CREDIT AGREEMENT
Dated as of April 30, 1998
FIRSTAR BANK MILWAUKEE, N.A. (the "Bank") and BANDO XXXXXXXXXX
CAPITAL CORPORATION (the "Company") agree as follows:
1. Definitions. As used in this Agreement, the following terms have
the following meanings:
"Affiliate" of any Person means any other Person, directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether by ownership of
stock (or other ownership interests), by contract or otherwise. As used
herein, "Person" means any natural person, corporation, limited liability
company, joint venture, partnership, association, trust or other entity or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Bank Security Documents" means the documents described in
section 4.1(b) and any other document, instrument or agreement furnished
by the Company to the Bank which provides collateral for the obligations
of the Company under the Loan Documents.
"BMIC" means Bando XxXxxxxxxx Investment Corporation, a Wisconsin
corporation.
"BMSBLC" means Bando XxXxxxxxxx Small Business Lending
Corporation, a Wisconsin corporation.
"Closing Date" means April 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Subsidiaries" means Subsidiaries whose financial
statements are consolidated with those of the Company in accordance with
GAAP.
"Controlled Group" means a group of trades or businesses (whether
or not incorporated) under common control, as defined in the regulations
issued pursuant to section 414(c) of the Code or such other regulations
prescribed by the Pension Benefit Guaranty Corporation pursuant to
section 4001(b)(1) of ERISA, of which the Company is a part.
"Default" means any act, event, condition or omission which, with
the giving of notice or lapse of time, would constitute an Event of
Default if uncured or unremedied.
"Environmental Laws" means all federal, state and local laws
including statutes, regulations, ordinances, codes, rules and other
governmental restrictions and requirements relating to the discharge of
air pollutants, water pollutants or process waste water or otherwise
relating to the environment or hazardous substances including, but not
limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air
Act, the Federal Clean Water Act, the Federal Resource Conservation and
Recovery Act of 1976, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, regulations of the Environmental
Protection Agency, regulations of the Nuclear Regulatory Agency and
regulations of any state department of natural resources or state
environmental protection agency now or at any time hereafter in effect.
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974, and the regulations thereunder, all as the same
shall be in effect at such date.
"Event of Default" means the occurrence of any of the events
described in section 7.1.
"GAAP" means generally accepted accounting principles in effect in
the United States from time to time.
"Guarantor" means either BMIC or BMSBLC and "Guarantors" means
both BMIC and BMSBLC.
"Guaranty" means any agreement, undertaking or arrangement
pursuant to which the Company or any Subsidiary guarantees, endorses or
otherwise becomes or is contingently liable for an obligation of any other
person or entity or any other liability which would be classified as
contingent in accordance with GAAP.
"Indebtedness" means (a) all items which, in accordance with GAAP,
would be classified as liabilities on the consolidated balance sheet of
the Company and its Consolidated Subsidiaries, including all Capitalized
Leases, and (b) indebtedness secured by any mortgage, lien, pledge or
security interest on property of the Company or a Subsidiary even though
it has not assumed or otherwise become liable for the payment thereof.
"Interest Rate Agreements" means all interest rate swap, cap,
collar, floor or similar agreements from time to time entered into by the
Company and the Bank, as amended, revised, supplemented or restated from
time to time.
"Loan Documents" means this Agreement, the Note, the Bank Security
Documents, any Interest Rate Agreements, any guaranty agreements
guaranteeing the prompt payment and performance of the Company's
obligations to the Bank and all other documents, instruments, agreements
and certificates related to or executed in connection with this Agreement
and the transactions contemplated hereby.
"Maturity Date" means April 30, 1999, or such earlier date on
which the Note becomes immediately due and payable pursuant to section 7.2
of this Agreement.
"Multiemployer Plan" means any pension benefit plan subject to
Title IV of ERISA as defined in section 4001(a)(3) of ERISA, to which the
Company, any of its Subsidiaries or any member of the Controlled Group is
required to contribute on behalf of its employees.
"Note" means the promissory note of the Company in the form of
Exhibit A attached hereto.
"Permitted Liens" means (a) liens, charges or encumbrances listed
on Schedule 1 attached hereto, provided that the Indebtedness secured
thereby shall not be renewed, extended or increased; (b) liens for taxes,
assessments or governmental charges not delinquent or being contested in
good faith by the Company or any Subsidiary for which adequate reserves
are established and maintained in accordance with GAAP; (c) construction
lien claims not delinquent; (d) purchase money security interests or liens
on any property acquired after the date hereof to be used by the Company
or a Subsidiary in the normal course of its business, and created or
incurred simultaneously with the acquisition of such property, if such
security interest or lien is limited to the property so acquired, the
Indebtedness secured by such security interest or lien does not exceed
100% of the purchase price of such property and the aggregate Indebtedness
secured by all such security interests and liens do not exceed $50,000 at
any time outstanding for the Company and all Subsidiaries; (e) liens or
deposits in connection with worker's compensation or other insurance or to
secure the performance of bids, trade contracts (other than for borrowed
money), leases, public or statutory obligations, surety or appeal bonds or
other obligations of like nature incurred in the ordinary course of
business; (f) liens in favor of the Bank; and (g) easements, restrictions,
minor title irregularities and similar matters which have no material
adverse effect as a practical matter upon the ownership or use of its
property by the Company or any Subsidiary.
"Plan" means any pension benefit plan subject to Title IV of
ERISA, including any Multiemployer Plan, maintained by the Company, any of
its Subsidiaries or any member of the Controlled Group or any such Plan to
which the Company, any of its Subsidiaries or any member of the Controlled
Group is required to contribute on behalf of its employees.
