1
EXHIBIT 99
EXECUTION
COPY
FINANCING AGREEMENT
DATED AS OF
OCTOBER 16, 2000
AMONG
AFA PRODUCTS, INC.
AND
CONTINENTAL SPRAYERS INTERNATIONAL, INC.,
AS BORROWERS,
INDESCO INTERNATIONAL, INC.,
AND
THE CIT GROUP /
BUSINESS CREDIT, INC.,
AS LENDER
$25 MILLION
2
TABLE OF CONTENTS
Page
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ARTICLE I.........................................................................................................1
DEFINITIONS.......................................................................................................1
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SECTION 1.01. Defined Terms......................................................................................1
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SECTION 1.02 Term Generally....................................................................................20
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SECTION 1.03. Accounting Terms; GAAP............................................................................20
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ARTICLE II.......................................................................................................20
CONDITIONS PRECEDENT.............................................................................................20
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SECTION 2.01. Conditions to Closing............................................................................20
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SECTION 2.02. Conditions to Each Extension of Credit............................................................24
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ARTICLE III......................................................................................................25
REVOLVING LOANS..................................................................................................25
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SECTION 3.01. Revolving Loans Generally.........................................................................25
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SECTION 3.02. Notice of Borrowing Request......................................................................25
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........................................................................................................25
SECTION 3.03. Revolving Loan Account............................................................................25
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SECTION 3.04. Statement of Account..............................................................................26
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ARTICLE IVTERM LOAN..............................................................................................26
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SECTION 4.01. The Term Loans; Amortization......................................................................26
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SECTION 4.02. Mandatory Prepayments.............................................................................26
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SECTION 4.03. Voluntary Prepayments.............................................................................27
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SECTION 4.04. Application of Payments...........................................................................27
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SECTION 4.05. Authorization to Charge Revolving Loan Account....................................................27
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ARTICLE VLETTERS OF CREDIT.......................................................................................27
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SECTION 5.01. Letters of Credit Generally.......................................................................28
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SECTION 5.02. Authorization to Charge Revolving Loan Account....................................................28
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SECTION 5.03. Indemnification....................................................................................28
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SECTION 5.04. Limitation on Lender's Responsibility.............................................................28
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SECTION 5.05. Further Provisions................................................................................29
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SECTION 5.06. Licenses; Risk....................................................................................29
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SECTION 5.07. Subrogation......................................................................................30
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ARTICLE VI.......................................................................................................30
COLLATERAL.......................................................................................................30
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SECTION 6.01. Grant of Security Interest........................................................................30
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SECTION 6.02. Security Interest Generally.......................................................................30
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SECTION 6.03. Collection of Trade Accounts Receivable...........................................................31
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SECTION 6.04. Delivery of Information Concerning Trade Accounts Receivable and Inventory........................31
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SECTION 6.05. Representations and Covenants With Respect to Trade Accounts Receivable and Inventory.............32
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SECTION 6.06. Additional Representations and Covenants With Respect to Trade Accounts Receivable and Inventory..33
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SECTION 6.07. Representations and Covenants With Respect to Equipment...........................................33
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SECTION 6.08. Representations and Covenants with Respect to General Intangibles.................................33
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SECTION 6.09. Continuing Security Interest......................................................................34
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SECTION 6.10. No Marshalling....................................................................................34
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SECTION 6.11. Credit Balances...................................................................................34
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SECTION 6.12. Mortgages................................................................................35
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ARTICLE VII......................................................................................................35
REPRESENTATIONS AND WARRANTIES...................................................................................35
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SECTION 7.01. Organization; Powers..............................................................................35
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SECTION 7.02. Authorization; Enforceability.....................................................................35
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SECTION 7.03. Governmental Approvals; No Conflicts..............................................................35
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SECTION 7.04. Financial Condition; No Material Adverse Change...................................................36
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SECTION 7.05. Properties........................................................................................36
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SECTION 7.06. Litigation, Environmental Matters and Labor Matters...............................................36
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SECTION 7.07. Compliance with Laws and Agreements...............................................................37
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SECTION 7.08. Investment and Holding Company Status.............................................................37
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SECTION 7.09. Taxes.............................................................................................37
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SECTION 7.10. ERISA.............................................................................................37
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SECTION 7.11. Disclosure........................................................................................37
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SECTION 7.12. Security Interest.................................................................................38
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SECTION 7.13. Use of Proceeds...................................................................................38
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SECTION 7.14. Corporate Structure...............................................................................38
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SECTION 7.15. Permits, Etc......................................................................................38
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SECTION 7.16. Fiscal Year.......................................................................................38
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SECTION 7.17. Status of the Borrowers' and Indesco's Obligations................................................39
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ARTICLE VIII.....................................................................................................39
AFFIRMATIVE COVENANTS............................................................................................39
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SECTION 8.01. Financial Statements, Projections, Borrowing Base Certificates and Other Information.............39
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SECTION 8.02. Notices of Material Events........................................................................41
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SECTION 8.03. Existence; Conduct of Business....................................................................41
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SECTION 8.04. Payment of Obligations............................................................................42
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SECTION 8.05. Maintenance of Properties; Insurance..............................................................42
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SECTION 8.06. Books and Records; Inspection Rights..............................................................42
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SECTION 8.07. Compliance with Laws..............................................................................42
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SECTION 8.08. Use of Proceeds and Letters of Credit.............................................................42
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SECTION 8.09. Lock Boxes and Blocked Account Agreements.........................................................43
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SECTION 8.10. New Subsidiaries..................................................................................43
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ARTICLE IX.......................................................................................................43
NEGATIVE COVENANTS AND FINANCIAL COVENANTS.......................................................................43
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SECTION 9.01. Indebtedness......................................................................................43
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SECTION 9.02. Liens.............................................................................................44
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SECTION 9.03. Fundamental Changes...............................................................................45
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SECTION 9.04. Investments, Loans, Advances, Guarantees and Acquisitions.........................................45
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SECTION 9.05. Restricted Payments...............................................................................46
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SECTION 9.06. Transactions with Subsidiaries and Affiliates.....................................................47
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. 47
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SECTION 9.07. Restrictive Agreements............................................................................47
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SECTION 9.08. Change in Fiscal Year.............................................................................47
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SECTION 9.09. Capital Expenditures..............................................................................48
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SECTION 9.10. Combined EBITDA....................................................................................48
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SECTION 9.11. Consolidated EBITDA................................................................................48
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SECTION 9.12. Consolidated Fixed Charge Coverage Ratio. Indesco and its subsidiaries, on a consolidated basis,
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shall have a............................................................................................48
ARTICLE X........................................................................................................48
INTEREST, FEES AND EXPENSES; LIBOR PROVISIONS....................................................................48
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SECTION 10.01. Interest Generally...............................................................................48
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SECTION 10.02. Default Charges..................................................................................49
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SECTION 10.04. Letter of Credit Fees............................................................................49
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SECTION 10.05. Authorization to Charge Revolving Loan Account for Letter of Credit Fees, etc....................49
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SECTION 10.06. Reimbursement of Out-of-Pocket Expenses; Documentation Fee.......................................49
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SECTION 10.07. Line of Credit Fee...............................................................................49
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SECTION 10.08. Loan Facility Fee................................................................................49
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SECTION 10.09. Administrative Management Fee...................................................................50
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SECTION 10.10. Field Examination Fees...........................................................................50
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SECTION 10.11. Authorization to Charge Revolving Loan Account for all Payments..................................50
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SECTION 10.12. Changes In Law...................................................................................50
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SECTION 10.13. Increased Costs..................................................................................51
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SECTION 10.14. LIBOR Provisions Generally.......................................................................52
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SECTION 10.15. LIBOR Unascertainable............................................................................53
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SECTION 10.16. Extension For Payment............................................................................53
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SECTION 10.17. Unlawfulness.....................................................................................53
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SECTION 10.18. Indemnification..................................................................................53
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SECTION 10.19. Regulatory Changes...............................................................................54
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ARTICLE XI.......................................................................................................55
POWERS...........................................................................................................55
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ARTICLE XII......................................................................................................55
EVENTS OF DEFAULT AND REMEDIES...................................................................................55
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SECTION 12.01 Events of Default................................................................................55
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SECTION 12.02 Termination of Commitments; Acceleration.........................................................57
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SECTION 12.03 Exercise of Remedies...............................................................................59
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ARTICLE XIII.....................................................................................................60
TERMINATION......................................................................................................60
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ARTICLE XIV......................................................................................................60
MISCELLANEOUS....................................................................................................60
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SECTION 14.01. Notices..........................................................................................60
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SECTION 14.02. Waivers; Amendments..............................................................................61
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SECTION 14.03. Expenses; Indemnity; Damage Waive................................................................62
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SECTION 14.04. Successors and Assigns...........................................................................63
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SECTION 14.05. Survival.........................................................................................63
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SECTION 14.06. Counterparts; Integration; Effectiveness.........................................................64
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SECTION 14.07. Severability.....................................................................................64
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SECTION 14.08. Right of Setoff..................................................................................64
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SECTION 14.09. Governing Law; Jurisdiction; Consent to Service of Process.......................................65
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SECTION 14.10. WAIVER OF JURY TRIAL.............................................................................66
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SECTION 14.11. Headings.........................................................................................66
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SECTION 14.12. Confidentiality..................................................................................67
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SECTION 14.13. Interest Rate Limitation.........................................................................67
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SECTION 14.14. [Intentionally Omitted]..........................................................................67
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EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Term Note
Exhibit C - Form of Borrowing Base Certificate
Exhibit D-1 - Form of Warehouseman's Waiver
Exhibit D-2 - Form of Processor's Waiver
SCHEDULES
Schedule 7.14 - corporate structure
Schedule 9.01 - existing Indebtedness
Schedule 9.02 - existing Liens
Schedule 9.04 - existing investments
Schedule 9.07 - restrictive agreements
ANNEXES
Annex I - Lien Perfection Information
Annex II - Closing Document Checklist
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FINANCING AGREEMENT dated as of October 16, 2000 among AFA PRODUCTS, INC. a
Delaware corporation ("AFA") and CONTINENTAL SPRAYERS INTERNATIONAL, INC., a
Delaware corporation ("CSI", and together with AFA, collectively, the
"Borrowers" and each, individually, a "Borrower"), INDESCO INTERNATIONAL, INC.,
a Delaware corporation ("Indesco") and THE CIT GROUP/BUSINESS CREDIT, INC. (the
"Lender").
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Financing Agreement,
the following terms shall have the following meanings:
ACCOUNTS shall mean all of the Borrowers' now existing and future: (a) accounts
(as defined in the UCC), and any and all other receivables (whether or not
specifically listed on schedules furnished to the Lender), including, without
limitation, all accounts created by, or arising from, all of the Borrowers'
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of the Borrowers'
trade names or styles, or through any of the Borrowers' divisions; (b) any and
all instruments, documents, chattel paper (including electronic chattel paper)
(all as defined in the UCC); (c) unpaid seller's or lessor's rights (including
rescission, replevin, reclamation, repossession and stoppage in transit)
relating to the foregoing or arising therefrom; (d) rights to any goods
represented by any of the foregoing, including rights to returned, reclaimed or
repossessed goods; (e) reserves and credit balances arising in connection with
or pursuant hereto; (f) guarantees, supporting obligations, payment intangibles
and letter of credit rights (all as defined in the UCC); (g) insurance policies
or rights relating to any of the foregoing; (h) general intangibles pertaining
to any and all of the foregoing (including all rights to payment, including
those arising in connection with bank and non-bank credit cards), and including
books and records and any electronic media and software thereto; (i) notes,
deposits or property of account debtors securing the obligations of any such
account debtors to any Borrower; and (j) cash and non-cash proceeds (as defined
in the UCC) of any and all of the foregoing.
ADMINISTRATIVE MANAGEMENT FEE shall mean the fee payable to the Lender for its
own account in accordance with Section 10.09 hereof to offset the costs and
expenses (excluding Out-of-Pocket Expenses and auditor fees) of the Lender in
connection with administration, record keeping, analysis and evaluation of the
Collateral.
AFFILIATE shall mean, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
ANNIVERSARY DATE shall mean the date occurring three (3) years from the Closing
Date and the same date in every year thereafter.
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APPLICABLE INCREMENT shall mean on any date of determination, with respect to
any Revolving Loan bearing interest based on the Base Rate or LIBOR, or any
portion of any Term Loan bearing interest based on the Base Rate or LIBOR, the
applicable rate per annum set forth below under the applicable caption, based
upon the level of Consolidated EBITDA corresponding thereto for the period of
four consecutive Fiscal Quarters ending immediately prior to such date of
determination. The Applicable Increment shall apply during the period commencing
on the first day of the month following the month during which the Lender shall
have received the financial statements required to be delivered pursuant to
Section 8.01 for any referenced Fiscal Quarter, and ending on the last day of
the month during which the Lender shall have received such financial statements
for the next succeeding Fiscal Quarter, provided however, that until such time
as the Lender receives such financial statements for the Fiscal Quarter ending
on December 31, 2000, the Applicable Increment shall be those set forth below
opposite Case 3, and provided further that upon the occurrence of a Liquidity
Event, each rate per annum set forth below shall automatically increase by one
percent (1%).
Applicable Increment
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for Revolving Loans Applicable Increment Applicable Increment Applicable Increment
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Consolidated based on the Base for Revolving Loans for Term Loans based for Term Loans based
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EBITDA Rate based on LIBOR on the Base Rate on LIBOR
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Case 1 .00% 2.00% .25% 2.50%
Case 2 .00% 2.25% .50% 2.75%
Case 3 .25% 2.50% .75% 3.00%
Case 4 .50% 2.75% 1.00% 3.25%
AUTHORIZED OFFICER shall mean, with respect to Indesco or any Borrower, its
Chief Executive Officer or Chief Financial Officer, or any other officer of
Indesco or such Borrower, as the case may be, duly authorized by its Board of
Directors to discharge some or all of the responsibilities of the Chief
Financial Officer.
AVAILABILITY shall mean, with respect to any Borrower at any time the amount by
which: (a) the lesser of (i) the Revolving Line of Credit minus the Letter of
Credit Exposure with respect to such Borrower, and minus the sum of all
Revolving Loans made to the other Borrower and the Letter of Credit Exposure in
effect with respect to such other Borrower or (ii) the Borrowing Base applicable
to such Borrower, minus the amount calculated pursuant to clause (b) of the term
Availability Reserve with respect to such Borrower exceeds (b) the sum of (i)
the aggregate principal amount of all outstanding Revolving Loans made to such
Borrower and (ii) the Letter of Credit Exposure with respect to such Borrower.
AVAILABILITY RESERVE shall mean, with respect to any Borrower, the sum of: (a)
any reserve in such amount and with respect to such risks as the Lender may
reasonably require from time to time pursuant to this Financing Agreement,
including without limitation, for Letter of Credit
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Exposure with respect to such Borrower pursuant to Section 5.01; and (b) a
reserve in an amount equal to the product of (x) the Eligible Accounts
Receivable of such Borrower, as of any date of determination, multiplied by (y)
the historic dilution for the period of six months preceding such date of
determination of the Trade Accounts Receivable of such Borrower, expressed as a
percentage, as determined and adjusted from time to time by the Lender in its
reasonable discretion, pursuant to its periodic examination of such Borrower's
books and records, minus five percent (5%).
BASE RATE shall mean the rate of interest per annum announced by The Chase
Manhattan Bank, or its successors, from time to time as its prime rate in effect
at its principal office in New York City. (The prime rate is not intended to be
the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers).
BASE RATE LOANS shall mean any loans or advances pursuant to this Financing
Agreement made or maintained at a rate of interest based upon the Base Rate.
BLOCKED ACCOUNT AND BLOCKED ACCOUNT AGREEMENT shall have the meanings given to
such terms in Section 6.03.
BORROWING BASE shall mean, with respect to any Borrower, the sum of (a)
eighty-five percent (85%) of such Borrower's aggregate outstanding Eligible
Accounts Receivable, plus (b) the lesser of (i) sixty percent (60%) of the
aggregate value of such Borrower's Eligible Inventory, where value shall be
based on the lower of cost or market determined on a first-in-first-out basis,
or (ii) the Inventory Loan Cap.
BORROWING BASE CERTIFICATE means, with respect to any Borrower, a certificate of
an Authorized Officer of such Borrower substantially in the form of Exhibit C
hereto appropriately completed.
BREAKAGE COSTS shall mean the costs and expenses described in Section 10.18.
BUSINESS DAY shall mean any day on which both the Lender and The Chase Manhattan
Bank are open for business in New York City.
CAPITAL EXPENDITURES shall mean, for any period, with respect to any Person, the
aggregate expenditures of such Person during such period on account of property,
plant, equipment or similar fixed assets that, in conformity with GAAP, are
required to be reflected in the balance sheet of such Person, including without
limitation the portion of each Capital Lease that is or should be capitalized in
accordance with GAAP.
CAPITAL LEASE shall mean, with respect to any Person, any lease by such Person
of property (whether real, personal or mixed) which, in conformity with GAAP, is
accounted for as a capital lease or a Capital Expenditure on the balance sheet
of such Person.
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CASE 1 shall mean, for any period of four consecutive Fiscal Quarters,
Consolidated EBITDA equal to or greater than $20,000,000.
CASE 2 shall mean, for any period of four consecutive Fiscal Quarters,
Consolidated EBITDA equal to or greater than $19,000,000, and less than
$20,000,000.
CASE 3 shall mean, for any period of four consecutive Fiscal Quarters,
Consolidated EBITDA of equal to or greater than $18,000,000, and less than
$19,000,000.
CASE 4 shall mean, for any period of four consecutive Fiscal Quarters,
Consolidated EBITDA of less than $18,000,000.
CLOSING DATE shall mean the date that this Financing Agreement has been duly
executed by the parties hereto and delivered to the Lender.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COLLATERAL shall mean all present and future Accounts, Documents of Title,
Equipment, General Intangibles, Intellectual Property, Inventory, Pledged Stock,
Real Estate and Other Collateral.
COMMITMENT LETTER shall mean, collectively, each Commitment Letter, dated
October 2, 2000, issued by the Lender to, and accepted by, the Borrowers.
CONSOLIDATED shall mean, with respect to any financial statement of Indesco, or
any financial statement of any Borrower, the preparation of such financial
statement on a consolidated basis for such Person and its consolidated
subsidiaries, eliminating all inter-company transactions and prepared in
accordance with GAAP.
CONSOLIDATED EBITDA shall mean, for any period, EBITDA of Indesco and its
consolidated subsidiaries, other than Polytek, for such period.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO shall mean, without duplication, for
the relevant period, the ratio determined by dividing (i) Consolidated EBITDA
for such period, by (ii) the sum of (a) Interest Expense of Indesco and its
consolidated subsidiaries paid or due, in cash, during such period, plus (b) the
amount of principal of the Term Loans and of any other Indebtedness of Indesco
and its consolidated subsidiaries (other than the Revolving Loans and Letters of
Credit) repaid or scheduled to be repaid during such period (including the
portion of payments made during such period under Capitalized Leases that are
allocable to the repayment of principal), plus (c) Capital Expenditures made by
Indesco or by any Borrower during such period which were not financed, plus (d)
all dividends and other distributions of a similar nature made in cash during
such period, the proceeds of which are used by Indesco to fund the payment in
the ordinary course of obligations incurred by it, other than any such dividends
or distributions made during such period in connection with the sale or other
distribution of the assets or capital stock of Polytek, plus (e) all federal,
state and local income tax expenses due and payable in cash by Indesco or by any
Borrower during such period.
