuting any action against, such Borrower or
any other guarantor of all or any part of the Obligations.
15.2 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.
(a) To the extent that any Borrower shall make a payment under this
SECTION 15 of all or any of the Obligations for which such Borrower is not
primarily liable (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by the other Borrower,
exceeds the amount which such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Borrower's "Allocable Amount" (as defined
below) (in effect immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of all of the Borrowers in effect immediately prior
to the making of such Guarantor Payment, THEN such Borrower shall be entitled to
receive contribution and indemnification payments from, and be reimbursed by,
the other Borrower for the amount of such excess, PRO RATA based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
(b) As of any date of determination, the "ALLOCABLE AMOUNT" of any
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this SECTION 15 without rendering such claim
voidable or avoidable under Section 548 of chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This SUBSECTION 15.2 is intended only to define the relative
rights of the Borrowers and nothing set forth in this SUBSECTION 15.2 is
intended to or shall impair the obligations of the Borrowers, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement including, without limitation,
SECTION 1 hereof, and nothing contained in this SUBSECTION 15.2 shall limit the
liability of any Borrower to pay the Obligations for which it is primarily
liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of any Borrower to which such
contribution and indemnification is owing.
15.3 OBLIGATIONS ABSOLUTE. The liability of each Borrower to the Agent
and the Lenders hereunder shall not be affected or impaired by any of the
following: (i) the validity or enforceability of the Obligations or any part
thereof, or of any Note or other instrument or document evidencing all or any
part of the Obligations, (ii) the absence of any attempt to collect the
Obligations from a Borrower or any guarantor or other Person liable in respect
of any Obligations or other action to enforce the same, (iii) any acceptance of
collateral security, guarantors, accommodation parties or sureties for any or
all Obligations; (iv) one or more extensions or renewals of Obligations (whether
or not for longer than the original period) or any modification of the interest
rates, fees, maturities or principal amount of, or other contractual terms
applicable to any Obligations; (v) any waiver or indulgence granted to a
Borrower, any delay or lack of diligence in the enforcement of Obligations, or
any failure to institute proceedings, file a claim, give any required notices or
otherwise protect any Obligations; (vi) any full or partial release of,
compromise or settlement with, or agreement not to sue a Borrower or any
guarantor or other Person liable in respect of any Obligations; (vii) any
release, surrender, cancellation or other discharge of any evidence of any of
the Obligations or the acceptance of any instrument in renewal or substitution
therefore; (viii) any failure to obtain collateral security (including rights of
setoff) for any of the Obligations, or to obtain or maintain the proper or
sufficient creation and perfection thereof, or to establish the priority
thereof, or to preserve, protect, insure, care for, exercise or enforce any
collateral security; (ix) any collection, sale, lease or disposition of, or any
other foreclosure or enforcement of or realization on, any collateral security;
(x) any assignment, pledge or other transfer of any of the Obligations or any
evidence thereof; (xi) any manner, order or method of application of any
payments or credits upon any of the Obligations; (xii) the Lenders' election, in
any case or proceedings under the Bankruptcy Code of the application of Section
1111(b)(2) thereof, (xiii) any borrowing or grant of a Lien by a Borrower as
debtor in possession under Section 364 of the Bankruptcy Code and (xiv) the
disallowance under the Bankruptcy Code of all or any portion of the Agent's or
any Lender's claim for repayment of the Obligations. Each Borrower hereby waives
any and all legal and equitable defenses and discharges available to a surety,
guarantor, or accommodation co-obligor.