"Prime Rate" means the prime rate of interest announced from time
to time by the Bank as its base rate for interest rate determinations.
The Prime Rate may or may not be the lowest interest rate charged by the
Bank.
"Reportable Event" means a reportable event as that term is
defined in ERISA.
"Subordinated Debt" means Indebtedness of the Company, the payment
of which is fully subordinated, in a manner satisfactory to the Bank, to
the prior payment of the Note and to all other Indebtedness of the Company
to the Bank.
"Subsidiary" means as of a particular date any corporation more
than 50% of whose outstanding stock having ordinary voting power for the
election of directors shall at the time be owned or controlled by the
Company or by one of its Subsidiaries.
2. The Credit Facility; Interest Rate; Fees.
2.1 The Loan. The Bank will make a term loan to the Company,
subject to the terms and conditions hereof, on the Closing Date, in the
principal amount of $5,000,000. The outstanding principal balance of such
term loan shall be due and payable, in one lump sum, on the Maturity Date.
The term loan shall be evidenced by, be repayable and bear interest in
accordance with the Note.
2.2 Interest Rate.
(a) The unpaid principal balance of the Note outstanding from
time to time shall bear interest prior to the Maturity Date at an annual
rate equal to the Prime Rate and such rate shall change on each day on
which the Prime Rate changes. Accrued interest shall be due on the last
business day of each month, commencing May 31, 1998, and on the Maturity
Date.
(b) Notwithstanding the provisions of section 2.2(a) above,
upon the occurrence and during the continuance of an Event of Default, the
unpaid principal balance of the Note shall, upon notice from the Bank to
the Company, bear interest at an annual rate equal to the Prime Rate plus
two (2.00%) percentage points (the "Default Rate"), payable upon demand,
and on and after the Maturity Date, the unpaid principal balance of the
Note and all accrued interest thereon shall bear interest at the Default
Rate and shall be payable upon demand.
(c) Interest shall be calculated for the actual number of days
elapsed on the basis of a 360-day year.
2.3 Payments. All payments of principal and interest on the
Note and of all fees due hereunder shall be made at the office of the Bank
in immediately available funds not later than 2:00 p.m., Milwaukee time,
on the date due; funds received after that time shall be deemed to have
been received on the next business day. Whenever any payment hereunder or
under any Note is stated to be due on a day which is not a business day,
such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing any interest or fee then
due. The Bank may charge any account of the Company at the Bank for any
payment due under the Note, or any fee or expense payable hereunder, on or
after the date due.
2.4 Prepayments. The Company will give the Bank notice of any
optional prepayment of the Note not later than the day prior to the
prepayment date, specifying the prepayment date and the amount to be
prepaid. Each prepayment of the Note shall be in a minimum amount of
$100,000. The amount of such prepayment shall become due and payable by
2:00 p.m., Milwaukee time, on the specified prepayment date.
2.5 Capital Adequacy. As used in this section, the term
"Regulatory Change" means any change enacted or issued after the date of
this Agreement of any (or the adoption after the date of this Agreement of
any new) federal or state law, regulation, interpretation, direction,
policy or guideline, or any court decision, which affects (or, in the case
of a court decision would, if the decision were applicable to the Bank,
affect) the treatment of any loan or commitment of the Bank hereunder as
an asset or other item included for the purpose of calculating the
appropriate amount of capital to be maintained by the Bank or any
corporation controlling the Bank. If such Regulatory Change has the
effect of reducing the rate of return on the Bank's or such corporation's
capital as a consequence of the loans or commitments of the Bank hereunder
to a level below that which the Bank or such corporation could have
achieved but for such Regulatory Change (taking into account the Bank's or
such corporation's policies with respect to capital adequacy) by an amount
deemed in good faith by the Bank to be material, then from time to time
following notice by the Bank to the Company of such Regulatory Change,
within ten days after demand from the Bank, the Company shall pay to the
Bank such additional amount or amounts as will compensate the Bank or such
corporation, as the case may be, for such reduction.
3. Representations and Warranties. In order to induce the Bank to
make the loans, the Company represents and warrants to the Bank:
3.1 Organization; Subsidiaries; Corporate Power. The Company
is a corporation validly existing under the laws of the State of Wisconsin
and (a) the Company has filed with the Wisconsin Secretary of State the
required annual report for its most recently completed report year, (b)
the Company is not the subject of a proceeding under Wisconsin Statutes
section 180.1421 to cause its dissolution, (c) no filing has been made
with the Wisconsin Secretary of State of a decree of dissolution with
respect to the Company and (d) neither the shareholders nor the Board of
Directors of the Company have taken any action authorizing the liquidation
or dissolution of the Company. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction
in which the nature of its business or the ownership of its properties
requires such qualification and in which the failure to so qualify would
materially adversely affect the business operations or financial condition
of the Company. Schedule 3.1 contains the name, state of incorporation
and number of authorized and outstanding shares of each class of stock of
each Subsidiary and the number thereof owned by the Company. Each
Subsidiary is validly existing and in good standing in the state of its
incorporation and each is duly qualified as a foreign corporation and is
in good standing in every jurisdiction in which the nature of its business
or the ownership of its properties requires such qualification and in
which the failure to so qualify would materially adversely affect the
business operations or financial condition of such Subsidiary. The
Company and each Subsidiary has the corporate power to own its properties
and carry on its business as currently being conducted.
