EXHIBIT 10.1
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of
August 19, 1998, is entered into by and among THE GSI GROUP, INC., a Delaware
corporation (the "Borrower"), the several financial institutions which are or
may from time to time become parties to this Agreement (each a "Bank" and
collectively, the "Banks") and LASALLE NATIONAL BANK, as Agent (as defined
below) for the Banks.
WITNESSETH:
WHEREAS, Borrower and Agent are party to a Loan and Security Agreement
dated April 26, 1995 (as amended and restated as of June 6, 1996 and later as of
November 5, 1997, and as further amended prior to the date hereof, the "Original
Loan Agreement"); and
WHEREAS, Borrower and Agent desire to amend and restate the Original Loan
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby amend and
restate the Original Loan Agreement to provide as follows:
ARTICLE I. DEFINITIONS.
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1.01 Certain Defined Terms. The following words and phrases, as used
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herein, shall have the following respective meanings:
"Accounts" shall mean any accounts, contract rights, notes, drafts, chattel
paper, instruments, documents and general intangibles consisting of rights to
payment (all as defined in the UCC).
"Account Debtor" shall mean any party who is obligated on any Account.
"Acquisition" shall mean any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (A) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (B) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (C) a merger or
consolidation or any other business combination with another Person (other than
a Person that is a Subsidiary).
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant to
the following formula:
Adjusted LIBOR Rate = LIBOR
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100% - Reserve Percentage
The Adjusted LIBOR Rate shall be adjusted automatically as to all Euro-
Dollar Loans then outstanding as of the effective date of any change in the
Reserve Percentage.
"Affiliate" shall mean any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, Stock having
ordinary voting power to elect a majority of the board of directors
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation have or might have voting power by reason of the happening of
any contingency) of Borrower, or which controls, is controlled by or is under
common control with Borrower or any stockholders of Borrower.
"Agent" shall mean LaSalle National Bank in its capacity as agent for the
Banks and any successor agent pursuant to Section 10.09.
"Agent-Related Persons" shall mean LNB and any successor agent arising
under Section 10.09 together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" shall mean the address for payments set forth on
Schedule 6 or such other address as Agent may from time to time specify.
"Applicable Margin" shall mean with respect to Euro-Dollar Loans and the
Non-Use Fee, the rate per annum determined as set forth below:
[SEE CHART ON NEXT PAGE]
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FUNDED DEBT TO EBITDA APPLICABLE APPLICABLE APPLICABLE STANDBY COMMERCIAL
RATIO MARGIN MARGIN FOR MARGIN FOR LETTERS OF LETTERS OF
for Euro- NON-USE FEE FLOATING CREDIT CREDIT
Dollar Loans RATE LOANS
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Greater Than And Less
or Equal to Than
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4.75 to 1 1.75% .375% .25% 1.75% .875%
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4.00 to 1 4.74 to 1 1.50% .30% 0 1.50% .75%
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3.25 to 1 3.99 to 1 1.25% 25% 0 1.25% .625%
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2.50 to 1 3.24 to 1 1.00% .25% 0 1.00% .5%
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2.49 to 1 .75% .20% 0 .75% .375%
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provided that for the period from the date hereof through the date Agent
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receives Borrower's compliance certificate for the fiscal quarter ending March
31, 1999, the Applicable Margin for Euro-Dollar Loans shall be 1.75%, the
Applicable Margin for the Non-Use Fee shall be .375%, the Applicable Margin for
Floating Rate Loans shall be .25%, the Applicable Margin for Standby Letters of
Credit shall be 1.75% and the Applicable Margin for Commercial Letters of Credit
shall be .875%. Any change in the Applicable Margin due to a change in
Borrower's Funded Debt to EBITDA Ratio shall take place upon receipt by Agent of
the Compliance Certificate pursuant to Section 7.01(E) indicating such change in
the Funded Debt to EBITDA Ratio.
"Assignee" shall have the meaning specified in Section 11.18(A).
"Assignment and Acceptance" shall have the meaning specified in Section
11.18(A).
"Attorney Costs" shall mean and include all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all disbursements of internal
counsel.
"Authorized Borrower Representative" shall mean any officer of Borrower
designated as such by resolution of the Board of Directors of Borrower from time
to time, a certified copy of which resolution shall be delivered to the Bank.
"Avemarau" shall mean Avemarau Equipamentos Agricolas Ltda., a Brazilian
company.
"Bank" shall have the meaning specified in the introductory clause hereto.
"Borrower" shall have the meaning specified in the preamble hereto.
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"Borrowing Base" shall mean at any time the sum of (i) 80% of the unpaid
amount of Eligible Accounts, plus (ii) the lesser of (A) 50% of the value of
Eligible Inventory, valued at the lower of cost or market and (B) $30,000,000.
"Business Day" shall mean any day, other than a Saturday or Sunday, on
which commercial banks are open for domestic business in Chicago, Illinois.
"Capital Expenditures" shall mean, for the period of four consecutive
fiscal quarters most recently ended on or prior to the date of determination,
Borrower's capital expenditures (including capital lease expense), net of
dispositions, determined in accordance with GAAP.
"Cash Equivalent Investments" shall mean, as of any date, (A) any evidence
of Debt, maturing not more than one year after such date, issued or guaranteed
by the United States Government or any agency thereof, (B) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by a Bank or its holding company) rated at
least A-1 by Standard & Poor's Rating Group or P-1 by Xxxxx'x Investors Service,
Inc., (C) any certificate of deposit (or time deposit represented by such
certificates of deposit) or banker's acceptance, maturing not more than one year
after such time, or overnight Federal Funds transactions that are issued or sold
by any Bank or its holding company or by a commercial banking institution that
is a member of the Federal Reserve System and has a combined capital surplus and
undivided profits of not less than $500,000,000.00, (D) any repurchase agreement
entered into with any Bank (or other commercial banking institution of the
stature referred to in clause (C)) which (i) is secured by a fully perfected
security interest in any obligation of the type described in any of clauses (A)
through (C) and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such Bank (or
other commercial banking institution) thereunder and (E) shares in money market
funds registered with the Securities and Exchange Commission under Rule 2a-7 of
the Investment Company Act of 1940.
"Closing" shall have the meaning specified in Section 3.01.
"Collateral" shall have the meaning specified in Section 4.01.
"Commitment" shall mean each Bank's Pro Rata Share of the Revolving Credit
Loan Commitment and the Term Loan as designated on Schedule 6.
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"Compliance Certificate" shall mean a certificate substantially in the form
of Exhibit C.
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"Debt" shall mean, with respect to the subject Person, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or indirect, or joint or several, including:
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(A) All Obligations of such Person;
(B) All indebtedness in effect guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(C) All indebtedness in effect guaranteed, directly or indirectly through
agreements, contingent or otherwise: (1) to purchase such indebtedness, or (2)
to purchase, sell or lease (as lessee or lessor) property, products, materials
or supplies or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to assure the owner
of the indebtedness against loss, or (3) to supply funds to or in any other
manner invest in any Person;
(D) All indebtedness secured (or for which the holder of such indebtedness
has a right, contingent or otherwise, to be secured) by any mortgage, trust
deed, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(E) All indebtedness incurred as the lessee of goods or services under
leases that, in accordance with GAAP, are or should be reflected on the lessee's
balance sheet as a capital lease.
"DMC" shall mean Xxxxx Manufacturing Co., an Iowa corporation whose
headquarters is located in Mason City, Iowa.
"Documents" shall mean this Agreement, the Notes and any other documents,
instruments or certificates to be executed and delivered hereunder or in
connection herewith by or on behalf of Borrower or any of its Affiliates.
"Domestic Account Debtor" shall mean an Account Debtor which is a resident
or citizen of, and is located in, the United States.
"EBITDA" shall mean, for the period of four consecutive fiscal quarters
most recently ended on or prior to the date of determination, Borrower's
earnings before interest, taxes, depreciation and amortization, and
notwithstanding any non-cash charge for increase in value of stock appreciation
rights (or similar rights), but accounting for same as a charge against earnings
when paid, determined in accordance with GAAP. Prior to the first anniversary
of the consummation of an Acquisition, the historical financial results of the
acquired Person or assets for the relevant period will be included for purposes
of calculating EBITDA (but without any adjustment to such historical results for
cost savings or other synergies).
"Eligible Account" shall mean an Account owing to Borrower or any
Subsidiary of Borrower which meets and continues to meet at all times the
following requirements:
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(A) it is genuine and in all respects what it purports to be;
(B) it is owned by Borrower or such Subsidiary of Borrower and either (i)
the Agent has a valid, perfected, first-lien security interest in it or (ii) it
is secured by a letter of credit or credit insurance; provided however, upon the
occurrence of an Event of Default and during the continuation thereof, any such
letters of credit shall be assigned to or endorsed for the benefit of Agent in
such form as Agent shall deem necessary or desirable, and the original thereof
shall be delivered to Agent;
(C) it arises from (i) the performance of services by Borrower or such
Subsidiary of Borrower and such services have been fully performed and
acknowledged and accepted by the Account Debtor thereunder; or (ii) the sale or
lease of Inventory by Borrower or such Subsidiary of Borrower, and such
Inventory has been completed in accordance with the Account Debtor's
specifications (if any) and delivered to and accepted by the Account Debtor,
such Account Debtor has not refused to accept and has not returned or offered to
return any of the Inventory, or has not refused to accept any of the services,
which are the subject of such Account, and Borrower or such Subsidiary has
possession of, or has delivered to Agent at Agent's reasonable request, shipping
and delivery receipts evidencing delivery of such Inventory;
(D) it is evidenced by the initial invoice rendered to the Account Debtor
thereunder, and (i) is due and payable within 30 days after the date of the
invoice and does not remain unpaid 60 days past the due date thereof, or (ii)
with respect to Accounts aggregating in face amount not more than the lesser of
(x) $2,000,000.00 and (y) 10% of all Eligible Accounts, is due and payable
within 90 days after the date of such invoice and does not remain unpaid past
the due date thereof; provided, however, that if more than 25% of the aggregate
dollar amount of invoices owing by a particular Account Debtor (excluding Hog
Slat, Inc. and FarmPro, Inc.) remain unpaid 90 days past the due dates thereof,
then all Accounts owing by that Account Debtor shall be deemed ineligible;
(E) it is not subject to any prior assignment, claim, lien, security
interest or encumbrance whatsoever, other than Permitted Liens and the security
interest granted to Agent hereunder;
(F) it is a valid, legally enforceable and unconditional obligation of the
Account Debtor thereunder, and is not subject to setoff, counterclaim, credit,
allowance or adjustment by such Account Debtor, or to any claim by such Account
Debtor denying liability thereunder in whole or in part;
(G) it does not arise out of a contract or order which fails in any
material respect to comply with the requirements of applicable Law;
(H) the Account Debtor thereunder is not a director, officer, employee or
agent of Borrower or such Subsidiary of Borrower, or Affiliate or Subsidiary of
Borrower or such
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Subsidiary, unless the Accounts due from such Account Debtor are approved in
writing by Agent as Eligible Accounts;
(I) it is not an Account with respect to which the Account Debtor is the
United States of America or any department, agency or instrumentality thereof,
unless Borrower or such Subsidiary of Borrower, as applicable, assigns its right
to payment of such Account to Agent pursuant to, and in full compliance with the
Assignment of Claims Act of 1940, as amended;
(J) with respect to a Domestic Account Debtor, it is not an Account with
respect to which the Account Debtor is located in a state which requires
Borrower or such Subsidiary of Borrower, as a precondition to commencing or
maintaining an action in the courts of that state, either to (i) receive a
certificate of authority to do business and be in good standing in such state,
or (ii) file a notice of business activities report or similar report with such
state's taxing authority, unless (x) Borrower or such Subsidiary, as applicable,
has taken one of the actions described in clause (i) or (ii), as appropriate,
(y) the failure to take one of the actions described in either clauses (i) or
(ii) may be cured retroactively by Borrower or such Subsidiary at its election
so as to permit such action to be commenced or maintained, or (z) Borrower or
such Subsidiary has proven, to Agent's satisfaction, that it is exempt from any
such requirements under any such state's laws;
(K) it is an Account which arises out of a sale or services made or
provided in the ordinary course of the business of Borrower or such Subsidiary
of Borrower;
(L) it is not an Account with respect to which the Account Debtor's
obligation to pay is conditional upon the Account Debtor's approval of the goods
or services or is otherwise subject to any repurchase obligation or return
right, as with sales made on a xxxx-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;
(M) it is not an Account (i) with respect to which any representation or
warranty contained in this Agreement is untrue or (ii) which violates any of the
covenants of Borrower or such Subsidiary of Borrower contained in this Agreement
or any other Document; and
(N) it is not an Account with respect to which the prospect of payment or
performance by the Account Debtor is or will be impaired, as reasonably
determined by Agent.
"Eligible Assignee" shall mean (A) any time an Event of Default shall have
occurred and be continuing, any commercial bank or other Person as to whom Agent
gives its consent, and (B) any other time, any commercial bank or other Person
as to whom Agent and Borrower each gives its consent; provided, however, in the
case of Borrower, such consent shall not be unreasonably withheld or delayed.
"Eligible Inventory" shall mean Inventory of Borrower or any Subsidiary of
Borrower which meets and continues to meet, the following requirements:
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(A) it is owned by Borrower or such Subsidiary of Borrower and, other than
Inventory of the type described in clause (B)(ii) of this definition, the Agent
has a valid, perfected, first-lien security interest in it;
(B) it is either located at (i) one of the premises listed on Schedule 2 or
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in any written notice to Agent pursuant to Section 4.08(C) and is not in transit
except to any other location set forth on Schedule 2 or in any written notice to
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Agent pursuant to Section 4.08(C) or (ii) at any location other than those
specified in clause (i), provided that value of such Inventory does not exceed
the sum of $6,000,000 in the aggregate (valued at the lower of cost or market)
as of any date;
(C) it is not subject to any prior assignment, claim, lien, security
interest or encumbrance whatsoever, other than Permitted Liens and the security
interest granted to Agent hereunder;
(D) it is raw materials, work-in-process or finished goods which is of
good, merchantable and first-grade quality, which is not materially damaged,
second-grade, second hand, out-of-style, discontinued or reconditioned, and
meets all standards imposed by any governmental agency, or department or
division thereof having regulatory authority over such materials or goods, its
use or sale; and is currently salable in the ordinary course of business;
(E) it is not stored with a bailee, consignee, warehouseman, processor or
similar party, or on premises leased by Borrower or such Subsidiary of Borrower,
unless: (i) set forth on Schedule 2 or Agent has given its written approval
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(which shall not be unreasonably withheld, delayed or conditioned); and (ii) (w)
if the Inventory is on consignment, Borrower or such Subsidiary of Borrower, as
applicable, has made the appropriate consignment filing(s) as prescribed by the
Uniform Commercial Code, (x) if the Inventory is located on premises leased by
Borrower or such Subsidiary of Borrower, Borrower or such Subsidiary, as
applicable, shall have delivered to Agent the landlord's lien waiver agreement
in form reasonably satisfactory to Agent; (y) if the Inventory is in the
possession of a processor or a public warehouseman, Borrower or such Subsidiary
of Borrower, as applicable, shall have delivered to such processor or
warehouseman a notice of Agent's security interest in form reasonably
satisfactory to Agent, or (z) in the case of any other bailment of Inventory,
Borrower or such Subsidiary of Borrower has caused the bailee to issue and
deliver to Agent such documents as Agent shall reasonably require;
(F) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue or (B)
which violates any of the covenants of Borrower or such Subsidiary of Borrower
contained in this Agreement; and
(G) it is accounted for by Borrower or such Subsidiary of Borrower on a
last-in, first-out basis under generally accepted accounting principles applied
on a consistent basis.
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"Debt Service Coverage Ratio" shall mean, for any period, the ratio of (A)
EBITDA in respect of such period to (B) Borrower's cash interest expense for the
previous twelve month period plus scheduled debt amortization for the next
succeeding such period (both determined in accordance with GAAP).
"Environmental Laws" shall mean any federal, state or local law, statute,
ordinance, order, decree, rule or regulation relating to releases, discharges,
emissions or disposals to air, water, land or groundwater; to the withdrawal or
use of groundwater; to the use, handling or disposal of polychlorinated
biphenyls, asbestos or urea formaldehyde; to the treatment, storage, disposal or
management of Hazardous Substances, to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances; and to the transportation,
storage, disposal, management or release of gaseous or other liquid substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 USC (S)9601 et seq., the Resource, Conservation and Recovery Act of
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1976, as amended by the Hazardous Solid Waste Amendments of 1984, 42 USC (S)6901
et seq., the Toxic Substances Control Act, 15 USC (S)2601 et seq., the
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Occupational Safety and Health Act of 1970, 29 USC (S)651 et seq., the Clean Air
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Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 USC (S)7401
et seq., and the Federal Water Pollution Control Act, as amended by the Clean
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Water Act of 1977, 33 USC (S)1251 et seq., and all rules, regulations and
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guidance documents promulgated pursuant thereto or published thereunder.
"Equipment" shall mean all equipment, machinery, fixtures and supplies and
any parts, accessories, attachments, fittings, special tools, additions and
accessories thereto and any renewals, substitutions or replacements thereof,
including licensed vehicles, plant trucks, furniture, office equipment and minor
plant equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean (A) any corporation which is now, or was at
any time, a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as Borrower or any
predecessor thereof; (B) any partnership, trade or business (whether or not
incorporated) which is now, or was at any time, under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with Borrower or any
predecessor thereof; and (C) any entity, which is now, or was at any time, a
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as either Borrower or any predecessor
thereof, or any corporation described in clause (A) or any partnership, trade or
business described in clause (B).
"Euro-Dollar Business Day" shall mean any day on which commercial banks are
open for domestic and international business (including dealing in dollar
deposits) in London and Chicago.