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CONSOLIDATING shall mean, with respect to any financial statement of Indesco,
the preparation of such financial statement on a consolidated basis plus
individual balance sheets for Indesco and its consolidated subsidiaries, showing
all eliminations of inter-company transactions, including balance sheets and
statements of operation and cash flow for each Borrower exclusively, all
prepared in accordance with GAAP.
CONTROL shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
COPYRIGHTS shall mean all present and hereafter acquired copyrights, copyright
registrations, recordings, applications, and licenses for any of the foregoing,
designs, styles, prints and labels bearing any of the foregoing, and all cash
and non-cash proceeds thereof.
DEFAULT shall mean any event specified in Article XII, or which, with the giving
of notice, the lapse of time, or both, or any other condition, event or act,
would become an Event of Default.
DEFAULT CHARGES shall mean (i) with respect to Loans, a rate of interest per
annum equal to the sum of two percent (2%) plus the Applicable Increment over
the Base Rate plus the Base Rate, in the case of Base Rate Loans, or two percent
(2%) plus the Applicable Increment over the LIBOR Rate plus the LIBOR Rate, in
the case of LIBOR Loans, and (ii) with respect to Letters of Credit, a rate of
interest per annum equal to the sum of two percent (2%) plus the applicable
Letter of Credit Fee.
DOCUMENTATION FEE shall mean the Lender's standard fees relating to any and all
modifications, waivers, releases or amendments with respect to this Financing
Agreement, the Collateral and/or the Obligations, or the perfection of the
Lender's security interest in additional collateral, in each case after the
Closing Date.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
EBITDA shall mean, for any period, Net Income for such period plus, to the
extent deducted in determining Net Income for such period, the aggregate amount
of Interest Expense and income tax expense for such period, and all
depreciation, amortization and other non-cash charges for such period, minus, to
the extent included in determining Net Income for such period, the aggregate
amount of interest income for such period that has been deferred or has not been
paid in cash, all determined in accordance with GAAP on a consistent basis, but
excluding the effect of extraordinary or non-reoccurring gains or losses for
such period.
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ELIGIBLE ACCOUNTS RECEIVABLE shall mean, with respect to any Borrower, the gross
amount of such Borrower's Trade Accounts Receivable that are subject to a valid,
first priority and fully perfected security interest in favor of the Lender,
which conform to the warranties contained herein and which, at all times,
continue to be acceptable to the Lender in the exercise of its reasonable
business judgment, less, without duplication, any returns, discounts, claims,
credits and allowances of any nature (whether issued, owing, granted, claimed or
outstanding). Trade Accounts Receivable that arise from or are subject to or
include any of the following shall not be considered Eligible Accounts
Receivable:
(i) sales to the United States of America, any state or other
governmental entity or to any agency, department or division thereof, except for
any such sales as to which such Borrower has complied with the Assignment of
Claims Act of 1940 or any other applicable statute, rules or regulation, to the
Lender's satisfaction in the exercise of its reasonable business judgment;
(ii) foreign sales, other than sales which otherwise comply with all of
the other criteria for eligibility hereunder and are (x) secured by letters of
credit (in form and substance satisfactory to the Lender) issued or confirmed
by, and payable at, banks having a place of business in the United States of
America, or (y) to customers residing in Canada, provided that the Accounts on
which such customers are obligated are by their terms payable in U.S. Dollars,
or payable in Canadian dollars and the risk in fluctuation of currency value
between Canadian and U.S. Dollars is hedged in a manner that is reasonably
satisfactory to the Lender;
(iii) Trade Accounts Receivable that remain unpaid beyond the sooner to
occur of the date which is sixty (60) days from due date or ninety (90) days
from invoice date;
(iv) contra accounts, to the extent of the applicable offset;
(v) sales to any employee, Affiliate or Subsidiary of such Borrower;
(vi) xxxx and hold (deferred shipment) or consignment sales, other than
sales made on a xxxx and hold basis to Scotts, provided that (A) any such sale
has been made by the applicable Borrower in the ordinary course of its business
and (B) the terms of such sale (including without limitation the terms
pertaining to the point at which title to the goods which are the subject of
such sale are transferred to Scotts) have been memorialized in a written
agreement signed by Scotts and delivered to such Borrower;
(vii) sales to any customer which is: (A) insolvent, (B) the debtor in
any bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, (C) negotiating, or has called a
meeting of all or substantially all of its material creditors for purposes of
negotiating, a compromise of its debts, (D) financially unacceptable to the
Lender or has a credit rating unacceptable to the Lender, in each case in the
Lender's reasonable judgment;
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(viii) all sales to any customer if fifty percent (50%) or more of the
aggregate dollar amount of all outstanding invoices to such customer are unpaid
beyond the sooner to occur of the date which is sixty (60) days from due date or
ninety (90) days from invoice date;
(ix) pre-billed Trade Accounts Receivable and Trade Accounts Receivable
arising from progress billing;
(x) an amount representing, historically, returns, warranty reserves,
discounts, claims, credits, allowances and applicable terms, samples, and an
amount representing late charges or finance charges;
(xi) sales not payable in United States currency, other than as provided
in clause (ii) (y) above; and
(xii) any other reasons deemed necessary by the Lender in its reasonable
judgment, including without limitation those which are customary either in the
commercial finance industry or in the lending practices of the Lender (with
respect to which reasons the Lender shall endeavor to give prior notice to the
applicable Borrower).
ELIGIBLE INVENTORY shall mean, with respect to any Borrower, the gross amount of
such Borrower's Inventory that is subject to a valid, first priority and fully
perfected security interest in favor of the Lender and which conforms to the
warranties contained herein and which, at all times, continues to be acceptable
to the Lender in the exercise of its reasonable business judgment, less, without
duplication, any (a) supplies (other than raw materials), (b) Inventory not
present in the United States of America, other than Inventory imported pursuant
to a Letter of Credit, (c) Inventory repossessed by such Borrower or returned or
rejected by such Borrower's customers (other than goods that are undamaged and
resalable in the normal course of business) and goods to be returned to such
Borrower's suppliers, (d) Inventory in transit to third parties (other than such
Borrower's agents or warehouses), or in the possession of a warehouseman,
bailee, third party processor, or other third party, unless such warehouseman,
bailee or third party has executed a notice of security interest agreement in
substantially the form of Exhibit D-1 or D-2 hereto (as applicable), or is
otherwise in form and substance satisfactory to the Lender, (e) Inventory which
materially fails to meet standards imposed by any applicable Governmental
Authority, and (f) any reserves required by the Lender in its reasonable
discretion, including without limitation for special order goods, discontinued,
slow-moving (based on the historical turnover of the applicable Borrower's
Inventory) and obsolete Inventory, market value declines, xxxx and hold
(deferred shipment), consignment sales, shrinkage and any applicable customs,
freight, duties and Taxes.
ENVIRONMENTAL LAW shall mean all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material.
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ENVIRONMENTAL LIABILITY shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of a Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed by or imposed upon, such Borrower with respect to any of the
foregoing.
EQUIPMENT shall mean all present and hereafter acquired equipment (as defined in
the UCC) including, without limitation, all machinery, equipment, furnishings
and fixtures, and all additions, substitutions and replacements thereof,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort, provided, however, that Equipment shall not include any machinery
or equipment acquired by a Borrower (i) by lease (whether pursuant to a Capital
Lease or otherwise) or (ii) pursuant to a purchase money financing arrangement,
to the extent that the terms of such lease or such financing arrangement
prohibit such Borrower from collaterally assigning or granting a Lien against
such machinery or equipment, so long as such prohibition is legally enforceable.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
ERISA AFFILIATE shall mean any trade or business (whether or not incorporated)
that, together with any Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
ERISA EVENT shall mean (a) any "reportable event," as defined in Section 4043 of
ERISA with respect to a Plan (other than an event for which the 30-day notice
period is waived); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by any Borrower or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by any Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by any Borrower or any of its ERISA
Affiliates of any material liability with respect to the withdrawal or partial
withdrawal from any Plan; or (g) the receipt by any Borrower or any ERISA
Affiliate of any notice concerning the imposition of withdrawal liability,
within the meaning of Title IV of ERISA.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR Loan, shall
mean the aggregate (without duplication) of the maximum rates of reserve
requirements (expressed as a decimal) in effect with respect to the Lender on
such day (including, without limitation, basic,
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supplemental, marginal and emergency reserves under Regulation D or any other
applicable regulations of the Board of Governors of the Federal Reserve System
or other governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect, dealing with reserve requirements prescribed
for Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by the Lender (such rate to be adjusted
to the nearest one sixteenth of one percent (1/16 of 1%) or, if there is not a
nearest one sixteenth of one percent (1/16 of 1%), to the next higher one
sixteenth of one percent (1/16 of 1%)).
EVENT(s) OF DEFAULT shall have the meaning provided for in Article XII.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
FISCAL QUARTER shall mean, with respect to Indesco and each Borrower, each three
(3) month period ending on March 31, June 30, September 30 and December 31 of
each Fiscal Year.
FISCAL YEAR shall mean, with respect to Indesco and each Borrower, the period of
four consecutive Fiscal Quarters commencing on January 1 of each year and ending
on December 31 of such year.
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply.
GENERAL INTANGIBLES shall mean all present and hereafter acquired general
intangibles (as defined in the UCC), and shall include, without limitation, all
present and future right, title and interest in and to: (a) all Trademarks,
corporate names, business names, logos and any other designs or sources of
business identities and the goodwill with respect to any of the foregoing, (b)
Patents, together with any improvements on said Patents, utility models,
industrial models, and designs, (c) Copyrights, (d) trade secrets, (e) licenses,
permits and franchises, (f) all applications with respect to the foregoing, (g)
all right, title and interest in and to any and all extensions and renewals, (h)
any other forms of similar intellectual property, and (i) all customer lists,
distribution agreements, supply agreements, blueprints, indemnification rights
and tax refunds, together with all monies and claims for monies now or hereafter
due and payable in connection with any of the foregoing or otherwise, and all
cash and non-cash proceeds thereof, including, without limitation, the proceeds
or royalties of any licensing agreements between a Borrower and any licensee of
any of such Borrower's General Intangibles, provided, however, that General
Intangibles shall not include any contract rights in which a Borrower has an
interest to the extent such contract rights arise under a license agreement (x)
to which such Borrower is a
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party as licensee and (y) which by its terms prohibits such Borrower from
collaterally assigning or granting a Lien against such contract rights, so long
as such prohibition is legally enforceable.
GOVERNMENTAL AUTHORITY shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
GUARANTY shall mean each instrument of guaranty dated as of the Closing Date,
executed by Indesco and each of the Borrowers in favor of the Lender.
HAZARDOUS MATERIALS shall mean all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls or radon gas and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
HEDGING OBLIGATIONS shall mean any obligation or liability arising under or
relating to an interest rate protection agreement, foreign currency exchange
agreement, commodity price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement, or any arrangement which
is derivative thereof.
HOLDINGS shall mean Indesco Holdings Co., a Delaware corporation.
INDEBTEDNESS of any Person shall mean, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business and
excluding installments of premiums payable with respect to policies of insurance
contracted for in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all guarantees by such Person of Indebtedness of others, (h)
all obligations under Capital Leases of such Person attributable to the payment
of principal, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
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INDENTURE EVENT shall mean the default or event of default under the
Subordinated Indenture arising from the failure to pay when due (and the
continuance of such failure for a period of 30 days or more) the scheduled
installment of interest on the Subordinated Notes payable on October 15, 2000.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTELLECTUAL PROPERTY shall mean all property and all interests in property
described in the Intellectual Property Agreements in which any Borrower has
granted security interests to the Lender.
INTELLECTUAL PROPERTY AGREEMENTS shall mean, collectively, the Trademark
Security Agreements and the Patent Security Agreements, in each case dated as of
the Closing Date and executed by the Borrowers in favor of the Lender, pursuant
to which the Borrowers shall have granted to the Lender a Lien on and security
interest in the property, and interests in property, described in each such
Agreement as security for the payment and performance of the Obligations.
INTEREST EXPENSE shall mean the total interest obligations (paid or accrued) of
a Person, determined on a consolidated basis in accordance with GAAP,
consistently applied.
INTEREST PERIOD shall mean:
(a) with respect to any initial request by a Borrower for a LIBOR Loan, a one
month, two month, three month or six month period commencing on the borrowing or
conversion date with respect to a LIBOR Loan and ending one, two, three or six
months thereafter, as applicable; and
(b) thereafter with respect to any continuation of, or conversion to, a LIBOR
Loan, at the option of such Borrower, any one month, two month, three month or
six month period commencing on the last day of the immediately preceding
Interest Period applicable to such LIBOR Loan and ending one, two, three or six
months thereafter, as applicable;
provided that, the foregoing provisions relating to Interest Periods are subject
to the following:
(i) if any Interest Period would otherwise end on a day which is not a Working
Day, that Interest Period shall be extended to the next succeeding Working Day,
unless the result of such extension would extend such payment into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Working Day;
(ii) any Interest Period that begins on the last Working Day of a 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 end on the last Working Day of
a calendar month; and
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(iii) for purposes of determining the availability of Interest Periods, such
Interest Periods shall be deemed available if (x) Chase Manhattan Bank quotes an
applicable rate or the Lender determines LIBOR, as provided in the definition of
LIBOR, (y) the LIBOR determined by Chase Manhattan Bank or the Lender will
adequately and fairly reflect the cost of maintaining or funding Loans bearing
interest at LIBOR, for such Interest Period, and (z) such Interest Period will
end on or before the earlier of Anniversary Date or the last day of the then
current term of this Financing Agreement. If a requested Interest Period shall
be unavailable in accordance with the foregoing sentence, such Borrower shall
continue to pay interest on the Obligations at the applicable per annum rate
based upon the Base Rate.
INVENTORY shall mean all of the Borrowers' present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production-from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
INVENTORY LOAN CAP shall mean, as of any date of determination, with respect to
any Borrower, the amount obtained after the subtraction from $6,000,000 of the
portion of the Revolving Loans outstanding on such date advanced against the
Eligible Inventory of the other Borrower.
ISSUING BANK shall mean the bank issuing Letters of Credit.
LC DISBURSEMENT shall mean (i) a payment made by the Issuing Bank pursuant to a
Letter of Credit, or (ii) a payment made by the Lender pursuant to any
indemnification agreement described in clause (ii) of the defined term Letter of
Credit Guaranty.
LETTER OF CREDIT EXPOSURE shall mean, as of any date of determination, without
duplication, the sum of (i) the aggregate undrawn amount of all outstanding
Letters of Credit, (ii) the aggregate unreimbursed amount of all drawn Letters
of Credit and (iii) any other unreimbursed LC Disbursement.
LETTER OF CREDIT FEE shall mean the fee chargeable to the Borrowers by the
Lender, pursuant to Section 10.04, for (a) issuing a Letter of Credit Guaranty,
and/or (b) otherwise aiding the Borrowers in obtaining Letters of Credit.
LETTER OF CREDIT GUARANTY shall mean (i) the guaranty delivered by the Lender to
the Issuing Bank of the Borrowers' reimbursement obligations under the Issuing
Bank's reimbursement agreement, application for Letter of Credit or other like
document and (ii) the indemnification by the Lender of First Union National Bank
for the undrawn principal amount as of the Closing Date of, and fees and
expenses payable in respect of, documentary letters of credit and stand-by
letters of credit issued by such bank under the Old Credit Agreement, pursuant
to an indemnity agreement, dated on or about the Closing Date, executed by the
Lender and such bank.
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LETTER OF CREDIT SUB-LINE shall mean the commitment of the Lender, pursuant to
Section 5.01, to assist the Borrowers in obtaining Letters of Credit having an
aggregate undrawn amount ,together with an aggregate drawn but unreimbursed
amount, not to exceed (i) in the aggregate, for all Letters of Credit,
$2,000,000 and (ii) in the case of documentary Letters of Credit, $1,000,000,
and in the case of stand-by Letters of Credit, $1,000,000.
LETTERS OF CREDIT shall mean all letters of credit issued by the Issuing Bank,
for or on behalf of a Borrower, with the assistance of the Lender, in accordance
with Article V.
LIBOR shall mean, at any time of determination, and subject to availability, for
each applicable Interest Period, a variable rate of interest equal to: (a) at
the Lender's election (i) the applicable LIBOR quoted to the Lender by The Chase
Manhattan Bank (or any successor thereof), or (ii) the rate of interest
determined by the Lender at which deposits in U.S. dollars are offered for the
relevant Interest Period based on information presented on Telerate Systems at
Page 3750 as of 11:00 A.M. (London time) on the day which is two (2) Business
Days prior to the first day of such Interest Period, provided that, if at least
two such offered rates appear on the Telerate System at Page 3750 in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Lender) will be the rate used; divided by (b) a number equal to 1.0 minus
the aggregate (but without duplication) of the rates (expressed as a decimal) of
Eurocurrency Reserve Requirements in effect on the day which is two (2) Business
Days prior to the beginning of such Interest Period.
LIBOR LENDING OFFICE shall mean, with respect to the Lender, the office of The
Chase Manhattan Bank, or any successor thereof, maintained at 000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000.
LIBOR LOAN shall mean any Loans made pursuant to this Financing Agreement which
are made or maintained at a rate of interest based upon LIBOR, provided that (i)
no Default or Event of Default has occurred hereunder, which has not been waived
in writing by the Lender, and (ii) no LIBOR Loan shall be made with an Interest
Period that ends subsequent to an Anniversary Date or any applicable Early
Termination Date.
LIEN shall mean with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
LINE OF CREDIT shall mean, as of any relevant date, the sum of the Lender's
commitments to make Revolving Loans, assist in the issuance of Letters of
Credit, and make Term Loans which, as of the Closing Date, shall equal
$25,000,000, in the aggregate.
LINE OF CREDIT FEE shall: (a) mean the fee payable jointly and severally by the
Borrowers to the Lender and due at the end of each month for the Line of Credit,
and (b) be determined by
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multiplying the difference between (i) the Revolving Line of Credit and (ii) the
sum, for such month, of (x) the average daily balance of Revolving Loans plus
(y) the average daily undrawn balance of Letters of Credit, in each case
outstanding during such month, by three-eighths of one percent (.375%) per annum
for the number of days in such month.
LIQUIDITY EVENT shall have the meaning given to such term in Section 10.03.
LOAN shall mean a Revolving Loan or a Term Loan; Loans shall mean all Revolving
Loans and all Term Loans.
LOAN DOCUMENTS shall mean this Financing Agreement, each Guaranty, the
Promissory Notes, the Intellectual Property Agreements, the Stock Pledge
Agreement, the Mortgages, the other closing documents and any other ancillary
documents, instruments and agreements executed from time to time in connection
with this Financing Agreement, all as may be renewed, amended, extended,
increased or supplemented from time to time.
LOAN FACILITY FEE shall mean the fee payable to the Lender in accordance with,
and pursuant to, the provisions of Section 10.08.
LOCK BOX shall have the meaning given such term in Section 6.03.