3.2 Authorization and Binding Effect. The execution and
delivery by the Company of the Loan Documents to which it is a party, and
the performance by the Company of its obligations thereunder, are within
its corporate power, have been duly authorized by proper corporate action
on the part of the Company, are not in violation of any existing law, rule
or regulation of any governmental agency or authority, any order or
decision of any court, the Articles of Incorporation or By-Laws of the
Company or the terms of any agreement, restriction or undertaking to which
the Company is a party or by which it is bound, and do not require the
approval or consent of the shareholders of the Company, any governmental
body, agency or authority or any other person or entity. The Loan
Documents to which the Company is a party, when executed and delivered,
will constitute the valid and binding obligations of the Company
enforceable in accordance with their terms, except as limited by
bankruptcy, insolvency or similar laws of general application affecting
the enforcement of creditors' rights and except to the extent that general
principles of equity might affect the specific enforcement of such Loan
Documents.
3.3 Financial Statements. The Company has furnished to the
Bank the consolidated balance sheet of the Company as of December 31,
1997, and related statements of income, retained earnings and cash flows
of the Company and its Consolidated Subsidiaries for the year ended on
that date, certified by BDO Xxxxxxx and the consolidated balance sheet of
the Company dated February 28, 1998 and related statements of income for
the period ended on such date, prepared by the Company. Such financial
statements were prepared in accordance with GAAP consistently applied
throughout the periods involved, are correct and complete and fairly
present the consolidated financial condition of the Company and such
Subsidiaries as of such dates and the results of their operations and cash
flows for the periods ended on such dates, subject, in the case of the
interim statements, to normal year-end adjustments. There has been no
material adverse change in the condition or prospects of the Company or
its Consolidated Subsidiaries, financial or otherwise, since the date of
the most recent financial statement furnished to the Bank.
3.4 Litigation. There is no litigation or administrative
proceeding pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Subsidiary or the properties of the
Company or any Subsidiary which if determined adversely would have a
material adverse effect upon the business, financial condition or
properties of the Company or such Subsidiary.
3.5 Indebtedness; No Default. Neither the Company nor any
Subsidiary has any outstanding Indebtedness or Guaranties, except those
permitted under sections 6.1 and 6.2. There exists no default nor has any
act or omission occurred which, with the giving of notice or the passage
of time, would constitute a default under the provisions of (a) any
instrument evidencing such Indebtedness or Guaranty or any agreement
relating thereto or (b) any other agreement or instrument to which the
Company or any Subsidiary is a party and which is material to the
financial condition, business operations or prospects of the Company or
any Subsidiary.
3.6 Ownership of Properties; Liens and Encumbrances. The
Company and each Subsidiary has good and marketable title to all property,
real and personal, reflected on the most recent financial statement of the
Company furnished to the Bank, and all property purported to have been
acquired since the date of such financial statement, except property sold
or otherwise disposed of in the ordinary course of business subsequent to
such date; and all such property is free of any lien, security interest,
mortgage, encumbrance or charge of any kind or any agreement not to grant
a security interest, mortgage or lien, except Permitted Liens. All owned
and leased buildings and equipment of the Company and each Subsidiary are
in good condition, repair and working order and, to the Company's
knowledge, conform to all applicable laws, ordinances and regulations.
3.7 Tax Returns Filed. The Company and each Subsidiary has
filed when due all federal and state income and other tax returns which
are required to be filed. The Company has paid or made provision for all
taxes shown on said returns and on all assessments received by it to the
extent that such taxes have become due except any such taxes which are
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been established. The
Company has no knowledge of any liabilities which may be asserted against
it or any Subsidiary upon audit of its federal or state tax returns.
3.8 Margin Stock. The Company will not use, directly or
indirectly, any part of the proceeds of the Note for the purpose of
purchasing or carrying, or to extend credit to others for the purpose of
purchasing or carrying, any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or
any amendments thereto. Neither the Company nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock.
3.9 Investment Company. The Company is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
3.10 ERISA Liabilities. The Company has no knowledge of the
occurrence of any event with respect to any Plan which could result in a
liability of the Company or any Subsidiary or any member of a Controlled
Group to any Plan, the Internal Revenue Service or to the Pension Benefit
Guaranty Corporation other than the payment of contributions in the normal
course or premiums (but not a late payment charge) pursuant to section
4007 of ERISA. With respect to each Plan there is no material
(a) accumulated funding deficiency within the meaning of section 412(a) of
the Code; (b) nondeductible contribution to any Plan within the meaning of
section 4972 of the Code; (c) excess contribution within the meaning of
section 4979(c) of the Code which would result in tax under section
4979(a) of the Code; (d) prohibited transaction within the meaning of
ERISA section 406 which is not exempt under ERISA section 408; (e) failure
to make required contributions to any Multiemployer Plan; or
(f) withdrawal or partial withdrawal from any Multiemployer Plan within
the meaning of ERISA sections 4203 and 4205.
3.11 No Burdensome Agreements. Neither the Company nor any
Subsidiary is a party to, or is bound by, any agreement, instrument or
undertaking, or subject to any other restriction (a) which materially
adversely affects or is likely in the future to so affect the property,
financial condition or business operations of the Company or any
Subsidiary, or (b) under or pursuant to which the Company or any
Subsidiary is or will be required to place (or under which any other
person may place) a lien upon any of its properties securing Indebtedness
either upon demand or upon the fullfillment of a condition, with or
without such demand.
3.12 Trademarks, Etc. The Company and each Subsidiary possess
adequate trademarks, trade names, copyrights, patents, permits, service
marks and licenses, or rights thereto, for the present and planned future
conduct of their respective businesses substantially as now conducted,
without any known conflict with the rights of others which might result in
a material adverse effect on the Company or any Subsidiary.