"Euro-Dollar Lending Office" shall mean as to each Bank such branch or
affiliate of the Bank as it may designate from time to time as its Euro-Dollar
Lending Office.
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"Euro-Dollar Loans" shall mean Loans which bear interest at a Euro-Dollar
Rate.
"Euro-Dollar Rate" shall mean, at the time of determination, the Adjusted
LIBOR Rate then in effect plus the Applicable Margin.
"Event of Default" shall have the meaning specified in Section 9.01.
"FRB" shall mean the Board of Governors of the Federal Reserve System or
any successor thereto.
"Federal Funds Rate" shall mean, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of three leading brokers of Federal funds transactions in New York
City selected by Agent.
"Financial Statements" shall mean, at any time, the audited financial
statements of Borrower for its most recently ended fiscal year and the unaudited
financial statements for the most recently ended accounting period of Borrower.
"Floating Rate" shall mean, at the time of determination, a floating per-
annum rate equal to the greater of (A) Prime Rate then in effect plus the
Application Margin or (B) the Federal Funds Rate plus the Applicable Margin.
"Floating Rate Loan" shall mean a Loan which is not a Euro-Dollar Loan.
"Funded Debt" shall mean, with respect to any Person, (A) all Debt of such
Person for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of more than one year
from the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods of more than one year from the
date of origin), including all payments in respect thereof that are required to
be made within one year from the date of any determination of Funded Debt,
whether or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP, but in any event including the Debt
outstanding hereunder from time to time and under the Subordinated Notes, (B)
all capitalized rentals of such Person, and (C) all guaranties by such Person of
Funded Debt of others. For purposes of determining Funded Debt hereunder, there
shall be included the average usage by Borrower under the Revolving Credit Loan
Commitment for the four calendar quarters immediately preceding determination,
as determined in the sole discretion of Agent.
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"Funded Debt to EBITDA Ratio" shall mean the ratio of (A) Borrower's total
Funded Debt determined in accordance with GAAP to (B) EBITDA.
"GAAP" shall mean generally accepted accounting principles consistently
applied throughout the period involved.
"General Intangibles" shall mean all general intangibles, including choses
in action, designs, patents, trademarks, service marks, trade names, good will,
applications for registration, registrations, licenses, franchises, customer
lists, and all other intangible property of every nature (other than Accounts).
"Governmental Authority" shall mean the United States of America, any
state, territory or district thereof, and any other political subdivision or
body politic created pursuant to any applicable Law, and any court, agency,
department, commission, board, bureau or instrumentality of any of the
foregoing.
"Grain King" a Delaware corporation that is a Subsidiary of Borrower to
which Borrower intends to convey all or substantially all of the assets of
Borrower's Grain King operating division within 120 days subsequent to Closing.
"Hazardous Substances" shall mean (A) any hazardous or toxic substance,
chemical or waste, or any pollutant or contaminant defined as such in any now or
hereafter existing Environmental Law, (B) asbestos, (C) radon, (D) petroleum,
crude oil or any fraction thereof which is not otherwise specifically listed or
designated as a hazardous substance under any Environmental Laws, (E)
polychlorinated biphenyls, (F) explosives and/or (G) radioactive materials.
"Indemnification Liabilities" shall have the meaning specified in Section
11.05.
"Indemnified Person" shall have the meaning specified in Section 11.05.
"Indenture" shall mean the Indenture dated as of November 5, 1997 between
Borrower and LaSalle National Trust, N.A., as trustee, relating to the
Subordinated Notes.
"Interest Period" shall mean with respect to each Euro-Dollar Loan:
(A) initially, the period commencing on the date of such Euro-Dollar Loan
and ending one, two, three or six months thereafter, as Borrower may elect; and
(B) thereafter, each period commencing on the last day of the next
preceding Interest Period for such Euro-Dollar Loan and ending one, two, three
or six months thereafter, as Borrower may elect;
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provided that:
(i) any Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day, unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Euro-
Dollar Business Day;
(ii) any Interest Period which begins on the last Euro-Dollar Business
Day, of the calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (iii) below, end on the last Euro-Dollar Business Day
of a calendar month;
(iii) any Interest Period in respect of a Revolving Credit Loan which
begins prior to the Revolving Credit Loan Termination Date and would otherwise
end after the Revolving Credit Loan Termination Date shall end on such date.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Inventory" shall mean all inventory, goods, merchandise and other personal
property held for sale or lease, or furnished or to be furnished under any
contract of service, or held as raw materials, work in process or material used
or consumed, or to be used or consumed, in business.
"Issuing Bank" shall mean LNB in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.
"Laws" shall mean any federal, state or local law, statute, ordinance,
order, decree, rule or regulation.
"Letter of Credit" shall mean a commercial or stand-by letter of credit
issued pursuant to the Revolving Credit Loan Commitment.
"Letter of Credit Obligations" shall have the meaning specified in Section
2.01(C).
"Loans" shall mean the Revolving Credit Loans and the Term Loan.
"London Interbank Offered Rate" or "LIBOR Rate" shall mean, with respect to
any Interest Period, the rate per annum (rounded upward, if necessary, to the
nearest 1/16 of 1%) as set by Agent as the rate of interest at which deposits in
dollars are offered by the Euro-Dollar Lending Office of Agent to other prime
banks in the London interbank market at approximately 11:00 a.m. two Euro-
Dollar Business Days prior to the first day of such Interest Period in an amount
approximately equal to the aggregate principal amount of the Euro-Dollar Loan to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
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"LNB" shall mean LaSalle National Bank in its individual capacity.
"Majority Banks" shall mean, as of any date, Banks holding at least 60% of
the aggregate Commitments as described on Schedule 6 as of such date.
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"Multiemployer Plan" shall have the meaning ascribed to it in Section
4001(a)(3) of ERISA.
"Non-Use Fee" shall have the meaning specified in Section 2.06(B).
"Note" or "Notes" shall mean the Revolving Credit Note and the DMC
Revolving Credit Note, and/or the Term Note, or any of them.
"Notice of Revolving Credit Borrowing" shall have the meaning specified in
Section 2.01(B).
"Obligations" shall mean, with respect to any Person, all of such Person's
liabilities, obligations and indebtedness to any Bank or Agent of any and every
kind and nature, including the Loans, such Person's other liabilities and
obligations to any Bank or Agent under this Agreement, such Person's
reimbursement obligations in respect of letters of credit issued for the account
of such Person, and such Person's liabilities and obligations to any Bank or
Agent under any other agreement, document or instrument, (including any guaranty
of another Person's Obligations), whether heretofore, now or hereafter owing,
arising, due or payable by or from such Person to any Bank or Agent, howsoever
evidenced, created, incurred, acquired or owing, and whether joint, several,
primary, secondary, direct, contingent, fixed or otherwise.
"Originator" shall have the meaning specified in Section 11.18(D).
"Participant" shall have the meaning specified in Section 11.18(D).
"Payment Date" shall mean (A) the last day of an Interest Period in the
case of any Interest Period other than an Interest Period as to which Borrower
has elected a six-month Interest Period and (B) as to an Interest Period as to
which Borrower has elected a six-month Interest Period, the last day of each of
the third and sixth months of such Interest Period.
"Payment Office" shall mean, with respect to any Bank, the address for
payments set forth for such Bank on Schedule 6 or such other address as such
----------
Bank may from time to time specify in accordance with Section 11.07.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Liens" shall mean:
13
(A) liens for taxes, assessments or other governmental charges for the then
current year which are not yet due or delinquent;
(B) liens for taxes, assessments or other governmental charges already due,
but the validity of which is being contested at the time in good faith by
appropriate proceedings and for which adequate reserve is maintained in
accordance with GAAP, and as to which no notice or claim of lien has been filed;
(C) statutory liens in favor of landlords, carriers, warehousemen and other
suppliers of services or materials for sums incurred in the ordinary course of
business, provided such sums are not delinquent and do not exceed the sum of
$250,000.00 in the aggregate at any time, and other liens of such type which
have been improperly asserted and which Borrower is contesting in good faith;
(D) liens for worker's compensation awards not due or delinquent, and other
liens of such type which have been improperly asserted and which Borrower is
contesting in good faith;
(E) pledges or deposits to secure obligations under worker's compensation
laws or similar legislation;
(F) deposits to secure public, statutory or insurance-related obligations
of the Person whose assets are subject to such liens;
(G) liens securing purchase money financing for Equipment acquired by
Borrower after the date hereof, provided that (i) each such lien secures only
the purchase price of the Equipment so encumbered thereby, (ii) the aggregate
amount of new financing secured thereby and incurred after the date of this
Agreement does not exceed $2,500,000.00 in any calendar year, and (iii) neither
the aggregate amount secured by all such liens nor the aggregate value of the
Equipment so encumbered exceeds $10,000,000.00 at any time.
(H) mortgages, pledges, encumbrances, security interests, assignments and
liens listed on Schedule 1, or approved in writing by Agent subsequent to the
----------
date hereof, mortgages securing only refinancings of the real estate comprising
Borrower's existing facility in Paris, Illinois (provided that the aggregate
amount secured does not exceed 75% of the appraised fair market value of such
real estate);
(I) mortgages, pledges, encumbrances, security interests, assignments or
liens in favor of Agent; and
(J) mortgages, pledges, encumbrances, security interests, assignments or
liens securing any Subsidiary Borrower' Debt of the type described in Section
6.14(G).
14
"Permitted Holders" shall mean J. Xxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxx X. Xxxx
and Xxxxxx X. Xxxxxxx or their successors and assigns who are Affiliates of the
Permitted Holders, members of their families and their heirs or executors.
"Person" shall mean any individual, corporation, partnership, association,
limited liability company, joint-stock company, trust, unincorporated
association, joint venture, Governmental Authority, or any other similar entity.
"Plan" shall mean any employee benefit plan or other plan for any employees
of Borrower or any employees of any Subsidiary of Borrower or any ERISA
Affiliate.
"Post-Term L/Cs" shall have the meaning specified in Section 2.01(C).
"Prime Rate" shall mean the rate of interest referred to by Agent from time
to time as its prime rate, as fixed by the management of Agent for the guidance
of its loan officers, whether or not such rate is otherwise published, with each
change in such prime rate to take effect on the same day as the determination of
each change by Agent. Such rate is not necessarily the most favorable rate
offered by Agent to its borrowers.
"Replacement Bank" shall have the meaning specified in Section 2.02(M).
"Pro Rata Share" shall mean as to any Bank at any time, the percentage
equivalent (expressed as a decimal rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the combined Commitments of all Banks.
"Reportable Event" shall mean any of the events described in Section 4043
of ERISA, excluding subsections 4043(b)(2) and (b)(3) thereof.
"Reserve Percentage" shall mean, for the purpose of computing the Adjusted
LIBOR Rate the reserve requirement imposed by the FRB under Regulation D on
Eurocurrency liabilities (as such term is defined in Regulation D) for the
applicable Interest Period as of the first day of such Interest Period, but
subject to any amendments of such reserve requirement by such Board or its
successor, and taking into account any transitional adjustments thereto becoming
effective during such Interest Period. For purposes of this definition, Euro-
Dollar Loans shall be deemed to be Eurocurrency liabilities as defined in
Regulation D without benefit of or credit for prorations, exemptions or offsets
under Regulation D.
"Revolving Credit Loan" shall have the meaning specified in Section
2.01(A).
"Revolving Credit Loan Commitment" shall have the meaning specified in
Section 2.01(A).
"Revolving Credit Loan Termination Date" shall have the meaning specified
in Section 2.01(A).
15
"Revolving Credit Note" shall have the meaning specified in Section
2.01(E).
"Senior Debt to EBITDA Ratio" shall mean the ratio of (x) all Funded Debt
of Borrower and its Subsidiaries, determined on a consolidated basis, other than
Subordinated Debt and (y) to EBITDA.
"Special Collateral" shall have the meaning specified in Section 4.06.
"Stock" shall mean all shares, options, interests, participations or other
equivalents, howsoever designated, of or in a corporation, partnership or
similar entity, whether voting or nonvoting, including common stock, warrants,
preferred stock, convertible debentures, partnership interests and all
agreements, instruments and documents convertible, in whole or in part, into any
one or more of the foregoing.
"Stockholder Agreements" shall mean each of the Stock Restriction and Buy-
Sell Agreements, made as of June 6, 1996 by and between each of the Permitted
Holders of Borrower with respect to Borrower's voting Stock, as amended, and the
Stock Restriction and Buy-Sell Agreement made as of January 1, 1997 among
Borrower, the Permitted Holders and other persons named therein with respect to
Borrower's non-voting Stock, as amended.
"Stockholders" shall mean those parties named as the stockholders of
Borrower on Schedule 5.
----------
"Subordinated Debt" shall mean any Debt of Borrower which is expressly
subordinated to the Obligations of Borrower pursuant to the terms of a written
agreement among Borrower, the Person to whom such Debt is owed and the Bank, the
terms of which are satisfactory to the Bank in all respects; including the Debt
evidenced by the Subordinated Notes.
"Subordinated Notes" shall mean the $100,000,000 aggregate principal amount
of 10.25% Senior Subordinated Notes due 2007 issued under the Indenture.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or similar entity of which fifty percent (50%) or more of the
outstanding Stock having ordinary voting power is at the time, directly or
indirectly, owned by such Person and/or one or more of such Person's
Subsidiaries (irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"Subsidiary Borrowers" shall mean DMC and Grain King.
"Subsidiary Borrower Revolving Credit Note" shall mean the note of DMC and
Grain King delivered in accordance with Section 2.01.
16
"Subsidiary Borrower Revolving Credit Loans" shall mean Revolving Credit
Loans advanced to DMC and Grain King pursuant to Section 2.01.
"Supplemental Documentation" shall mean all agreements, instruments,
documents, financing statements, warehouse receipts, schedules of accounts
assigned, mortgages, certificates of title and other written matter necessary or
requested by Agent to create, evidence, enforce, perfect or maintain perfected
the Banks' security interest in the Collateral and to consummate the
transactions contemplated in or by this Agreement and the other Documents.
"Term Loan" shall have the meaning specified in Section 2.01(F).
"Term Loan Termination Date" shall have the meaning specified in Section
2.01(G).
"Term Note" shall have the meaning specified in Section 2.01(I).
"Tranche" shall have the meaning specified in Section 2.01(I).
"UCC" shall mean the Uniform Commercial Code as in effect in Illinois.
"Year 2000 Problem" shall mean the risk that computer applications and
embedded microchips in non-computing devices may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date on or after December 31, 1999)
1.02 Other Interpretative Provisions. Words and phrases not defined
---------------------------------
herein shall be construed according to their ordinary meanings as the context
requires. The following words and phrases shall be construed as follows: (i)
"at any time" shall be construed as "at any time or from time to time"; (ii)
"any" shall be construed as "any and all"; (iii) "include" and "including" shall
each be construed as "including but not limited to"; (iv) "will" and "shall"
shall each be construed as mandatory; (v) "control," "controlling" and
"controlled" shall be construed as the possession, directly or indirectly, of
the power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise; and (vi)
"may" shall be construed as meaning that a party "may, but shall not be
obligated to," perform an act or do anything. Except as otherwise specifically
indicated, all references to Article or Section numbers and letters shall refer
to Articles and Sections of this Agreement. The words "hereby," "hereof,"
"hereto," "herein," and "hereunder" and any similar terms shall refer to this
Agreement as a whole and not to any particular Article or Section. Words of the
masculine, feminine, or neuter gender shall mean and include the corresponding
words of other genders, and words implying the singular number shall mean and
include the plural number and vice versa. The Article and Section headings are
inserted in this Agreement for convenience only and are not intended, and shall
not be construed, to limit, enlarge, or affect the scope or intent of this
Agreement or the meaning of any provision hereof. All references to any
agreement or instrument (including this Agreement) shall be to such agreement or
instrument as in effect from time to time, including any amendments,
replacements, restatements and/or modifications thereof and/or supplements
thereto.
17
1.03 Accounting Principles. Any accounting terms used in this Agreement
----------------------
which are not specifically defined shall have the meaning customarily given them
in accordance with GAAP; provided, however, that, in the event that changes in
generally accepted accounting principles shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by Borrower's certified public accountants, to
the extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after such date as Borrower and the
Banks shall have amended this Agreement to the extent necessary to reflect any
such changes in the financial covenants and other terms and conditions of this
Agreement.
1.04 UCC Governs. All other terms contained in this Agreement shall,
------------
when the context so indicates, have the meanings provided for by the UCC to the
extent the same are used or defined therein.
ARTICLE II. THE LOANS.
---------
2.01(A) Subject to the terms and conditions of this Agreement, the Banks
will make available to Borrower a revolving credit facility in an aggregate
amount not to exceed the lesser of (x) $55,000,000 or (y) the Borrowing Base
(the "Revolving Credit Loan Commitment"), pursuant to which each Bank may from
time to time: (i) make revolving credit advances to Borrower or (ii) make
revolving credit advances to the Subsidiary Borrowers (a "Subsidiary Borrower
Revolving Credit Loan"), but in the aggregate, not to exceed the amount set
forth on Schedule 6 (together with the Term Loan Commitment shown on Schedule 6,
---------- ----------
and as the same may be reduced by one or more assignments under Section 11.18,
such Bank's "Commitment"). Any revolving credit advance made pursuant to the
Revolving Credit Loan Commitment as described in clauses (i) or (ii) of the
immediately preceding sentence is referred to herein as a "Revolving Credit
Loan." The amount otherwise available for borrowing under the Revolving Credit
Loan Commitment shall be reduced by: (i) the aggregate face amounts of all
Letters of Credit issued by the Issuing Bank for the account of Borrower and
outstanding or drawn but unreimbursed from time to time, which shall in no event
exceed $20,000,000 at any time, (ii) the amount of Subsidiary Borrower Revolving
Credit Loans outstanding, which in no event shall exceed (x) $10,000,000 in the
case of DMC and $3,000,000 in the case of Grain King or (y) $13,000,000 in the
aggregate at any time, (iii) the amount of Debt of FarmPro, Inc. guaranteed by
Borrower, if any, and (iv) the amount of Revolving Credit Loans outstanding.