MATERIAL ADVERSE CHANGE shall mean a material adverse change in the business,
assets, operations, prospects or condition, financial or otherwise, of any
Borrower, or of Indesco and its subsidiaries, taken as a whole, other than any
such change arising from or relating to the occurrence of the Indenture Event.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
any Borrower, or of Indesco and its subsidiaries, taken as a whole, other than
any such effect arising from or relating to the occurrence of the Indenture
Event, (b) the ability of any Borrower to perform any of its material
obligations under this Financing Agreement or any of the other Loan Documents or
(c) the rights of or benefits available to the Lender under this Financing
Agreement or any of the other Loan Documents.
MATERIAL INDEBTEDNESS shall mean any Indebtedness (other than the Loans, Letters
of Credit and other Obligations) of Indesco or of any Borrower in a principal
amount, as of any date of determination, exceeding $250,000.
MORTGAGES shall mean each Future Advances Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing executed by AFA, each dated as of
the Closing Date, each Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing executed by CSI, each dated as of the Closing Date,
and the Fee and Leasehold Deed of Trust and Security Agreement executed by CSI,
dated as of the Closing Date.
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NET CASH PROCEEDS shall mean, with respect to any property, the aggregate amount
of all proceeds, payable in cash, arising from the sale, transfer or other
disposition of such property, minus the usual and customary out-of-pocket costs
and expenses payable by the seller of such property, the principal amount of
Indebtedness that is mandatorily payable by such seller upon the disposition of
such property (other than Indebtedness incurred under this Financing Agreement),
and the amount of taxes paid (or reasonably estimated to be payable) by such
seller in connection with such disposition.
NET INCOME shall mean, with respect to any Person for any period, the net after
tax income (or loss) of such Person for such period, determined on a
consolidated basis in accordance with GAAP.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by the Lender to any Borrower (or all Borrowers), or to others for such
Borrower's account, pursuant to this Financing Agreement (including, without
limitation, all Revolving Loans, Letter of Credit Guaranties, and the Term
Loans); and any and all indebtedness, liabilities and obligations which may at
any time be owing by such Borrower to the Lender arising under or relating to
this Financing Agreement, whether now in existence or incurred by such Borrower
from time to time hereafter; whether consisting of principal, interest, fees,
costs, expenses (including reasonable attorney's fees and disbursements) or
otherwise; whether secured by Liens upon any of such Borrower's Collateral,
assets or property or the assets or property of any other Person; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether such Borrower is liable to the Lender for such
indebtedness as principal, surety, endorser, guarantor or otherwise, provided,
however, that Obligations shall not include any obligations, liabilities or
indebtedness arising under the Guaranty executed by such Borrower. Obligations
shall also include indebtedness, obligations and liabilities owing to the Lender
by such Borrower under any Loan Document or under any other agreement or
arrangement now or hereafter entered into between the Borrower and the Lender
pursuant to or in connection with the transactions contemplated to occur under
or in respect of this Financing Agreement and all Out-of-Pocket Expenses.
OLD CREDIT AGREEMENT shall mean the Loan and Security Agreement dated as of
September 29, 1998 by and among Indesco International, Inc., AFA Products, Inc.,
Continental Sprayers, Inc. and First Union National Bank, as the same may be
renewed, amended, extended, increased or supplemented from time to time.
OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
blocked account and any other deposit accounts maintained with any bank or
financial institutions into which the proceeds of Collateral are or may be
deposited; all cash and other monies and property in the possession or control
of the Lender; all books, records, ledger cards, disks and related data
processing software at any time evidencing or containing information relating to
any of the Collateral described herein or otherwise necessary or helpful in the
collection thereof or realization thereon; and all cash and non-cash proceeds of
the foregoing.
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OUT-OF-POCKET EXPENSES shall mean all of the out-of-pocket costs and expenses
incurred pursuant to this Financing Agreement or any other Loan Documents by the
Lender, whether incurred heretofore or hereafter, which expenses shall include,
without being limited to: the cost of record searches, all costs and expenses
incurred by the Lender in opening bank accounts, depositing checks, receiving
and transferring funds, and wire transfer charges, any charges imposed on the
Lender due to returned items and "insufficient funds" of deposited checks and
the Lender's standard fees relating thereto, any amounts paid by, incurred by or
charged to, the Lender by the Issuing Bank under a Letter of Credit Guaranty or
any Borrower's reimbursement agreement, application for Letters of Credit or
other like document which pertain either directly or indirectly to such Letters
of Credit, and the Lender's standard fees relating to the Letters of Credit and
any drafts thereunder, travel, lodging and similar expenses of the Lender's
personnel in connection with inspecting and monitoring the Collateral from time
to time hereunder, any applicable reasonable counsel fees and disbursements,
fees and taxes relative to the filing of financing statements, all expenses,
costs and fees set forth in Section 12.03, and title insurance premiums, real
estate survey costs, costs of preparing and recording the Mortgages.
OVERADVANCE shall mean, as of any date of determination, with respect to any
Borrower, the amount by which (a) the sum of all Revolving Loans made to such
Borrower and the Letter of Credit Exposure applicable to such Borrower exceeds
(b) the lesser of (i) the Revolving Line of Credit minus the sum of all
Revolving Loans made to the other Borrower and the Letter of Credit Exposure
applicable to such other Borrower and (ii) the Borrowing Base applicable to such
Borrower minus the Availability Reserve in effect with respect to such Borrower,
in each case as of such date.
PATENTS shall mean all present and hereafter acquired patents, patent
applications, any reissues or renewals thereof, licenses for any of the
foregoing, any inventions and improvements claimed thereunder, and all income,
royalties, cash and non-cash proceeds thereof.
PERMITS shall have the meaning given to such term in Section 7.16.
PERMITTED ENCUMBRANCES shall mean: (a) liens of local or state authorities for
franchise or other like Taxes not yet due; (b) statutory liens of landlords and
liens of carriers, warehousemen, bailees, mechanics, materialmen and other like
liens imposed by law, created in the ordinary course of business and for amounts
not yet due (or which are being contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent
imminent foreclosure of such liens and with respect to which adequate reserves
or other appropriate provisions are being maintained by the Borrower obligated
with respect thereto in accordance with GAAP); (c) pledges or deposits made (and
the liens thereon) in the ordinary course of business of the Borrowers
(including, without limitation, security deposits for leases, indemnity bonds,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements or to secure the performance of tenders, bids, contracts (other
than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations and other similar obligations; (d) easements
(including, without limitation, reciprocal easement agreements and utility
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agreements), encroachments, minor defects or irregularities in title, variation
and other restrictions, charges or encumbrances (whether or not recorded)
affecting the Real Estate, if applicable, and which in the aggregate (i) do not
materially interfere with the occupation, use or enjoyment by a Borrower of its
business or property so encumbered and (ii) in the reasonable business judgment
of the Lender do not materially and adversely affect the value of such Real
Estate; (e) tax liens which are not yet due and payable or which are being
diligently contested in good faith by the applicable Borrower by appropriate
proceedings; (f) liens created in favor of a bank at which a deposit account,
other than a Blocked Account, is maintained, including set off rights in favor
of such bank; (g) the items identified in Schedules A, B and C of each of the
Mortgages; and (h) zoning, entitlement, building and other land use regulations
imposed by governmental agencies having jurisdiction over the Real Estate which
are not violated by the current use and operation of the Real Estate.
PERMITTED INVESTMENTS shall mean (a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof; (b)
investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Xxxxx'x; (c) investments in certificates of
deposit, banker's acceptances and time deposits maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000; and (d) fully collateralized repurchase agreements
with a term of not more than 30 days for securities described in clause (a)
above and entered into with a financial institution satisfying the criteria
described in clause (c) above.
PERSON shall mean any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, or other entity.
PLAN shall mean any employee pension benefit plan subject to the provisions of
Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
PLEDGED STOCK shall mean the securities pledged by Indesco and CSI,
respectively, pursuant to the Stock Pledge Agreement executed by each such
Person in favor of the Lender as security for the payment and performance of all
Obligations.
POLYTEK shall mean AFA Polytek B.V., a Netherlands corporation.
PROMISSORY NOTES shall mean the Revolving Notes and the Term Notes delivered by
the Borrowers to the Lender to evidence the Revolving Loans and the Term Loans
made to each of them pursuant to, and repayable in accordance with, the
provisions of this Financing Agreement.
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PROPERTY SURVEY shall have the meaning given to such term in Section 2.01(t).
REAL ESTATE shall mean the fee and/or leasehold interests of the applicable
Borrower in the real property described in the Mortgages.
RESTRICTED PAYMENT shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of Indesco or any of its subsidiaries, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of Indesco or
any of its subsidiaries or any option, warrant or other right to acquire any
such shares of capital stock of Indesco or any of its subsidiaries.
REVOLVING LINE OF CREDIT shall mean the commitment of the Lender to make
Revolving Loans pursuant to Article III, and to issue Letter of Credit
Guaranties pursuant to Article V, in the combined amount of $10,000,000.
REVOLVING LOAN ACCOUNT shall mean, collectively, each of the accounts on the
Lender's books, established in the name of each of the Borrowers, against which
each of the Borrowers will be charged with all Obligations owing by such
Borrower under this Financing Agreement, as and when payable.
REVOLVING LOANS shall mean the loans and advances from time to time made to or
for the account of each Borrower pursuant to the provisions of Section 3.01.
REVOLVING NOTE shall mean a promissory note of a Borrower in the form of Exhibit
A to this Financing Agreement.
STOCK PLEDGE AGREEMENT shall mean each Stock Pledge Agreement, dated as of the
Closing Date, executed by Indesco and CSI, respectively, in favor of the Lender,
pursuant to which each such Person shall have pledged and collaterally assigned
the Pledged Stock owned by it as security for the payment and performance of the
Obligations.
SUBORDINATED DEBT shall mean the principal of, interest on, premium, if any, and
fees and expenses payable in connection with, Indebtedness of Indesco,
guaranteed by the Borrowers, incurred pursuant to the Subordinated Indenture.
SUBORDINATED INDENTURE shall mean the Indenture dated as of April 23, 1998 among
Indesco International, Inc., as Issuer, the Subsidiary Guarantors named therein,
and Norwest Bank Minnesota, National Association, as Trustee.
SUBORDINATED NOTES shall mean the 9 3/4% Series B Senior Subordinated Notes Due
2008 issued pursuant to the Subordinated Indenture by Indesco in the aggregate
original principal amount of $145,000,000.
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SUBSIDIARY shall mean with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
SURPLUS CASH shall mean, for any Fiscal Year, with respect to any Borrower on a
consolidated basis with its subsidiaries, (a) EBITDA of such Borrower for such
Fiscal Year less (b) the sum of (i) all cash Interest Expense of such Borrower
for such Fiscal Year, (ii) the aggregate scheduled amount of principal of the
Term Loan made to such Borrower, repaid during such Fiscal Year, (iii) Capital
Expenditures actually made by such Borrower during such Fiscal Year and not
financed, (iv) cash expenditures made in respect of Hedging Obligations of such
Borrower (to the extent not reflected in such EBITDA or Interest Expense), and
(v) all cash income tax expense of such Borrower for such Fiscal Year.
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due from a Person
with respect to its business, operations, assets, properties or otherwise.
TERM NOTE shall mean a promissory note of a Borrower in the form of Exhibit B to
this Financing Agreement.
TERM LOANS shall mean the term loans in the aggregate original principal amount
of $15,000,000 made to the Borrowers pursuant to, and repayable in accordance
with, the provisions of Sections 4.01 and 4.02.
TRADE ACCOUNTS RECEIVABLE shall mean, with respect to any Borrower, the accounts
(as defined in the UCC) of such Borrower which arise from the sale of Inventory
or the rendition of services in the ordinary course of such Borrower's business.
TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications and licenses for any of the foregoing,
tradenames, trade styles, service marks, prints and labels (on which any of the
foregoing may appear), reissues, and renewals, together with the goodwill
associated therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the state of New York.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
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SECTION 1.02 Term Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Financing Agreement in its entirety
and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Financing
Agreement and (e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if Indesco or any Borrower notifies the Lender that it requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Lender notifies Indesco or any Borrower
that it requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.01. Conditions to Closing. The Lender's commitment to
fund the initial Revolving Loan and the Term Loans, and assist in the issuance
of the initial Letter of Credit, is subject to the satisfaction, extension or
waiver (in writing), on or prior to the Closing Date, of each of the following
conditions precedent:
(a) Lien Searches - The Lender shall have received and reviewed to its
satisfaction, as of a recent date, tax, judgment and Uniform Commercial Code
searches for all locations presently occupied or used by the Borrowers.
(b) Casualty Insurance - The Borrowers shall have delivered to the Lender
evidence satisfactory to the Lender that casualty insurance policies listing the
Lender as additional insured, loss payee or mortgagee, as the case may be, are
in full force and effect, provided that any certificate that evidences such
insurance shall be in the form of "Accord 27".
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(c) UCC Filings - All financing statements required to be filed in order to
perfect, in favor of the Lender, a first priority security interest in the
Collateral, subject only to the Permitted Encumbrances, shall have been properly
filed in each such office in each jurisdiction. The Lender shall have received
acknowledgment copies of all such filings (or, in lieu thereof, the Lender shall
have received other evidence satisfactory to it that all such filings have been
made) and the Lender shall have received evidence that all necessary filing fees
and all taxes or other expenses related to such filings have been paid in full.
(d) Board Resolutions - The Lender shall have received a copy of the
resolutions of the Board of Directors of (i) each Borrower authorizing the
execution, delivery and performance of this Financing Agreement, and all other
Loan Documents to which such Borrower is a party, and the consummation of the
transactions contemplated to occur hereunder and thereunder, and (ii) Indesco
authorizing the execution, delivery and performance of this Financing Agreement
and each other Loan Document to which Indesco is a party, and the consummation
of the transactions contemplated to occur hereunder and thereunder, in each case
certified by the Secretary or Assistant Secretary of such Borrower or Indesco,
as the case may be, as of the date hereof, together with a certificate of the
Secretary or Assistant Secretary of such Borrower or Indesco, as the case may
be, as to the incumbency and validity of the signature of the officers of such
Borrower or Indesco, as the case may be, executing this Financing Agreement and
such other Loan Documents, and any certificate or other documents to be
delivered by them pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary.
(e) Corporate Organization, Good Standing and Qualification - The Lender
shall have received (i) a copy of the Certificate of Incorporation of Indesco
and each Borrower certified by the Secretary of State of the state of its
incorporation, (ii) a copy of the By-Laws of Indesco and each Borrower certified
by the Secretary or Assistant Secretary thereof, all as amended through the date
hereof, (iii) a Certificate of Good Standing from the Secretary of State of the
state of Indesco's and each Borrower's incorporation and (iv) a Certificate of
Qualification from the Secretary of State of each other state in which Indesco
and each Borrower is doing business, except where the failure to be so qualified
would not have a Material Adverse Effect.
(f) Officer's Certificate - The Lender shall have received an executed
Officer's Certificate of Indesco and each Borrower, satisfactory in form and
substance to the Lender, certifying that (i) the applicable representations and
warranties made by each of them contained herein are true and correct in all
material respects on and as of the Closing Date; (ii) each of Indesco and such
Borrower is in compliance with all of the terms and provisions set forth herein;
and (iii) no Default or Event of Default has occurred.
(g) Opinions - the Lender shall have received and reviewed to its
satisfaction legal opinions from (i) the law firm of Xxxxxx Xxxxxx & Brozman,
P.C., as general counsel to the Borrowers, (ii) the law firm of Xxxxxx &
Xxxxxxx, L.L.P., as special North Carolina counsel to AFA, (iii) the law firm of
Xxxxxxx, Mag & Fizzell, as special Missouri counsel to CSI and (iv) the law firm
of Xxxxxxxx, Xxxxxxxx & Xxxxxx P.C., as special Texas counsel to CSI.
(h) Absence of Default; No Material Adverse Change - No Default or Event of
Default shall have occurred and no Material Adverse Change shall have occurred
since July 31, 2000.
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(i) Legal Restraints/Litigation - As of the Closing Date, there shall be no:
(x) litigation, investigation or proceeding (judicial or administrative) pending
or threatened against Indesco or any Borrower or its assets, by any agency,
division or department of any county, city, state or federal government arising
out of this Financing Agreement; (y) injunction, writ or restraining order
restraining or prohibiting the financing arrangements contemplated under this
Financing Agreement; or (z) suit, action, investigation or proceeding (judicial
or administrative) pending against Indesco or any Borrower or its assets, which,
in the opinion of the Lender, if adversely determined, would be reasonably
likely to have a Material Adverse Effect.
(j) Cash Budget Projections - The Lender shall have received and reviewed to
its satisfaction a twelve (12) month cash budget projection prepared by or on
behalf of the Borrowers on the form provided by the Lender.
(k) Financing Agreement and Additional Documents - Indesco and the Borrowers
shall have executed and delivered to the Lender this Financing Agreement and all
other Loan Documents to which each is a party.
(l) Pledged Stock - Indesco and each Borrower shall have delivered to the
Lender possession of the stock certificates evidencing all of the certificated
shares of Pledged Stock required to be pledged and collaterally assigned to the
Lender pursuant to the Stock Pledge Agreements, executed by each, together with
duly executed stock powers (undated and in-blank) with respect thereto, all in
form and substance satisfactory to the Lender.
(m) Blocked Accounts and Blocked Account Agreements - Each Borrower shall
have established a system of lockboxes and Blocked Accounts with respect to the
collection of Trade Accounts Receivable and the deposit of proceeds of
Collateral, and the Lender, such Borrower and each bank at which a Blocked
Account is maintained shall have entered into a Blocked Account Agreement in
form and substance satisfactory to the Lender.
(n) Disbursement Authorization - The Borrowers shall have delivered to the
Lender all information necessary for the Lender to issue wire transfer
instructions on behalf of the Borrowers for the initial and subsequent loans
and/or advances to be made under this Financing Agreement including, but not
limited to, disbursement authorizations in form acceptable to the Lender.
(o) Examination and Verification; Opening Availability - The Lender shall
have completed, to its satisfaction, an examination and verification of the
Trade Accounts Receivable, Inventory, financial statements, and books and
records of each Borrower, which examination shall indicate that, after giving
effect to all Revolving Loans, advances and extensions of credit to be made at
closing, the Borrowers shall have an opening combined Availability of at least
$7,000,000, as evidenced by a Borrowing Base Certificate delivered by the
Borrowers to the Lender as of the Closing Date. It is understood that such
requirement contemplates that all debts and obligations are current, other than
the past due installment of interest described in the term Indenture Event, and
that all payables are being handled in the normal course of each Borrower's
business and consistent with the practice in such Borrower's industry.
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(p) Old Credit Arrangements - The Old Credit Agreement shall have been
terminated, all loans and obligations of Indesco and the Borrowers thereunder
shall have been paid or satisfied in full, including through utilization of the
proceeds of the initial Revolving Loans and the Term Loans to be made under this
Financing Agreement and all liens or security interests in favor of the lenders
thereunder (or the agent on their behalf) and otherwise in connection therewith
shall have been terminated and/or released upon such payment.
(q) Payment of Fees - The Lender shall have received payment in full, in
cash, of all fees for which the Borrowers are obligated to make payment on or
before the Closing Date.
(r) Mortgages - The Borrowers shall have executed and delivered to the
Lender, an agent of the Lender or to a title insurance company acceptable to the
Lender, all of the Mortgages.