3.13 Dump Sites. With respect to the period during which the
Company or any Subsidiary owned or occupied its real estate, and to the
Company's knowledge after reasonable investigation, with respect to the
time before the Company or any Subsidiary owned or occupied its real
estate, no person or entity has caused or permitted materials to be
stored, deposited, treated, recycled or disposed of on, under or at any
real estate owned or occupied by the Company or any Subsidiary, which
materials, if known to be present, would require cleanup, removal or some
other remedial action under Environmental Laws.
3.14 Tanks. There are not now, nor, to the Company's knowledge
after reasonable investigation, have there ever been tanks or other
facilities on, under or at any real estate owned or occupied by the
Company or any Subsidiary which contained materials which, if known to be
present in soils or ground water, would require cleanup, removal or some
other remedial action under Environmental Laws.
3.15 Other Environmental Conditions. There are no conditions
existing currently or likely to exist during the term of this Agreement
which would subject the Company or any Subsidiary to damages, penalties,
injunctive relief or cleanup costs under any Environmental Laws or which
require or are likely to require cleanup, removal, remedial action or
other response pursuant to Environmental Laws by the Company or any
Subsidiary.
3.16 Changes in Laws. To the Company's knowledge after
reasonable investigation, there are no proposed or pending changes in
Environmental Laws that would adversely affect the Company or any
Subsidiary.
3.17 Environmental Judgments, Decrees and Orders. Neither the
Company nor any Subsidiary is subject to any judgment, decree, order or
citation related to or arising out of Environmental Laws or has been named
as a potentially responsible party by a governmental body or agency in a
matter arising under any Environmental Laws.
3.18 Environmental Permits and Licenses. The Company and each
Subsidiary has all permits, licenses and approvals required under
Environmental Laws.
3.19 Year 2000. Except as set forth on Schedule 3.19 attached
hereto, the information technology systems used by the Company in its
business operations accurately process date/time data (including without
limitation calculating, comparing and sequencing) from, into and between
the twentieth and twenty-first centuries, the year 1999 and 2000 and leap
year calculations.
3.20 Accuracy of Information. All information furnished by the
Company to the Bank is true, correct and complete in all material respects
as of the date furnished and does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
4. Conditions for Borrowing. The Bank's obligation to make any loan
is subject to the satisfaction, on or before the following Borrowing
Dates, of the following conditions:
4.1 On or Before the Closing Date. The Bank shall have
received the following, all in form, detail and content satisfactory to
the Bank:
(a) Note. The Note, duly executed by the Company.
(b) Bank Security Documents.
(i) a security agreement, granting the Bank a security
interest in all of the personal property of the Company;
(ii) all financing statements required to perfect the
security interests granted to the Bank by the Company;
(iii) a collateral pledge agreement granting the Bank a
security interest in that certain Business Note dated as of April 30, 1998
in the stated principal amount of $5,000,000 from Xxx Xxxxxxxxx Original
Dolls, Inc. payable to the Company, endorsed in blank;
Each of the Bank Security Documents shall be duly executed
by the Company.
(c) Guaranty. A guaranty agreement duly executed by each
Guarantor pursuant to which such Guarantor guarantees the payment of all
amounts the Company owes to the Bank.
(d) Guarantor Security Documents. The Bank shall have
received:
(i) security agreements duly executed by BMIC and BMSBLC,
respectively, granting the Bank a security interest in all of the personal
property of each respective company;
(ii) all financing statements required to perfect the
security interests granted to the Bank by the Guarantors;
(iii) a collateral pledge agreement duly executed by
BMIC, granting the Bank a security interest in all outstanding stock of
Xxx Xxxxxxxxx Original Dolls, Inc., now or hereafter owned by BMIC,
together with certificates representing such stock and blank stock powers;
(iv) an assignment duly executed by BMIC, assigning to the
Bank all of BMIC's rights under that certain Master Services Agreement
dated as of January 1, 1998 by and between BMIC and Xxx Xxxxxxxxx Original
Dolls, Inc.
(e) Intercreditor Agreement. The Bank shall have entered into
an Intercreditor Agreement, in form and content satisfactory to the Bank,
with the senior secured creditors of BMSBLC and shall have received the
consent and approval of such creditors for the guaranty and security
interests granted by BMSBLC in favor of the Bank.
(f) Certified Articles of Incorporation. A copy of the
Articles of Incorporation of the Company, each Guarantor and Xxx Xxxxxxxxx
Original Dolls, Inc., certified as of a recent date by the Secretary of
State of their respective states of incorporation.
(g) Certificates of Status. Certificates of status with
respect to the Company, each Guarantor and Xxx Xxxxxxxxx Original Dolls,
Inc., issued as of a recent date by the Secretary of State of their
respective states of incorporation and each state in which the Company or
a Guarantor is qualified to transact business as a foreign corporation.
(h) Closing Certificates. Copies, certified by the Secretary
of the Company and of each Guarantor to be true and correct and in full
force and effect on the Closing Date, of (i) the By-Laws of the Company
and each Guarantor; (ii) resolutions of the Board of Directors of the
Company and each Guarantor authorizing the issuance, execution and
delivery of the Loan Documents to which such corporation is a party; and
(iii) a statement containing the names and titles of the officer or
officers of the Company and of each Guarantor authorized to sign such Loan
Documents, together with true signatures of such officers.
(i) Personal Property Searches. Searches of the appropriate
public offices demonstrating that no security interest, tax lien, judgment
lien or other charge or encumbrance is of record affecting the Company ,
any Guarantor or their respective properties except those which are
acceptable to the Bank.
(j) No Default Certificate. The representations and warranties
contained in section 3 hereof and in the other Loan Documents shall be
true and correct on and as of the Closing Date; there shall exist on the
Closing Date no Default or Event of Default, and the Bank shall have
received a certificate to those effects, signed by the President of the
Company.