Notwithstanding anything contained herein to the contrary, for at least 30
consecutive days during each calendar year commencing with the calendar year
1998, the aggregate amount of cash advances outstanding under the Revolving
Credit Loan Commitment shall be repaid in full and no amounts shall be advanced
and outstanding thereunder.
The face amount of all Letters of Credit issued by the Issuing Bank for the
account of Borrower under the Original Loan Agreement that are outstanding or
drawn but unreimbursed as of the date hereof shall be deemed Letters of Credit
issued pursuant to, and subject to the terms,
18
conditions and limitations of, this Agreement. The Revolving Credit Loan
Commitment shall terminate on August 1, 2003 (the "Revolving Credit Loan
Termination Date"). The Revolving Credit Loans made by each Bank shall be
evidenced by one or more loan accounts or records maintained by such Bank in the
ordinary course of business. The loan accounts or records maintained by Agent
and each Bank shall be conclusive and binding evidence of the amount of the
Revolving Credit Loans made by the Banks to Borrower and the interest and
payments thereon, absent manifest error. Any failure so to record or any error
in doing so shall not, however, limit or otherwise affect the Obligations of
Borrower hereunder to pay any amount owing with respect to the Loans or Letter
of Credit Obligations.
(B) Borrower may, from time to time, request whether for its own account
or for the Subsidiary Borrowers, by giving notice ("Notice of Revolving Credit
Borrowing") to Agent prior to 11:00 a.m., that Revolving Credit Loans be made in
an aggregate amount specified, in a form specified (cash disbursement or
continuation of outstanding Loan) and on the Business Day specified in such
request (which as to Euro-Dollar Loans must also be a Euro-Dollar Business Day).
Floating Rate Loans may be disbursed on the date requested. If Borrower elects
whether for its own account or for the Subsidiary Borrowers to pay interest on
any Revolving Credit Loan based on a Euro-Dollar Rate, notice must be given to
Agent at least three Euro-Dollar Business days prior to the requested
disbursement date. Any such notice must also specify the Interest Period
selected by Borrower for each Loan based on a Euro-Dollar Rate and each request
for a Euro-Dollar Loan and Interest Period with respect thereto shall be
irrevocable once given. Not later than 1:00 p.m., Chicago time, on the date
specified in such request, the Bank shall make the Revolving Credit Loan(s) to
Borrower or to the Subsidiary Borrowers in the aggregate amount specified in
such request, or convert or continue the outstanding Loan, as the case may be.
Agent will promptly notify each Bank of its receipt of any Notice of Revolving
Credit Borrowing, conversion or continuation of an outstanding Loan, of the name
of the applicable Borrower and of the amount of such Bank's Pro Rata Share of
that borrowing. Each Bank will make the amount of its Pro Rata Share of each
borrowing available to Agent for the account of the applicable Borrower at
Agent's Payment Office by 11:00 a.m. (Chicago time) on the borrowing date
requested by Borrower in funds immediately available to Agent. The proceeds of
all Revolving Credit Loans will then be made available to Borrower by Agent by
wire transfer in accordance with written instructions provided to Agent by such
Borrower.
After giving effect to any Revolving Credit Loan borrowings, unless Agent
shall otherwise consent, there may not be more than ten different Interest
Periods in effect in respect of all Loans together then outstanding.
(C) The proceeds of Revolving Credit Loans shall be disbursed by deposit
to Borrower's account maintained at LNB or otherwise in accordance with the
written instructions of Borrower or the other provisions of this Agreement.
Revolving Credit Loans shall be used by Borrower solely for its working capital
and general corporate purposes, Letters of Credit for Borrower or for the
Subsidiary Borrowers' working capital and general corporate purposes. The
Issuing Bank may from time to time issue one or more Letters of Credit at the
request and for the
19
account of Borrower, provided: (i) the aggregate amount of Letters of Credit
outstanding including those being requested plus amounts drawn under Letters of
Credit but not repaid to the Bank plus the principal sum of advances of
Revolving Credit Loans outstanding plus the amount of Subsidiary Borrower
Revolving Credit Loans outstanding plus the amount of Debt of Farm Pro, Inc.
guaranteed by Borrower does not exceed the lesser of (x) $55,000,000 or (y) the
Borrowing Base; (ii) Borrower pays to the Issuing Bank a Letter of Credit
issuance fee equal to the Applicable Margin; (iii) Borrower executes and
delivers to the Issuing Bank a Letter of Credit Application in the form of
Exhibit G, including a LaSalle L/C Connection Agreement in the form of Exhibit
--------- -------
H;(iv) the Issuing Bank is not restricted or prohibited from issuing such Letter
-
of Credit by any Law, regulation or policy of any Governmental Authority or by
any policy of the Issuing Bank, and (v) the aggregate amount of Letters of
Credit outstanding including those being requested plus amounts drawn under
Letter of Credit but not repaid to the Issuing Bank does not exceed the lesser
of (x) $20,000,000 or (y) the Borrowing Base. Borrower's Obligations under this
Agreement shall include reimbursement obligations regarding Letters of Credit
("Letter of Credit Obligations") and shall be secured by the Collateral in
accordance with Article IV and any other collateral pledged to secure such
Obligations pursuant to any of the Documents.
Borrower agrees to reimburse the Issuing Bank on demand for each payment
made by the Issuing Bank under or pursuant to any Letter of Credit or any draft
drawn on the Issuing Bank pursuant to a Letter of Credit. The Issuing Bank may,
in its sole discretion, provide for such reimbursement by advancing the amount
thereof to Borrower as a Revolving Credit Loan. In the event the Issuing Bank
does not, in accordance with the terms and conditions hereof, make a Revolving
Credit Loan for reimbursement, Borrower agrees to reimburse the Issuing Bank in
the amount of such payment and shall also pay to the Issuing Bank, on demand,
interest at the rate provided in Section 2.02(B) on any amount paid by the
Issuing Bank under or pursuant to any Letter of Credit or any draft drawn on the
Issuing Bank pursuant to a Letter of Credit from the date of payment until the
date of reimbursement to the Issuing Bank.
Notwithstanding anything to the contrary herein or in any Letter of Credit
application of Borrower or other Document, upon the occurrence of an Event of
Default, an amount equal to the aggregate amount of the outstanding Letters of
Credit and all drawn but unreimbursed Letters of Credit shall, at the Issuing
Bank's option and without demand upon or further notice to Borrower, be deemed
(as between the Issuing Bank and Borrower) to have been paid or disbursed by the
Issuing Bank under the Letters of Credit (notwithstanding that such amounts may
not in fact have been so paid or disbursed), and a Revolving Credit Loan to
Borrower in the amount of such Letter of Credit Obligations to have been made
and accepted, which Revolving Credit Loan shall be immediately due and payable.
In lieu of the foregoing, at the election of the Issuing Bank at any time after
an Event of Default, Borrower shall, upon the Issuing Bank's demand, deliver to
the Issuing Bank cash, or other collateral of a type satisfactory to the Issuing
Bank, having a value, as determined by the Issuing Bank in its reasonable
judgment, equal to the aggregate Letter of Credit Obligations. Any such
collateral and/or any amounts received by Issuing Bank in payment of the
Revolving Credit Loan made pursuant to this subparagraph shall be held by
Issuing Bank in a separate account appropriately designated as a cash collateral
account in relation to this
20
Agreement and the Letters of Credit and retained by the Issuing Bank as
collateral security for Borrower's Obligations in respect of this Agreement and
each of the Letters of Credit. Such amounts shall not be used by the Issuing
Bank to pay any amounts drawn or paid under or pursuant to any Letter of Credit,
but may be applied to reimburse the Issuing Bank for drawings or payments under
or pursuant to any Letter of Credit which the Issuing Bank has paid, or if no
such reimbursement is required, any cash collateral account established pursuant
to this paragraph following payment in full of all of the Obligations, which are
not (as determined by the Issuing Bank) to be applied to reimburse Bank for
amounts actually paid by the Issuing Bank in respect of Letter of Credit, shall
be returned to Borrower (after deduction of the Issuing Bank's reasonable
expenses).
Each Bank hereby purchases and takes from the Issuing Bank an undivided
participation and interest in and to each Letter of Credit, including any
existing Letters of Credit, ratably according to such Bank's Pro Rata Share,
with a corresponding interest in and to any guaranty relating to such Letter of
Credit and all collateral to which such Letter of Credit is entitled; provided,
however, that no Bank other than the Issuing Bank shall purchase or take any
undivided participation interest in and to any Letter of Credit issued by the
Issuing Bank that has an expiration date later than the Revolving Credit Loan
Termination Date.
This Agreement and any Letter of Credit application or other Document
regarding Letters of Credit shall be interpreted as supplemental to each other.
However, in the event of an express conflict in terms, the terms of this
Agreement shall govern.
No Letter of Credit shall (i) be issued after the Revolving Credit Loan
Termination Date and (ii) have an expiration date later than the Revolving
Credit Loan Termination Date.
Notwithstanding the above, the Issuing Bank will, upon Borrower's request,
issue for the account of Borrower Letters of Credit having terms which expire
after the expiration of the Revolving Credit Loan Termination Date ("Post-Term
L/Cs"). All security interests granted by Borrower to Agent under this
Agreement shall secure, inter alia, Letter of Credit Obligations in respect of
----- ----
all Post-Term L/Cs; provided, however, that upon payment and satisfaction in
full of all Obligations of Borrower in respect of the Revolving Credit Loans,
and further provided (1) no Event of Default and no event which, with the giving
of notice, the lapse of time, or both, would constitute an Event of Default,
exists, (2) all funding obligations of the Banks to Borrower have been
terminated, and (3) Borrower has no Obligations hereunder other than those in
respect of Post-Term L/Cs, Agent will, upon request of Borrower, release the
security interests granted by Borrower pursuant to this Agreement, provided that
Agent receives replacement cash collateral in an amount, covering such Letter of
Credit Obligations, and pursuant to such documents, as Agent shall deem
necessary in its sole discretion, (iii) no Post-Term L/Cs shall have a term
which expires more than three years after the expiration of the Revolving Credit
Loan Termination Date, and (iv) the aggregate face amounts of the Post-Term L/Cs
shall not exceed $6,000,000.00.
21
(D) All outstanding Revolving Credit Loans together with any accrued but
unpaid interest thereon shall be repaid in full on the Revolving Credit Loan
Termination Date. In addition, outstanding Revolving Credit Loans shall be
repaid immediately, without the necessity of any demand or notice from Agent or
any other Bank, if and to the extent that they exceed the limitations imposed by
Section 2.02(A). Borrower may repay and reborrow under the Revolving Credit
Loan Commitment subject to the terms and conditions of this Agreement.
(E) The Revolving Credit Loans shall be evidenced by notes in the form of
Exhibit A (each a "Revolving Credit Note") and Subsidiary Borrower Revolving
---------
Credit Loans shall be evidenced by notes in the form of Exhibit F (each a
---------
"Subsidiary Borrower Revolving Credit Note").
(F) Subject to the terms and conditions of this Agreement, the Banks shall
make to Borrower a term loan (the "Term Loan") in the aggregate principal amount
of $35,000,000.00. Each Bank's Pro Rata Share of the Term Loan is set forth on
Schedule 6. The disbursement of the Term Loan pursuant to this Section 2.01
----------
shall be made in accordance with the written instructions of Borrower on the
date hereof.
(G) The Term Loan shall be evidenced by notes, maturing on August 1, 2003,
(the "Term Loan Termination Date"), in the form of Exhibit B (each a "Term
---------
Note").
(H) The Term Loan shall be repaid by Borrower in 20 installments of
$1,250,000.00 each, payable on the first day of each September, December, March
and June hereafter, commencing September 1, 1998. Any principal outstanding
under the Term Loan, together with any interest thereon which is accrued but not
paid, shall be payable on the Term Loan Termination Date.
(I) Borrower may from time to time request that any portion of the Term
Loan (each a "Tranche") in excess of $1,000,000 (with increments of $500,000
above $1,000,000) bear interest at a Euro-Dollar Rate, upon at least three Euro-
Dollar Business Days' notice to Bank specifying the desired Interest Period to
be applicable to such Tranche in accordance with and subject to the mechanics
described in Section 2.01(B); provided, however, that in no event shall more
than six such Tranches be outstanding at any time.
2.02(A) Except as provided in Section 2.02(B), (i) while the Term Loan or
any portion thereof is a Euro-Dollar Loan, it shall bear interest at a per-annum
rate equal to the applicable Euro-Dollar Rate, and at other times it shall bear
interest at the applicable Floating Rate and (ii) while any Revolving Credit
Loan is a Euro-Dollar Loan, it shall bear interest at a per-annum rate equal to
the applicable Euro-Dollar Rate, and at other times it shall bear interest at
the applicable Floating Rate. Interest shall be calculated on the basis of a
360-day year, counting the actual number of days elapsed. Interest on the
Floating Rate Loans shall be paid quarterly in arrears on each September 1,
December 1, March 1 and June 1, commencing on September 1, 1998 and
22
continuing on the first day of each quarterly period thereafter. Interest on
each Euro-Dollar Loan shall be paid on the applicable Payment Date.
(B) Any Obligation of Borrower or the Subsidiary Borrowers which is not
paid when due, whether at stated maturity, by acceleration or otherwise, shall
bear interest payable on demand at the interest rate then in effect with respect
thereto plus two percent. In addition, after the occurrence of any Event of
Default and delivery to Borrower of Agent's notice to charge post-default
interest, all Obligations of Borrower and the Subsidiary Borrowers shall bear
interest at the highest rate provided for in the immediately preceding sentence.
(C) In the event Borrower or the Subsidiary Borrowers elect to pay
interest on any Loan based on a Euro-Dollar Rate, upon the expiry of the
applicable Interest Period, such Loan shall bear interest at the applicable rate
determined by reference to the Floating Rate unless Borrower or the Subsidiary
Borrowers repays such Loan on the Payment Date or Borrower or the Subsidiary
Borrower timely elects, in the manner provided herein, to pay interest based on
a Euro-Dollar Rate prior to such expiry.
(D) Notwithstanding any other provisions of this Agreement, if at any time
a Bank shall determine in good faith that any change in applicable law or
regulation or in the interpretation thereof makes it unlawful or unduly
burdensome for such Bank to make or continue to maintain any Euro-Dollar Loan,
then such Bank shall promptly give notice thereof to Agent and Borrower, and
such Bank's obligation to make, continue or effect by conversion such Euro-
Dollar Loan under this Agreement shall terminate until it is no longer unlawful
or unduly burdensome for such Bank to make such Euro-Dollar Loan. In such event,
Borrower and the Subsidiary Borrowers shall prepay on demand the outstanding
principal amount of the affected Euro-Dollar Loans, together with all interest
accrued thereon and all other amounts payable to such Bank under this Agreement;
provided, however, Borrower and the Subsidiary Borrowers may then elect to
borrow the principal amount of such Euro-Dollar Loans by means of a Floating
Rate Loan subject to the terms and conditions of this Agreement. If the
obligation of any Bank to make or maintain Euro-Dollar Loans has been so
terminated or suspended, Borrower may elect, by giving notice to such Bank
through Agent that all Loans which would otherwise be made by such Bank to such
Borrower as Euro-Dollar Loans shall be instead Floating Rate Loans.
(E) Notwithstanding any other provision of this Agreement to the contrary,
if prior to the commencement of any Interest Period any Bank shall determine (i)
that deposits in the amount of any Euro-Dollar Loan scheduled to be outstanding
are not available to such Bank in the relevant market or (ii) by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Adjusted LIBOR Rate, then such Bank shall
promptly give notice thereof to Agent and Borrower and the obligation of such
Bank to make or effect by conversion any such Euro-Dollar Loan in such amount
and for such Interest Period shall terminate until deposits in such amount and
for the Interest Period selected by Borrower shall again be readily available in
the relevant market and adequate and reasonable means exist for ascertaining the
Adjusted LIBOR Rate. Upon the giving of such notice, Borrower and the
Subsidiary
23
Borrowers may elect to either (i) pay or prepay, as the case may be, such
affected Loan together with all accrued interest thereon and all other amounts
payable to such Bank under Section 2.02(H) or (ii) convert such affected Loan to
a Floating Rate Loan, subject to all the terms and conditions of this Agreement.