(s) Title Insurance Policies - The Lender shall have received, in respect of
each Mortgage, a mortgagee's title policy or marked-up unconditional binder for
such insurance. Each such policy shall (i) be in an amount satisfactory to the
Lender; (ii) insure that the Mortgage insured thereby creates a valid lien on
the Real Estate covered by such Mortgage, subject to no prior mortgages, and
otherwise free and clear of all defects and encumbrances except those acceptable
to the Lender; (iii) name the Lender as the insured thereunder; and (iv) contain
such endorsements and effective coverage as the Lender may reasonably request,
including, without limitation, a revolving line of credit endorsement. The
Lender shall also have received evidence that all premiums in respect of such
policies have been paid and that all charges for mortgage recording taxes, if
any, shall have been paid.
(t) Surveys - The Lender and each title insurance company issuing a policy
referred to in the immediately preceding paragraph (each, a "Title Insurance
Company") shall have received originals, or certified copies in existence as of
the Closing Date, of the maps or plats of a perimeter or boundary of the site of
each of the properties covered by the Mortgages (each a "Property Survey"),
prepared by an independent professional licensed land surveyor, which maps or
plats and the surveys on which they are based shall be made in accordance with
the Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping. Without limiting the generality of the
foregoing, there shall be surveyed and shown on each Property Survey the
following: (i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines insofar as the
foregoing affect the perimeter or boundary of such property; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the sites, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building,
structures and improvements on the sites; and (vi) if the site is designated as
being on a filed map, a legend relating the survey to said map. Further, each
Property Survey shall contain a legend reciting as to whether or not the site is
located in a flood zone.
(u) Environmental Report - The Lender shall have received environmental audit
reports on (i) all of the Real Estate and (ii) the Borrowers' waste disposal
practices. The reports must (x) be
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satisfactory to the Lender and (y) not disclose or indicate any material
liability (either actual or reasonably likely to occur within the period during
which any Obligations are outstanding) stemming from either Borrower's premises,
its operations, its waste disposal practices or waste disposal sites used by
such Borrower.
(v) Subordinated Debt; Material Agreements. The Lender and its counsel shall
have received and reviewed to their satisfaction copies of the Subordinated
Indenture, the Subordinated Notes, and all other instruments, documents and
agreements to which Indesco or either Borrower is a party or by which it or its
property is bound, and which is material to the business of Indesco or such
Borrower, as the case may be.
(w) The Commitment Letter; Closing Document Checklist - Indesco and the
Borrowers shall have fully complied, to the reasonable satisfaction of the
Lender, with all of the other terms and conditions contained in the Commitment
Letter, and shall have delivered to the Lender all documents listed on the
Closing Document Checklist attached to this Financing Agreement as Annex II for
which they are responsible.
Upon the execution of this Financing Agreement and the initial disbursement of
Loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as otherwise set forth hereinabove or as the Borrowers and the
Lender shall otherwise agree in writing.
SECTION 2.02. Conditions to Each Extension of Credit . Subject to
the terms of this Financing Agreement, after the Closing Date, the commitment of
the Lender to make Revolving Loans, and to assist in the issuance of Letters of
Credit, is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties - Each of the representations and
warranties made by Indesco and each Borrower in or pursuant to this Financing
Agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date, except for any such representation or
warranty which by its terms speaks only as of an earlier date.
(b) No Default - No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) Borrowing Base - Except as may be otherwise agreed to from time to time
by the Lender in writing, after giving effect to the extension of credit
requested to be made by any Borrower on such date, the aggregate outstanding
balance of the Revolving Loans made to such Borrower and Letter of Credit
Exposure applicable to such Borrower will not exceed the lesser of (i) the
Revolving Line of Credit minus the aggregate outstanding balance of the
Revolving Loans made to the other Borrower and Letter of Credit Exposure
applicable to such other Borrower or (ii) the Borrowing Base applicable to such
Borrower, minus the amount calculated pursuant to clause (b) of the Availability
Reserve, in effect with respect to such Borrower.
Each borrowing of a Revolving Loan by a Borrower hereunder, and each request by
such Borrower for the issuance of a Letter of Credit, shall constitute a
representation and warranty by such Borrower as of the date of such borrowing or
request that each of the representations and
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warranties contained in this Financing Agreement have been satisfied and are
true and correct, except as such Borrower and the Lender shall otherwise agree
herein or in a separate writing.
ARTICLE III
REVOLVING LOANS
SECTION 3.01. Revolving Loans Generally. The Lender agrees,
subject to the terms and conditions of this Financing Agreement, from time to
time to make loans and advances to each Borrower on a revolving basis (each a
"Revolving Loan" and collectively the "Revolving Loans"). Subject to the
limitations set forth herein, each Borrower may borrow, repay and re-borrow
Revolving Loans. Requests for Revolving Loans shall be in amounts not to exceed
(a) the lesser of (i) the Borrowing Base applicable to such Borrower minus the
Availability Reserve applicable to such Borrower or (ii) the Revolving Line of
Credit, minus the aggregate principal amount of the outstanding Revolving Loans
made to the other Borrower and the Letter of Credit Exposure applicable to the
other Borrower minus (b) the aggregate principal amount of all outstanding
Revolving Loans made to such Borrower and minus the Availability Reserve
applicable to such Borrower. All requests for Revolving Loans must be received
by an officer of the Lender no later than (i) 1:00 p.m., New York time, of the
Business Day on which any Revolving Loans based on the Base Rate are required or
(ii) 11:00 a.m., New York time, on the third Business Day prior to the Business
Day on which any Revolving Loans based on LIBOR are required. Should the Lender
for any reason honor requests for Overadvances, any such Overadvances shall be
made in the Lender's sole discretion and subject to any additional terms the
Lender deems necessary. In the event that after making a requested Revolving
Loan to a Borrower, such Revolving Loan exceeds the Availability applicable to
such Borrower existing immediately prior to the making of such Revolving Loan or
the sum of (i) the outstanding balance of Revolving Loans made to such Borrower
and (ii) outstanding Letter of Credit Exposure applicable to such Borrower
exceeds (x) the Borrowing Base applicable to such Borrower or (y) the Revolving
Line of Credit minus the aggregate principal amount of all outstanding Revolving
Loans made to the other Borrower and the Letter of Credit Exposure applicable to
the other Borrower, then any such nonconsensual Overadvance shall be due and
payable to the Lender immediately upon the Lender's demand therefor.
SECTION 3.02. Notice of Borrowing Request. Whenever a Borrower
requests the Lender to make a Revolving Loan pursuant to Section 3.01, it shall
give the Lender notice in writing or irrevocable telephonic notice confirmed
promptly in writing, specifying (A) the amount to be borrowed, and (B) the
requested borrowing date (which shall be a Business Day and shall be prior to
the Anniversary Date, and prior to any effective termination date of this
Financing Agreement, all as further set forth herein), and (C) specify whether
the requested Revolving Loan shall bear interest at the Base Rate or at LIBOR,
as further set forth herein. Proceeds of Revolving Loans shall be disbursed by
the Lender to a bank account of such Borrower designated by it. Requests for
Revolving Loans shall be made solely by each Borrower and shall be directed
solely to the Lender.
SECTION 3.03. Revolving Loan Account. The Lender shall maintain a
Revolving Loan Account on its books in which each Borrower will be charged with
all Revolving Loans made to it, and with any other Obligations applicable to it,
as and when
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payable, including any and all Out-of-Pocket Expenses which the Lender may incur
in connection with the exercise by or for the Lender of any of the rights or
powers herein conferred upon the Lender, or in the prosecution or defense of any
action or proceeding to enforce or protect any rights of the Lender in
connection with this Financing Agreement, the other Loan Documents or the
Collateral assigned hereunder, or any Obligations owing by such Borrower. Each
Borrower will be credited with all amounts received by the Lender from such
Borrower or from others for such Borrower's account, including, as above set
forth, all amounts received by the Lender in payment of Accounts, and such
amounts will be applied to payment of the Obligations as set forth herein.
SECTION 3.04. Statement of Account. After the end of each month,
the Lender shall promptly send to each Borrower a statement showing the
accounting for the charges, loans, advances and other transactions occurring
between the Lender and such Borrower during that month. The monthly statements
shall be deemed correct and binding upon each Borrower and shall constitute an
account stated between such Borrower and the Lender unless the Lender receives a
written statement of the exceptions within thirty (30) days after such
Borrower's receipt of the monthly statement.
ARTICLE IV
TERM LOANS
SECTION 4.01. The Term Loans; Amortization. AFA hereby agrees to
execute and deliver to the Lender a Term Note in the amount of $10,000,000, and
CSI hereby agrees to execute and deliver to the Lender a Term Note in the amount
of $5,000,000. Upon the satisfaction of the conditions contained in Section 2.01
and its receipt of such Term Notes, the Lender hereby agrees to make a Term Loan
to AFA in the amount of $10,000,000 and a Term Loan to CSI in the amount of
$5,000,000. The principal amount of each Term Loan shall be repaid by the
Borrower to which such Term Loan was made in nine equal and consecutive
quarterly installments (each a "Quarterly Installment"), followed by a final
installment (the "Balloon Installment"). The first Quarterly Installment of each
Term Loan shall be due and payable by each Borrower, respectively, on the first
Business Day in October, 2001, the subsequent Quarterly Installments on each
Term Loan shall be due and payable by each Borrower, respectively, on the first
Business Day in each of the months of January, April, July and October
thereafter, and the Balloon Installment shall be due and payable by each
Borrower, respectively, on the initial Anniversary Date, provided, however, that
if this Financing Agreement or the Line of Credit is terminated by the Lender or
by either Borrower for any reason whatsoever, the unpaid principal balance of
the Term Loans, and all interest accrued thereon, shall become due and payable
on the effective date of such termination, notwithstanding any provision to the
contrary contained in the Term Notes or this Financing Agreement. The amount of
the Quarterly Installments and the Balloon Installment applicable to the Term
Loan made to (i) AFA shall equal $358,929 and $6,769,639, respectively, and (ii)
CSI shall equal $176,785 and $3,408,935, respectively.
SECTION 4.02. Mandatory Prepayments. (a) Subject to the terms of
Section 9.03, if any Borrower sells any Equipment or other tangible personal
property (other than Inventory in the ordinary course of business), or if any
Equipment of such Borrower or such
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other property is lost, destroyed, or taken by condemnation, such Borrower shall
pay to the Lender, unless otherwise agreed by the Lender, or as otherwise set
forth in this Financing Agreement, as and when received by such Borrower and as
a mandatory prepayment of the Term Loan made to such Borrower, until such Term
Loan is paid in full and then the Revolving Loans, a sum equal to the Net Cash
Proceeds (including Insurance Proceeds) received by such Borrower from such
sale, loss, destruction or condemnation, provided, however, that so long as no
Event of Default has occurred and is continuing, the proceeds of any such
Equipment or other such property so lost, destroyed or taken by condemnation, to
the extent such proceeds are equal to or less than $500,000 in the aggregate,
may be used to replace or restore such Equipment or other property, as the case
may be, so long as (i) such Net Cash Proceeds are so used within 180 days of
receipt thereof, or (ii) within 30 days of receipt thereof, the applicable
Borrower shall have confirmed in writing to the Lender such Borrower's proposed
use thereof and the Lender shall have given its written consent thereto.
(b) Beginning with the Fiscal Year ending on December 31, 2001, each Borrower
shall make a mandatory prepayment of the unpaid principal balance of the Term
Loan made to it no later than ninety days after the end of each Fiscal Year, in
an aggregate amount equal to fifty percent (50%) of Surplus Cash of such
Borrower for the Fiscal Year then ended, as calculated in accordance with and as
set forth in the audited consolidated and unaudited consolidating financial
statements of Indesco for the Fiscal Year then ended, which calculation shall be
certified by an Authorized Officer.
SECTION 4.03. Voluntary Prepayments. Upon at least one Business
Day's prior notice, in the case of that portion of a Term Loan bearing interest
based on the Base Rate, and at least three Business Day's prior notice, in the
case of that portion of a Term Loan bearing interest based on LIBOR, each
Borrower may make voluntary prepayments, in whole or in part, of the Term Loan
made to it, provided that (a) each partial prepayment shall be in an amount
equal to the lesser of (i) $25,000 or an integral multiple of $5,000 in excess
thereof or (ii) the amount necessary to prepay in full the unpaid principal
balance of such Term Loan, as the case may be and (b) in the case of any
prepayment of that portion of such Term Loan bearing interest based on LIBOR,
such Borrower shall pay all applicable Breakage Costs.
SECTION 4.04. Application of Payments. All prepayments of each
Term Loan shall be applied first to the Balloon Installment applicable to such
Term Loan until paid in full, and then pro rata against the remaining Quarterly
Installments applicable to such Term Loan.
SECTION 4.05. Authorization to Charge Revolving Loan Account. Each
Borrower hereby authorizes the Lender to charge the Revolving Loan Account with
the amount of all obligations owing by such Borrower under this Article IV as
such amounts become due. Each Borrower confirms that any charges which the
Lender may so make to the Revolving Loan Account as herein provided will be made
as an accommodation to such Borrower and solely at the Lender's discretion.
ARTICLE V
LETTERS OF CREDIT
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In order to assist the Borrowers in establishing or opening Letters of Credit
with an Issuing Bank, each Borrower has requested the Lender to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or acceptances thereunder through the
issuance of the Letters of Credit Guaranty, thereby lending the Lender's credit
to such Borrower and the Lender has agreed to do so. These arrangements shall be
handled by the Lender subject to the terms and conditions set forth below.
SECTION 5.01. Letters of Credit Generally. Within the Revolving
Line of Credit, the Lender shall assist the Borrowers in obtaining Letters of
Credit from time to time, so long as after giving effect to the issuance of any
requested Letter of Credit, the Letter of Credit Exposure applicable to such
Borrower shall not exceed the lesser of (a) the Letter of Credit Sub-Line minus
the Letter of Credit Exposure applicable to the other Borrower and (b)
Availability applicable to such Borrower. The Lender's assistance for amounts in
excess of the limitation set forth herein shall at all times and in all respects
be in the Lender's sole discretion. It is understood that the term, form and
purpose of each Letter of Credit and all documentation in connection therewith,
and any amendments, modifications or extensions thereof, must be mutually
acceptable to the Lender, the Issuing Bank and the applicable Borrower, provided
that no Letter of Credit may be used for the purchase of domestic Inventory or
to secure present or future debt of domestic Inventory suppliers. Any and all
outstanding Letters of Credit issued for a Borrower's account shall be reserved
dollar for dollar from Availability as an Availability Reserve applicable to
such Borrower.
SECTION 5.02. Authorization to Charge Revolving Loan Account. The
Lender shall have the right, without notice, to charge each Borrower's Revolving
Loan Account with the amount of any and all indebtedness, liability or
obligation of any kind incurred by the Lender under the Letter of Credit
Guaranty executed with respect to such Borrower at the earlier of (a) payment by
the Lender under such Letter of Credit Guaranty; or (b) the occurrence of an
Event of Default which has not been waived in writing by the Lender. Any amount
charged to a Borrower's Revolving Loan Account shall be deemed a Revolving Loan
hereunder and shall incur interest at the Base Rate plus the Applicable
Increment.
SECTION 5.03. Indemnification. Each Borrower unconditionally
indemnifies the Lender and holds the Lender harmless from any and all loss,
claim or liability incurred by the Lender arising from any transactions or
occurrences relating to Letters of Credit established or opened for such
Borrower's account, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any errors, omissions, negligence, misconduct or action taken by
any Issuing Bank, other than for any such loss, claim or liability arising out
of the gross negligence or willful misconduct by the Lender under the Letter of
Credit Guaranty executed with respect to such Borrower. This indemnity shall
survive termination of this Financing Agreement. Each Borrower agrees that any
charges incurred by the Lender for such Borrower's account by the Issuing Bank
shall be conclusive on the Lender and may be charged to such Borrower's
Revolving Loan Account.
SECTION 5.04. Limitation on Lender's Responsibility. The Lender
shall not be responsible for: (a) the existence, character, quality, quantity,
condition, packing, value or delivery of the goods purporting to be represented
by any documents; (b) any difference or variation in the character, quality,
quantity, condition, packing, value or delivery of the goods
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from that expressed in the documents; (c) validity, sufficiency or genuineness
of any documents or of any endorsements thereon, even if such documents should
in fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (d) the time, place, manner or order in which shipment is made; (e)
partial or incomplete shipment, or failure or omission to ship any or all of the
goods referred to in the Letters of Credit or documents; (f) any deviation from
instructions; (g) delay, default, or fraud by the shipper and/or anyone else in
connection with the goods or the shipping thereof; or (h) any breach of contract
between the shipper or vendors and the applicable Borrower.
SECTION 5.05. Further Provisions. Each Borrower agrees that any
action taken by the Lender, if taken in good faith, or any action taken by any
Issuing Bank, under or in connection with the Letters of Credit, the Letter of
Credit Guarantees, the drafts or acceptances, or the Collateral, in each case
applicable to such Borrower, shall be binding on such Borrower and shall not
result in any liability whatsoever of the Issuing Bank or the Lender to such
Borrower. In furtherance thereof, the Lender shall have the full right and
authority, in good faith, to: (a) clear and resolve any questions of
non-compliance of documents; (b) give any instructions as to acceptance or
rejection of any documents or goods; (c) grant any extensions of the maturity
of, time of payment for, or time of presentation of, any drafts, acceptances, or
documents; and (d) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; all in the Lender's sole
name. The Issuing Bank shall be entitled to comply with and honor any and all
such documents or instruments executed by or received solely from the Lender,
all without any notice to or any consent from any Borrower. Notwithstanding any
prior course of conduct or dealing with respect to the foregoing including
amendments and non-compliance with documents and/or any Borrower's instructions
with respect thereto, the Lender may exercise its rights hereunder in its sole
and reasonable judgment. In addition, without the Lender's express consent and
endorsement in writing, each Borrower agrees: (a) not to execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders;
to grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents; or to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances applicable to such Borrower; and (b) after the occurrence of an
Event of Default which is not cured within any applicable grace period, if any,
or waived by the Lenders, not to (i) clear and resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptances or
rejection of any documents or goods or (iii) execute any and all steamship or
airways guaranties (and applications therefor), indemnities or delivery orders.
SECTION 5.06. Licenses; Risk. Each Borrower agrees that: (a) any
necessary import, export or other licenses or certificates for the import or
handling of the Collateral applicable to such Borrower will have been promptly
procured; (b) all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of such Collateral, or the financing
thereof will have been promptly and fully complied with; and (c) any
certificates in that regard that the Lender may at any time request will be
promptly furnished. In connection herewith, each Borrower warrants and
represents that all shipments made under any such Letters of Credit are in
accordance with the laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such laws and
regulations. Each
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Borrower assumes all risk, liability and responsibility for, and agrees to pay
and discharge, all present and future local, state, federal or foreign Taxes,
duties, or levies applicable to it. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision, where
such Collateral is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely such
Borrower's risk, liability and responsibility.
SECTION 5.07. Subrogation. Upon any payments made to the Issuing
Bank under the Letter of Credit Guaranty, the Lender shall acquire by
subrogation, any rights, remedies, duties or obligations granted or undertaken
by the applicable Borrower to the Issuing Bank in any application for Letters of
Credit applicable to such Borrower, any standing agreement relating to such
Letters of Credit or otherwise, all of which shall be deemed to have been
granted to the Lender and apply in all respects to the Lender and shall be in
addition to any rights, remedies, duties or obligations contained herein.