(k) Opinion of Counsel. An opinion from Xxxxx & Lardner,
counsel to the Company, in form and content satisfactory to the Bank and
its legal counsel.
(l) Proceedings Satisfactory. Such other documents as the Bank
may reasonably request; and all proceedings taken in connection with the
transactions contemplated by this Agreement, and all instruments,
authorizations and other documents applicable thereto, shall be
satisfactory to the Bank.
5. Affirmative Covenants. The Company covenants that it will, until
the Bank's commitment to extend credit hereunder has terminated or expired
and the Note, and all fees and expenses payable hereunder, have been paid
in full:
5.1 Annual Financial Statements. Furnish to the Bank within 90
days after the end of each fiscal year of the Company a balance sheet of
the Company as of the close of such fiscal year and related statements of
income, retained earnings and cash flows for such year, setting forth in
each case in comparative form corresponding figures from the preceding
annual audit, all in reasonable detail and satisfactory in scope to the
Bank, prepared in accordance with GAAP applied on a consistent basis,
certified by a firm of independent certified public accountants selected
by the Company and satisfactory to the Bank. All such financial
statements shall be furnished in consolidated form for the Company and all
Consolidated Subsidiaries which it may at the time have. The Company
further agrees to furnish the Bank the separate, audited financial
statements of Xxx Xxxxxxxxx Original Dolls, Inc.
5.2 Interim Financial Statements. Furnish to the Bank within
45 days after the end of each of the first three quarters of each fiscal
year of the Company a balance sheet of the Company as of the end of each
such period and related statements of income, retained earnings and cash
flows for the period from the beginning of the fiscal year to the end of
such quarter, prepared in the manner set forth in section 5.1 hereof for
the annual statements, certified, subject to audit and normal year-end
adjustments, by an authorized financial officer of the Company and
accompanied by the certificate of such officer to the effect that there
exists no Default or Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of existence
thereof and what action the Company proposes to take with respect thereto.
All such financial statements shall be furnished in consolidated and
consolidating form for the Company and all Consolidated Subsidiaries which
it may at the time have.
5.3 Audit Reports. Furnish to the Bank, promptly upon receipt,
copies of all management letters and detailed audit reports submitted to
the Company by independent certified public accountants.
5.4 Other Financial Information. Furnish to the Bank, as soon
as available, copies of all reports submitted to the shareholders of the
Company in their capacity as shareholders, and such other financial
information as the Bank may from time to time reasonably request.
5.5 Books and Records. Keep and cause each Subsidiary to keep
proper, complete and accurate books of record and account and permit any
representatives of the Bank to visit and inspect any of the properties and
examine and copy any of the books and records of the Company or any
Subsidiary at any reasonable time and as often as may reasonably be
desired.
5.6 Insurance. Maintain and cause each Subsidiary to maintain
insurance coverage as may be required by law or the Bank Security
Documents but in any event not less than insurance coverage, in the forms,
amounts and with companies, which would be carried by prudent management
in connection with similar properties and businesses. Without limiting
the foregoing, the Company will and will cause each Subsidiary to (a) keep
all its physical property insured against fire and extended coverage risks
in amounts and with deductibles at least equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas; (b) maintain all such worker's compensation and similar
insurance as may be required by law; and (c) maintain, in amounts and with
deductibles at least equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general public
liability insurance against claims for bodily injury, death or property
damage occurring on, in or about the properties of the Company or such
Subsidiary, business interruption insurance and product liability
insurance.
5.7 Condition of Property. Keep and cause each Subsidiary to
keep its properties (whether owned or leased) in good condition, repair
and working order.
5.8 Payment of Taxes. Pay and discharge, and cause each
Subsidiary to pay and discharge, all lawful taxes, assessments and
governmental charges upon it or against its properties prior to the date
on which penalties are attached thereto, unless and to the extent only
that the same shall be contested in good faith and by appropriate
proceedings by the Company or the appropriate Subsidiary and appropriate
reserves with respect thereto are established and maintained in accordance
with GAAP.
5.9 Compliance with Law. Do and, except as permitted under
section 6.6, cause each Subsidiary to do all things necessary to
(a) maintain its corporate existence in its state of incorporation and
maintain its qualification as a foreign corporation in any other state
where the ownership of property or the conduct of business make
qualification necessary and where the failure to so qualify would have a
material adverse effect upon its business, operations or financial
condition, (b) preserve and keep in full force and effect its rights and
franchises necessary to continue its business and (c) comply with all
applicable laws, rules, regulations, ordinances, writs, judgments,
injunctions, decrees and awards to which it may be subject including all
applicable Environmental Laws, except those being contested in good faith
and involving no possibility of criminal liability.
5.10 ERISA. Comply and cause each Subsidiary to comply with all
applicable requirements of ERISA for each Plan and furnish to the Bank, as
soon as possible and in any event within 30 days after the Company shall
have obtained knowledge that a Reportable Event has occurred with respect
to any Plan, a certificate of an officer of the Company setting forth the
details as to such Reportable Event and the action which the Company
proposes to take with respect thereto, and a copy of each notice of a
Reportable Event sent to the Pension Benefit Guaranty Corporation by the
Company and, with respect to a Multiemployer Plan, furnish to the Bank as
soon as possible after the Company receives notice or obtains knowledge
that the Company or any member of the Controlled Group may be subject to
withdrawal liability, or required to post a bond to avoid such liability,
to a Multiemployer Plan, a certificate of an officer of the Company
setting forth the details as to such event and the actions which the
Company plans to take with respect thereto.