(F) With respect to the Euro-Dollar Loans, if a Bank shall determine in
good faith that any change in any applicable law, treaty, regulation or
guideline (including Regulation D of the FRB) or any new law, treaty, regulation
or guideline, or any interpretation of any of the foregoing by any governmental
authority charged with the administration thereof or any central bank or other
fiscal, monetary or other authority having jurisdiction over the Bank or its
Euro-Dollar Lending Office or the Euro-Dollar Loans contemplated by this
Agreement (whether or not having the force of law) shall:
(i) impose, modify or deem applicable any reserve (but excluding with
respect to any Euro-Dollar Loan any reserve percentage included in
determining the applicable Adjusted LIBOR Rate), capital, special
deposit, compulsory loan, assessment or similar requirements against
assets held by, or deposits in or for the account of, or loans by,
or any other acquisition of funds or disbursements by, such Bank or
an office thereof;
(ii) subject such Bank, any Euro-Dollar Loan or the Note evidencing such
Euro-Dollar Loans to any tax (including any United States interest
equalization tax or similar tax however named applicable to the
acquisition or holding of debt obligations and any interest or
penalties with respect thereto), duty, charge, stamp tax, fee,
deduction or withholding in respect of this Agreement, any Euro-
Dollar Loan or any Note evidencing a Euro-Dollar Loan, except such
taxes as may be measured by the overall net income of such Bank or
its Euro-Dollar Lending Office and imposed by the jurisdiction, or
any political subdivision or taxing authority thereof, in which such
Bank's principal executive office or its Euro-Dollar Lending Office
is located;
(iii) change the basis of taxation of payments of principal and interest
due from Borrower to such Bank hereunder or under any Note
evidencing a Euro-Dollar Loan (other than by a change in taxation of
the overall net income of such Bank); or
(iv) impose on the Bank any penalty with respect to the foregoing or any
other condition regarding this Agreement, its disbursement, any
Euro-Dollar Loan or any Note evidencing a Euro-Dollar Loan except
for any penalty which results directly from the negligence or
misconduct of the Bank in requesting such reimbursement;
and such Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such Bank
of making or maintaining any Euro-
24
Dollar Loan hereunder or to reduce the amount of principal or interest received
by such Bank (without benefit of, or credit for, any prorations, exemptions,
credits or other offsets available under any such laws, treaties, regulations,
guidelines or interpretations thereof), then Borrower and the Subsidiary
Borrowers shall pay to such Bank on demand, from time to time as specified by
the Bank, such additional amounts as such Bank shall determine are sufficient to
compensate and indemnify such Bank for such increased cost or reduced amount;
provided that such Bank shall give prior notice of such increased cost or
reduced amount and Borrower and the Subsidiary Borrowers may at their option,
prepay such affected Euro-Dollar Loans together with the amount payable pursuant
to Section 2.03(H). If a Bank makes such a claim for compensation, it shall
provide to Borrower a certificate setting forth such increased cost or reduced
amount and the basis for such determination as a result of any event mentioned
herein and such certificate shall in the absence of manifest error, constitute
prima facie evidence as to the amount thereof.
(G) If prior to any Interest Period a Bank shall have determined (which
determination shall be conclusive and binding upon Borrower and the Subsidiary
Borrowers) that the method of computing the rate of interest applicable to any
Euro-Dollar Loan does not accurately reflect the cost to such Bank of making or
effecting by conversion any such Euro-Dollar Loan, then such Bank shall give
prompt telephonic, telex or telegraphic notice of such determination to Agent
and Borrower. After such notice and in the event Borrower or the Subsidiary
Borrowers desire to make or effect by conversion such Euro-Dollar Loan, during
the 30 calendar days next succeeding the giving of such notice, Borrower and the
affected Bank shall negotiate in good faith in order to arrive at a mutually
satisfactory method of computing the interest rate applicable to the Euro-Dollar
Loans hereunder, as the case may be, to be substituted for the interest rate
specified in this Agreement. If within such 30 day period Borrower and the
affected Bank shall agree in writing upon a substituted interest rate, then such
substituted interest rate shall be effective from the first day of the relevant
Interest Period for such Euro-Dollar Loan. If Borrower and the affected Bank are
unable to agree in writing upon a substituted rate within the above 30 day
period, then Borrower and the Subsidiary Borrowers shall on demand either (i)
prepay, without penalty or charge, the relevant Euro-Dollar Loans, in full, or
(ii) convert such Euro-Dollar Loans into Floating Rate Loans subject to all the
terms and conditions of this Agreement, and, in either case, shall pay interest
thereon from the date such Euro-Dollar Loan was made or effected by conversion
until such Euro-Dollar Loan is prepaid or converted, as the case may be, at the
rate per annum (rounded upward, if necessary, to the nearest whole multiple of
1/16 of 1%) which is equal to the sum of (i) 3.5% and (ii) the effective cost as
computed by the affected Bank of maintaining such Loan from deposits obtained in
the secondary market, together with all other amounts then due and payable to
the affected Bank under this Agreement. A certificate as to such effective cost
and the manner of the computation of such cost shall, in the absence of manifest
error, constitute prima facie evidence as to the amount thereof.
(H) In the event a Bank shall incur any loss, cost or expense (including
any loss of profit and any loss, cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Bank to
fund or maintain any Euro-Dollar Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to the Bank) as a result of:
25
(i) any payment (including any prepayment) of a Euro-Dollar Loan on a
date other than the last day of the then applicable Interest Period;
(ii) any failure by Borrower or the Subsidiary Borrowers to borrow a Euro-
Dollar Loan on the date specified in its notice given pursuant to
this Agreement;
(iii) any failure by Borrower or the Subsidiary Borrowers to make any
payment of principal or interest when due on any Euro-Dollar Loan,
whether at stated maturity, by acceleration or otherwise; or
(iv) the occurrence of any Event of Default;
then, upon the demand of the Bank, Borrower and the Subsidiary Borrowers shall
pay to such Bank such amount as will reimburse such Bank for such loss, cost or
expense to the extent such loss, cost or expense is not otherwise reimbursed by
the after-maturity interest rate specified in this Agreement or reimbursed
pursuant to Section 11.03. If a Bank makes such a claim for compensation, it
shall provide to Borrower a certificate setting forth the amount of such loss,
cost or expense in reasonable detail and the manner of computation of the same
and such certificate shall constitute, in the absence of manifest error, prima
facie evidence as to the amount thereof.
(I) Any Bank may, at its option, elect to make, fund or maintain its
Loans hereunder at the branch or office specified on the signature page hereto
or such other of its branches or offices as the Bank may from time to time
elect.
(J) Notwithstanding any provision of this Agreement to the contrary, such
Bank shall be entitled to fund and maintain its funding of all or any part of
the Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder as to Euro-Dollar Loans
shall be made as if the Bank had actually funded and maintained each Euro-Dollar
Loan during each Interest Period for such Euro-Dollar Loan through the purchase
of deposits in the relevant market having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Euro-Dollar Rate for
such Interest Period.
(K) The provisions of Section 2.02 shall survive for a period of six
months following the later of the termination of this Agreement and the payment
in full of the Revolving Credit Loans.
(L) Each Bank agrees that in making calculations and determinations under
Sections 2.02(F), (G) and (H), it will do so in good faith and will make
allocations, on an equitable basis, of amounts to be charged to Borrower and to
other customers of the Bank which have arrangements for LIBOR borrowings similar
to those hereunder.
26
(M) Each Bank shall promptly notify Borrower and Agent of any event of
which it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's sole judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by
Borrower to pay any amount pursuant to Section 2.02(G) or (ii) the occurrence of
any circumstances described in Sections 2.02(D), (E), or (F) (and, if any Bank
has given notice of any such event described in clause (i) or (ii) above and
thereafter such event ceases to exist, such Bank shall promptly so notify
Borrower and Agent). Without limiting the foregoing, each Bank will designate a
different funding office if such designation will avoid (or reduce the cost to
Borrower of) any event described in clause (i) or (ii) of the preceding sentence
and such designation will not, in such Bank's sole judgment, be otherwise
disadvantageous to such Bank.
If Borrower becomes obligated to pay additional amounts to any Bank
pursuant to Section 2.02(G), or any Bank gives notice of the occurrence of any
circumstances described in Sections 2.02(D), (E) or (F), Borrower may designate
another bank which is acceptable to Agent in its reasonable discretion (such
other bank being called a "Replacement Bank") to purchase the Loans of such
Bank and such Bank's rights hereunder, and to assume such Bank's Commitment and
other obligations hereunder, without recourse to or warranty by, or expense to,
such Bank, for a purchase price equal to the outstanding principal amount of the
Loans payable to such Bank plus any accrued but unpaid interest on such Loans
and all accrued but unpaid fees owed to such Bank and any other amounts payable
to such Bank under this Agreement, and to assume all the obligations of such
Bank hereunder, and, upon such purchase, such Bank shall no longer be a party
hereto or have any rights hereunder (other than indemnities and other similar
rights applicable to such Bank prior to the date of such assignment and
assumption) and shall be relieved from all obligations to Borrower hereunder,
and the Replacement Bank shall succeed to the rights and obligations of such
Bank hereunder.
2.03 Maximum Rate Permitted. If, at any time, the interest rate and other
-----------------------
charges imposed hereunder shall be deemed by any competent Governmental
Authority to exceed the maximum rate of interest permitted by any applicable
Laws, for such time as the interest and such charges would be deemed excessive,
its application shall be suspended and there shall be charged instead the
maximum rate of interest and charges permissible under such Laws.
2.04 Prepayment. Borrower may prepay the Term Loan without penalty,
-----------
premium or additional charge (except as provided in Sections 2.02(D) through
(H)) at any time and in whole or in part (but, if in part, then in an amount not
less than $1,000,000.00 or a whole multiple thereof).
2.05 Application of Payments. All payments, which are not prepayments,
------------------------
received from Borrower for payment on the Loans shall be applied by Agent first
to unpaid interest due and payable on the Term Loan, second to unpaid interest
due and payable on the Revolving Credit Loans, third to installments in respect
of the Term Loan then due or past due, fourth to the reduction of the principal
outstanding on the Revolving Credit Loans (Borrower may designate whether
payments are to be applied to other Revolving Credit Loans, and in the absence
of such
27
designation Agent may direct the application in its discretion), and fifth to
further reduction of the principal amount of the Term Loan in inverse order of
maturity.
2.06 Fees.
----
(A) Borrower shall pay Agent a closing fee in the amount, in the
manner and at the time set forth in the fee letter dated August 6, 1998 by and
between Agent and Borrower.
(B) Borrower shall pay Agent a fee (the "Non-Use Fee") equal to the
Applicable Margin per annum multiplied by the daily unused portion of the
Revolving Credit Loan Commitment. For purposes of calculating the Non-Use Fee as
provided in the immediately preceding sentence, any amount of Debt of FarmPro,
Inc. that is guaranteed by Borrower shall be deemed to be included as part of
the unused portion of the Revolving Credit Loan Commitment. The Non-Use Fee
shall be payable quarterly in arrears on the first day of each September,
December, March and June hereafter.
(C) Borrower shall pay an annual fee to Agent in the amount, in the
manner and at the time set forth in the fee letter dated August 6, 1998 by and
between Agent and Borrower.
(D) On the date of issuance of each standby Letter of Credit,
Borrower shall pay a fronting fee to the Issuing Bank in an amount equal to .15%
of the face amount of such Letter of Credit.
2.07 Payments by Borrowers. (A) All payments to be made by Borrower or
---------------------
Borrowing Subsidiary shall be made without set-off, recoupment or counterclaim.
Except as otherwise expressly provided herein, all payments by Borrower shall be
made to Agent for the account of the Banks at Agent's Payment Office, and shall
be made in U.S. dollars. Such payments shall be in immediately available in
funds and made no later than 11:00 a.m. (Chicago time) on the date specified
herein. Agent will promptly distribute to each Bank its Pro Rata Share (or other
applicable share as expressly provided herein) of such payment in like funds as
received. Any payment received by Agent later than the time specified above
applicable to such payment shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(B) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(C) Unless Agent receives notice from Borrower prior to the date on
which any payment is due to the Banks that a Borrower will not make such payment
in full as and when required, Agent may assume that such Borrower has made such
payment in full to Agent on such date in immediately available funds and Agent
may (but shall not be so required), in reliance upon
28
such assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent any Borrower has not made such
payment in full to Agent, each Bank shall repay to Agent on demand such amount
distributed to such Bank, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Bank until
the date repaid.
2.08 Payments by the Banks to Agent. (A) Unless Agent receives notice
------------------------------
from a Bank on or prior to the Closing with respect to such Borrower or, with
respect to any borrowing by Borrower after such Closing with respect to such
Borrower, at least one Business Day prior to the date of such borrowing, that
such Bank will not make available as and when required hereunder to Agent for
the account of Borrower the amount of that Bank's Pro Rata Share of the
borrowing, Agent may assume that each Bank has made such amount available to
Agent in immediately available funds on the borrowing date and Agent may (but
shall not be so required), in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to Agent in immediately available
funds and Agent in such circumstances has made available to Borrower such
amount, that Bank shall on the Business Day following such borrowing date make
such amount available to Agent, together with interest at the Federal Funds Rate
for each day during such period. A notice of Agent submitted to any Bank with
respect to amounts owing under this Section 2.08(A) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to Agent shall
constitute such Bank's Loan on the date of borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the Business Day
following the borrowing date, Agent will notify Borrower of such failure to fund
and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such borrowing.
(B) The failure of any Bank to make any Loan on any borrowing date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such borrowing date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any borrowing date.
2.09 Sharing of Payments, Etc. If, other than as expressly provided
------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it to
any Borrower or Letter of Credit Obligations for the account of any Borrower any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share (or other share
contemplated hereunder), such Bank shall immediately (a) notify Agent of such
fact, and (b) purchase from the other Banks such participations in the Loans
made by them to such Borrower or Letters of Credit issued for the account of
such Borrower as shall be necessary to cause such purchasing Bank to share the
excess payment pro rata with each of them; provided, however, that if all or any
portions of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together with an
amount equal to such paying Bank's
29
ratable share (according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Borrower agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of such Borrower in the amount of such
participation. Agent will keep records (which shall be conclusive and binding in
the absence of manifest error) of participations purchased under this Section
2.09 and will in each case notify the Banks following any such purchases or
repayments.
ARTICLE III. CONDITIONS PRECEDENT
--------------------
The obligation of the Banks to make the Loans and issue Letters of Credit
is subject to the following conditions precedent:
3.01 Conditions of Initial Loans and Letters of Credit. Borrower shall
--------------------------------------------------
have delivered or caused to be delivered to the Bank on or before the date of,
but prior to, any disbursement of Revolving Credit Loans and the Term Loan
(hereinafter called the "Closing"), the following, each to be satisfactory to
Agent in all respects:
(A) The documents, certificates and instruments listed on Schedule 7; and
----------
(B) Such other documents, certificates and evidence as Agent may request
to consummate the transactions contemplated hereby.
3.02 At the time of the Closing, at the time of each subsequent
disbursement under the Revolving Credit Loan Commitment or issuance of a Letter
of Credit, each of the following statements shall be true; and (a) at the
Closing, Borrower shall deliver to Agent a certificate dated the date of the
Closing, signed by an Authorized Borrower Representative, to such effect, and
(b) with respect to each subsequent Revolving Credit Loan, Borrower's or
Subsidiary Borrower's request for same shall be deemed to be Borrower's
representation to such effect at and as of the time such Revolving Credit Loan
is made.
(A) The representations and warranties set forth in this Agreement are
true and correct as of such date.
(B) No Event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage of time or both, would be an Event of Default.
(C) No material adverse change shall have occurred in the financial
condition of Borrower since the date of this Agreement.
30
(D) All liens on Collateral granted to Agent are and remain valid first
priority liens (subject only to Permitted Liens) in full force and effect.
ARTICLE IV. COLLATERAL SECURITY
-------------------
4.01 Collateral. The property in which a security interest is granted
-----------
pursuant to the provisions of Sections 4.02 and 4.03 is herein collectively
called the "Collateral." The Collateral, together with all of Borrower's other
property of any kind held by any Bank, shall stand as one general, continuing
collateral security for all Obligations of Borrower and may be retained by any
Bank until all such Obligations have been satisfied in full, and this Agreement
shall have been terminated.
4.02 Amounts Held by Banks. As security for the prompt satisfaction of all
----------------------
Obligations of Borrower, Borrower hereby assigns, transfers and sets over to
Agent on behalf of the Banks all of its right, title and interest in and to, and
grants Agent on behalf of the Bank's a lien on and a security interest in, all
amounts that may be owing from time to time by any Bank to Borrower in any
capacity, including but without limitation, any balance or share belonging to
Borrower of any deposit or other account with a Bank, which lien and security
interest shall be independent of any right of set-off which a Bank may have.
4.03 Further Collateral. As further security for the prompt satisfaction
-------------------
of all Obligations of Borrower, Borrower hereby assigns, transfers and sets over
to Agent on behalf of the Bank all of its right, title and interest in and to,
and grants to Agent on behalf of the Banks a lien on and security interest in,
all of its right, title and interest in and to the following, wherever located,
whether now owned or hereafter acquired or arising, together with all
replacements therefor, proceeds, including insurance proceeds, thereof and
products thereof:
(A) Accounts;
(B) Inventory;
(C) Equipment;
(D) rights as seller of goods and rights to returned, rejected or
repossessed goods;
(E) General Intangibles, including those described on Schedule 4;
----------
(F) all Stock of any Subsidiary of Borrower, whether now existing or
hereafter formed or acquired, other than any foreign Subsidiary of
Borrower;
(G) as to any foreign Subsidiary of Borrower (whether now existing or
hereafter formed or acquired), the maximum percentage of the Stock of
such Subsidiary
31
which may be pledged from time to time without causing Borrower to be
subject to U.S. income tax on the earnings and profits of such
Subsidiary; provided; however, that in the case of Avemarau, Borrower
shall pledge 49% of the Stock thereof to the Agent until December 31,
2001 and thereafter, the maximum percentage of the Stock thereof which
may be pledged from time to time without causing Borrower to be
subject to U.S. income tax on the earnings and profits of Avemarau;
and
(H) all books and records pertaining to any of the foregoing.
In addition and as further security, Borrower will execute and deliver to Agent
on behalf of the Banks security agreements and such other documents, including
financing statements, in connection herewith as shall be required by Agent.
4.04 First Liens. The liens created in Sections 4.02 and 4.03 shall be
------------
first and prior liens, subject only to Permitted Liens.
4.05 Representatives and Warranties Regarding Collateral. Borrower
----------------------------------------------------
represents and warrants to Agent and each Bank as follows:
(A) Borrower is the owner of the Collateral and grants the security
interest made in Sections 4.02 and 4.03 in consideration of value given by the
Banks, the sufficiency of which Borrower hereby acknowledges.
(B) Other than the security interests granted in Sections 4.02 and 4.03,
the Collateral is free from any lien, security interest, encumbrance or other
right, title or interest of any other Person except for Permitted Liens.
(C) All Collateral is kept solely at the location or locations identified
in Schedule 2. Except as specified on Schedule 2, no Collateral is or shall be
---------- ----------
kept, stored or maintained with a bailee, warehouseman, carrier or similar party
without Agent's prior written consent.