Each Borrower hereby assumes responsibility for keeping itself
informed of the financial condition of the other Borrower, and any and all
endorsers and other guarantors of any agreement, instrument or document
evidencing or securing all or any part of the Obligations and of all other
circumstances bearing upon the risk of nonpayment of the Obligations or any part
thereof that diligent inquiry would reveal, and each Borrower hereby agrees that
the Agent and the Lenders shall have no duty to advise such Borrower of
information known to such Person regarding such condition or any such
circumstances. Each Borrower hereby acknowledges familiarity with the other
Borrower's financial condition and has not relied on any statements by the Agent
or any Lender in obtaining such information. In the event the Agent or any
Lender, in its sole discretion, undertakes at any time or from time to time to
provide any such information to a Borrower, the Lender shall not be under any
obligation (i) to undertake any investigation with respect thereto, (ii) to
disclose any information which, pursuant to accepted or reasonable credit
practices, such Person wishes to maintain confidential or (iii) to make any
other or future disclosures of such information, or any other information, to
such Borrower.
15.4 WAIVER. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT, THE LENDERS MAY, AT THEIR SOLE ELECTION, PROCEED DIRECTLY,
WITHOUT NOTICE, AGAINST A BORROWER TO COLLECT AND RECOVER ALL OR ANY PART OF THE
OBLIGATIONS WITHOUT FIRST PROCEEDING AGAINST ANY OTHER BORROWER, ANY OTHER
GUARANTOR, OR ANY COLLATERAL FOR THE OBLIGATIONS.
EACH BORROWER ALSO WAIVES ALL SETOFFS AND COUNTERCLAIMS AND ALL
PRESENTMENTS, DEMANDS FOR PERFORMANCE, NOTICES OF NONPERFORMANCE, PROTESTS,
NOTICES OF PROTEST, NOTICES OF DISHONOR, AND NOTICES OF ACCEPTANCE OF THIS
GUARANTY. EACH BORROWER FURTHER WAIVES ALL NOTICES OF THE EXISTENCE, CREATION OR
INCURRING OF NEW OR ADDITIONAL INDEBTEDNESS, ARISING EITHER FROM ADDITIONAL
LOANS EXTENDED TO THE OTHER BORROWER OR OTHERWISE, AND EXCEPT FOR NOTICES
EXPRESSLY REQUIRED HEREUNDER, ALSO WAIVES ALL NOTICES THAT THE PRINCIPAL AMOUNT,
OR ANY PORTION THEREOF, OR ANY INTEREST ON ANY AGREEMENT, INSTRUMENT OR DOCUMENT
EVIDENCING OR SECURING ALL OR ANY PART OF THE OBLIGATIONS IS DUE, NOTICES OF ANY
AND ALL PROCEEDINGS TO COLLECT FROM THE MAKER, ANY ENDORSER OR ANY GUARANTOR OF
ALL OR ANY PART OF THE OBLIGATIONS, OR FROM ANY OTHER PERSON, AND, TO THE EXTENT
PERMITTED BY LAW, NOTICES OF EXCHANGE, SALE, SURRENDER OR OTHER HANDLING OF ANY
COLLATERAL GIVEN TO THE AGENT ON BEHALF OF THE LENDERS TO SECURE PAYMENT OF THE
OBLIGATIONS.
15.5 RECOVERY. Each Borrower agrees that, to the extent that the other
Borrower makes a payment or payments to the Lender, or receives any proceeds of
Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to such other Borrower, its estate, trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the Obligations or the
part thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred, and this cross guaranty shall
continue to be in existence and full force and effect, irrespective of whether
any evidence of the Obligations has been surrendered or canceled.
15.6 LIABILITY CUMULATIVE. The liability of the Borrowers under this
SECTION 15 is in addition to and shall be cumulative with all liabilities of
each Borrower to the Agent and the Lenders under this Agreement and the other
Financing Agreements to which such Borrower is a party or in respect of any
Obligations or obligation of the other Borrower, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
[SIGNATURE PAGES FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly
executed as of the day and year first above written.
ZYX INC. (formerly LOIS/USA WEST INC.)
By: /s/ Robert K. Stewart
Title: Chief Financial Officer
LOIS/USA CHICAGO INC.
By: /s/ Robert K. Stewart
Title: Chief Financial Officer
LOIS/USA NEW YORK INC.