5.11 Compliance with Other Loan Documents. Timely comply with
all of its obligations under the other Loan Documents including any grace
periods provided therin.
5.12 Notice of Default or Claimed Default. Furnish to the Bank
(a) promptly upon, and in any event within 5 days of, becoming aware of
any Default or Event of Default, a written notice specifying the nature
and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto; (b) promptly upon, and in any
event within 5 days of, becoming aware that the holder of any other
Indebtedness issued or assumed by the Company or any Subsidiary, or the
lessor under any lease as to which the Company or any Subsidiary is the
lessee, has given notice or has taken any action with respect to a claimed
default thereunder, or under any agreement under which any such
Indebtedness was issued or secured, a written notice specifying the notice
given or action taken, the nature of the claimed default and what action
the Company is taking or proposes to take with respect thereto;
(c) promptly upon, and in any event within 5 days of, upon receipt, copies
of any correspondence, notice, pleading, citation, indictment, complaint,
order, decree or other document from any source asserting or alleging a
circumstance or condition which requires or may require a financial
contribution by the Company or a cleanup, removal, remedial action or
other response by or on the part of the Company or any Subsidiary under
Environmental Laws or which seeks damages or civil, criminal or punitive
penalties from the Company or any Subsidiary for an alleged violation of
Environmental Laws; and (d) written notice of any condition or event which
would make any warranty contained in section 3 inaccurate, as soon as the
Company becomes aware of such condition or event.
5.13 BMSBLC Collateral. Within 90 days of the Closing Date,
deliver, or cause to be delivered, to the Bank (a) the various collateral
documents set forth in section 4.1 covering collateral to be provided by
BMSBLC or (b) such substitute collateral as is satisfactory to the Bank.
6. Negative Covenants. The Company covenants that, without the prior
written consent of the Bank, it will not, and will not permit any
Subsidiary to, until the Bank's commitment to extend credit hereunder has
terminated or expired and the Note, and all fees and expenses payable
hereunder, have been paid in full:
6.1 Limitations on Indebtedness. Create, incur, assume or
permit to exist any Indebtedness except (a) Indebtedness owed to the Bank;
(b) Indebtedness secured by Permitted Liens; (c) Subordinated Debt;
(d) Indebtedness permitted under section 6.5; (e) trade credit incurred to
acquire goods, services and supplies in the ordinary course of business;
(f) wages or other compensation due to employees and agents for services
actually performed; (g) deferred taxes; (h) unfunded obligations with
respect to Plans but only to the extent they are permitted to remain
unfunded under applicable law and (i) Indebtedness existing on the Closing
Date provided that such Indebtedness is not increased.
6.2 Limitations on Guaranties. Create, incur, assume or permit
to exist any Guaranties except for (a) the endorsement of negotiable or
nonnegotiable instruments for collection in the ordinary course of
business, (b) Guaranties in favor of the Bank, (c) a Guaranty of the
Indebtedness of BMSBLC to the lenders under that certain Credit Agreement
dated as of March 11, 1998 among BMSBLC, the lenders from time to time
parties thereto and Firstar Bank Milwaukee, N.A., as agent and (d) a
Guaranty of the obligations of Moldmakers Leasing and Investments Limited
Partnership, LLP owing to the Village of Germantown.
6.3 Limitations on Liens and Encumbrances. Create, assume or
permit to exist any mortgage, security interest, lien or charge of any
kind, including any restriction against mortgages, security interests,
liens or charges, upon any of its property or assets, whether now owned or
hereafter acquired, except Permitted Liens.
6.4 Limitations on Mergers, Etc. Merge or consolidate with or
into any other corporation or entity or sell, lease, transfer or otherwise
dispose of in a single transaction or a series of transactions, all or a
substantial part of its assets (other than sales made in the ordinary
course of business), except that any Subsidiary may merge into, or
transfer all or a substantial part of its assets to the Company or to a
Subsidiary wholly owned by the Company.
6.5 Limitations on Acquisitions, Advances and Investments.
Acquire any other business or partnership or joint venture interest or
make any loans, advances or extensions of credit to, or any investments
in, any person or entity except (a) the purchase of United States
government bonds and obligations; (b) extensions of credit to customers in
the usual course of business of the Company or any Subsidiary;
(c) commercial paper having a maturity not exceeding 90 days; (d) existing
investments of the Company in and existing advances to wholly owned
Subsidiaries of the Company and advances by any Subsidiary to the Company
or to another Subsidiary; (e) deposits in deposit accounts at banks,
provided that any such deposits by BMIC or BMCC shall be maintained at the
Bank or at InvestorsBank; (f) investments in bank repurchase agreements;
(g) loans and advances to employees and agents in the ordinary course of
business for travel and entertainment expenses and similar items; (h) the
purchase by BMSBLC of properties owned by Bando XxXxxxxxxx Real Estate
Investment Corporation; and (i) the purchase by BMSBLC of commercial loans
from InvestorsBank.
6.6 Lines of Business. Engage or permit any Subsidiary to
engage in any business other than those in which it is now engaged and any
business directly related thereto.
6.7 Sales of Receivables. Discount or sell with recourse, or
sell for less than the face amount thereof, any of its notes or accounts
receivable.
6.8 Sales of Subsidiaries. Sell or otherwise dispose of any
stock, or securities convertible into stock, of any Subsidiary except to
the Company or to a Subsidiary wholly owned by the Company.
6.9 Sale and Leaseback. Sell or transfer any fixed assets and
then or thereafter rent or lease as lessee any such assets.
6.10 Transactions with Affiliates. Enter into or be a party to
any transaction with any Affiliate except as otherwise provided herein or
in the ordinary course of business and upon fair and reasonable terms
which are no less favorable than a comparable arm's length transaction
with an entity which is not an Affiliate.