(D) With respect to Accounts of Borrower or any Subsidiary thereof, except
as otherwise disclosed by Borrower to Agent in writing:
(i) the Accounts are genuine, in all respects what they purport to be
and are not evidenced by a judgment;
(ii) the Accounts represent bona fide transactions completed in
accordance with the terms and provisions contained in the
invoices and other documents evidencing same;
32
(iii) the amounts thereof, which are shown on all such invoices and
statements evidencing same, are actually and absolutely owing
to Borrower and are not contingent for any reason;
(iv) to the best of Borrower's knowledge, there are no setoffs,
counterclaims or disputes existing or asserted with respect to
the Accounts and Borrower has not made any agreement with any
Account Debtor thereof for any deduction therefrom;
(v) to the best of Borrower's knowledge, there are no facts,
events or occurrences which in any way impair the validity or
enforceability of the Accounts or tend to reduce the amount
payable thereunder from the amount thereof;
(vi) to the best of Borrower's knowledge, all of the Account
Debtors have the capacity to contract and are solvent;
(vii) the services and/or goods sold giving rise to the Accounts are
not subject to any lien, claim, encumbrance or security
interest except that of Agent and except for Permitted Liens;
(viii) Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectability of the Accounts;
(ix) to the best of Borrower's knowledge, there are no proceedings
or actions which are threatened or pending against any Account
Debtor which might result in a material adverse change in such
Account Debtor's financial condition; and
(x) none of the Accounts is pursuant to an invoice requiring
payment in more than 30 days, except for Accounts representing
in the aggregate not more than 5% of all Accounts.
(E) With respect to Inventory of Borrower or any Subsidiary of Borrower,
Borrower has correct and accurate records itemizing and describing the type and
quantity of Inventory, and Borrower's or such Subsidiary's cost therefor and
selling price thereof; provided, however, that it is acknowledged that Borrower
does not maintain a perpetual inventory at its manufacturing facilities, but
rather performs an annual physical inventory thereat.
4.06 Special Collateral. Immediately upon Borrower's receipt of that
-------------------
portion of the Collateral, if any, which is evidenced by an instrument and/or
document, including promissory notes, documents of title, certificated
securities and warehouse receipts (collectively the "Special Collateral") for
the purpose of perfecting Agent's security interest in such Special Collateral,
33
Borrower shall deliver the original thereof to Agent, together with appropriate
endorsements and/or specific evidence of the assignment thereof to Agent, in
form and substance acceptable to Agent; provided, however, that unless there
shall exist an Event of Default or Agent shall have specifically requested same,
Borrower need not deliver to Agent Special Collateral representing advances to
employees.
4.07 Contracts with U.S. Government. If and to the extent that any of the
-------------------------------
Collateral is evidenced by, or arises under, any contract with the United States
of America or any agency or instrumentality thereof, Borrower will immediately
notify Agent of same.
4.08 Contracts Regarding Collateral. Borrower covenants and agrees with
-------------------------------
Agent and each Bank as follows:
(A) Borrower will not hereafter grant a security interest in the
Collateral, or transfer the Collateral to any other Person, except as
specifically permitted by this Agreement.
(B) Borrower will at all times defend the Collateral against any claims of
any Person adverse to the claims of Agent.
(C) All of Borrower's places of business, including Borrower's principal
office, are described on Schedule 2. All Collateral covered by this Agreement
----------
is and will be kept only at location(s) specified on Schedule 2. Collateral
----------
shall not be removed to, or kept at, and Borrower shall not establish a place of
business at, any other place without the prior written consent of Agent, other
than new locations within the 48 contiguous states, provided that (i) at least
60 days prior to the establishment of such new location, Borrower shall have
given Bank written notice thereof, and (ii) prior to the establishment of such
new location, Borrower shall have delivered to Agent such financing statements,
third-party lien waivers and other documentation as Agent shall require in
connection therewith. If Collateral is at any time kept or located at locations
other than those listed, the Bank's security interest therein shall continue.
(D) During the preceding five years, neither Borrower nor any predecessor
of Borrower has been known as or used any corporate, fictitious or trade names
or trade styles, other than those disclosed on Schedule 3.
----------
(E) All patents, trademarks, service marks and copyrights, and all
licenses, registrations and applications for registration thereof, owned, used
or to be used by Borrower in the operation of its business, are listed on
Schedule 4. Borrower will promptly notify Agent in writing of Borrower's
----------
acquisition of any such assets hereafter occurring.
(F) The Equipment in which Agent is granted a security interest will not
at any time be affixed or attached to any real estate in such a manner that it
will become a fixture, unless Agent shall have a first priority, perfected lien
on such real estate as security for the Obligations of Borrower. The Equipment
will be used or bought for use solely for business purposes.
34
(G) Borrower shall permit Agent to inspect and evaluate the Collateral and
any books and records of Borrower relating thereto at all reasonable times and
to verify any Accounts by any reasonable method satisfactory to Agent, all at
the expense and risk of Borrower.
(H) By identifying Accounts on any schedule or other document delivered to
Agent or any Bank Borrower shall be deemed to be making the representations and
warranties contained in Section 4.05(D) with respect to such Accounts.
(I) With respect to Accounts, Borrower shall:
(i) promptly upon Borrower's learning thereof, inform Agent in
writing of any material delay in Borrower's performance of any
of its obligations to any Account Debtor whose outstanding
Accounts aggregate $500,000.00 or more and of any assertion of
any claims, offsets or counterclaims by any such Account Debtor
and of any extraordinary allowances, credits and/or other
monies granted by Borrower to any such Account Debtor;
(ii) not permit or agree to any material extension, compromise or
settlement or make any change or modification of any kind or
nature with respect to any material Accounts, including any of
the terms relating thereto;
(iii) promptly upon Borrower's receipt or learning thereof, inform
Agent of the commencement of bankruptcy proceedings involving
any Account Debtor whose outstanding Accounts aggregate
$500,000.00 or more; and
(iv) other than goods returned in the ordinary course of business
and having an aggregate invoice price not exceeding $500,000.00
per year, keep all goods returned by any Account Debtor and all
goods repossessed or stopped in transit by Borrower from any
Account Debtor segregated from the other property of Borrower,
and hold the same as trustee for Agent until resold or
otherwise directed in writing by Agent.
(J) With respect to Inventory, Borrower shall from and after the date
hereof keep correct and accurate records reflecting Borrower's cost therefor and
the selling price thereof, all of which records shall be available at all
reasonable times, upon demand, to any of Agent's officers, employees or agent
for inspection and copying thereof.
(K) Borrower shall keep and maintain the Equipment in good operating
condition and repair 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; provided, however, that Borrower may sell
obsolete Equipment for a price which reasonably approximates its fair market
value if the proceeds thereof are paid directly to Agent for application to
Borrower's Obligations.
35
4.09 Insurance. Borrower shall, at its sole cost and expense, keep and
----------
maintain the Collateral insured for the greater of the full insurable value or
the full replacement value thereof against loss or damage by fire, theft,
explosions, sprinklers and all other hazards and risks (i) covered by extended
coverage and/or (ii) ordinarily insured against by other owners or users of
properties in similar businesses. All such policies of insurance shall be in
form, with insurers and in such amounts as may be satisfactory to Agent.
Borrower shall deliver to Agent a certificate of insurance with respect to each
policy of insurance and evidence of payment of all premiums for each such
policy. Such policies of insurance shall contain a lender's loss payable
endorsement, in form and substance acceptable to Agent, showing loss payable to
Agent. Such endorsement or an independent instrument furnished to Agent shall
provide that all insurance companies shall give Agent at least thirty (30) days
prior written notice before any such policy or policies of insurance shall be
altered or cancelled and that no act or default of Borrower or any other Person
shall affect the right of Agent to recover under such policy or policies of
insurance in case of loss or damage. Borrower hereby directs all insurers under
such policies of insurance to pay all proceeds payable thereunder directly to
Agent. With respect to all claims in excess of $100,000.00, and with respect to
all claims of any size at any time during the existence of an Event of Default,
Borrower irrevocably appoints Agent and all officers, employees or agents
designated by Agent as Borrower's true and lawful attorney and agent in fact for
the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. If Borrower 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, Agent, without waiving or releasing any of
the Obligations of Borrower or any Event of Default, 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 Agent deems necessary or advisable. All sums so disbursed
by Agent, including attorney's fees, court costs, expenses and other charges
relating thereto, shall be part of the Obligations, payable by Borrower to Agent
on demand.
4.10 Actions by Agent. Agent may, at any time or times hereafter, in its
-----------------
sole discretion, without waiving or releasing any obligation, liability or duty
of Borrower under this Agreement or the other Documents, or any Event of
Default, pay, acquire and/or accept an assignment of any security interest,
lien, claim or encumbrance asserted by any Person against the Collateral. All
sums paid by Agent in respect thereof and all costs, fees and expenses,
including attorneys' fees, court costs, expenses and other charges relating
thereto, which are incurred by Agent on account thereof, shall be payable, upon
demand, by Borrower to Agent and shall be additional Obligations of Borrower
hereunder secured by the Collateral.
4.11 Subsidiary Collateral. Simultaneous herewith, the Subsidiary
----------------------
Borrowers are delivering the following: (a) the Subsidiary Borrower Revolving
Credit Note, (b) a guaranty of the Obligations of Borrower, and (c) security
agreements pledging certain assets.
36
4.12 Survival. Each of the representations, warranties and agreements set
---------
forth in this Article IV shall survive the execution and delivery of this
Agreement and shall remain effective until this Agreement shall have been
terminated and all Obligations of Borrower shall have been paid and satisfied in
full.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Banks to consummate the transactions contemplated hereby,
Borrower represents and warrants to Agent and each Bank as follows:
5.01 Corporate Existence. Borrower is a corporation duly organized,
--------------------
validly existing and in good standing under the laws of the State of Delaware,
has the lawful power and authority to own its properties and to carry on its
business as now conducted, and is qualified to do business and is in good
standing as a foreign corporation in the State of Illinois and in each other
jurisdiction wherein the nature of the business transacted or to be transacted
by it or property owned or to be owned by it makes such qualification necessary
and where the failure to be so qualified would have a material adverse effect on
its business, properties or condition, financial or otherwise and possesses all
material permits necessary to operate the business it conducts.
5.02 Corporate Authorization. Borrower is empowered to perform all acts
------------------------
and things undertaken and done pursuant to this Agreement and has taken all
corporate or other action necessary to authorize the execution, delivery and
performance of the Documents. The officers of Borrower executing the Documents
have been duly elected or appointed and have been fully authorized to execute
such Documents at the time executed. The Documents, when executed and
delivered, will be the legal, valid and binding obligations of Borrower,
enforceable against it in accordance with their respective terms.
5.03 Financial Statements. The Financial Statements are complete and
---------------------
accurate, fairly present the financial condition of Borrower at the respective
dates thereof and the results of operations for the respective periods covered
thereby, and (subject to normal year-end adjustments with respect to interim
Financial Statements) were prepared in accordance with GAAP. Borrower does not
have any material liabilities or obligations (contingent or otherwise),
liability for taxes or unusual forward or long-term commitments, except as
disclosed in the Financial Statements, and except for obligations under
Stockholder Agreements.
5.04 No Changes. Since December 31, 1997, there has been no material
-----------
change in the assets, liabilities or financial condition of Borrower, other than
changes arising from transactions in the ordinary course of business and the
financing transactions contemplated by this Agreement, and none of such changes
has been materially adverse.
5.05 Litigation. Other than as set forth in Schedule 8, there are no
----------- ----------
actions, suits or proceedings pending, or, to the best of the knowledge of
Borrower, threatened against or affecting
37
Borrower at law or in equity or before or by any Governmental Authority or any
foreign equivalent thereof, which involve the reasonable possibility of any
material judgment or liability, or which are, in the aggregate, material in
light of the financial condition and assets of Borrower. There are no actions,
suits, investigations or proceedings pending, or to the best of the knowledge of
Borrower, threatened against Borrower or its properties regarding Environmental
Laws, the manufacture, storage or treatment of Hazardous Substances or products
liability.
5.06 No Default. Borrower is not in violation of, and the execution and
-----------
delivery of the Documents and the performance by Borrower of its obligations
under the Documents, do not and will not result in Borrower being in violation
of or in conflict with, or constitute a default under any of, Borrower's
organizational documents, any term or provision of any note, mortgage,
indenture, contract, agreement, instrument, judgment or Law applicable to
Borrower, or result in the creation or imposition of any mortgage, lien, charge
or encumbrance of any nature whatsoever (other than those in favor of Bank) upon
any of the assets of Borrower pursuant to any such term or provision. Borrower
is not in default, after the expiration of any applicable grace or cure periods,
in any respect in the performance or fulfillment of any of its obligations,
covenants or conditions contained in any agreement or instrument to which it is
a party or by which any of its properties may be bound, and Borrower does not
know of any dispute regarding any such agreement or instrument.
5.07 Use of Proceeds. Borrower's uses of the proceeds of the Loans are,
----------------
and will continue to be, legal and proper corporate uses which are consistent
with all applicable Laws, with Borrower's Certificate of Incorporation, its By-
Laws, the resolutions of its Board of Directors, and the terms of this
Agreement.
5.08 Outstanding Debt. Borrower does not have outstanding any Debt
-----------------
(except to the Banks and the Subordinated Notes,) or other obligation for
borrowed money, or for the deferred purchase price of property or services and
Borrower is not obligated as guarantor, co-signer or otherwise on any Debt or
other obligation of any kind of any other Person, except and to the extent shown
on the Financial Statements at the date of this Agreement, incurred in the
ordinary course of business or pursuant to the Stockholder Agreements or as
otherwise permitted hereunder. No Person is in default under any of said
obligations.
5.09 Taxes. All tax returns and reports of Borrower required by law to be
------
filed, have been duly filed, and all taxes, assessments, fees and other
governmental charges (other than those presently payable without penalty or
interest) upon Borrower or upon any of its properties or assets, which are due
and payable, have been paid. The charges, accruals and reserves on the books of
Borrower in respect of taxes are considered adequate by Borrower, and Borrower
does not know of any assessment of a material nature against it.
38
5.10 Compliance. Except to the extent that failure to comply would not
-----------
materially interfere with the conduct of the business of Borrower, or affect in
any way Borrower's obligations (or Banks' rights) under the Documents, Borrower
has complied with all applicable laws with respect to: (i) any restrictions,
specifications or other requirements pertaining to products that Borrower
manufactures and sells or the services it performs, including all Environmental
Laws, (ii) the conduct of its business and (iii) the use, maintenance, and
operation of the real and personal properties owned or leased by it in the
conduct of its business.
5.11 Governmental Authorization. No authorization, consent, license or
---------------------------
approval of, or filing or registration with, or notification to, any
Governmental Authority is required in connection with the execution, delivery or
performance of the Documents by Borrower.
5.12 Title to Properties. Borrower has good and marketable title to all
--------------------
of its assets, all subject to no security interest, encumbrance, lien or claim
of any Person excepting only Permitted Liens, and there are no financing
statements or other evidence of any such security interest, encumbrance or lien
or any claim of any Person on file in any public office other than those
evidencing Permitted Liens.
5.13 Ownership of Stock. Except as set forth on Schedule 5, Borrower does
------------------- ----------
not own, directly or indirectly, any Stock. As of the date of this Agreement,
the ownership of all of the issued and outstanding shares of Stock of Borrower
is as set forth on Schedule 5. All outstanding shares of Borrower have been
----------
duly authorized, validly issued, fully paid and are nonassessable.
5.14 ERISA Compliance. Borrower is in full compliance with the
-----------------
requirements of ERISA; no fact, including any Reportable Event, exists in
connection with any Plan which might constitute grounds for the termination of
any such Plan by the PBGC or for the appointment by the appropriate United
States district court of a trustee to administer any such Plan; none of
Borrower, its Subsidiaries and the ERISA Affiliates maintains any Plan which has
an "accumulated funding deficiency" (as defined in Section 412 of the Internal
Revenue Code) whether or not waived; none of Borrower, its Subsidiaries and the
ERISA Affiliates has incurred or is expected to incur, directly or indirectly,
any actual or contingent liabilities arising from plan termination or
withdrawal, under Title IV of ERISA; none of Borrower, its Subsidiaries and the
ERISA Affiliates has any Plan with an actuarial present value of accrued plan
benefits which exceeds the net assets available for such benefits determined as
of said Plan's most recent actuarial valuation within the last 12 months; except
as disclosed in writing to the Agent prior to the date hereof, none of Borrower,
its Subsidiaries and the ERISA Affiliates has any employees who participate in a
Multiemployer Plan, and no such Multiemployer Plan is in reorganization under
Section 4241 of ERISA or is "insolvent" (as described in Section 4245 of ERISA);
and none of Borrower, its Subsidiaries and the ERISA Affiliates nor any
fiduciary designated by any of them has engaged in a "prohibited transaction"
within the meaning of Section 4975 of the Internal Revenue Code or Section 406
of ERISA with respect to any "employee benefit plan," as defined in Section 3(3)
of ERISA.
39
5.15 Solvency. Borrower retains sufficient capital for the business and
--------
transactions in which it engages or intends to engage, no obligation incurred
hereby is beyond the ability of Borrower to pay as such obligation matures,
Borrower is not contemplating either the filing of a petition under any state or
federal bankruptcy or insolvency laws or the liquidating of all or a major
portion of any of its property, and Borrower has no knowledge of any person
contemplating the filing of any such petition against it.
5.16 Brokerage. No brokerage commissions, finder's fees or investment
---------
banking fees will be payable to any Person engaged by or on behalf of Borrower
or any of its Affiliates in connection with the transactions contemplated by
this Agreement.