ARTICLE VI
COLLATERAL
SECTION 6.01. Grant of Security Interest. As security for the
prompt payment in full of all Obligations owing by it, or for which it is
indebted or liable or on which it is otherwise obligated, each Borrower hereby
pledges and grants to the Lender a continuing general lien upon, and security
interest in, all of its:
(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Other Collateral;
(f) Equipment; and
(g) Real Estate.
SECTION 6.02. Security Interest Generally.
The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is owned by such Borrower or in which such Borrower has
any interest, whether held by such Borrower or others for its account, and, if
any Collateral is Equipment, whether such Borrower's interest in such Equipment
is as owner, finance lessee or conditional vendee;
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(b) All Equipment in which such Borrower has an interest, whether the same
constitutes personal property or fixtures, including, but without limiting the
generality of the foregoing, all dies, jigs, tools, benches, molds, tables,
accretions, component parts thereof and additions thereto, as well as all
accessories, motors, engines and auxiliary parts used in connection with, or
attached to, such Equipment; and
(c) All Inventory in which such Borrower has an interest and any portion thereof
which may be returned, rejected, reclaimed or repossessed by either the Lender
or such Borrower from its customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute to
the finished goods or products manufactured or processed by such Borrower, or to
the sale, promotion or shipment thereof.
SECTION 6.03. Collection of Trade Accounts Receivable. Each
Borrower shall establish and maintain, in its name and at its expense, a system
of lock boxes ("Lock Boxes") and deposit accounts ("Blocked Accounts"), in each
case with such banks as are acceptable to the Lender. Each Borrower shall: (i)
indicate on all of its invoices that funds should be delivered to and deposited
to a Lock Box; (ii) direct all of its account debtors to deposit any and all
payments, remittances, checks, collections and proceeds of Trade Accounts
Receivable and other Collateral into a Lock Box; (iii) irrevocably authorize and
direct any bank which maintains a Lock Box or otherwise maintains such
Borrower's initial receipt of cash, checks and other items to promptly transfer
all available funds to a Blocked Account; and (iv) advise all such banks of the
Lender's security interest in such funds. Each Borrower shall promptly cause to
be deposited into a Blocked Account owned by such Borrower all proceeds of
Collateral received by such Borrower. Each bank at which a Lock Box and Blocked
Account are established shall enter into a written agreement among the
applicable Borrower, the Lender and such bank, in form and substance
satisfactory to the Lender (the "Blocked Account Agreements"), providing that
all cash, checks and items received or deposited in the Lock Box and Blocked
Account of such Borrower are the property of the Lender, that the depository
bank has no lien upon, or right of set off against, such Lock Box and Blocked
Accounts or any cash, checks, items, wires or other funds from time to time on
deposit therein, except as otherwise provided in the applicable Blocked Account
Agreement, and that automatically, on a daily basis, the depository bank will
wire, or otherwise transfer, in immediately available funds, all funds received
or deposited into such Blocked Accounts to such bank account as the Lender may
from time to time designate for such purpose. Each Borrower hereby confirms and
agrees that all amounts deposited in such Lock Box and Blocked Accounts and any
other funds received and collected by the Lender, whether as proceeds of
Inventory of such Borrower or other Collateral of such Borrower or otherwise,
shall be the property of the Lender.
SECTION 6.04. Delivery of Information Concerning Trade Accounts
Receivable and Inventory. In furtherance of the continuing assignment and
security interest in each Borrower's Accounts and Inventory, each Borrower will,
upon the creation of Accounts and purchase or acquisition of Inventory, execute
and deliver to the Lender in such form and manner as the Lender may reasonably
require, solely for the Lender's convenience in maintaining records of
Collateral, such confirmatory schedules of Trade Accounts Receivable and
Inventory as the Lender may reasonably request, including, without limitation,
weekly schedules of Trade Accounts Receivable and monthly schedules of
Inventory, all in form and substance satisfactory to the Lender, and such other
appropriate reports designating, identifying and describing the
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Trade Accounts Receivable and Inventory as the Lender may reasonably request,
and provided further that the Lender may request any such information more
frequently, from time to time, upon its reasonable prior request. In addition,
upon the Lender's request, each Borrower shall provide the Lender with copies of
agreements with, or purchase orders from, such Borrower's customers, and copies
of invoices to customers, proof of shipment or delivery, access to its
computers, electronic media and software programs associated therewith
(including any electronic records, contracts and signatures) and such other
documentation and information relating to such Trade Accounts Receivable and
other Collateral as the Lender may reasonably require. Failure to provide the
Lender with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. Each Borrower hereby
authorizes the Lender to regard such Borrower's printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a manual
signature by one of such Borrower's Authorized Officers or Lenders.
SECTION 6.05. Representations and Covenants With Respect to Trade
Accounts Receivable and Inventory. Each Borrower hereby represents and warrants
that: each Trade Account Receivable owing to such Borrower is based on an actual
and bona fide sale and delivery of Inventory or rendition of services to its
customers, made by such Borrower in the ordinary course of its business; the
Inventory being sold, and the Trade Accounts Receivable created, are the
exclusive property of such Borrower and are not and shall not be subject to any
Lien whatsoever, other than Liens in favor of the Lender and the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable are in the
name of such Borrower; and the customers of such Borrower have accepted the
Inventory or services, owe and are obligated to pay the full amounts stated in
the invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, except for disputes and other matters arising in the
ordinary course of business with respect to which the Borrower has complied with
the following notification requirements. Each Borrower agrees to notify the
Lender promptly, with respect to the Trade Accounts Receivable and Inventory of
such Borrower, of: (a) any matters affecting the enforceability or
collectability of such any Trade Account Receivable; (b) with respect to any
such Trade Account Receivable in the face amount of $250,000, or greater, all
customer disputes, offsets, defenses, counterclaims, returns, rejections, (c)
all reclaimed or repossessed merchandise or goods, (d) any adverse effect in the
value of such Inventory, or of any matter which materially and adversely affects
such Borrower's weekly and monthly collateral reports (as applicable) provided
to the Lender hereunder, in such detail and format as the Lender may reasonably
require from time to time and (e) any such matters which are material, as a
whole, to such Trade Accounts Receivables and/or such Inventory. Each Borrower
agrees to issue credit memoranda promptly (with duplicates to the Lender upon
request after the occurrence of an Event of Default) upon accepting returns or
granting allowances. Upon the occurrence of an Event of Default (which is not
waived in writing by the Lender) and on notice from the Lender, each Borrower
agrees that all returned, reclaimed or repossessed merchandise or goods shall be
set aside by such Borrower, marked with the Lender's name (as secured party) and
held by such Borrower for the Lender's account. Each Borrower confirms to the
Lender that any and all Taxes or fees relating to its business, its sales, the
Accounts or Inventory relating thereto, are its sole responsibility and that
same will be paid by such Borrower when due, and that none of said Taxes or fees
represent a Lien on the Accounts. Each Borrower hereby further represents and
warrants that (i) any Inventory it may acquire on a consignment basis shall be
segregated and set apart from all other Inventory, shall under no circumstances
be included in any Borrowing Base
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Certificate as Eligible Inventory or otherwise be deemed to be Eligible
Inventory, and is not subject to any Lien in favor of the consignor of such
Inventory, (ii) it shall not co-mingle its Inventory with the inventory of any
of its customers or the inventory of any other Person, including pursuant to any
xxxx and hold sale or otherwise, and (iii) its Inventory is marketable to its
customers in the ordinary course of business of such Borrower, except as it may
otherwise report in writing to the Lender pursuant to this Section from time to
time. Each Borrower agrees to maintain such books and records regarding its
Accounts and Inventory as the Lender may reasonably require and agrees that the
books and records of such Borrower will reflect the Lender's interest in such
Accounts and Inventory.
SECTION 6.06. Additional Representations and Covenants With
Respect to Trade Accounts Receivable and Inventory. Each Borrower agrees to
safeguard, protect and hold all of its Inventory for the Lender's account and
make no disposition thereof except in the ordinary course of its business, as
herein provided. Each Borrower represents and warrants that its Inventory will
be sold and shipped by such Borrower to its customers only in the ordinary
course of such Borrower's business, and then only on open account and on terms
currently being extended by such Borrower to its customers, and absent the prior
written consent of the Lender, such Borrower shall not sell Inventory on a
consignment basis. Upon the sale, exchange, or other disposition of Inventory,
as herein provided, the security interest in the Inventory provided for herein
shall, without break in continuity and without further formality or act,
continue in, and attach to, all proceeds, including any instruments for the
payment of money, Trade Accounts Receivable, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition. As to any such sale, exchange or other disposition, the
Lender shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation. Each Borrower hereby agrees to
immediately forward any and all proceeds of Collateral in which it has an
interest to a Blocked Account, and to hold any such proceeds (including any
notes and instruments), in trust for the Lender, pending delivery to the Lender.
Irrespective of the Lender's perfection status in any and all of the General
Intangibles, including, without limitation, any Patents, Trademarks, or
Copyrights, each Borrower hereby irrevocably grants to the Lender a royalty free
license to sell, or otherwise dispose or transfer, in accordance with Section
12.03, and the applicable terms hereof, any of the Inventory upon the occurrence
of an Event of Default which has not been waived in writing by the Lender.
SECTION 6.07. Representations and Covenants With Respect to
Equipment. Each Borrower agrees at its own cost and expense to keep the
Equipment of such Borrower in satisfactory operating condition, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary in accordance with such Borrower's reasonable business judgment and
sound business practices. Each Borrower also agrees to safeguard, protect and
hold all Equipment of such Borrower in accordance with the terms hereof and
subject to the Lender's security interest.
SECTION 6.08. Representations and Covenants with Respect to
General Intangibles. Each Borrower makes the following representations,
warranties and covenants with respect to such General Intangibles in which it
has an interest. Such Borrower possess all such General Intangibles and rights
thereto necessary to conduct its business as conducted as of the Closing Date
and such Borrower shall maintain its rights in, and the value of, the foregoing
in
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the ordinary course of its business, including, without limitation, by making
timely payment with respect to any applicable licensed rights, in accordance
with such Borrower's reasonable business judgment and sound business practices.
Such Borrower shall deliver to the Lender, and/or shall cause the appropriate
party to deliver to the Lender, from time to time such pledge or security
agreements with respect to such General Intangibles (now or hereafter acquired)
of such Borrower as the Lender shall reasonably require to obtain valid first
liens thereon. In furtherance of the foregoing, such Borrower shall provide
notice to the Lender no less frequently than quarterly of any additional
Patents, Trademarks, tradenames, service marks, Copyrights, brand names, trade
names, logos and other trade designations in which such Borrower has an
interest, which, during any calendar quarter, such Borrower acquired or applied
for subsequent to the Closing Date, and such Borrower shall execute such
documentation as the Lender may reasonably require to obtain and perfect its
lien thereon. Such Borrower hereby irrevocably grants to the Lender a
royalty-free, non-exclusive license in the General Intangibles, including
tradenames, Trademarks, Copyrights, Patents, licenses, and any other proprietary
and intellectual property rights, in each case in which such Borrower has an
interest, and any and all right, title and interest in any of the foregoing, for
the sole purpose, upon the occurrence and during the continuance of an Event of
Default, of the right to: (i) advertise for sale and sell or transfer any
Inventory of such Borrower bearing any of such Borrower's General Intangibles,
and (ii) make, assemble, prepare for sale or complete, or cause others to do so,
any applicable raw materials or such Inventory bearing any of such General
Intangibles, including use of the Equipment and Real Estate in which such
Borrower has an interest for the purpose of completing the manufacture of
unfinished goods, raw materials or work-in-process comprising such Inventory,
and apply the proceeds thereof to such Borrower's Obligations hereunder, all as
further set forth in this Financing Agreement.
SECTION 6.09. Continuing Security Interest. The rights and
security interests granted to the Lender hereunder are to continue in full force
and effect, notwithstanding the termination of this Financing Agreement or the
fact that the Revolving Loan Account may from time to time be temporarily in a
credit position, until the final payment in full to the Lender of all
Obligations and the termination of this Financing Agreement. Any delay, or
omission by the Lender to exercise any right hereunder shall not be deemed a
waiver thereof, or be deemed a waiver of any other right, unless such waiver
shall be in writing and signed by the Lender. A waiver on any one occasion shall
not be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
SECTION 6.10. No Marshalling. Notwithstanding the Lender's
security interest in the Collateral and to the extent that the Obligations are
now or hereafter secured by any assets or property other than the Collateral or
by the guarantee, endorsement, assets or property of any other Person, the
Lender shall have the right in its sole discretion to determine which rights,
liens, security interests or remedies the Lender shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action with
respect to, without in any way modifying or affecting any of them, or any of the
Lender's rights hereunder.
SECTION 6.11. Credit Balances. Any balances to the credit of a
Borrower and any other property or assets of such Borrower in the possession or
control of the Lender may be held by the Lender as security for any Obligations
of such Borrower and applied in whole or partial satisfaction of such
Obligations when due. The security interests granted herein, and any
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other Lien the Lender may have in any other assets of each Borrower, shall
secure payment and performance of all now existing and future Obligations of
such Borrower. The Lender may, in its discretion, charge any or all of the
Obligations of such Borrower to the Revolving Loan Account when due.
SECTION 6.12. Mortgages. The Borrowers' Obligations are further
secured by Mortgages on the Real Estate.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Indesco and each Borrower represent and warrant to the Lender,
with respect to itself (except as otherwise specifically set forth herein), its
business, operations, assets and liabilities, as follows:
SECTION 7.01. Organization; Powers. Each Borrower and Indesco is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
carry on its business as now conducted. Except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, such Borrower is qualified to do business in, and is
in good standing in, every jurisdiction where such qualification is required, or
where the failure to so qualify would have a material adverse effect on the
ability of such Borrower to enforce collection of Trade Accounts Receivable due
from customers residing in that jurisdiction.
SECTION 7.02. Authorization; Enforceability. This Financing
Agreement, the other Loan Documents to which such Borrower or Indesco is a
party, and the transactions contemplated to occur hereunder and thereunder are
within such Borrower's and Indesco's corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action. This
Financing Agreement and each such Loan Document has been duly executed and
delivered by such Borrower or Indesco, as the case may be, and constitutes a
legal, valid and binding obligation of such Borrower or Indesco, as the case may
be, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 7.03. Governmental Approvals; No Conflicts. The
transactions contemplated to occur under this Financing Agreement and under the
other Loan Documents to which such Borrower or Indesco is a party (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of such
Borrower or Indesco, as the case may be, or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon such Borrower or its assets, or
Indesco or its assets, or give rise to a right thereunder to require any payment
to be made by such Borrower or Indesco, as the case may be and (d) will not
result in
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the creation or imposition of any Lien on any asset of such Borrower or Indesco
other than Liens in favor of the Lender.
SECTION 7.04. Financial Condition; No Material Adverse Change. (a)
Indesco has heretofore furnished to the Lender its consolidated and
consolidating balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the Fiscal Year ended December 31, 1999, which
consolidated financial statements have been certified by independent public
accountants, and (ii) as of and for the period of seven fiscal months of the
Fiscal Year ending on December 31, 2000, each certified by the applicable
Authorized Officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of
Indesco and its consolidated subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Since July 31, 2000, there has been no Material Adverse
Change.
SECTION 7.05. Properties. (a) Such Borrower and Indesco has good
title to, or valid leasehold interests in, all its real and personal property
material to its business, except for the Permitted Encumbrances and minor
defects or encumbrances in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes.
(b) Such Borrower and Indesco owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by such Borrower or Indesco, as
the case may be, does not infringe upon the rights of any other Person, except
for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) As of the Closing Date, the information contained in Annex I
to this Financing Agreement is true and correct in all respects.
SECTION 7.06. Litigation, Environmental Matters and Labor Matters.
(a) There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of such Borrower or
Indesco, threatened against or affecting such Borrower or Indesco (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve this
Financing Agreement or the transactions contemplated to occur hereunder.
(b) Except with respect to any other matters that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, neither such Borrower nor Indesco (i) has failed to comply with
any Environmental Law or to obtain, maintain or comply with any material and
necessary permit, license or other approval required under any Environmental
Law, (ii) to its best knowledge, has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
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(c) Neither Indesco nor any Borrower, as of the Closing Date,
is a party to or is bound by or subject to any collective bargaining agreement.
SECTION 7.07. Compliance with Laws and Agreements. Each of such
Borrower and Indesco is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 7.08. Investment and Holding Company Status. Neither such
Borrower nor Indesco is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 7.09. Taxes. Indesco has timely filed or caused to be
filed, on a consolidated or combined basis with its U.S. subsidiaries, all Tax
returns and reports required to have been filed under (i) all applicable federal
and state laws, and (ii) all other laws, to the extent that the failure to do so
could reasonably be expected to result in a Material Adverse Effect. Each of
such Borrower and Indesco has paid or caused to be paid all Taxes required to
have been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Borrower or Indesco, as the case may
be, has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 7.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount which could reasonably be
expected to result in a Material Adverse Effect, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount which could reasonably be expected to result in a Material
Adverse Effect.
SECTION 7.11. Disclosure. Each such Borrower and Indesco has
disclosed to the Lender all agreements, instruments and corporate or other
restrictions to which such Borrower or Indesco is subject, and all other matters
known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other information furnished by or on behalf of such
Borrower or Indesco to the Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not
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misleading; provided that, with respect to projected financial information, such
Borrower and Indesco represent only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.
SECTION 7.12. Security Interest. Each Loan Document that purports
to create or grant in favor of the Lender a security interest in or other Lien
on any property creates and grants to the Lender, a legal and valid security
interest in or other Lien on the collateral identified therein. Such security
interest or Lien will be a perfected and, except as permitted hereby or by such
Loan Document, first priority security interest in or Lien on the collateral
identified in such Loan Document upon the filing of the financing statements in
the filing offices, the recording of such agreement or another instrument in the
recording offices, or the delivery of possession of a certificate or other
writing to the Lender or its designees, in each case as provided herein or in
such Loan Document. Such collateral or property is not subject to any other
Liens whatsoever, except Liens permitted by Section 9.02.
SECTION 7.13. Use of Proceeds. All proceeds of the Term Loans and
the Revolving Loans made on the Closing Date shall be used to refinance existing
Indebtedness under the Old Credit Agreement, to pay the transaction costs and
expenses relating to the consummation of the transactions contemplated to occur
under this Financing Agreement and to provide for the working capital
requirements of the Borrowers. All proceeds of Revolving Loans made after the
Closing Date shall be used to provide for each Borrower's ongoing working
capital requirements, general operating requirements and other proper corporate
purposes of such Borrower not otherwise prohibited by the terms hereof.
SECTION 7.14. Corporate Structure.. Schedule 7.14 sets forth, as
of the Closing Date, (a) all of the owners, beneficially or of record, directly
or indirectly, of the authorized, issued, and outstanding shares of capital
stock of Holdings, and the number of shares so owned by each and (b) the
corporate structure of Holdings and each of its direct and indirect
subsidiaries, together with the exact name of each such subsidiary, its
jurisdiction of organization or formation, the number of authorized, issued, and
outstanding shares of capital stock (or analogous partnership or limited
liability company equity interests) of such subsidiary, and the owner,
beneficially or of record, of all such shares.