By: /s/ Robert K. Stewart
Title: Chief Financial Officer
FOGARTY & KLEIN, INC.
By: /s/ Robert K. Stewart
Title: Chief Financial Officer
YEAR 2K COMMUNICATIONS, INC.
By: /s/ Robert K. Stewart
Title: Chief Financial Officer
<PAGE>
GREEN TREE FINANCIAL SERVICING
CORPORATION, as Agent and as a Lender
By: /s/ Chris Gouskos
Title: SVP
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By: /s/ Geoffrey K. Hall
Title: Duly Authorized Signatory
<PAGE>
SCHEDULE 1
LENDER COMMITMENTS
LENDER COMMITMENT
Green Tree Financial $15,000,000
Servicing Corporation
100 North Point Center East
Suite 200
Alpharetta, Georgia 30022
Attn: Commercial Finance Division
Telecopy No.: (770) 772-3786
General Electric Capital Corporation $15,000,000
10 South Lasalle Street
Suite 2800
Chicago, Illinois 60603
Attn:
Telecopy No.: (312) 419-5700
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS................................................................1
1.1 General Terms...................................................1
1.2 Accounting Terms...............................................29
1.3 Other Terms Defined in Illinois Uniform Commercial Code........29
1.4 Effective Date.................................................29
1.5 References.....................................................30
2. CREDIT....................................................................30
2.1 Revolving Credit Facility......................................30
2.2 Maximum Principal Balance of Revolving Loan....................35
2.3 Evidence of Revolving Loan and Swingline Indebtedness..........36
2.4 Notification of Advances, Interest Rates and Prepayment........36
2.5 Interest and Applicable Margins................................36
2.6 Method of Borrowing; Manner and Method of Making Interest
and Other Payments............................................39
2.7 Term of this Agreement.........................................40
2.8 Prepayments....................................................41
2.9 Commitment Fee and Fee Letter..................................41
2.10 Unused Line Fee................................................41
2.11 Other Fees, Costs and Expenses.................................41
2.12 Loan Account...................................................43
2.13 Statements.....................................................43
2.14 Payment Dates..................................................44
2.15 Lender Guaranty Fees...........................................44
2.16 Other Lender Guaranty Provisions...............................44
2.17 Taxes; Changes in Law..........................................46
2.18 Changes in Capital Adequacy Regulations........................48
2.19 Special Provisions Governing LIBOR Rate Loans..................48
3. REPORTING AND ELIGIBILITY REQUIREMENTS....................................50
3.1 Monthly Reports and Borrowing Base Certificates................50
3.2 Eligible Accounts..............................................51
3.3 Account Warranties.............................................52
3.4 Verification of Accounts.......................................53
3.5 Collection of Accounts and Payments............................53
3.6 Appointment of the Agent as Borrower's Attorney-in-Fact........54
3.7 Account Records................................................54
3.8 Instruments and Chattel Paper..................................55
3.9 Notice to Account Debtors......................................55
3.10 Equipment Warranties...........................................55
3.11 Equipment Records..............................................55
3.12 Maintenance of Equipment.......................................55
3.13 Real Estate....................................................56
3.14 Maintenance of Real Estate.....................................56
3.15 Intellectual Property and General Intangibles..................56
4. CONDITIONS TO ADVANCES....................................................56
4.1 Conditions to All Advances.....................................56
4.2 Conditions to Initial Advance..................................57
5. COLLATERAL................................................................61
5.1 Security Interest..............................................61
5.2 Preservation of Collateral and Perfection of Liens Thereon.....61
6. REPRESENTATIONS AND WARRANTIES............................................61
6.1 Existence......................................................62
6.2 Authority......................................................62
6.3 Binding Effect.................................................63
6.4 Financial Data.................................................63
6.5 Collateral.....................................................64
6.6 Solvency.......................................................64
6.7 Places of Business.............................................64
6.8 Other Names....................................................64
6.9 Tax Obligations................................................64