6.11 Middleton Doll Note. Amend, modify, waive or defer any
provision, payment, term or covenant contained in that certain Business
Note dated as of April 30, 1998 in the stated principal amount of
$5,000,000 from Xxx Xxxxxxxxx Original Dolls, Inc. payable to the Company,
or in any agreement, document or instrument related thereto.
7. Event of Default; Remedies.
7.1 Events of Default. The occurrence of any of the following
shall constitute an Event of Default:
(a) Failure to Pay Note. The Company fails to pay (i)
principal on the Note when the same becomes due and payable, whether at a
stated payment date, or a date fixed by the Company for prepayment or by
acceleration or (ii) interest on the Note, or any fee payable hereunder,
when the same becomes payable and such failure to timely pay interest or
fees continues uncured for a period of five days; or
(b) Falsity of Representations and Warranties. Any
representation or warranty made in any Loan Document is false in any
material respect on the date as of which made or as of which the same is
to be effective; or
(c) Breach of Covenants. The Company fails to comply with any
term, covenant or agreement contained in (i) sections 5.3, 5.4, 5.5, 5.6,
5.7, 5.9, 5.10 or 5.12 and such failure continues uncured for a period of
20 days or (ii) sections 5.1, 5.2, 5.8, 5.11, 5.13 or section 6 hereof; or
(d) Breach of Other Provisions. The Company fails to comply
with any other agreement contained herein and such default continues for a
period of 30 days after written notice to the Company from the Bank; or
(e) Default Under Other Agreements. The Company, any
Subsidiary or any Guarantor fails to pay when due any other Indebtedness
issued or assumed by the Company, such Subsidiary or such Guarantor or
fails to comply with the terms of any agreement under which such
Indebtedness was created and such default continues beyond the period of
grace, if any, therein provided; or
(f) Entry of Final Judgments. A final judgment is entered
against the Company, any Subsidiary or any Guarantor which, together with
all unsatisfied final judgments entered against the Company, all
Subsidiaries and all Guarantors, exceeds the sum of $500,000, and such
judgment shall remain unsatisfied or unstayed for a period of 60 days
after the entry thereof; or
(g) ERISA Liability. Any event in relation to any Plan which
the Bank determines in good faith could result in any of the occurrences
set forth in section 3.11 above; or
(h) Default Under Other Loan Documents. An "Event of Default"
(as defined therein) shall occur under any other Loan Document including,
without limitation, any guaranty agreement or any the Guarantor ceases to
exist or revokes or terminates its liability under any guaranty agreement
or the party to any other Loan Document fails to timely comply with any
term, covenant or agreement contained therein; or
(i) Insolvency, Failure to Pay Debts or
Appointment of Receiver, Etc. The Company, any Subsidiary or any
Guarantor becomes insolvent or the subject of state insolvency
proceedings, fails generally to pay its debts as they become due or makes
an assignment for the benefit of creditors; or a receiver, trustee,
custodian or other similar official is appointed for, or takes possession
of any substantial part of the property of, the Company, any Subsidiary or
any Guarantor; or
(j) Subject of United States Bankruptcy Proceedings. The
taking of corporate action by the Company, any Subsidiary or any Guarantor
to authorize such organization to become the subject of proceedings under
the United States Bankruptcy Code; or the execution by the Company, any
Subsidiary or any Guarantor of a petition to become a debtor under the
United States Bankruptcy Code; or the filing of an involuntary petition
against the Company, any Subsidiary or any Guarantor under the United
States Bankruptcy Code which remains undismissed for a period of 60 days;
or the entry of an order for relief under the United States Bankruptcy
Code against the Company, any Subsidiary or any Guarantor.
7.2 Remedies. Upon the occurrence of an Event of Default, the
obligation of the Bank to make loans hereunder shall terminate and (a) as
to an Event of Default described in sections 7.1(a) through 7.1(i),
inclusive, the holder of the Note may, at its option and without notice,
declare the Note to be, and the Note shall thereupon become, immediately
due and payable, together with accrued interest thereon, and (b) as to an
Event of Default described in section 7.1(j), the Note shall, without
action on the part of any holder or any notice or demand, become
automatically due and payable, together with accrued interest thereon.
Presentment, demand, protest and notice of acceleration, nonpayment and
dishonor are hereby expressly waived.
8. Miscellaneous.
8.1 Survival of Representations and Warranties. The
representations and warranties contained in section 3 hereof and in the
other Loan Documents shall survive closing and execution and delivery of
the Note.
8.2 Indemnification. The Company agrees to defend, indemnify
and hold harmless the Bank, its directors, officers, employees and agents
from and against any and all loss, cost, expense or liability (including
reasonable attorneys' fees) incurred in connection with any and all claims
or proceedings (whether brought by a private party or governmental agency)
as a result of, or arising out of or relating to:
(a) bodily injury, property damage, abatement or remediation,
environmental damage or impairment or any other injury or damage resulting
from or relating to any hazardous or toxic substance or contaminated
material (as determined under Environmental Laws) located on or migrating
into, from or through property previously, now or hereafter owned or
occupied by the Company, which the Bank may incur due to the making of the
loans provided for in section 2, the exercise of any of its rights under
the Bank Security Documents, or otherwise;
(b) any transaction financed or to be financed, in whole or in
part, directly or indirectly, with the proceeds of any loan made by the
Bank to the Company; or
(c) the entering into, performance of and exercise of its
rights under any Loan Document by the Bank.