SECTION 7.15. Permits, Etc. Each of such Borrower and Indesco
possesses all material licenses, permits, approvals and consents, including,
without limitation, all environmental, health and safety licenses, permits,
approvals and consents (collectively, "Permits") of all Federal, state and local
governmental authorities as required to conduct properly its business, each such
Permit is and will be in full force and effect, and each of Indesco and such
Borrower, respectively, is in compliance in all material respects with all such
Permits, and no event (including, without limitation, any violation of any law,
rule or regulation) has occurred which allows the revocation or termination of
any such Permit or any restriction thereon, except where non-compliance or such
revocation or termination, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 7.16. Fiscal Year. The fiscal year of Indesco and each
Borrower ends on December 31 of each year.
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SECTION 7.17. Status of the Borrowers' and Indesco's Obligations.
All of the Obligations of each Borrower, and all of the indebtedness,
obligations and liabilities of Indesco arising under the Guaranty executed by
it, constitute "Senior Indebtedness" and "Designated Senior Indebtedness," as
such terms are defined in the Subordinated Indenture.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Revolving Line of Credit has expired or been terminated,
the principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full, all Letters of Credit shall have expired or terminated,
all LC Disbursements shall have been reimbursed and all other Obligations paid
in full, each Borrower and Indesco, to the extent applicable, covenants and
agrees with the Lender that:
SECTION 8.01. Financial Statements, Projections, Borrowing Base
Certificates and Other Information. Each Borrower and Indesco, to the extent
applicable, will furnish to the Lender the following:
(a) as soon as available but in any event within 90 days after the
end of each Fiscal Year, Indesco's audited consolidated balance sheet,
consolidating balance sheet and related audited consolidated and
consolidating statements of operations, stockholders' equity and cash
flows as of the end of and for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous Fiscal Year, all
reported on by Price Waterhouse Coopers or other independent public
accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Indesco and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) as soon as available but in any event within 45 days after the
end of the first, second and third Fiscal Quarters and within 90 days
after the fourth Fiscal Quarter, each Borrower's balance sheet and
related statements of operations, stockholders' equity and cash flows as
of the end of and for such Fiscal Quarter, all on a consolidated basis
with such Borrower's subsidiaries, and the then elapsed portion of the
Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous Fiscal Year, all certified
by an Authorized Officer as presenting fairly in all material respects
the financial condition and results of operations of such Borrower on a
consolidated basis with its subsidiaries in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) as soon as available but in any event within 30 days after the
end of each of the first eleven fiscal months of each Borrower (except
for the third fiscal month of each of the first three Fiscal Quarters,
which shall be within 45 days after the end of each such fiscal month)
and within 90 days after the end of the last fiscal month of each
Borrower,
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its balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal month, all on
a consolidated basis with such Borrower's subsidiaries, and the then
elapsed portion of the Fiscal Year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or in the case of the balance sheet, as of the end of) the previous
Fiscal Year, all certified by an Authorized Officer as presenting fairly
in all material respects the financial condition and results of
operations of such Borrower on consolidated basis with its subsidiaries
in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of an Authorized Officer of Indesco, and
under clause (b) or (c) above, a certificate of an Authorized Officer of
each Borrower (i) certifying as to whether a Default has occurred and, if
a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations (A) in the case of quarterly financial
statements, of Consolidated EBITDA for the period of four Fiscal Quarters
then ended and (B) demonstrating compliance with Sections 9.10 through
and including 9.13 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial
statements referred to in clause (a) and, if any such change has
occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a copy of the "management letter", if any, of the
accounting firm that reported on such financial statements;
(f) promptly after the same become publicly available, copies of
all periodic and other reports, financial statements, proxy statements
and other materials filed by Indesco or any of its subsidiaries with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange;
(g) no later than thirty (30) days after the beginning of each
Fiscal Year, each Borrower's forecasted balance sheet prepared on a
consolidated basis with its subsidiaries and related consolidated
statements of operations, stockholders' equity and cash flows (all
prepared on a consistent basis with such Borrower's historical financial
statements) together with appropriate supporting details and a statement
of underlying assumptions for such Fiscal Year, prepared on a
month-by-month basis;
(h) (i) on Friday of each week (or on the preceding Business Day,
if such Friday is not a Business Day) (x) a report of each Borrower's
sales, collections, debit and credit adjustments for the preceding week,
such report to contain such level of detail and to otherwise be in such
scope, form and substance as the Lender may reasonably require, (y) a
Borrowing Base Certificate applicable to such Borrower as of the last day
of the preceding week, which Borrowing Base Certificate shall reflect
such Borrower's total
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Eligible Inventory as of the last day of the second preceding month, in
the case of the Borrowing Base Certificates delivered on the first and
second Friday of each month, or the immediately preceding month, in the
case of all other Borrowing Base Certificates delivered during such month
and (z) a reconciliation to the Trade Accounts Receivable of such
Borrower outstanding as of the prior Friday (or the preceding Business
Day of the prior week, if such prior Friday is not a Business Day), and
(ii) within fifteen (15) days after the end of each month, a Borrowing
Base Certificate applicable to such Borrower as of the last day of such
month, together with a report, in form and substance, and in such detail,
as shall be satisfactory to the Lender, of (w) the amount and value, by
location, of the Inventory as of the end of such month, (x) an aging of
the Trade Accounts Receivable of such Borrower as of the end of such
month, (y) an aging of such Borrower's accounts payable as of the end of
such month, and (z) a work-up of ineligible Trade Accounts Receivable and
ineligible Inventory of such Borrower as of the end of such month; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Indesco and each Borrower, or compliance with the terms of
this Financing Agreement, as the Lender may reasonably request.
SECTION 8.02. Notices of Material Events. Indesco and each
Borrower will furnish to the Lender prompt written notice of the following:
(a) the occurrence of any Event of Default, and with respect to
the Indenture Event, any demand for payment of Subordinated Debt, or the
acceleration thereof, or any exercise of remedies or rights with respect
thereto;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting Indesco, any Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect;
(d) the receipt of any material notice or other material
communication from the Securities Exchange Commission; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
an Authorized Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
SECTION 8.03. Existence; Conduct of Business. Indesco and each
Borrower will do or cause to be done all things necessary to preserve, renew and
keep in full force and
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effect its legal existence and the rights, licenses, Permits, privileges and
franchises material to the conduct of its business.
SECTION 8.04. Payment of Obligations. Indesco and each Borrower
will pay its obligations, including Tax liabilities, that, if not paid, could
result in a Material Adverse Effect before the same shall become delinquent or
in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) Indesco or such Borrower, as the
case may be, has set aside on its books adequate reserves with respect thereto
in accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 8.05. Maintenance of Properties; Insurance. Each Borrower
will (a) keep and maintain all property material to the conduct of its business
in good working order and condition, ordinary wear and tear excepted, and (b)
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations, each policy in respect of which shall list the Lender as loss payee
and/or additional insured as applicable.
SECTION 8.06. Books and Records; Inspection Rights. Indesco and
each Borrower will keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to its
business and activities. Indesco and each Borrower will permit any
representatives designated by the Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, as often as reasonably requested, and unless and
until an Event of Default has occurred and is continuing, only during regular
business hours. If Indesco or such Borrower reasonably believes that any of its
material interests relating to any non-public, confidential or proprietary
information which could become available to the Lender during the course of such
inspections or such discussions are not adequately protected by any then
existing confidentiality agreements entered into by the Lender with respect to
Indesco or such Borrower, then any such visit and examination or discussions
shall be performed in compliance with reasonable and customary security
procedures mutually agreeable to the Lender, Indesco, or such Borrower, as the
case may be.
SECTION 8.07. Compliance with Laws. Indesco and each Borrower will
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, except where any single failure to
do so, or any series of failures to do so, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 8.08. Use of Proceeds and Letters of Credit. The proceeds
of the Loans made to each Borrower will be used only for such Borrower's working
capital needs and for the other purposes described in the last sentence of
Section 7.13. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Federal Reserve Board, including Regulations U and X.
Documentary or commercial Letters of Credit will be issued only to support a
Borrower's
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importation of merchandise and inventory. Standby Letters of Credit will be
issued only to support a Borrower's insurance obligations and its Hedging
Obligations.
SECTION 8.09. Lock Boxes and Blocked Account Agreements. Each
Borrower will maintain at all times a Lock Box, Blocked Account and Blocked
Account Agreement, containing terms and conditions reasonably satisfactory to
the Lender, among such Borrower, the Lender, and each bank at which a Lock Box
is maintained to which such Borrower's customers remit their payments and
collections.
SECTION 8.10. New Subsidiaries. Without the Lender's prior written
consent, none of Holdings, Indesco or any Borrower shall create or acquire a
subsidiary.
SECTION 8.11. Post-Closing Items. As soon as possible, and in any
event no later than thirty (30) days from the Closing Date, Indesco and the
Borrowers shall deliver to the Lender, or cause to be delivered to the Lender,
each of the items listed below:
(a) a legal opinion, in form and substance satisfactory to the
Lender, from special Mexico counsel to CSI, opining, among other things,
as to the perfection of the Lender's security interest in the shares of
capital stock of Continental Sprayers de Mexico, S.A. de C.V. pledged and
collaterally assigned by CSI to the Lender, and the enforceability under
the laws of Mexico of the Stock Pledge Agreement executed by CSI;
(b) a certificate of qualification from the Secretary of State of
the State of Missouri (or comparable officer) indicating that CSI is
qualified as a foreign corporation to do business in such State; and
(c) a Property Survey for each parcel of Real Estate dated as of a
date after the Closing Date, certified to the Lender and the relevant
Title Insurance Company and satisfactory to each of them.
ARTICLE IX
NEGATIVE COVENANTS AND FINANCIAL COVENANTS
Until the Revolving Line of Credit has expired or terminated, the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, all Letters of Credit have expired or terminated, all LC
Disbursements shall have been reimbursed and all other Obligations paid in full,
Indesco and each Borrower covenants and agrees with the Lender that:
SECTION 9.01. Indebtedness. Indesco will not, and such Borrower
will not, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) the Subordinated Debt, and extensions, renewals and
replacements of any such Indebtedness, that do not increase the
outstanding principal amount thereof and which are governed by terms and
conditions, including terms of subordination, which are substantially
similar to the terms and conditions which govern the Subordinated Debt;
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(c) Indebtedness existing on the date hereof and set forth in
Schedule 9.01, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof;
(d) Indebtedness arising from loans and advances made in the
ordinary course of business by (i) a Borrower to Indesco or (ii) one
Borrower to another Borrower, provided that the principal balance of the
loans and advances made after the Closing Date permitted under this
clause (ii) shall not exceed $2,000,000 in the aggregate outstanding at
any one time;
(e) Indebtedness of a Borrower incurred to finance the
acquisition, construction or improvement of any real property or the
fixed or capital assets, including pursuant to Capital Leases, and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or
within 90 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (e) by all Borrowers shall not
exceed $2,500,000 at any time outstanding; and
(f) Indebtedness consisting of Hedging Obligations, provided that
as of any date of determination, the notional amount of such Indebtedness
shall not exceed $12,500,000 in the aggregate.
SECTION 9.02. Liens. Indesco will not, and such Borrower will not,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of Indesco or a Borrower
existing on the date hereof and set forth in Schedule 9.02; provided that
(i) such Lien shall not apply to any other property or asset of Indesco
or such Borrower, as the case may be and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
(c) Liens on fixed or capital assets acquired, leased, constructed
or improved by a Borrower; provided that (i) such security interests
secure Indebtedness permitted by clause (e) of Section 9.01, (ii) such
security interests and the Indebtedness secured thereby are incurred
prior to or within 90 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby
does not exceed the cost of acquiring, constructing or improving such
fixed or capital assets and (iv) such security interests shall not apply
to any other property or assets of such Borrower; and
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(d) Liens in favor of the Lender.
SECTION 9.03. Fundamental Changes. (a) Indesco will not, and such
Borrower will not, merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or any substantial part of its assets, or any real property owned by it, or all
or substantially all of the stock of any of its subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, provided,
however, that (x) Indesco may sell, assign or otherwise transfer for fair
consideration all or substantially all of the assets or capital stock of Polytek
and (y) CSI may continue to lease to Polytek, on the same terms and conditions
as those in effect on the Closing Date, two certain assembly machines, and after
the Closing Date, may transfer title to Indesco or to Polytek of one such
assembly machine, on terms acceptable to CSI, provided further, that during each
Fiscal Year, each Borrower may sell, transfer, or otherwise dispose of (i)
Inventory in the ordinary course of its business, (ii) Equipment no longer used
or useful in the conduct of its business and (iii) other Equipment, so long as
the fair market value of such Equipment does not exceed, in the aggregate, for
all Borrowers, $250,000 during any such Fiscal Year, and the Net Cash Proceeds
received in connection with any such disposition are promptly reinvested in the
business of the Borrower which has disposed of such Equipment or, within sixty
(60) days from receipt thereof, is used to purchase Equipment in replacement of
such disposed Equipment.
(b) Indesco will not, and such Borrower will not, engage to any
material extent in any business other than businesses of the type conducted by
it on the date of execution of this Financing Agreement and businesses
reasonably related thereto.
(c) Without the prior written consent of the Lender, Indesco will
not, and such Borrower will not, consent or agree to any material modification
or amendment of its articles or certificate of incorporation or corporate
bylaws.
(d) Without the prior written consent of the Lender, Indesco will
not, and such Borrower will not, consent to any amendment or other modification
of any term or provision contained in the Subordinated Notes or the Subordinated
Indenture.
SECTION 9.04. Investments, Loans, Advances, Guarantees and
Acquisitions. Indesco will not, and such Borrower will not, purchase, hold or
acquire (including pursuant to any merger with any Person) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, guaranty any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) endorsements of instruments for collection or deposit, in the
ordinary course of Indesco's or such Borrower's business;
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(c) loans and advances in an aggregate principal amount not to
exceed $500,000 made by Indesco or any Borrower to officers of any such
Person, the proceeds of which are used contemporaneously by such officer
to purchase shares of capital stock in Indesco or a Borrower, as the case
may be;
(d) loans and advances made by Indesco or such Borrower to
employees of Indesco or such Borrower (other than loans and advances
described in clause (c) above), provided that (i) each such loan or
advance is made in the ordinary course of business and (ii) the principal
amount of all such loans and advances outstanding shall not exceed
$500,000 at any time;
(e) loans and advances made by a Borrower to Indesco or to another
Borrower, but only to the extent allowed under Section 9.01(d);
(f) investments by Indesco in any of its subsidiaries, and
investments by any Borrower in any of its subsidiaries, in each case
existing on the date hereof;
(g) the contribution by Indesco to Polytek of one of the assembly
machines described in Section 9.03;
(h) guarantees constituting Indebtedness permitted by Section
9.01;
(i) transfers of Equipment permitted under Section 9.06(e); and
(j) investments by Indesco or such Borrower existing on the date
hereof and identified on Schedule 9.04.
SECTION 9.05. Restricted Payments; Payments on Subordinated Debt.
Indesco will not, and each Borrower will not, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, and Indesco will not,
and each Borrower will not, make any payment or prepayment of any kind in
respect of the Subordinated Debt, whether of interest, principal or otherwise,
except that:
(a) any Borrower may declare and pay dividends with respect to its
capital stock payable solely in additional shares of its common stock;
(b) any Borrower may declare and pay cash dividends with respect
to its capital stock, in the ordinary course of its business, to Indesco;
and
(c) Indesco and each Borrower, without duplication, may make
scheduled payments of interest on and principal of the Subordinated Debt,
strictly in accordance with the terms thereof as in effect on the date of
issuance of the Subordinated Indenture, and, without duplication, each
Borrower may declare and pay dividends in cash to Indesco, in amounts in
the aggregate equal to the amount of each such scheduled installment of
interest on and principal of the Subordinated Debt, as and when each such
installment is due and payable, in accordance with the terms thereof as
in effect on the date of issuance of the Subordinated Indenture, so long
as (i) such amounts are simultaneously used by Indesco to fund such
scheduled installments, and (ii) both before
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and immediately after giving effect to any payment or dividend described
in this clause (c), no Default or Event of Default shall have occurred
and be continuing.
SECTION 9.06. Transactions with Subsidiaries and Affiliates. No
Borrower will sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Subsidiaries and Affiliates,
other than:
(a) the transactions described in that certain Management
Agreement dated as of February 4, 1998 between Indesco and Gadraz, Inc.,
a Delaware corporation;
(b) the transactions described in that certain Executive
Employment Agreement dated as of February 4, 1998 between Indesco and
Xxxxx Xxxxxx, an individual;
(c) the purchase of raw materials by any Borrower from a Person
owned or controlled by Yehochai Xxxxxxxxx, an individual;
(d) the rendering of legal services to Indesco and the Borrowers
by the law firm of Gratch, Xxxxxx and Xxxxxxx, P.C. ;
(e) the lease or transfer from time to time, in the ordinary
course of business, of Equipment by one Borrower to another Borrower, so
long as the Lender's Lien on any Equipment so transferred continues to be
perfected at all times;
(f) agreements in existence on the Closing Date between a Borrower
and Polytek; and
(g) as otherwise permitted under Section 9.01(d), Section 9.03 and
Section 9.04.
SECTION 9.07. Restrictive Agreements. Indesco will not, and each
Borrower will not, directly or indirectly, enter into, incur or permit to exist
any agreement or other arrangement that prohibits, restricts or imposes any
condition upon the ability of Indesco or such Borrower, as the case may be, to
incur Indebtedness or to create, incur or permit to exist any Lien upon any of
its property or assets, provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by or in connection with this
Financing Agreement or the Subordinated Indenture (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 9.07 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Financing Agreement
if such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (iv) the foregoing shall not apply to customary provisions
in leases and other contracts restricting the assignment thereof.
SECTION 9.08. Change in Fiscal Year. Indesco will not, and each
Borrower will not, change its Fiscal Year from a fiscal year ending on December
31 of each year.
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SECTION 9.09. Capital Expenditures. The Borrowers will not make on
a combined basis Capital Expenditures during any Fiscal Year (including those
made in connection with Indebtedness permitted to be incurred pursuant to
Section 9.01) in an aggregate amount in excess of $3,000,000 during any Fiscal
Year, provided, however, that (a) Capital Expenditures funded with the proceeds
of casualty losses (to the extent permitted under this Financing Agreement) or
of contributions of capital shall be permitted without regard to the annual
dollar limitation contained in this Section 9.09, and (b) if the aggregate
amount of Capital Expenditures actually made during any Fiscal Year (or lesser
period, if applicable) shall be less than the limit with respect thereto set
forth in this Section 9.09 (such limit, without giving effect to any increase
therein pursuant to this clause (b), the "base amount"), then up to $1,000,000
of the amount of such short fall (the "rollover amount") may be added to the
amount of Capital Expenditures permitted to be made for the immediately
succeeding Fiscal Year, provided further that (i) any Capital Expenditures made
during any Fiscal Year for which any rollover amount shall have been so added
shall be applied first, to the base amount for such Fiscal Year and second, to
the rollover amount added to such Fiscal Year and (ii) such rollover amount, if
any, must be used during such Fiscal Year, it being understood that any portion
of such rollover amount that is not so used during such Fiscal Year shall be
forfeited and may not be carried forward for use in any subsequent period.
SECTION 9.10. Combined EBITDA. The Borrowers shall have on a
combined basis, as of the end of each Fiscal Quarter, EBITDA of not less than
$2,250,000.