6.10 Indebtedness and Liabilities...................................65
6.11 Use of Proceeds and Margin Security............................65
6.12 Government Contracts...........................................65
6.13 Investments....................................................65
6.14 Litigation and Proceedings.....................................65
6.15 Other Agreements and Deliveries................................66
6.16 Labor Matters..................................................67
6.17 Compliance with Laws and Regulations...........................67
6.18 Patents, Trademarks and Licenses...............................67
6.19 ERISA..........................................................67
6.20 Property.......................................................68
6.21 Adverse Contracts..............................................68
6.22 Purchase or Other Commitments and Outstanding Bids.............69
6.23 Investment Company Act; Public Utility Holding Company Act.....69
6.24 Broker's Fees..................................................69
6.25 Licenses and Permits...........................................69
6.26 Environmental Compliance.......................................69
6.27 Full Disclosure................................................71
6.28 Insurance Policies.............................................71
6.29 Corporate and Contractual Restrictions.........................71
6.30 Subsidiaries...................................................71
6.31 Deposit and Disbursement Accounts..............................72
6.32 Subordinated Debt..............................................72
6.33 Year 2000 Compliance...........................................72
7. AFFIRMATIVE COVENANTS.....................................................72
7.1 Financial Statements...........................................72
7.2 Inspections and Audits.........................................75
7.3 Conduct of Business; Compliance With Laws......................76
7.4 Claims and Taxes...............................................76
7.5 Borrower's Liability Insurance.................................76
7.6 Borrower's Property Insurance..................................77
7.7 Pension Plans..................................................77
7.8 Notice of Certain Matters......................................78
7.9 Landlord Agreements............................................79
7.10 Indemnity......................................................79
7.11 Interest Coverage Ratio........................................80
7.12 EBITDA.........................................................80
7.13 Fixed Charge Coverage Ratio....................................81
7.14 Borrowing Availability Reserve.................................81
7.15 Accounting Systems Plan........................................81
7.16 Preferred Stock Agreements.....................................82
8. NEGATIVE COVENANTS........................................................82
8.1 Encumbrances...................................................82
8.2 Indebtedness and Liabilities...................................83
8.3 Mergers, Consolidations, Acquisitions..........................83
8.4 Investments....................................................87
8.5 Guaranties.....................................................87
8.6 Collateral Locations...........................................87
8.7 Disposal of Property...........................................87
8.8 Capital Expenditures Limitations...............................88
8.9 Employee Loans.................................................88
8.10 Plans..........................................................88
8.11 Restricted Payments............................................89
8.12 Securities.....................................................89
8.13 Changes in Charter, Bylaws or Fiscal Year......................90
8.14 Lease Limitations..............................................90
8.15 Transactions with Affiliates...................................90
8.16 Capital Structure; Other Business..............................90
8.17 Sale and Leaseback.............................................90
8.18 Impairment Agreements..........................................90
8.19 Corporate Accounts.............................................91
8.20 Intercompany Loans.............................................91
8.21 Subordinated Debt..............................................92
8.22 Bank Accounts..................................................92
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.................93
9.1 Obligations....................................................93
9.2 Rights and Remedies Generally..................................93
9.3 Entry Upon Premises and Access to Information..................93
9.4 Sale or Other Disposition of Collateral by the Agent...........94
9.5 Grant of License...............................................94
9.6 Waiver of Demand...............................................94
9.7 Waiver of Notice...............................................95