This indemnity will survive foreclosure of any security interest
or mortgage or conveyance in lieu of foreclosure and the repayment of the
Note and the discharge and release of any Bank Security Documents.
8.3 Expenses. The Company agrees, whether or not the
transaction hereby contemplated shall be consummated, to pay on demand
(a) all out-of-pocket expenses incurred by the Bank in connection with the
negotiation, execution, administration, amendment or enforcement of any
Loan Document including the reasonable fees and expenses of the Bank's
counsel, (b) any taxes (including any interest and penalties relating
thereto) payable by the Bank (other than taxes based upon the Bank's net
income) on or with respect to the transactions contemplated by this
Agreement (the Company hereby agreeing to indemnify the Bank with respect
thereto) and (c) all out-of-pocket expenses, including the reasonable fees
and expenses of the Bank's counsel, incurred by the Bank in connection
with any litigation, proceeding or dispute in any way related to the
Bank's relationship with the Company, whether arising hereunder or
otherwise. The obligations of the Company under this section will survive
payment of the Note.
8.4 Notices. Except as otherwise provided in section 2.3, all
notices provided for herein shall be in writing and shall be
(a) delivered; (b) sent by express or first class mail; or (c) sent by
facsimile transmission and confirmed in writing provided to the recipient
in a manner described in (a) or (b), and, if to the Bank, addressed to it
at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Facsimile
No. 000-000-0000 and if to the Company, addressed to it at W239 X0000
Xxxxx Xxxx xxx Xxx. X, Xxxxxxxx, Xxxxxxxxx 00000, Facsimile No. 414-523-
4193, or to such other address with respect to either party as such party
shall notify the other in writing; such notices shall be deemed given when
delivered, mailed or so transmitted.
8.5 Setoff. As security for payment of the Note and all other
obligations of the Company to the Bank, the Company grants to the Bank a
security interest in and lien on any credit balance or other money now or
hereafter owed the Company by the Bank. In addition, the Company agrees
that the Bank may, at any time after the occurrence of an Event of
Default, without prior notice or demand, set off against any such credit
balance or other money all or any part of the unpaid balance of the Note
or any other obligation of the Company to the Bank.
8.6 Participations. The Company agrees that the Bank may, at
its option, sell to another financial institution or institutions
interests in the Note and, in connection with each such sale, and
thereafter, disclose to the purchaser or prospective purchaser of each
such interest financial and other information concerning the Company. The
Company agrees that if amounts outstanding under this Agreement or the
Note are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each such
purchaser shall be deemed to have, to the extent permitted by applicable
law, the right of setoff in respect of its participating interest in
amounts owing under this Agreement and the Note to the same extent as if
the amount of its participating interest were owed directly to it. The
Company further agrees that each such purchaser shall be entitled to the
benefits of section 2.9 with respect to its participation in the Bank's
obligation to make loans; provided that no such purchaser shall be
entitled to receive any greater amount pursuant to that section than the
Bank would have been entitled to receive if no such sale had occurred.
8.7 Titles. The titles of sections in this Agreement are for
convenience only and do not limit or construe the meaning of any section.
8.8 Parties Bound; Waiver. The provisions of this Agreement
shall inure to the benefit of and be binding upon any successor of any of
the parties hereto and shall extend and be available to any holder of the
Note; provided that the Company's rights under this Agreement are not
assignable. No delay on the part of any holder of the Note in exercising
any right, power or privilege hereunder shall operate as a waiver thereof,
and no single or partial exercise of any right, power or privilege
hereunder shall preclude other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
specified are cumulative and not exclusive of any rights or remedies which
the holder of the Note would otherwise have.
8.9 Governing Law. This Agreement is being delivered in and
shall be deemed to be a contract governed by the laws of the State of
Wisconsin and shall be interpreted and enforced in accordance with the
laws of that state without regard to the principles of conflicts of laws.
8.10 Submission to Jurisdiction; Service of Process. To induce
the Bank to enter into this Agreement:
(a) THE COMPANY AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY
MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF WISCONSIN LOCATED
IN MILWAUKEE COUNTY OR THE FEDERAL COURT FOR THE EASTERN DISTRICT OF
WISCONSIN AND THE COMPANY CONSENTS TO THE JURISDICTION OF SUCH COURTS.
THE COMPANY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH COURT AND ANY RIGHT IT MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM
THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; and
(b) The Company consents to the service of process in any such
action or proceeding by certified mail sent to the address specified in
section 8.4.
Nothing contained herein shall affect the right of the Bank to
serve process in any other manner permitted by law or to commence an
action or proceeding in any other jurisdiction.
8.11 Waiver of Jury Trial. THE COMPANY AND THE BANK HEREBY
KNOWINGLY AND VOLUNTARILY WAIVE THE RIGHT EACH OF THEM MAY HAVE TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM BASED ON OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ANY
OTHER ACTION OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO
THE BANK TO ENTER INTO THIS AGREEMENT.
8.12 Limitation of Liability. THE COMPANY AND THE BANK HEREBY
WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER
PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES, OF WHATEVER NATURE, OTHER THAN ACTUAL DAMAGES.
8.13 Entire Agreement. This Agreement and the other Loan
Documents shall constitute the entire agreement of the parties pertaining
to the subject matter hereof and supersede all prior or contemporaneous
agreements and understandings of the parties in connection therewith.
BANDO XXXXXXXXXX CAPITAL
CORPORATION
BY______________________________
Its____________________________
FIRSTAR BANK MILWAUKEE, N.A.
BY______________________________
Its____________________________
SCHEDULE 1
Permitted Liens
Secured Party Collateral
Security Bank SSB All Personal Property
SCHEDULE 1
Permitted Liens
NONE