SECTION 9.11. Consolidated EBITDA. Indesco and its subsidiaries,
on a consolidated basis, shall have Consolidated EBITDA of not less than (i)
$13,000,000 for each period of four consecutive Fiscal Quarters ending in
December, 2000, March, 2001, June 2001, September, 2001 and December, 2001, and
(ii) $14,500,000 for each period of four consecutive Fiscal Quarters ending in
March, 2002, and each period of four consecutive Fiscal Quarters thereafter.
SECTION 9.12. Consolidated Fixed Charge Coverage Ratio. Indesco
and its subsidiaries, on a consolidated basis, shall have a Consolidated Fixed
Charge Coverage Ratio, as of the end of each Fiscal Quarter, of not less than
3:00 to 1:00.
ARTICLE X
INTEREST, FEES AND EXPENSES; LIBOR PROVISIONS
SECTION 10.01. Interest Generally. Interest on all Revolving Loans
and on the Term Loans shall be payable monthly as of the end of each month. Base
Rate Loans shall bear interest at a variable per annum rate of the Base Rate
plus the Applicable Increment, and LIBOR Loans shall bear interest at a fixed
per annum rate of LIBOR plus the Applicable Increment. Interest on Revolving
Loans shall be charged on the average of the net balances owing by each Borrower
to the Lender in the Revolving Loan Account at the close of each day during such
month, and interest on the Term Loans shall be payable on the unpaid principal
balance thereof. In the event of any change in the Base Rate, the rate hereunder
with respect to Base Rate Loans shall change, as of the date of such change, so
as to remain equal to the Applicable Increment plus the new Base Rate then in
effect. The rate hereunder for Base Rate Loans shall be
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calculated based on a 360-day year, and for LIBOR Loans shall be calculated on
the basis of a 365-day year.
SECTION 10.02. Default Charges. Upon and after the occurrence of
an Event of Default and the giving of any required notice by the Lender in
accordance with the terms of this Financing Agreement, all Loans shall bear
interest at the rate set forth in clause (i) of the term Default Charges, and
fees shall be charged on all Letters of Credit based on the rate set forth in
clause (ii) of the term Default Charges.
SECTION 10.03. Liquidity Fee. In the event that, on any Business
Day of determination, the Availability of the Borrowers on an combined basis as
of the opening of business on such Business Day is less than $4,000,000 (such
event, a "Liquidity Event"), then, automatically and without notice to the
Borrowers, on the next Business Day the Lender shall charge the Loan Account
with, and the Borrowers agree to be jointly and severally liable for the payment
of, a liquidity fee in the amount of $500,000.
SECTION 10.04. Letter of Credit Fees. In consideration of the
Letter of Credit Guaranty of the Lender, the Borrower for whose account a Letter
of Credit was issued shall pay the Lender a Letter of Credit Fee which shall be
an amount equal to (a) two percent (2%) per annum on the face amount of each
such documentary Letter of Credit payable monthly, commencing upon issuance
thereof and (b) two percent (2%) per annum, payable monthly, commencing upon
issuance thereof, on the face amount of each such standby Letter of Credit less
the amount of any and all amounts previously drawn under such standby Letter of
Credit.
SECTION 10.05. Authorization to Charge Revolving Loan Account for
Letter of Credit Fees, etc. Any and all charges, fees, commissions, costs and
expenses charged to the Lender for a Borrower's account by any Issuing Bank in
connection with, or arising out of, Letters of Credit or out of transactions
relating thereto will be charged to the Revolving Loan Account in full when
charged to, or paid by the Lender, or as may be due upon any termination of this
Financing Agreement, and when made by any such Issuing Bank shall be conclusive
on the Lender.
SECTION 10.06. Reimbursement of Out-of-Pocket Expenses;
Documentation Fee. The Borrowers jointly and severally agree to reimburse or pay
the Lender, as the case may be, for: (a) all Out-of-Pocket Expenses and (b) any
applicable Documentation Fee.
SECTION 10.07. Line of Credit Fee. Upon the last Business Day of
each month, commencing with the month of October, 2000, the Borrowers jointly
and severally agree to pay the Lender the Line of Credit Fee, which shall be
calculated based on a 360-day year.
SECTION 10.08. Loan Facility Fee. To induce the Lender to enter
into this Financing Agreement and in consideration of the Lender's agreement to
extend the Line of Credit to the Borrowers, the Borrowers jointly and severally
agree to pay the Lender a Loan Facility Fee in the aggregate amount of $250,000
(less the amount of the commitment fee, if any, paid by the Borrowers pursuant
to the Commitment Letter), which amount shall be payable upon execution of this
Financing Agreement.
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SECTION 10.09. Administrative Management Fee. The Borrowers
jointly and severally agree to pay to the Lender, during each consecutive period
of 365 days commencing on the Closing Date, an Administrative Management Fee in
the amount of $20,000, which shall be deemed fully earned when paid, shall be
paid in quarterly installments of $5,000 each, and shall be due on the first day
of each calendar quarter, except that the first such installment shall be due
and payable on the Closing Date.
SECTION 10.10. Field Examination Fees. The Borrowers jointly and
severally agree to pay the Lender's standard charges and fees for any personnel
engaged or employed by the Lender for reviewing the books and records of the
Borrowers and for verifying, testing, protecting, safeguarding, preserving or
disposing of all or any part of the Collateral (which fees shall be in addition
to the Administrative Management Fee and any Out-of-Pocket Expenses), provided,
however, that unless and until an Event of Default shall have occurred and be
continuing, the fees of the Lender's field examination staff for which the
Borrowers shall be liable for the payment and reimbursement (exclusive of the
Lender's Out-of-Pocket Expenses, as to which there shall be no dollar
limitation) shall not exceed, during any consecutive period of 365 days
commencing on the Closing Date, $750 per day for each member of such staff so
engaged during such period in an examination of the Borrowers' books and
records, for up to ten (10) days during each such period.
SECTION 10.11. Authorization to Charge Revolving Loan Account for
all Payments. The Borrowers hereby authorize the Lender to charge the Revolving
Loan Account with the amount of all payments due hereunder as such payments
become due. The Borrowers confirm that any charges which the Lender may so make
to the Revolving Loan Account as herein provided will be made as an
accommodation to the Borrowers and solely at the Lender's discretion.
SECTION 10.12. Changes In Law. In the event that the Lender (or
any financial institution which may from time to time become a participant or
assignee hereunder) shall have determined in the exercise of its reasonable
business judgment that, subsequent to the Closing Date, any change in applicable
law, rule, regulation or guideline regarding capital adequacy, or any change in
the interpretation or administration thereof, or compliance by the Lender, such
assignee or participant with any new request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the Lender's or such assignee's or participant's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such assignee or participant could have achieved but for such adoption,
change or compliance (taking into consideration the policies of the Lender or
such assignee or participant with respect to capital adequacy) by an amount
reasonably deemed by the Lender or such assignee or participant to be material,
then, from time to time, the Borrowers shall pay, no later than ten (10) days
following demand and receipt of the certificate described below, to the Lender
or such assignee or participant such additional amount or amounts as will
compensate the Lender or such assignee or participant for such reduction. In
determining such amount or amounts, the Lender or such assignee or participant
may use any reasonable averaging or attribution methods. The protection of this
Section 10.12 shall be available to the Lender or such assignee or participant
regardless of any possible contention of invalidity or inapplicability
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with respect to the applicable law, regulation or condition. A certificate of
the Lender or such assignee or participant setting forth such amount or amounts
as shall be necessary to compensate the Lender or such assignee or participant
with respect to this Section 10.12 and the calculation thereof when delivered to
the Borrowers shall be conclusive on the Borrowers absent manifest error.
Notwithstanding anything in this section to the contrary, in the event the
Lender or such assignee or participant has exercised its rights pursuant to this
section, and subsequent thereto determines that the additional amounts paid by
the Borrowers in whole or in part exceed the amount which the Lender or such
assignee or participant actually required to be made whole, the excess, if any,
shall be returned to the Borrowers by the Lender or such assignee or
participant.
SECTION 10.13. Increased Costs. In the event that any change in
(i) any applicable law, treaty or governmental regulation not in effect as of
the date of this Agreement, or, (ii) any existing law, treaty or governmental
regulation, or in the interpretation or application thereof, or compliance by
the Lender or any assignee of the Lender's rights hereunder (each an "Affected
Party") with any request or directive (whether or not having the force of law)
from any central bank or other financial, monetary or other authority, shall:
(a) subject the Affected Party to any tax of any kind whatsoever with respect to
this Financing Agreement or change the basis of taxation of payments to the
Affected Party of principal, fees, interest or any other amount payable
hereunder or under any other documents (except for changes relating to tax on
the overall net income of the Affected Party by the federal government or the
jurisdiction in which it maintains an office or in which it would be subject to
tax without regard to the transactions contemplated under this Financing
Agreement);
(b) impose, modify or hold applicable any reserve, special deposit, assessment
or similar requirement against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended by the Affected Party by
reason of or in respect to this Financing Agreement and the Loan Documents,
including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on the Affected Party any other condition with respect to this
Financing Agreement or any other document, and the result of any of the
foregoing is to increase the cost to the Affected Party of making, renewing or
maintaining its Loans hereunder by an amount that the Affected Party deems to be
material in the exercise of its reasonable business judgment or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Loans by an amount that the Affected Party deems to be material in
the exercise of its reasonable business judgment, then, in any case the
Borrowers shall pay the Affected Party, within five (5) days following its
demand and receipt of the certificate described below, such additional cost or
such reduction, as the case may be, provided that such Affected Party shall have
made such demand within ninety (90) days after the date such Affected Party
first became aware of such additional cost or such reduction, as the case may
be. In the event that such additional cost or such reduction results from a
change in tax law the effect of which can be mitigated or eliminated by filing
with the applicable tax authorities a form or certificate, and the filing of
such form or certificate is not, in the sole determination of the Affected
Party, unreasonably burdensome and will not have any adverse consequence on the
Affected Party, the Affected Party shall file such form or certificate and
provide a copy thereof to the Borrowers. The Affected Party shall certify the
amount of such additional cost or reduced amount to the Borrowers and the
calculation thereof and such certification shall be conclusive upon the
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Borrowers absent manifest error. Notwithstanding anything in this paragraph to
the contrary, in the event the Affected Party has exercised its rights pursuant
to this Section, and subsequent thereto determines that the additional amounts
paid by the Borrowers in whole or in part exceed the amount which the Affected
Party actually required pursuant hereto, the excess, if any, shall be returned
to the Borrowers by the Affected Party.
SECTION 10.14. LIBOR Provisions Generally. The Borrowers may
request LIBOR Loans on the following terms and conditions:
(a) Each Borrower may elect from time to time (i) to request any Loan made to it
hereunder to be a LIBOR Loan as of the date of such Loan or (ii) to convert Base
Rate Loans made to it to LIBOR Loans, and may elect from time to time to convert
LIBOR Loans made to it to Base Rate Loans by giving the Lender at least three
(3) Business Days' prior irrevocable notice of such election, provided that any
such conversion of LIBOR Loans to Base Rate Loans shall only be made, subject to
the second following sentence, on the last day of an Interest Period with
respect thereto. Should a Borrower elect to convert Base Rate Loans made to it
to LIBOR Loans, it shall give the Lender at least four Business Days' prior
irrevocable notice of such election. If the last day of an Interest Period with
respect to a Loan that is to be converted is not a Business Day or Working Day,
then such conversion shall be made on the next succeeding Business Day or
Working Day, as the case may be, and during the period from such last day of an
Interest Period to such succeeding Business Day, as the case may be, such Loan
shall bear interest as if it were an Base Rate Loan. All or any part of
outstanding Base Rate Loans then outstanding with respect to Revolving Loans and
the Term Loans may be converted to LIBOR Loans as provided herein, provided that
partial conversions shall be in multiples in an aggregate principal amount of
$1,000,000 or more.
(b) Any LIBOR Loan may be continued as such upon the expiration of an Interest
Period, provided the Borrower to which such LIBOR Loan was made so notifies the
Lender, at least three (3) Business Days' prior to the expiration of said
Interest Period, and provided further that no LIBOR Loan may be continued as
such upon the occurrence of any Default or Event of Default under this Financing
Agreement, but shall be automatically converted to a Base Rate Loan on the last
day of the Interest Period during which occurred such Default or Event of
Default. Absent such notification, LIBOR Rate Loans shall convert to Base Rate
Loans on the last day of the applicable Interest Period. Each notice of
election, conversion or continuation furnished by the applicable Borrower
pursuant hereto shall specify whether such election, conversion or continuation
is for a one, two, three or six month period. Absent such specification, the
Interest Period shall be a one month period. Notwithstanding anything to the
contrary contained herein, the Lender shall not be required to purchase United
States Dollar deposits in the London interbank market or from any other
applicable LIBOR Rate market or source or otherwise "match fund" to fund LIBOR
Rate Loans, but any and all provisions hereof relating to LIBOR Rate Loans shall
be deemed to apply as if the Lender had purchased such deposits to fund any
LIBOR Rate Loans.
(c) Each Borrower may request a LIBOR Loan, convert any Base Rate Loan made to
it or continue any LIBOR Loan made to it provided there is then no Default or
Event of Default in effect.
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(d) If all or a portion of the outstanding principal amount of the Obligations
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such outstanding amount, to the extent it is a LIBOR Loan, shall be
converted to a Base Rate Loan at the end of the last Interest Period therefor.
(e) The Borrowers may not have more than five (5) LIBOR Loans in the aggregate
outstanding at any given time.
SECTION 10.15. LIBOR Unascertainable. In the event that the Lender
or any other Affected Party shall have determined in the exercise of its
reasonable business judgment (which determination shall be conclusive and
binding upon the Borrowers) that by reason of circumstances affecting the
interbank LIBOR market, adequate and reasonable means do not exist for
ascertaining LIBOR applicable for any Interest Period with respect to: (a) a
proposed Loan that a Borrower has requested be made as a LIBOR Loan; (b) a LIBOR
Loan that will result from the requested conversion of a Base Rate Loan into a
LIBOR Loan; or (c) the continuation of LIBOR Loans beyond the expiration of the
then current Interest Period with respect thereto, the Lender shall forthwith
give written notice of such determination to the Borrowers at least one day
prior to, as the case may be, the requested borrowing date for such LIBOR Loan,
the conversion date of such Base Rate Loan or the last day of such Interest
Period. If such notice is given (i) any requested LIBOR Loan shall be made as a
Base Rate Loan, (ii) any Base Rate Loan that was to have been converted to a
LIBOR Loan shall be continued as a Base Rate Loan, and (iii) any outstanding
LIBOR Loan shall be converted, on the last day of then current Interest Period
with respect thereto, to a Base Rate Loan. Until such notice has been withdrawn
by the Lender, no further LIBOR Loan shall be made nor shall the Borrowers have
the right to convert a Base Rate Loan to a LIBOR Loan.
SECTION 10.16. Extension For Payment. If any payment on a LIBOR
Loan becomes due and payable on a day other than a Business Day or Working Day,
the maturity thereof shall be extended to the next succeeding Business Day or
Working Day unless the result of such extension would be to extend such payment
into another calendar month in which event such payment shall be made on the
immediately preceding Business Day or Working Day.
SECTION 10.17. Unlawfulness. Notwithstanding any other provisions
herein, if any law, regulation, treaty or directive or any change therein or in
the interpretation or application thereof, shall make it unlawful for the Lender
to make or maintain LIBOR Loans as contemplated herein, the then outstanding
LIBOR Loans, if any, shall be converted automatically to Base Rate Loans as of
the end of the Interest Period applicable thereto, or within such earlier period
as required by law. The Borrowers hereby agrees promptly to pay the Lender, upon
demand, any additional amounts necessary to compensate the Lender for any costs
incurred by the Lender in making any conversion in accordance with this Section,
including, but not limited to, any interest or fees payable by the Lender to
lenders of funds obtained by the Lender in order to make or maintain LIBOR Loans
hereunder.
SECTION 10.18. Indemnification. The Borrowers jointly and
severally agree to indemnify and to hold the Lender and all other Affected
Parties harmless from any loss or expense which such Affected Party may sustain
or incur as a consequence of: (a) Default by any Borrower in payment of the
principal amount of or interest on any LIBOR Loans, as and when
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the same shall be due and payable in accordance with the terms of this Financing
Agreement, including, but not limited to, any such loss or expense arising from
interest or fees payable by such Affected Party to lenders of funds obtained by
any of them in order to maintain the LIBOR Loans hereunder; (b) default by any
Borrower in making a borrowing or conversion after such Borrower has given a
notice in accordance with Section 10.14; (c) any prepayment of LIBOR Loans on a
day which is not the last day of the Interest Period applicable thereto,
including, without limitation, prepayments arising as a result of the
application of the proceeds of Collateral to the Revolving Loans; and (d)
default by any Borrower in making any prepayment after such Borrower had given
notice to the Lender thereof. The determination by the Lender of the amount of
any such loss or expense, when set forth in a written notice to the Borrowers,
containing the Lender's calculations thereof in reasonable detail, shall be
conclusive on the Borrowers in the absence of manifest error. Calculation of all
amounts payable under this paragraph with regard to LIBOR Loans shall be made as
though the Lender had actually funded the LIBOR Loans through the purchase of
deposits in the relevant market and currency, as the case may be, bearing
interest at the rate applicable to such LIBOR Loans in an amount equal to the
amount of the LIBOR Loans and having a maturity comparable to the relevant
Interest Period; provided, however, that the Lender may fund each of the LIBOR
Loans in any manner the Lender sees fit and the foregoing assumption shall be
used only for calculation of amounts payable under this paragraph. In addition,
notwithstanding anything to the contrary contained herein, the Lender shall
apply all proceeds of Collateral and all other amounts received by it from or on
behalf of the Borrowers (i) initially to the Base Rate Loans and (ii)
subsequently to LIBOR Loans; provided, however, (x) upon the occurrence of an
Event of Default or (y) in the event the aggregate amount of outstanding LIBOR
Rate Loans exceeds Availability or the applicable maximum levels set forth
therefor, the Lender may apply all such amounts received by it to the payment of
Obligations in such manner and in such order as the Lender may elect in its
reasonable business judgment. In the event that any such amounts are applied to
Revolving Loans which are LIBOR Loans, such application shall be treated as a
prepayment of such Revolving Loans and the Lender shall be entitled to
indemnification hereunder. This covenant shall survive termination of this
Financing Agreement and payment of the outstanding Obligations.
SECTION 10.19. Regulatory Changes. Notwithstanding anything to the
contrary in this Financing Agreement, in the event that, by reason of any
Regulatory Change (for purposes hereof "Regulatory Change" shall mean, with
respect to the Lender, any change after the date of this Financing Agreement in
United States federal, state or foreign law or regulations (including, without
limitation, Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks including the
Lender of or under any United States federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful), the Lender (a) incurs any material
additional costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Financing Agreement or a category of extensions
of credit or other assets of the Lender which includes LIBOR Loans, or (b)
becomes subject to any material restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if the Lender so elects by notice
to the Borrowers, the obligation of the Lender to make or continue, or to
convert Base Rate Loans into LIBOR Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect.