5.17 Subordinated Notes. The Subordinated Notes have been validly issued
------------------
in accordance with the terms of the Indenture. Borrower has received the
proceeds of the Subordinated Notes. No event of default or event which with the
passage of time, the giving of notice or otherwise could constitute an event of
default under the Subordinated Notes or the Indenture has occurred. The
Obligations of Borrower constitute Senior Indebtedness and Designated Senior
Indebtedness under the Indenture.
5.18 Year 2000 Compliance. Borrower and its Subsidiaries have
--------------------
reviewed the areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the Year 2000 Problem, and have made related appropriate inquiries
of material suppliers and vendors as to the effect of the Year 2000 Problem will
have on their material suppliers and customers. Based on such review, program
and inquiries, Borrower reasonably believes that the Year 2000 Problem will not
have a material adverse effect on Borrower. From time to time, at the request
of Agent, Borrower and its Subsidiaries shall provide to Agent such updated
information or documentation as is requested regarding the status of their
efforts to address the Year 2000 Problem.
5.19 Condition of Business. There exists no actual or threatened
----------------------
termination, cancellation or limitation of, or any modification or change in,
the proposed business relationship of Borrower with any customer or group of
customers whose purchases individually or in the aggregate are material to the
current business of Borrower, or in the proposed business relationship of
Borrower with any material supplier, and Borrower reasonably anticipates that
all such customers and suppliers will continue a business relationship with
Borrower on a basis no less favorable to Borrower than that heretofore
conducted; and there exists no other condition or state of facts or
circumstances which would materially adversely affect the current operation of
the business of Borrower, DMC, Grain King or Avemarau after the consummation of
the transactions contemplated by this Agreement on a basis no less favorable to
Borrower than that on which it has heretofore been conducted by Borrower.
5.20 Certain Acts and Regulations. Neither Borrower nor any Subsidiary
----------------------------
thereof is an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940; neither
Borrower nor any Subsidiary thereof is a
40
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935;
and Borrower is not engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
"margin stock" (as defined in Regulation U of the FRB).
5.21 Labor Matters. Neither Borrower nor any Subsidiary thereof is subject
-------------
to any labor or collective bargaining agreement. There are no existing or
threatened strikes, lockouts or other labor disputes involving Borrower or any
Subsidiary thereof that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the financial condition, assets,
business or business prospects of Borrower or any such Subsidiary. Hours worked
by and payment made to employees of Borrower and its Subsidiaries are not in
violation of the Fair Labor Standards Act or any other applicable Law.
5.22 Intellectual Property. Borrower and each Subsidiary thereof owns and
---------------------
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights and copyrights as are necessary for the conduct of the
business of Borrower and its Subsidiaries, without any infringement upon rights
of others which could reasonably be expected to have a material adverse effect
on the financial condition, assets, business or business prospects of Borrower
or any such Subsidiary.
5.23 Dissolution of Xxxxx Service Company. Xxxxx Service Company has
------------------------------------
heretofore ceased to do business and was involuntarily dissolved.
5.24 No Untrue Representations. No representation or warranty by Borrower
-------------------------
contained herein or in any certificate or other document furnished by or on
behalf of Borrower in connection with the transactions hereunder contains any
untrue statement of material fact or omits to state a material fact necessary to
make such representation or warranty not misleading in light of the
circumstances under which it was made.
5.25 Survival of Representations. All of the representations and
---------------------------
warranties set forth in this Article V shall survive and continue to be true,
complete and correct until all Obligations of Borrower hereunder are paid and
satisfied in full and this Agreement shall have been terminated.
ARTICLE VI. NEGATIVE COVENANTS
------------------
Borrower covenants that until all Obligations of Borrower are paid and
satisfied in full, and the Banks obligations hereunder have terminated, Borrower
will not, nor will it permit any of its Subsidiaries to, directly or indirectly,
without the prior consent in writing of the Majority Banks:
6.01 Negative Pledge. Create, assume, incur or suffer or permit to exist
---------------
any mortgage, pledge, encumbrance, security interest, assignment, lien or charge
of any kind or character upon
41
any of its assets, including its inventory and equipment, whether owned at the
date hereof or hereafter acquired, excepting only Permitted Liens.
6.02 Loans. Make any loans, or advances, whether secured or unsecured,
------
to, or make any guaranty of, or otherwise become obligated on behalf of any
other Person for, any such loans or advances to, any Person, except for (A)
guaranties in favor of the Banks, (B) loans to any of its Subsidiaries, provided
such loans do not exceed, when added to the capital contributions referenced in
Section 6.05(C), the sum of $10,000,000 in any 12 month period and/or
$25,000,000 in the aggregate at any time and (C) advances for business expenses
made to employees in the ordinary course of business (not to exceed $500,000 in
the aggregate at any one time outstanding to any employee).
6.03 Disposition of Assets. Dispose by sale, assignment, lease, sale and
----------------------
leaseback or otherwise any of the Collateral, whether now owned or hereafter
acquired and including any Accounts or Equipment, except that, unless an Event
of Default shall exist and Agent shall have required the cessation of inventory
sales, (A) such Person may sell its inventory in the ordinary course of business
as conducted by it on the date of this Agreement, for a reasonably equivalent
value and (B) such Person may sell Equipment no longer used by such Person or
which is otherwise obsolete, provided the aggregate dollar value of all such
Equipment sold does not exceed the sum of $2,500,000 in any calendar year.
6.04 [Intentionally Omitted.]
6.05 Investments. Own, hold, purchase or acquire Stock, bonds, debentures
------------
or other debt or equity securities of, or make any capital contribution to, or
make any other investment in any Person or otherwise engage in an Acquisition,
or form any Subsidiary; provided, however, (A) Borrower may make an Acquisition
or Acquisitions whose total aggregate gross purchase price do not exceed
$5,000,000, (B) Borrower may hold or form other Subsidiaries (domestic or
foreign) if (i) prior to forming a new Subsidiary after the date hereof,
Borrower gives 30 days prior written notice thereof to Agent, (ii) the total
aggregate amount of assets of all such Subsidiaries other than DMC, and
Avemarau does not exceed 10% of the total assets of Borrower and (iii) prior to
forming such Subsidiary, Borrower executes and delivers such documents and
instruments to the Agent as the Agent may require to create a perfected, first-
priority security interest in and to all of the Stock of such Subsidiary in
favor of the Banks (other than any foreign Subsidiary, as to which the
percentage of the Stock pledged shall be subject to the limitations set forth in
Section 4.03(G)), (C) Borrower may make capital contributions to Subsidiaries
not to exceed, the sum of $10,000,000 in any 12 month period and/or $25,000,000
in the aggregate at any time, (D) Borrower or any Subsidiary of Borrower may
make Cash Equivalent Investments and (E) Borrower or any Subsidiary of Borrower
may make bank deposits in the ordinary course of business.
6.06 Merger, etc. Make any material change in its financial structure,
------------
make any material change in its management (except on prior notice to Agent),
change its name (except on
42
90 days' prior notice to Agent), enter into any merger, consolidation,
dissolution, liquidation, reorganization or recapitalization, or
reclassification of its Stock, or issue any Stock or issue any warrant, right or
option pertaining thereto or other security convertible into any of the
foregoing.
6.07 Change in Business. Engage in business activities or operations
-------------------
substantially different from and unrelated to its business activities on the
date of this Agreement.
6.08 Dividends. Declare or pay any dividends, or redeem or repurchase any
----------
of, or make any other payment or distribution on account of, any Stock, except
as permitted under the terms of the Indenture.
6.09 Sale - Leaseback. Enter into any sale-leaseback transaction.
-----------------
6.10 Prepayment of Debt. Prepay any Debt, including the Subordinated Debt
------------------
by way of optional redemption or otherwise, except for prepayment of trade
creditors in the ordinary course of business and other prepayments expressly
permitted hereunder; or enter into or modify any agreement as a result of which
the terms of payment of any Debt are waived or modified.
6.11 Use of Proceeds. Directly or indirectly apply any part of the
----------------
proceeds of the Loans for any purpose other than as set forth herein.
6.12 Margin Stock. Directly or indirectly apply any part of the proceeds
-------------
of the Loans to the purchasing or carrying of any "margin stock" within the
meaning of Regulation U of the FRB, or any regulations, interpretations or
rulings thereunder.
6.13 ERISA. Engage in any "prohibited transaction" within the meaning of
------
Section 4975 of the Internal Revenue Code or Section 406 of ERISA with respect
to any "employee benefit plan," as defined in Section 3(3) of ERISA; or effect
any termination of any Plan which would result in a liability to Borrower.
6.14 Other Debt. Create, incur or assume any Debt other than (A) the
-----------
Loans, (B) the Subordinated Notes, (C) Debt disclosed on Schedule 9, (D) Debt
----------
(other than Debt for money borrowed) incurred in the ordinary course of business
and which is not prohibited by the other provisions of this Agreement, (E) new
mortgage and Equipment financing Debt permitted pursuant to clauses (G) and (H)
of the definition of "Permitted Liens", (F) Debt in the form of the guarantee of
Debt of FarmPro, Inc., a Pennsylvania corporation in an aggregate amount not in
excess of $6,000,000 at any time outstanding; (G) Debt under Stockholder's
Agreement to the extent expressly permitted by the terms of the Indenture and
(H) Debt of any Subsidiary of Borrower that is owed to any Person other than the
Banks or, to the extent otherwise permitted under Section 6.02, Borrower or any
other Subsidiary of Borrower, provided such Debt does not exceed the sum of
$7,500,000 in the aggregate at any time.
43
6.15 Transactions with Affiliates. Enter into, or be a party to, any
-----------------------------
transaction with any Affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of its business and upon fair and reasonable terms
which are fully disclosed in writing to Agent and are no less favorable to such
Person than would be obtained in a comparable arm's length transaction with a
person not an Affiliate.
6.16 Deposits. Maintain deposit accounts jointly with any Affiliate or
--------
commingle any funds with funds of any Affiliate.
6.17 Fiscal Year. Change its fiscal year.
-----------
6.18 Subordinated Notes. Amend or modify the terms of the Subordinated
------------------
Notes or the Indenture.
ARTICLE VII. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that until all Obligations of Borrower are paid and
satisfied in full, and the Banks' obligations hereunder have terminated,
Borrower will, and will cause each of its Subsidiaries to:
7.01 Financial Statements. Furnish and deliver to Agent and each Bank:
---------------------
(A) as soon as practicable, and in any event within 90 days after the end
of each fiscal year, (i) a statement of cash flows of Borrower for
such year, (ii) an income statement of Borrower for such year and
(iii) a balance sheet of Borrower as of the end of such year; all in
reasonable detail, including all footnotes, and audited by certified
public accountants selected by Borrower and reasonably acceptable to
Agent and certified by such accountants to have been prepared in
accordance with GAAP, except for any inconsistencies explained in such
certificate;
(B) as soon as practicable, and in any event within 30 days after the end
of each month commencing with the month ending August 31, 1998, (i) a
statement of cash flows of Borrower for such month and the portion of
the fiscal year then ended, (ii) an income statement of Borrower for
such month and the portion of the fiscal year then ended and (iii) a
balance sheet of Borrower as of the end of such month; all in
reasonable detail and certified by an Authorized Borrower
Representative as complete and accurate in all material respects,
fairly presenting the financial condition of Borrower and prepared in
accordance with GAAP;
(C) not later than 45 days after the end of each fiscal year, a detailed
budget for the 3 fiscal years next following, containing monthly
detail for the first of such 3 years,
44
and annual detail for the following years, and otherwise in form
reasonably satisfactory to Agent;
(D) at the Closing, thereafter no later than 15 days after the end of each
month, and at such other times as Agent shall request, an accounts
receivable aging in form satisfactory to Agent;
(E) with each set of calendar quarterly Financial Statements delivered
hereunder, a Compliance Certificate of an Authorized Borrower
Representative (i) calculating Borrower's compliance (or lack thereof)
with the financial covenants in Article VIII hereof, in reasonable
detail, and (ii) stating that no Event of Default has occurred and is
continuing or if an Event of Default has occurred and is continuing
setting forth a description of such event and the steps being taken to
remedy such event;
(F) immediately upon receipt thereof, copies of any management letters,
interim and supplemental reports submitted to Borrower by independent
accountants in connection with any review of the books of Borrower
made by such accountants;
(G) at the time any independent accounting firm is engaged to perform an
audit or other services for Borrower, a letter reasonably acceptable
to Agent to the effect that Bank may rely on such firm's work product;
(H) upon request by Agent, evidence satisfactory to the Bank of the
insurance coverages required under this Agreement;
(I) with reasonable promptness, such other information materially
concerning the business, properties, conditions or operations,
financial or otherwise, of Borrower, or compliance by Borrower with
any of the covenants in the Documents, as Agent may from time to time
reasonably request;
(J) promptly upon the filing or sending thereof, copies of all regular,
periodic or special reports of the Company or any Subsidiary thereof
filed with the Securities and Exchange Commission or any other
Governmental Authority succeeding to any of the principal functions
thereof; and
(K) at the Closing, thereafter no less often than monthly within 15 days
of the end of the previous month, and at such other times as Bank
shall request, a borrowing base certificate in the form of Exhibit E.
---------
7.02 Other Information. Furnish and deliver to Agent and each Bank:
------------------
(A) immediately after the occurrence thereof, notice of any Event of
Default or of any fact, condition or event that with the giving of
notice or passage of time or both,
45
would reasonably be expected to become an Event of Default, or of the
failure by Borrower to observe any of its respective undertakings
hereunder;
(B) immediately after the occurrence thereof, notice of any default under
any Debt, or under any indenture, mortgage or other agreement relating
thereto for which Borrower or any of its Subsidiaries is liable;
(C) immediately after obtaining knowledge thereof, notice of any
litigation or proceeding in which Borrower or any of its Subsidiaries
is a party if Borrower reasonably estimates that an adverse decision
therein would require Borrower or any of its Subsidiaries to pay over
more than $500,000.00 or deliver assets the value of which exceeds
such sum (whether or not the claim is considered to be covered by
insurance);
(D) immediately after receipt of notice thereof, notice of the institution
of any other suit or proceeding involving Borrower or any of its
Subsidiaries that Borrower reasonably determines could materially and
adversely affect Borrower's business, properties or financial
condition; and
(E) immediately after the occurrence thereof, notice of any other matter
which has resulted in, or might result in, a materially adverse change
in the business, properties, or the financial condition of Borrower or
any of its Subsidiaries.
7.03 Taxes. Promptly pay and discharge when due all taxes, assessments
------
and other governmental charges imposed upon it, or upon its income, profits or
property, and all claims for labor, material or supplies which, if unpaid, might
by law become a lien or charge upon its property; provided, however, that it
shall not be required to pay any tax, assessment, charge or claim if so
permitted by law, so long as the validity thereof shall be contested in good
faith by appropriate proceedings and adequate reserves therefor in accordance
with GAAP shall be maintained on its books.
7.04 Maintenance of Property. Maintain its inventory, equipment, real
------------------------
estate and other properties in good condition and repair (normal wear and tear
excepted), pay and discharge or cause to be paid and discharged when due, the
costs of repairs to or maintenance of the same, and pay or cause to be paid all
rental or mortgage payments due on the same except if it is in good faith
contesting by appropriate proceedings such amounts due and is maintaining
adequate reserves for such liability in accordance with GAAP.
7.05 Comply with Leases. Maintain and comply with leases covering real
-------------------
property, if any, used by it in accordance with the respective terms thereof so
as to prevent any default thereunder which may result in the exercise or
enforcement of any landlord's or other lien against it or its property;
provided, however, that it may contest any matters in connection with such
leases in good faith and by appropriate proceedings if it makes such payments as
are required by
46
law and maintains adequate reserves on its books in accordance with GAAP in
connection therewith.
7.06 Maintain Existence; Comply with Law. Maintain its corporate
------------------------------------
existence, maintain all rights, privileges, franchises, permits and approvals
necessary or desirable for the continuation of its business, and comply with the
requirements of all material agreements to which it is a party or by which any
of its assets is bound, and all applicable Laws, including Environmental Laws,
and orders of any Governmental Authority, noncompliance with which would
materially adversely affect its business, properties or financial condition, or
ability to repay its Obligations.
7.07 Books and Records. Keep adequate records and books of account and
------------------
inventory, in which complete entries will be made in accordance with its past
practices and consistent with sound business practice, reflecting all of its
financial transactions, and collect its accounts only in the ordinary course of
business.
7.08 Inspection. Permit any of Banks' representatives to examine and
-----------
inspect the Collateral, its business premises, all other of its properties and
operations, and all books of account, records, reports and other papers and to
make copies and extracts therefrom, and to discuss its affairs, finances and
accounts with its officers and employees or its independent public accountants
(and by this provision Borrower authorizes said accountants to discuss the
finances and affairs of Borrower and its Subsidiaries), all at such reasonable
times and as often as may be reasonably requested. Borrower shall pay all of
Agent's reasonable expenses incurred in connection with such examinations and
inspections.
7.09 Payment of Debt. Pay when due all of its Debt except if (with
----------------
respect to Debt other than the Obligations) it is in good faith contesting by
appropriate proceedings such amounts due and has maintained adequate reserves
for such liability in accordance with GAAP.
7.10 ERISA. At all times make prompt payment of contributions required to
------
meet the minimum funding standards set forth in ERISA with respect to each of
its Plans; promptly after the filing thereof, furnish to Agent copies of any
annual report required to be filed pursuant to ERISA in connection with each
Plan; notify Agent as soon as practicable of any Reportable Event and of any
additional act or condition arising in connection with any Plan which might
constitute grounds for the termination thereof by PBGC or for the appointment by
the appropriate United States district court of a trustee to administer any
Plan; and furnish to Agent, promptly upon Agent's request therefor, such
additional information concerning any "employee benefit plan," as defined in
Section 3(3) of ERISA, as may be reasonably requested by Agent.
7.11 Supplemental Documentation. At Agent's request, execute and/or
---------------------------
deliver to Agent, at any time or times hereafter, all Supplemental Documentation
that Agent may request, in form and substance acceptable to Agent, and pay the
costs of any recording or filing of the same. Borrower hereby irrevocably
makes, constitutes and appoints Agent (and all Persons designated by Agent for
that purpose) as Borrower's true and lawful attorney, effective
47
immediately upon the failure or refusal of Borrower to execute and/or deliver to
Agent any Supplemental Documentation required hereby, to sign the name of
Borrower on any of the Supplemental Documentation and to deliver any of the
Supplemental Documentation to such Persons as Agent, in its sole discretion, may
elect. Borrower agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement and may be filed by Agent in any filing office.
7.12 Insurance. Maintain, in addition to the insurance on Collateral
----------
required pursuant to Section 4.09, (A) liability insurance in form, with
insurers and in amounts as may be satisfactory to the Bank, showing the Bank as
an additional insured, and (B) fidelity bonds and such other insurance in form,
with insurers and in amounts as may be satisfactory to the Bank.
7.13 Accounts. Maintain its principal banking accounts with LNB.
---------
ARTICLE VIII. FINANCIAL COVENANTS
-------------------
Borrower covenants that until all Obligations of Borrower have been paid
and satisfied in full, and the Banks obligations hereunder have terminated,
Borrower on a consolidated basis with its Subsidiaries will:
8.01 Funded Debt to EBITDA Ratio. Have and maintain at all times in
----------------------------
respect of any period of four consecutive calendar quarters ending with a
calendar quarter set forth below a Funded Debt to EBITDA Ratio not greater than
as follows:
-----------------------------------------------------------------------------------------------------------
Period 4Q98 1Q99 2Q99 3099 4Q99 1Q, 2Q, 3Q & 4Q00 1Q, 2Q, 3Q & 4Q01 1Q, 2Q, 3Q & 4Q02
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Ratio 5.50/1 5.50/1 5.50/1 5.25/1 5.25/1 5.00/1 4.50/1 4.00/1
-----------------------------------------------------------------------------------------------------------
8.02 Debt Service Coverage Ratio. Have and maintain at all times in respect
----------------------------
of any period of four consecutive calendar quarters ending with a calendar
quarter set forth below a Debt Service Coverage Ratio not less than as follows:
-----------------------------------------------------------------------------------------------------------
Period 4Q98 1Q99 2Q99 3099 4Q99 1Q, 2Q, 3Q & 4Q00 1Q, 2Q, 3Q & 4Q01 1Q, 2Q, 3Q & 4Q02
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Ratio 1.25/1 1.25/1 1.25/1 1.25/1 1.25/1 1.40/1 1.50/1 1.50/1
-----------------------------------------------------------------------------------------------------------
48
8.03 EBITDA. Have and maintain at all times in respect of any period of
-------
four consecutive calendar quarters ending with a calendar quarter set forth
below EBITDA of not less than as follows:
-----------------------------------------------------------------------------------------------------------------
Period 4Q98 1Q99 2Q99 3099 4Q99 1Q, 2Q, 3Q & 4Q00 1Q, 2Q, 3Q & 4Q01 1Q, 2Q, 3Q & 4Q02
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
in 000's $22,000 $22,000 $23,000 $24,000 $25,000 $27,000 $32,500 $37,500
-----------------------------------------------------------------------------------------------------------------
8.04 Senior Debt to EBITDA. Have as of the end of any calendar quarter a
---------------------
Senior Debt to EBITDA Ratio of not more than 2.0 to 1.0.
8.05 Capital Expenditures. Make Capital Expenditures of not more than the
--------------------
amount set forth below in respect of any period of four consecutive calendar
quarters ending with a calendar quarter set forth below:
-----------------------------------------------------------------------------------------------------------------
Period 4Q98 1Q99 2Q99 3099 4Q99 1Q, 2Q, 3Q & 4Q00 1Q, 2Q, 3Q & 4Q01 1Q, 2Q, 3Q & 4Q02
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
in 000's $12,500 $12,500 $12,500 $12,500 $10,000 $10,000 $10,000 $10,000
-----------------------------------------------------------------------------------------------------------------
provided, however, that with respect to each period of four consecutive calendar
quarters, the unused portion of any Capital Expenditure amount in any such
period may be used in the next succeeding period of four consecutive calendar
quarters and only in such next succeeding period. Any such unused portion of
any Capital Expenditure amount not used in the next succeeding period of four
consecutive calendar quarters shall not be available for use in any subsequent
period.
ARTICLE IX. EVENTS OF DEFAULT
-----------------
9.01 Event of Default. The occurrence of any of the following events or
-----------------
acts shall constitute an Event of Default ("Event of Default"):
(A) Borrower defaults in the payment of any of its Obligations or any part
thereof when the same shall become due and payable, either by their terms or as
otherwise herein provided, and such default continues uncured for a period of
two days.
(B) Any Financial Statement, representation or warranty made by Borrower
herein or delivered by Borrower pursuant hereto or otherwise made in writing by
Borrower in connection with this Agreement proves to have been false in any
material respect as of the date on which it
49
was made or deemed made; Borrower shall default in performance of any of the
covenants set forth in Article VII of this Agreement (other than those set forth
in Sections 7.01 and 7.02), and such default shall continue uncured for a period
of 30 days following the earlier of (i) notice from Agent to Borrower, or (ii)
the day on which Borrower otherwise becomes aware of same; or Borrower defaults
in the performance of any of the other covenants, conditions or agreements
contained in this Agreement.
(C) Borrower or any of its Subsidiaries suffers to exist any event of
default (other than an event of default which is wrongly asserted by the other
party and which Borrower is contesting in good faith) under any agreement
binding Borrower or any of its Subsidiaries and involving an obligation in
excess of $500,000.00, and such event of default continues beyond any applicable
grace period.
(D) Borrower or any of its Subsidiaries files a petition under any section
or chapter of the United States Bankruptcy Code or any similar federal or state
law or regulation, Borrower or any of its Subsidiaries admits its inability to
pay debts as they mature, Borrower or any of its Subsidiaries makes an
assignment for the benefit of one or more of its creditors, Borrower or any of
its Subsidiaries makes an application for the appointment of a receiver, trustee
or custodian for any of its assets, or Borrower or any of its Subsidiaries files
any case or proceeding for its reorganization, dissolution or liquidation or for
relief from creditors.
(E) Borrower or any of its Subsidiaries is enjoined, restrained or in any
way prevented by court order from conducting all or any material part of its
business affairs, a petition under any section or chapter of the United States
Bankruptcy Code or any similar federal or state law or regulation is filed
against Borrower or any of its Subsidiaries, any case or proceeding is filed
against Borrower or any of its Subsidiaries for its reorganization, dissolution
or liquidation or for creditor relief, or an application is made by any Person
other than Borrower or any of its Subsidiaries for the appointment of a
receiver, trustee, or custodian for any of Borrower's or any of its
Subsidiaries' assets, and such injunction, restraint, petition or application is
not dismissed or stayed within 30 days after the entry or filing thereof.
(F) Borrower or any of its Subsidiaries conceals or removes or permits to
be concealed or removed any part of its property with intent to hinder, delay or
defraud its creditors or any of them, or makes or suffers to be made a transfer
of any of its property that may be fraudulent under any federal or state
bankruptcy, fraudulent conveyance or similar law.
(G) Borrower or any of its Subsidiaries permits any of its assets to be
attached, seized, subjected to a writ or distress warrant, or levied upon, or to
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors and does not cause the same to be terminated within 30
days thereafter.
(H) Other than Permitted Liens, a notice of any charge is filed of record
with respect to all or any of Borrower's or any of its Subsidiaries' assets or
any charge becomes a lien or
50
encumbrance upon any such assets and the same is not released within 30 days
after the same becomes a lien or encumbrance.
(I) The occurrence of any of the following events: (i) the happening of a
Reportable Event with respect to any Plan which the Bank determines in good
faith might constitute grounds for the termination by the PBGC of such Plan or
for the appointment by the appropriate United States district court of a trustee
to administer such Plan; (ii) any Plan which is not "sufficient for benefit
liabilities" (as determined under Section 4041(d)(1) of ERISA) shall be
terminated; (iii) Borrower, any of its Subsidiaries or any ERISA Affiliate shall
effect a complete or partial withdrawal from any Multiemployer Plan without the
prior written consent of the Bank and shall have a withdrawal liability (as
determined under the Multiemployer Pension Plan Amendments Act of 1980); (iv)
Borrower, any of its Subsidiaries or any ERISA Affiliate shall, without the
prior written consent of the Bank, withdraw from a Plan under which liability
may be imposed pursuant to Section 4063 of ERISA; (v) the appointment of a
trustee by an appropriate United States district court to administer any Plan;
or (vi) the institution of any proceedings by the PBGC to terminate any Plan or
to appoint a trustee to administer any Plan.
(J) Borrower or any of its Subsidiaries suffers any final judgment for
payment of money in excess of $2,500,000 which shall not be on appeal and does
not discharge the same within a period of 30 days.
(K) A judgment creditor of Borrower obtains possession of any Collateral
by any means, including levy, distraint, replevin or self-help.
(L) The occurrence of a default or an Event of Default under any of the
other Documents which is not cured within the time, if any, specified therefor
in such other Document; or the actual or attempted unilateral termination,
modification or abrogation by any Person other than the Banks of any obligation
under, or of any right or remedy of Banks under, any of the Documents.
(M) Xxxx X. Xxxxx fails to own directly, beneficially and of record
greater than 50% of each class of the issued and outstanding voting Stock of
Borrower.
(N) The occurrence of an "Event of Default" under the Subordinated Notes,
the Indenture, or the Subsidiary Borrower Revolving Credit Note.
9.02 Remedies. Upon the occurrence of any Event of Default, and at any
---------
times while any Event of Default shall be continuing, the Banks shall have all
rights and remedies provided by this Agreement or any other Document and by
applicable law and, without limiting the generality of the foregoing, Agent
will, at the request of the Majority Banks, or may, with the consent of the
Majority Banks, declare the Revolving Credit Loan Commitment to be terminated by
giving written notice thereof to Borrower, and upon such declaration, all
Obligations of Borrower including the Term Loan, shall thereupon be and become
forthwith, due and payable,
51
without any presentment, demands, protest or other notice of any kind, all of
which are hereby expressly waived. Further, in addition to all the rights and
remedies provided in Article 9 of the UCC and any other applicable law, Agent
may (but is under no obligation to do so): take physical possession of any of
the Collateral and sell, lease or otherwise dispose of the Collateral in whole
or in part; require Borrower to assemble the Collateral to which Borrower has or
is entitled to possession at a place designated by Agent, which is reasonably
convenient to both parties; collect any money due or to become due and enforce
in Borrower's name all rights with respect to the Collateral; receive and open
mail addressed to Borrower; and/or notify any Account Debtors (whether or not
such Account Debtors are in default) to make payments directly to Agent.
Borrower agrees to deliver to Agent promptly upon receipt thereof, in the form
in which received (together with all necessary endorsements), all payments
received by Borrower in respect of any Account. Agent may apply all such
payments against Borrower's Obligations or at the Bank's option to any of
Borrower's accounts maintained at Agent.
9.03 Powers. In exercising their right to sell, lease or otherwise
-------
dispose of the Collateral, the Banks may sell, lease or otherwise dispose of all
or any Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, all as the Majority Banks, in their sole
discretion, may deem advisable; such sales may be adjourned from time to time
with or without notice. The Banks shall have the right to conduct such sales on
Borrower's premises or elsewhere and shall have the right to use Borrower's
premises without charge for such sales for such time or times as the Banks may
see fit. Agent, on behalf of the Banks, is hereby granted a license or other
right to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, tradenames, trademarks, service marks and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to the Banks'
benefit. The Banks shall have the right to sell, lease or otherwise dispose of
the Collateral, or any part thereof, for cash, credit or any combination
thereof, and the Banks, or any of them, 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 price
against Borrower's Obligations. The proceeds realized from the sale of any
Collateral shall be applied first to the costs, expenses and Attorney Costs and
expenses incurred by the Banks for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second to
interest due upon any of Borrower's Obligations; and third to the principal of
Borrower's Obligations. If any deficiency shall arise, Borrower shall remain
liable to the Banks therefor.
9.04 Valid Notice. Any notice of any sale, lease, other disposition, or
-------------
other intended action by the Banks shall be reasonable if it is given to
Borrower at least ten days in advance of the intended disposition or other
intended action.
9.05 Attorney-in-Fact. Upon and after the occurrence of an Event of
-----------------
Default, Borrower irrevocably designates, makes, constitutes and appoints Agent
(and all persons designated by
52
Agent) as Borrower's true and lawful attorney, and Agent or its agent, may,
without notice to Borrower, and at such time or times thereafter as Agent or
said agent, in its sole discretion, may determine, in Borrower's or Agent's
name: (A) demand payment of the Accounts; (B) enforce payment of the Accounts,
by legal proceedings or otherwise; (C) exercise all of Borrower's rights and
remedies with respect to the collection of the Accounts and Special Collateral;
(D) settle, adjust, compromise, extend or renew the Accounts; (E) settle, adjust
or compromise any legal proceedings brought to collect the Accounts or any other
dispute with respect thereto; (F) if permitted by applicable law, sell or assign
the Accounts and Special Collateral upon such terms, for such amounts and at
such time or times as Agent deems advisable; (G) discharge and release the
Accounts and Special Collateral; (H) prepare, file and sign Borrower's name on a
Proof of Claim in Bankruptcy or similar document against any Account Debtor; (I)
prepare, file and sign Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts and
Special Collateral; (J) do all acts and things necessary, in Agent's sole
discretion, to fulfill Borrower's obligations under this Agreement; (K) endorse
the name of Borrower upon any item of payment or proceeds and deposit the same
to the account of Agent on account of Borrower's Obligations; (L) endorse the
name of Borrower upon any chattel paper, document, instrument, invoice, freight
xxxx, xxxx of lading or similar document or agreement relating to the Accounts,
Inventory and Special Collateral; (M) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; and (N) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory and Special Collateral to which Borrower has access.
9.06 Securities. Borrower agrees that in any sale of Collateral
-----------
consisting of securities, Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as Agent may be advised
by counsel is necessary or advisable in order to avoid any violation of
applicable Law (including compliance with such procedures as may restrict the
number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict such
prospective bidders and purchasers to Persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of that portion of the Collateral consisting of
securities), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and Borrower
further agrees that such compliance shall not result in such sale being
considered commercially unreasonable, nor shall Agent be liable or accountable
to Borrower for any discount allowed by reason of the fact that Collateral was
sold in compliance with any such limitation or restriction.
ARTICLE X - AGENT
-----------------
10.01 Appointment and Authorization; "Agent". Each Bank hereby irrevocably
-------------------------------------
(subject to Section 10.09) appoints, designates and authorizes Agent to take
such action on its behalf under the provisions of this Agreement and each other
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other
53
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Document, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Document or otherwise exist against
Agent. Without limiting the generality of the foregoing sentence, the use of the
term "agent" in this Agreement with reference to Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
10.02 Delegation of Duties. Agent may execute any of its duties under
--------------------
this Agreement or any other Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that its selects with
reasonable care.
10.03 Liability of Agent. None of Agent-Related Persons shall (A) be
-------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (B) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer thereof, contained in this Agreement or in
any other Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any other Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Document, or for any failure of Borrower or any other party to any Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or condition
of, this Agreement or any other Document, or to inspect the properties, books or
records of Borrower or any of Borrower's Subsidiaries or Affiliates.
10.04 Reliance by Agent. (A) Agent shall be entitled to rely, and shall
-----------------
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Agent. Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Document unless it shall first receive such advice or concurrence
of the Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
54
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Document in accordance with a request
or consent of the Banks or the Majority Banks, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Banks or the Majority Banks, as the case may be.
(B) For purposes of determining compliance with the conditions
specified in Sections 3.01 and 3.02, each Bank that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
Agent for the account of the Banks, unless Agent shall have received written
notice from a Bank, Borrower or any Subsidiary Borrower referring to this
Agreement, describing such Event of Default and stating that such notice is a
"notice of default". Agent will notify the Banks of its receipt of any such
notice. Agent shall take such action with respect to such Event of Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article IX; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Event of Default as it shall deem
advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of Agent-Related
---------------
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to Agent that is
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and credit-worthiness of Borrower and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower hereunder. Each Bank also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
credit-worthiness of Borrower. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by Agent, Agent shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or credit worthiness of Borrower or any of its Subsidiaries
which may come into the possession of any of Agent-Related Persons.
55
10.07 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Banks shall indemnify upon demand
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so), pro rata, from and
against any Indemnified Liabilities; provided, however, that no Bank shall be
liable for the payment to Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Document, or any document contemplated by or referred to herein, to
the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section 10.07 shall survive the payment of
all Obligations hereunder and the resignation or replacement of Agent.
10.08 Agent in Individual Capacity. LNB and it Affiliates may make loans
-----------------------------
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with Borrower, any Subsidiary
of Borrower or any Subsidiary or Affiliate of any of them as though LNB were not
Agent hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, LNB or its Affiliates may receive
information regarding Borrower, the Subsidiary Borrowers or their Affiliates
(including information that may be subject to confidentiality obligations in
favor of Borrower or such Subsidiary of Borrower) and acknowledge that Agent
shall be under no obligation to provide such information to them. With respect
to its Loans, LNB shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not Agent, and the
terms "Bank" and "Banks" include LNB in its individual capacity.
10.09 Successor Agent. Agent may, and at the request of all of the Banks
---------------
shall, resign as Agent upon 30 days' notice to the Banks. If Agent resigns
under this Agreement, the Majority Banks shall appoint from among the Banks a
successor agent for the Banks. If no successor agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Banks and Borrower, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article X and
Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of Agent hereunder until such time, if any, as the
Majority Banks appoint a successor Agent as provided for above.
56
10.10 Withholding Tax. (A) If any Bank is a "foreign corporation,
---------------
partnership or trust" within the meaning of the Internal Revenue Code and such
Bank claims exemption from, or a reduction of, U.S. withholding tax under
Section 1441 or 1442 of the Internal Revenue Code, such Bank agrees with and in
favor of Agent, to deliver to Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form 1001 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement; and
(iii) such other form or forms as may be required under the Internal
Revenue Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees promptly to notify Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(B) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS From 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of Borrowers to such Bank, such Bank agrees to notify
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Bank. To the extent of such percentage amount,
Agent will treat such Bank's IRS Form 1001 as no longer valid.
(C) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of Borrower to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Section 1441 and 1442 of the Internal
Revenue Code.
(D) If any Bank is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
Section 10.10(A) are not delivered to Agent, then Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation
57
an amount equivalent to the applicable withholding tax imposed by Sections 1441
and 1442 of the Internal Revenue Code, without reduction.
(E) If the Internal Revenue Service or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
did not properly withhold tax from amounts paid to or for the account of any
Bank (because the appropriate form was not delivered or was not properly
executed, or because such Bank failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify Agent fully
for all amounts paid, directly or indirectly, by Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent under this Section 10.10, together
with all costs and expenses (including Attorney Costs). The obligation of the
Banks under this Section 10.10(E) shall survive the payment of all Obligations
and the resignation or replacement of Agent.
10.11 Collateral Matters. The Banks irrevocably authorize Agent, at its
------------------
option and in its discretion, to release any lien granted to or held by Agent
under any Document (i) upon termination of the Commitments and payment in full
of all Loans and all other obligations of Borrower hereunder and the expiration
or termination of all Letter of Credit or (ii) constituting property sold or to
be sold or disposed of as part of or in connection with any disposition
permitted hereunder. Upon request by Agent at any time the Banks will confirm
in writing Agent's authority to release particular types or items of collateral
pursuant to this Section 10.11.
ARTICLE XI. MISCELLANEOUS
-------------
11.01 No Waiver. No failure or delay on the part of the Banks in
----------
exercising any right, power or remedy hereunder or under any other Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder or under any other
Document. The remedies herein provided and under any other Document are
cumulative and not exclusive of any remedies provided by law.
11.02 Entire Agreement; Amendments and Waivers. (A) This Agreement and
-----------------------------------------
the other Documents constitute the entire agreement between the parties and
there are no promises expressed or implied unless contained herein and therein.
This Agreement and the other Documents supersede all prior negotiations,
understandings and agreements of the parties hereto and thereto in respect of
the transactions contemplated hereby, including those expressed in any
commitment or proposal letter.
(B) No amendment or waiver of any provision of this Agreement or any
other Document, and no consent with respect to any departure by any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks (or by Agent at the written request of the Majority Banks)
and Borrower and acknowledged by Agent, and then any
58
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks and
Borrower and acknowledged by Agent, do any of the following:
(i) increase or extend the Commitment of any Bank;
(ii) postpone or delay any date fixed by this Agreement or any
other Document for, or reduce the amount of, any repayment or prepayment of
principal, interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any other Document;
(iii) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Document;
(iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder;
(v) amend this Section 11.02, or any provision herein providing
for consent or other action by all Banks;
(vi) change the definition of "Majority Banks"; or
(vii) release any lien granted to or held by Agent under any
Document, except and to the extent expressly permitted under Section 10.11.
and, provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by Agent in addition to all the Banks, affect the rights or
duties of Agent under this Agreement or any other Document.
11.03 Costs and Expenses. Borrower will pay any documentary, stamp or
-------------------
similar taxes payable in respect of the Documents or the Collateral granted
hereby or in connection herewith. Borrower will, on demand, reimburse the Agent
for the Attorney Costs incurred by Agent in connection with the preparation of
the Documents, and the negotiation and closing of the transactions contemplated
hereby. Borrower will further, on demand, reimburse Agent for all expenses,
including Attorney Costs, incurred by Agent in connection with any amendment or
modification of the Documents, the administration of the Loans and by each of
the Banks in connection with the enforcement of the Documents and the collection
or attempted collection of the Obligations of Borrower.
11.04 Jurisdiction. (A) For the purposes of any action or proceeding
-------------
involving the Documents or any other agreement or document referred to therein,
Borrower hereby expressly submits to the jurisdiction of all federal and state
courts located in the State of Illinois and consents
59
that any order, process, notice of motion or other application to or by any of
said courts or a judge thereof may be served within or without such court's
jurisdiction by registered mail or by personal service, provided a reasonable
time for appearance is allowed. Borrower hereby irrevocably waives any objection
that it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Document
brought in any federal or state court sitting in Xxxx County, State of Illinois,
and hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
(B) BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE NOTES, ANY OTHER
OF THE DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT REFERRED TO HEREIN OR
THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY.
11.05 Indemnification by Borrower. Whether or not the transactions
----------------------------
contemplated hereby are consummated, Borrower agrees to indemnify, defend and
hold Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the Loans
and Letter of Credit Obligations and the termination, resignation or replacement
of Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any insolvency proceeding or
appellate proceeding) related to or arising out of this Agreement, the Loans,
the Letter of Credit Obligations or the use of the proceeds thereof, whether or
not any Indemnified Person is a party thereto including (i) any tender offer,
merger, purchase of stock, purchase of assets or other similar transaction
financed or proposed to be financed in whole or in part, directly or indirectly,
with the proceeds of any of the Loans, (ii) the use, handling, release,
emission, discharge, transportation, storage, treatment or disposal of any
Hazardous Substance at any property owned or leased by Borrower or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by Borrower or any Subsidiary or the
operations conducted thereon, (iv) the investigation, cleanup or remediation of
offsite locations at which Borrower or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of Hazardous
Substances (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that Borrower shall not have any obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting
60
solely from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section 11.05 shall survive payment of all other
Obligations.
11.06 UCC 9 - 404(1). Borrower acknowledges and agrees that this
---------------
Agreement constitutes a commitment on the part of the Banks to make advances,
incur obligations and otherwise to give value to Borrower and that all financing
statements filed hereunder shall remain in full force and effect until this
Agreement shall have been terminated even if, at any time or times prior to such
termination, no Loans or other Obligations shall be outstanding hereunder.
Accordingly, Borrower waives any rights which it may have under Section 9-404(1)
of the UCC to demand the filing of termination statements with respect to the
Collateral, and agrees that the Banks shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement shall have been terminated and all Obligations
of Borrower shall have been paid in full in immediately available funds.
11.07 Notices. Any notices or consents required or permitted by this
--------
Agreement shall be in writing and shall be delivered in person or sent by
certified mail, postage prepaid, return receipt requested, or delivered by
facsimile, or delivered by a nationally recognized overnight express delivery
service, in any case addressed as follows, unless such address is changed by
written notice hereunder:
(i) If to Borrower:
The GSI Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
telephonic facsimile number: (000) 000-0000
With a copy to:
The GSI Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
telephonic facsimile number: (000) 000-0000
(ii) If to Agent:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
telephonic facsimile number: (000) 000-0000
61
telephonic facsimile number: (000) 000-0000
With copies to:
Xxxxx, Xxxxx and Xxxxx and the Banks as identified
00 Xxxxx Xxxxxx Xxxxx on Schedule 6.
----------
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
telephonic facsimile number: (000) 000-0000
Any such notice or communication shall be deemed to have been given either at
the time of personal delivery, or in the case of overnight express delivery, as
of the date delivery was first attempted, or in the case of facsimile, upon
receipt or in the case of certified mail, five days after delivery to the United
States Postal Service.
Any agreement of Agent and the Banks herein to receive certain notices
by telephone or facsimile is solely for the convenience and at the request of
Borrower. Agent and the Banks shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by Borrower to give such notice and
Agent and the banks shall not have any liability to such Borrower or any other
Borrower or other person on account of any action taken or not taken by Agent or
the Banks in reliance upon such telephonic or facsimile notice. The obligation
of Borrower to repay the Loans made to it and the other Obligations of Borrower
shall not be affected in any way or to any extent by any failure by Agent and
the Banks to receive written confirmation of any telephonic or facsimile notice
or the receipt by Agent and the Banks of a confirmation which is at variance
with the terms understood by Agent and the Banks to be contained in the
telephonic or facsimile notice.
11.08 Counterparts. This Agreement may be executed in any number of
-------------
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.
11.09 Effectiveness. This Agreement shall become effective when it
--------------
shall have been executed by Borrower and the Banks, and thereafter shall be
binding upon and inure to the benefit of Borrower and the Bank and their
respective successors and assigns, except that Borrower shall not have the right
to assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
11.10 Governing Law. This Agreement has been, and any other Documents
--------------
will be, delivered and accepted in and shall be deemed to be, contracts made
under and governed by the laws of the State of Illinois, and for all purposes
shall be construed in accordance with the laws of said State.
62
11.11 Severability. Any provision of this Agreement which is prohibited
-------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction; wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable Law.
11.12 Everything Material. All covenants, agreements, representations
--------------------
and warranties made by Borrower herein and any certificates and instruments
delivered by Borrower in connection herewith shall, notwithstanding any
investigation by Agent, be deemed material and relied on by the Banks and shall
survive the execution and delivery to the Banks of this Agreement, the Notes,
the other Documents, and any extension or renewal thereof.
11.13 Application to Notes. This Agreement shall secure and govern the
---------------------
terms of any amendments, extensions or renewals to either or both of the Notes.
11.14 Further Information. From time to time, Borrower will execute and
--------------------
deliver to Agent such additional documents and will provide such additional
information as Agent may reasonably require to carry out the terms of this
Agreement and be informed of Borrower's status and affairs.
11.15 Exhibits Incorporated. All Exhibits and Schedules attached to
---------------------
this Agreement shall be deemed incorporated herein by this reference.
11.16 Time for Performance. Whenever under the terms of this Agreement,
---------------------
the time for performance of a covenant or condition falls upon a day which is
not a Business Day, such time for performance shall be extended to the next
Business Day. Unless otherwise stated, all references herein to "days" shall
mean calendar days.
11.17 Payments Set Aside. To the extent that Borrower makes a payment to
-------------------
Agent or the Banks, or Agent or the Banks exercise their right of set-off, and
such payment or the proceeds of such set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Agent or such
Bank in its discretion) to be repaid to a trustee, receiver or any other party,
in connection with any insolvency proceeding or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and each Bank severally agrees
to pay to Agent upon demand its Pro Rata Share of any amount so recovered from
or repaid by Agent.
11.18. Assignments, Participations, etc. (A) Any Bank may, with the written
---------------------------------
consent of Agent and so long as no Event of Default exists Borrower (which
consents shall not be unreasonably delayed or withheld), at any time assign and
delegate to one or more Eligible
63
Assignees (each an "Assignee") all, or any ratable part of all, of the Loans,
the Letters of Credit, the Commitments and the other rights and obligations of
such Bank hereunder, in a minimum amount equal to the lesser of such Bank's
then-current Commitment or $5,000,000.00; provided, however, that Borrower and
Agent may continue to deal solely and directly with such Bank in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect the Assignee, shall have been given to Borrower and
Agent by such Bank and the Assignee; (ii) such Bank and its Assignee shall have
delivered to Borrower and Agent an Assignment and Acceptance in the form of
Exhibit D -("Assignment and Acceptance") together with any Note or Notes subject
----------
to such assignment and (iii) the assignor Bank or Assignee has paid to Agent a
processing fee in the amount of $3,500.00; provided, however, that no such
processing fee shall be due in respect of any such assignment from any Bank to
an Affiliate thereof.
(B) From and after the date that Agent notifies the assignor Bank that
it has received (and provided its and Borrower's consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) 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, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Documents.
(C) Within five Business Days after its receipt of notice by Agent and
Borrower that they have received an executed Assignment and Acceptance and
payment of the processing fee, (and provided that they consent to such
assignment in accordance with Section 11.18(A)), each Borrower shall execute and
deliver to Agent, new notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
--- -----
(D) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of any Borrower (a "Participant") participating
interests in any Loans, the Letters of Credit, the Commitment of that Bank and
the other interests of that Bank (the "Originator") hereunder and under the loan
Documents; provided, however, that (i) the Originator's Obligations under this
Agreement shall remain unchanged, (ii) the Originator shall remain solely
responsible for the performance of such obligations, (iii) Borrower and Agent
shall continue to deal solely and directly with the Originator in connection
with the Originator's rights and obligations under this Agreement and the other
Documents, and (iv) no Bank shall transfer
64
or grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as described in the first
proviso to Section 11.02. In the case of any such participation, the Participant
shall be entitled to the benefit of Sections 2.02 and 11.05 as though it were
also a Bank (as the case may be) hereunder, and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Even of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank (as the case may be) under this Agreement.
(E) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
11.19 Set-off. In addition to any rights and remedies of the Banks
--------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to Borrower, any such notice being waived by Borrower to the
fullest extent permitted by law, to set off and apply any deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of such Borrower (in its individual capacity and not as trustee) against any
Obligations of Borrower owing to such Bank, now or hereafter existing,
irrespective of whether or not Agent or such Bank shall have made demand under
this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify Borrower and Agent
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such set-
off and application.
11.20 Automatic Debits of Fees. With respect to any arrangement fee,
-------------------------
agency fee, Letter of Credit fee or other fee, or any other cost or expense
(including attorney costs) due and payable by Borrower to Agent or the Issuing
Bank under the Documents, Borrower hereby irrevocably authorizes Agent to debit
any deposit account of such Borrower with LNB in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in such deposit
accounts to cover this amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in LNB's sole discretion) and such
amount not debited shall be deemed to be unpaid. No such debit under this
Section 11.20 shall be deemed a set-off.
65
11.21 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify Agent in writing of any changes in the address to which notices to the
Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as Agent shall reasonably request.
11.22 No Third Parties Benefitted. This Agreement is made and entered
----------------------------
into for the sole protection and legal benefit of Borrower, the Banks, Agent and
Agent-Related persons, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.
11.23 Guaranty. Borrower hereby unconditionally and irrevocably
--------
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on the Subsidiary
Borrower Revolving Credit Note issued by the Subsidiary Borrowers pursuant to
this Agreement, and the full and punctual payment of all other amounts payable
by each of the Subsidiary Borrowers under this Agreement. Upon failure by any
Subsidiary Borrower to pay punctually any such amount, Borrower shall forthwith
on demand pay the amount not so paid at the place and in the manner specified in
this Agreement. In addition (and without limiting the foregoing), upon the
Subsidiary Borrower Revolving Credit Loan of the Subsidiary Borrowers being
declared or otherwise becoming immediately due and payable, Borrower shall
forthwith on demand pay all amounts payable under such Subsidiary Borrower
Revolving Credit Loan at the place and in the manner specified in this
Agreement.
11.24 Unconditional Obligations. The obligations of Borrower under
-------------------------
Section 11.23 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(A) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of any Subsidiary Borrower under this Agreement or the
Subsidiary Borrower Revolving Credit Note, by operation of law or otherwise;
(B) any modification or amendment of or supplement to this Agreement or
the Subsidiary Borrower Revolving Credit Note;
(C) any release, impairment, non-perfection or invalidity of any direct
or indirect security for any obligation of any Subsidiary Borrower under this
Agreement or any Document or the Subsidiary Borrower Revolving Credit Note;
(D) any change in the corporate existence, structure or ownership of any
Subsidiary Borrower or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Subsidiary Borrower or such Subsidiary
Borrower's assets or any resulting release or discharge of any obligation of any
Subsidiary Borrower contained in this Agreement or the Subsidiary Borrower
Revolving Credit Note;
66
(E) the existence of any claim, set-off or other right which Borrower
may have at any time against any Subsidiary Borrower, or any other Person,
whether in connection herewith or any unrelated transaction, provided that
--------
nothing herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(F) any invalidity or unenforceability relating to or against any
Subsidiary Borrower for any reason of this Agreement or the Subsidiary Borrower
Revolving Credit Note, or any provision of applicable law or regulation
purporting to prohibit the payment by any Subsidiary Borrower of the principal
of or interest on the Subsidiary Borrower Revolving Credit Note or any other
amount payable by any Subsidiary Borrower under this Agreement or the Subsidiary
Borrower Revolving Credit Note; or
(G) any other act or omission to act or delay of any kind by any
Subsidiary Borrower or any other person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of Borrower's obligations as guarantor hereunder.
11.25 Survival. Borrower's obligations as guarantor hereunder shall
---------
remain in full force and effect until the Revolving Credit Loan Commitment and
Term Loan shall have terminated and all Obligations of the Subsidiary Borrowers
under this Agreement and the Subsidiary Borrower Revolving Credit Note shall
have been paid in full. If any time any payment of principal, interest or any
other amount payable by any Subsidiary Borrower under this Agreement or the
Subsidiary Borrower Revolving Credit Note is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of such
Subsidiary Borrower or otherwise, Borrower's obligations hereunder with respect
to such payment shall be reinstated as though such payment had been due but not
made at such time.
11.26 Waivers. Borrower irrevocably waives acceptance hereof,
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presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
Subsidiary Borrower or any other Person.
11.27 No Subrogation. Notwithstanding any payment made by or for the
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account of any Subsidiary Borrower pursuant to this Agreement, Borrower shall
not be subrogated to any right of the Bank until such time as the Bank shall
have received final payment in cash of the full amount of all Obligations.
11.28 Bankruptcy. If acceleration of the time for payment of any amount
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payable by any Subsidiary Borrower under this Agreement or the Subsidiary
Borrower Revolving Credit Note is stayed upon the insolvency, bankruptcy or
reorganization of such Subsidiary Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement shall nonetheless be payable
by Borrower hereunder forthwith on demand by the Bank.
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IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE GSI GROUP, INC.
By: /s/ Xxxx Xxxx
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Title: CFO
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LASALLE NATIONAL BANK
By:____________________________________
Title: Officer
---------------------------------
MERCANTILE BANK N.A.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Title: Vice-President
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