10. OTHER RIGHTS AND OBLIGATIONS..............................................95
10.1 Waiver.........................................................95
10.2 Several Obligations; Nature of Lender's Rights.................95
10.3 Expenditures by the Agent and the Lenders......................95
10.4 Custody and Preservation of Collateral.........................96
10.5 Reliance by the Agent and Lenders..............................96
10.6 Parties and Assignment.........................................96
10.7 Applicable Law; Severability...................................96
10.8 Submission to Jurisdiction; Waiver of Jury and Bond............97
10.9 Marshalling....................................................98
10.10 Section Titles.................................................98
10.11 Incorporation by Reference.....................................98
10.12 Notices........................................................98
10.13 Waivers With Respect to Other Instruments......................99
10.14 Retention of the Borrowers' Documents..........................99
10.15 Entire Agreement...............................................99
10.16 Equitable Relief...............................................99
10.17 Survival of Warranties........................................100
10.18 Counterparts..................................................100
10.19 Several Obligations; Nature of Lenders' Rights................100
10.20 Exceptions to Covenants.......................................100
10.21 Construction..................................................100
10.22 Reinstatement.................................................100
10.23 ACKNOWLEDGMENT................................................101
11. ASSIGNMENT AND PARTICIPATION.............................................101
11.1 Assignments...................................................101
11.2 Participations................................................101
12. AGENT....................................................................102
12.1 Appointment...................................................102
12.2 Powers........................................................102
12.3 General Immunity..............................................102
12.4 No Responsibility for Loans, Recitals, etc....................102
12.5 Action on Instructions of Lenders.............................102
12.6 Employment of Agents and Counsel..............................103
12.7 Reliance on Documents; Counsel................................103
12.8 Agent's Reimbursement and Indemnification.....................103
12.9 Rights as a Lender............................................103
12.10 Lender Credit Decision........................................104
12.11 Successor Agent...............................................104
12.12 Notice of Default.............................................104
13. AMENDMENTS AND WAIVERS...................................................104
14. SET OFF AND SHARING OF PAYMENTS..........................................106
14.1 Setoff........................................................106
14.2 Ratable Payments..............................................106
15. CROSS-GUARANTY...........................................................106
15.1 Cross-Guaranty................................................106
15.2 Contribution with Respect to Guaranty Obligations.............107
15.3 Obligations Absolute..........................................107
15.4 Waiver........................................................108
15.5 Recovery......................................................109
15.6 Liability Cumulative..........................................109
<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.1(a) Form of Assignment and Acceptance
Exhibit 1.1(b) Form of Borrowing Base Certificate
Exhibit 1.1(c) Key Employees
Exhibit 2.3(a) Form of Revolving Loan Note
Exhibit 2.3(b) Form of Swingline Loan Note
Exhibit 2.5-1 Form of Borrowing Notice
Exhibit 2.5-2 Form of Conversion/Continuation Notice
Exhibit 3.1 Form of Monthly Report Certificate
Exhibit 3.1-1 Initial Monthly Report
Exhibit 3.10 Equipment Locations and Leased Equipment
Exhibit 3.13 Real Estate
Exhibit 4.2(n) Form of Power of Attorney
Exhibit 6.1-1 Jurisdictions of Qualification
Exhibit 6.1-2 Stock of Borrowers and Subsidiaries
Exhibit 6.4 Projections
Exhibit 6.7 Places of Business
Exhibit 6.8 Trade Names
Exhibit 6.12 Government Contracts
Exhibit 6.14 Pending or Threatened Litigation
Exhibit 6.15 Existing Defaults
Exhibit 6.16 Labor Matters
Exhibit 6.18 Patents, Trademarks and Licenses
Exhibit 6.19(a) ERISA Obligations
Exhibit 6.20 Property
Exhibit 6.26 Environmental Matters
Exhibit 6.30 Subsidiaries
Exhibit 6.31 Bank Accounts
Exhibit 7.5 Insurance
Exhibit 7.6 Form of Insurance Endorsement
Exhibit 8.1 Liens
Exhibit 8.2 Indebtedness
Exhibit 8.4 Investments
Exhibit 8.5 Guaranties
Exhibit 8.6 Collateral Locations
Exhibit 8.9 Employee Loans
Exhibit 8.15 Transactions with Affiliates
SCHEDULES
Schedule 1 Commitments of Lenders