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ARTICLE XI
POWERS
Each Borrower hereby constitutes the Lender, or any Person the Lender may
designate, as its attorney-in-fact, at the Borrowers' cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name of the
Lender or the applicable Borrower, any and all checks, notes, drafts, and other
documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to any Borrower and to
notify postal authorities to change the address for delivery thereof to such
address as the Lender may designate;
(c) To request from customers indebted on Accounts at any time in the name of
the Lender information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time, in the name of
the applicable Borrower, in the name of certified public accountant designated
by the Lender or in the name of the Lender's designee, information concerning
the amounts owing on the Accounts;
(e) To transmit to customers indebted on Accounts notice of the Lender's
interest therein and to notify customers indebted on Accounts to make payment
directly to the Lender for the applicable Borrower's account; and
(f) To take or bring, in the name of the Lender or the applicable Borrower, all
steps, actions, suits or proceedings deemed by the Lender necessary or desirable
to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers set
forth in (b), (c), (e) and (f) above may only be exercised after the occurrence
and during the continuance of an Event of Default, or until such time as such
Event of Default is waived in writing by the Lender.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
SECTION 12.01 Events of Default. Each of the following shall be an
Event of Default:
(a) any Borrower shall fail to pay any principal of any Loan made
to it or any reimbursement obligation in respect of any Letter of Credit
issued for such Borrower's
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account when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan made
to it or any fee, other amount or other Obligation (other than an amount
or Obligation referred to in clause (a) of this Section) payable by such
Borrower under this Financing Agreement, when and as the same shall
become due and payable, and such failure shall continue unremedied for a
period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of Indesco or by any Borrower in or in connection with this
Financing Agreement or any amendment or modification hereof or waiver
hereunder, or in any other Loan Document, or under any report,
certificate, financial statement or other document furnished pursuant to
or in connection with this Financing Agreement or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) any Borrower or Indesco shall fail to observe or perform any
covenant, condition or agreement applicable to it contained in Section
6.03 or 6.06, Article VIII or Article IX;
(e) Indesco or any Borrower shall fail to observe or perform any
covenant, condition or agreement applicable to it contained in this
Agreement (other than those specified in clause (a), (b) or (d) of this
Section), or contained in any other Loan Document, and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Lender to Indesco or such Borrower, as the case may be;
(f) any "Event of Default", as such term is defined in the
Subordinated Indenture, shall have occurred and be continuing, other than
the Indenture Event, or any event or condition occurs that results in the
Subordinated Debt (except on account of the Indenture Event) or any other
Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the lapse
of time or both) the holder or holders of any such Indebtedness, or any
trustee or agent on its or their behalf, to cause such Indebtedness to
become due, or to require the prepayment, repurchase, redemption or
defeasance thereof prior to its scheduled maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Holdings, Indesco or any Borrower or its debts, or
of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestration, conservator or similar official for Holdings, Indesco or
any Borrower or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be
entered;
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(h) Holdings, Indesco or any Borrower shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Section, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestration, conservator or similar
official for such Person or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting
any of the foregoing;
(i) Holdings, Indesco or any Borrower shall become unable, admit
in writing its inability or fail generally to pay its debts as they
become due;
(j) one or more judgments for the payment of money in an aggregate
amount in excess of $2,500,000 shall be rendered against Holdings,
Indesco or any Borrower or any combination thereof and the same shall
remain undischarged or unsatisfied for a period of 30 consecutive days
during which execution shall not be effectively stayed or bonded pending
appeal, or for which such judgment is not covered by insurance to an
extent deemed adequate by the Lender, in its commercially reasonable
judgment, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of Holdings, Indesco or any Borrower to
enforce any such judgment; or
(k) Xxxxx Xxxxxx ceases to have an irrevocable proxy to exercise
all of the voting rights of AFA International Limited, a British Virgin
Islands corporation, in its capacity as holder of shares of capital stock
in Holdings, or such proxy is or becomes void or unenforceable for any
reason, or AFA International Limited, together with Xxxxx Xxxxxx, cease
to own, beneficially and of record, more than fifty percent (50%) of the
equity securities of Holdings having ordinary voting power, or Holdings
ceases to own beneficially and of record, all of the equity securities of
Indesco having ordinary voting power, or Indesco fails to own
beneficially and record all of the equity securities of each Borrower, or
Xxxxx Xxxxxx ceases for any reason to be actively engaged in the
management of Indesco and the Borrowers, or a "Change of Control" occurs,
as such term is defined in the Subordinated Indenture.
SECTION 12.02 Termination of Commitments; Acceleration.
Upon the occurrence of any Event of Default (other than an Event of
Default described in clause (g) or (h) of Section 12.01), and at any time
thereafter during the continuance of such event, the Lender may, by notice to
the Borrowers, take either or both of the following actions, at the same or
different times: (i) terminate the Line of Credit and thereupon the Line of
Credit shall terminate immediately, and (ii) declare the Loans and all other
Obligations then outstanding to be due and payable in whole (or in part, in
which case any principal or other Obligation not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans and all other Obligations so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or
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other notice of any kind, all of which are hereby waived by the Borrowers. In
case of any Event of Default described in clause (g) or (h) of Section 12.01,
the Line of Credit shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and all fees and other
Obligations of the Borrowers accrued hereunder, shall automatically become due
and payable, without presentment demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers, provided, however, that in the
event that the Borrowers file a voluntary petition under Chapter 11 of the
United States Bankruptcy Code (the "Code") within one hundred and eighty (180)
days after the Closing Date, then (a) upon the written request of the Borrowers,
the Lenders shall consent to the entry of a cash collateral order (the "Cash
Collateral Order") by a court of competent jurisdiction (the "Bankruptcy
Court"), in form and substance acceptable to the Lender, in its sole discretion,
exercised in a commercially reasonable manner, pursuant to Section 363 of the
Code, and the Borrowers' use of cash collateral thereunder shall terminate upon
the earlier to occur of (i) 15 days from the entry of the Cash Collateral Order
and (ii) entry of such an order approving the establishment of DIP financing, as
referred to below, and (b) the Borrowers shall enter into a financing agreement
(including a consent to proposed order to be approved by the Bankruptcy Court),
in form and substance substantially the same as, and containing such terms and
conditions substantially the same as, those contained in this Financing
Agreement, pursuant to Section 364(c)(1), (2) and (3) of the Code, which shall
provide for debtor-in-possession ("DIP") financing in amounts at least equal to
the original amount of the Revolving Line of Credit and the original principal
amounts of the Term Loans. Such financing agreement shall include, without
limitation, the following provisions: (i) that the Lender has first priority
liens on all pre- and post-petition property of the Borrowers as security for
all pre- and post-petition Obligations, subject only to validly perfected
pre-petition Permitted Encumbrances existing as of the Closing Date; (ii) that
the Lender be granted a superpriority over all claims, priority claims,
superpriority claims and administrative expenses; (iii) that the Lender's lien
cannot be primed by another security holder; (iv) that no Section 506(c)
administrative expenses can be charged to the collateral that secures such DIP
financing without the Lender's consent; (v) that the Lender can apply for relief
from the Section 362 stay upon shortened notice (which request for shortened
notice would not be opposed by the Borrowers, the Borrowers reserving all rights
to oppose the substantive relief sought in any such Section 362 motion); (vi)
that the Lender shall be entitled to the full protection of Section 364(e);
(vii) a finding by the Bankruptcy Court that the Lender is extending financing
to the Borrowers in good faith; (viii) that Lender may at any time give notice
of its security interest in the Accounts without prior notice to the Borrowers
or application to the Bankruptcy Court; (ix) that the conditions set forth in
paragraphs (k), (o) and (j) of Section 2.01 hereof be re-satisfied at the time
of the DIP financing; (x) that there be no material existing Default (other than
under clause (g) or (h) of Section 12.01 and other than a Default arising from
the Indenture Event); (xi) that the DIP financing shall have a term of no more
than one year; and (xii) neither the proceeds of any loan from the Lender, nor
any of the Lender's collateral, shall be used for the payment or reimbursement
of any fees or disbursements of any professionals retained by the
debtor-in-possession, any trustee or examiner, or any official committee,
incurred in connection with the assertion or joinder in any claim, counterclaim,
action, proceeding, application, motion, objection, defense or other contested
matter, the purpose of which is to seek any order, judgment, determination or
similar relief; invalidating, setting aside, avoiding, subordinating or
rendering or deeming unenforceable, in whole or in part, any of Lender's
pre-petition or post-petition liens or any of the Obligations to Lender, or any
claim against the Borrowers by Lender, under any of the Loan Documents.
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SECTION 12.03 Exercise of Remedies.
Immediately upon the occurrence and during the continuance of any
Event of Default, the Lender may, to the extent permitted by law: (a) remove
from any premises where same may be located any and all books and records,
computers, electronic media and software programs associated with any Collateral
(including any electronic records, contracts and signatures pertaining thereto),
documents, instruments, files and records, and any receptacles or cabinets
containing same, relating to the Accounts, or the Lender may use, at each
Borrower's expense, such of each Borrower's personnel, supplies or space at each
Borrower's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of each applicable Borrower or
the Lender, and generally shall have all other rights respecting said Accounts,
including without limitation the right to: accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any Accounts and issue credits in the name of the applicable Borrower or the
Lender; (c) sell, assign and deliver the Collateral and any returned, reclaimed
or repossessed Inventory, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at the Lender's sole option and
discretion, and the Lender may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by the
Borrowers; (d) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any Inventory and Equipment and/or Other Collateral may be located for the
purpose of taking possession of or removing the same; and (e) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise. The
Lender shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of the
applicable Borrower or the Lender, or in the name of such other party as the
Lender may designate, either at public or private sale or at any broker's board,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Lender in its
sole discretion may deem advisable, and the Lender shall have the right to
purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, the Lender shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as the
Lender shall deem appropriate and any such costs shall be deemed an Obligation
hereunder. Each Borrower agrees, at the request of the Lender, to assemble the
Inventory and Equipment and to make it available to the Lender at premises of
such Borrower or elsewhere and to make available to the Lender the premises and
facilities of such Borrower for the purpose of the Lender's taking possession
of, removing or putting the Inventory and Equipment in saleable form. The Lender
agrees to give each Borrower ten (10) days prior notice of intended disposition
of any Collateral, and each Borrower agrees that ten (10) days prior notice
shall constitute reasonable notification and full compliance with all applicable
laws. The net cash proceeds resulting from the Lender's exercise of any of the
foregoing rights (after deducting all charges, costs and expenses, including
reasonable attorneys' fees) shall be applied by the Lender to the payment of the
Obligations of the applicable Borrower, whether due or to become due, in such
order as the Lender may elect, and such Borrower shall remain liable to the
Lender for any deficiencies, and the Lender in turn
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agrees to remit to such Borrower or its successors or assigns, any surplus
resulting therefrom. The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative. Each Borrower hereby
indemnifies the Lender and holds the Lender harmless from any and all costs,
expenses, claims, liabilities, Out-of-Pocket Expenses or otherwise, incurred or
imposed on the Lender by reason of the exercise of any of its rights, remedies
and interests hereunder, including, without limitation, from any sale or
transfer of Collateral, preserving, maintaining or securing the Collateral,
defending its interests in Collateral (including pursuant to any claims brought
by such Borrower, such Borrower as debtor-in-possession, any secured or
unsecured creditors of such Borrower, any trustee or receiver in bankruptcy, or
otherwise), and each Borrower hereby agrees to so indemnify and hold the Lender
harmless, absent the Lender's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. The foregoing indemnification
shall survive termination of this Financing Agreement until such time as all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof the Lender may establish such reserves for
Obligations hereunder (including any contingent Obligations) as it may deem
advisable in its reasonable business judgment.
ARTICLE XIII
TERMINATION
Except as otherwise permitted herein, the Lender may terminate
this Financing Agreement only as of the initial or any subsequent Anniversary
Date and then only by giving the Borrowers at least one hundred and twenty (120)
days prior written notice of termination. Notwithstanding the foregoing, the
Lender may terminate the Financing Agreement immediately upon the occurrence of
an Event of Default. This Financing Agreement, unless terminated as herein
provided, shall automatically continue from Anniversary Date to Anniversary
Date. The Borrowers may terminate this Financing Agreement at any time upon
sixty (60) days' prior written notice to the Lender. All Obligations shall
become due and payable as of any termination hereunder or under Article XII
hereof and, pending a final accounting, the Lender may withhold any balances in
the Revolving Loan Account (unless supplied with an indemnity satisfactory to
the Lender) to cover all of the Obligations, whether absolute or contingent,
including, but not limited to, cash reserves for any contingent Obligations,
including an amount equal to 110% of the undrawn face amount of any outstanding
Letters of Credit. All of the Lender's rights, liens and security interests
shall continue after any termination until all Obligations have been paid and
satisfied in full, unless the Lender shall have received from or on behalf of
the Borrowers cash collateral in aggregate amount equal to 110% of the amount of
such Obligations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Indesco or to either Borrower, to Indesco at:
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Indesco International, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
With a copy to:
.
Gratch, Xxxxxx & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
and
(b) if to the Lender, to:
The CIT Group / Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Regional Manager
Fax No.: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx, Esq.
Fax No.: (000) 000-0000
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Financing Agreement shall be deemed to have been given on the date of
receipt.
SECTION 14.02. Waivers; Amendments. (a) No failure or delay by the
Lender or the Issuing Bank in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Lender
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Financing
Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be
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permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan,
or issuance of a Letter of Credit, shall not be construed as a waiver of any
Default, regardless of whether the Lender or the Issuing Bank may have had
notice or knowledge of such Default at the time.
(b) Neither this Financing Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement in writing
entered into by Indesco, the Borrowers and the Lender.
SECTION 14.03. Expenses; Indemnity; Damage Waiver. (a) Indesco and
each Borrower jointly and severally agree to pay (i) all reasonable
out-of-pocket expenses incurred by the Lender and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Lender, in
connection with the preparation and administration of this Financing Agreement
or any amendments, modifications or waivers of the provisions hereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, (iii) all amounts paid by the Lender which
constitute indemnity payments under the Old Credit Agreement, and (iv) all
reasonable out-of-pocket expenses incurred by the Lender or the Issuing Bank,
including the reasonable fees, charges and disbursements of any counsel
(including the allocated costs of internal counsel) for the Issuing Bank or the
Lender, in connection with the enforcement or protection of its rights in
connection with this Financing Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such reasonable out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans or Letters
of Credit.
(b) Indesco and each Borrower jointly and severally agree to
indemnify the Lender and the Issuing Bank and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Financing Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of transactions contemplated hereby,
(ii) any Loan, Letter of Credit, or the use of the proceeds therefrom (including
any refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual presence or
release of Hazardous Materials from any property owned or operated by Indesco or
any Borrower in violation of applicable Environmental Laws and resulting in
Environmental Liability, or any Environmental Liability related in any way to
Indesco or any Borrower, or (iv) any actual claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and
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nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent permitted by applicable law, Indesco and each
Borrower agree not to assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Financing Agreement or the transactions
contemplated hereby, any Loan or Letter of Credit or the use of the proceeds
thereof.
(d) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 14.04. Successors and Assigns. (a) The provisions of this
Financing Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
except that neither Indesco nor the Borrowers may assign or otherwise transfer
any of their rights or obligations hereunder without the prior written consent
of the Lender (and any attempted assignment or transfer by any of them without
such consent shall be null and void). Nothing in this Financing Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby)
any legal or equitable right, remedy or claim under or by reason of this
Financing Agreement.
(b) The Lender shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, its obligations under the Line of Credit, the
Term Loans, the Revolving Loans and its rights and obligations with respect to
Letters of Credit), provided, however, that unless an Event of Default has
occurred and is continuing, the Lender shall not make any such assignment
without the prior written consent of the Borrowers, which consent will not be
unreasonably withheld or delayed. Upon execution of an assignment and transfer
agreement, (a) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment, have the rights and obligations of the Lender as the case
may be hereunder and (b) the Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such assignment,
relinquish its rights and be released from its obligations under this Financing
Agreement. Indesco and the Borrowers shall, if necessary, execute any documents
reasonably required to effectuate the assignments.
(c) Indesco and the Borrowers acknowledge that the Lender may sell
participations in the Loans and extensions of credit made and to be made to the
Borrowers hereunder. Indesco and the Borrowers further acknowledge that in doing
so, the Lender may grant to any such participant certain rights which would
require such participant's consent to certain waivers, amendments and other
actions with respect to the provisions of this Financing Agreement.
SECTION 14.05. Survival. All covenants, agreements,
representations and warranties made by Indesco and the Borrowers herein and in
the certificates or other instruments delivered in connection with or pursuant
to this Financing Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
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Financing Agreement and the making of any Loans and issuance of any Letters of
Credit, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Lender or the Issuing Bank may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Financing Agreement is outstanding
and unpaid or any Letter of Credit is outstanding (unless such Letter of Credit
has been collateralized by cash pursuant to Article XIII) and so long as the
Revolving Line of Credit has not expired or terminated. Each provision contained
in this Financing Agreement pursuant to which Indesco or the Borrowers
indemnifies, or agrees to be liable for any loss suffered by, the Lender or the
Issuing Bank shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Financing Agreement or any provision
hereof.
SECTION 14.06. Counterparts; Integration; Effectiveness. This
Financing Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. This
Financing Agreement constitutes the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 2.01, this Financing Agreement shall become effective
when it shall have been executed by the Lender and when the Lender shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Financing Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Financing Agreement.
SECTION 14.07. Severability. Any provision of this Financing
Agreement held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 14.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by the Lender or such Affiliate to or for the credit or the account of
Indesco or the Borrowers against any of and all the obligations of the Borrowers
now or hereafter existing under this Financing Agreement held by the Lender,
irrespective of whether or not the Lender shall have made any demand under this
Financing Agreement and although such obligations may be unmatured. The rights
of the Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which the Lender may have.
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SECTION 14.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Financing Agreement shall be construed in accordance with and
governed by the law of the State of New York.
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(b) Indesco and each Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Financing Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Financing Agreement shall affect any right that
the Lender or the Issuing Bank may otherwise have to bring any action or
proceeding relating to this Financing Agreement against Indesco or any Borrower
or its properties in the courts of any jurisdiction.
(c) Indesco and each Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Financing
Agreement in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Financing Agreement irrevocably consents to
service of process in the manner provided for notices in Section 14.01. Nothing
in this Financing Agreement will affect the right of any party to this Financing
Agreement to serve process in any other manner permitted by law.
SECTION 14.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS FINANCING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
FINANCING AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 14.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Financing Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Financing Agreement.
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SECTION 14.12. Confidentiality. The Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a)to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Financing
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Financing Agreement or the
enforcement of rights hereunder, (f) subject to a confidentiality agreement
containing provisions substantially the same as those of this Section, to any
participant or prospective participant of the Lender or to any assignee of, or
any prospective assignee of, any of its rights or obligations under this
Financing Agreement, (g) with the consent of Indesco or the applicable Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the Lender
on a nonconfidential basis from a source other than Indesco or a Borrower. For
the purposes of this Section, "Information" means all information received from
Indesco and the Borrowers relating to any of them or their business, other than
any such information that is available to the Lender on a nonconfidential basis
prior to disclosure by Indesco or the Borrowers, as applicable; provided that,
in the case of information received from Indesco or any Borrower after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 14.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and, to
the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to the Lender in
respect of other Loans or periods shall be increased (but not above the Maximum
Rate therefor) until such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been
received by the Lender.
SECTION 14.14. [Intentionally Omitted].
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IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THE CIT GROUP/ BUSINESS CREDIT, INC.,
By
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Name:
Title:
INDESCO INTERNATIONAL, INC.
By
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Name:
Title:
AFA PRODUCTS, INC.
By
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Name:
Title:
CONTINENTAL SPRAYERS INTERNATIONAL, INC.
By
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Name:
Title: