Exhibit 10.18
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FALCON PRODUCTS, INC.,
XXXXXX XXXXXXXX INDUSTRIES, INC.
AND
SELLERS & XXXXXXXXX INC.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED: JANUARY 15, 2004
$89,331,000
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FLEET CAPITAL CORPORATION
INDIVIDUALLY AND AS AGENT FOR ANY LENDER WHICH IS
OR BECOMES A PARTY HERETO
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TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY.......................................................................................1
1.1. Loans................................................................................................1
1.2. Letters of Credit; LC Guaranties.....................................................................4
1.3. Term Loans...........................................................................................5
1.4. Borrowing Agent......................................................................................5
1.5. Effect of Amendment and Restatement; Waiver of Existing Events of Default............................6
SECTION 2. INTEREST, FEES AND CHARGES............................................................................6
2.1. Interest.............................................................................................6
2.2. Computation of Interest and Fees.....................................................................7
2.3. Fee Letter...........................................................................................8
2.4. Letter of Credit and LC Guaranty Fees................................................................8
2.5. Unused Line Fee......................................................................................8
2.6. Prepayment Fee.......................................................................................9
2.7. Audit Fees...........................................................................................9
2.8. Reimbursement of Expenses...........................................................................10
2.9. Bank Charges........................................................................................10
2.10. Collateral Protection Expenses; Appraisals..........................................................11
2.11. Payment of Charges..................................................................................11
2.12. Intentionally Omitted...............................................................................11
2.13. No Deductions.......................................................................................11
2.14. Joint and Several Obligations.......................................................................12
SECTION 3. LOAN ADMINISTRATION..................................................................................14
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR Option.............................................14
3.2. Payments............................................................................................18
3.3. Mandatory and Optional Prepayments..................................................................21
3.4. Application of Payments and Collections.............................................................25
3.5. All Loans to Constitute One Obligation..............................................................26
3.6. Loan Account........................................................................................26
3.7. Statements of Account...............................................................................26
3.8. Increased Costs.....................................................................................27
3.9. Basis for Determining Interest Rate Inadequate......................................................28
3.10. Sharing of Payments, Etc............................................................................28
3.11. Post Event of Default Allocation....................................................................29
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SECTION 4. TERM AND TERMINATION.................................................................................30
4.1. Term of Agreement...................................................................................30
4.2. Termination.........................................................................................31
SECTION 5. SECURITY INTERESTS...................................................................................32
5.1. Security Interest in Collateral.....................................................................32
5.2. Other Collateral....................................................................................33
5.3. Lien Perfection; Further Assurances.................................................................34
5.4. Lien on Realty......................................................................................34
5.5. Pledge of Securities................................................................................35
SECTION 6. COLLATERAL ADMINISTRATION............................................................................35
6.1. General.............................................................................................35
6.2. Administration of Accounts..........................................................................36
6.3. Administration of Inventory.........................................................................38
6.4. Records and Schedules of Equipment..................................................................38
6.5. Payment of Charges..................................................................................38
SECTION 7. REPRESENTATIONS AND WARRANTIES.......................................................................38
7.1. General Representations and Warranties..............................................................38
7.2. Continuous Nature of Representations and Warranties.................................................47
7.3. Survival of Representations and Warranties..........................................................47
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS..................................................................47
8.1. Affirmative Covenants...............................................................................47
8.2. Negative Covenants..................................................................................51
8.3. Specific Financial Covenants........................................................................60
SECTION 9. CONDITIONS PRECEDENT.................................................................................60
9.1. Documentation.......................................................................................61
9.2. No Default..........................................................................................61
9.3. Other Conditions....................................................................................61
9.4. Availability........................................................................................61
9.5. No Litigation.......................................................................................61
9.6. Term B Fees.........................................................................................61
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...................................................61
10.1. Events of Default...................................................................................61
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10.2. Acceleration of the Obligations.....................................................................65
10.3. Other Remedies......................................................................................66
10.4. Set Off and Sharing of Payments.....................................................................67
10.5. Remedies Cumulative; No Waiver......................................................................68
SECTION 11. THE AGENT; CERTAIN PROVISIONS RELATING TO LENDERS...................................................68
11.1. Authorization and Action............................................................................68
11.2. Agent's Reliance, Etc...............................................................................69
11.3. Fleet and Affiliates................................................................................70
11.4. Lender Credit Decision..............................................................................70
11.5. Indemnification.....................................................................................70
11.6. Rights and Remedies to be Exercised by Agent Only...................................................71
11.7. Agency Provisions Relating to Collateral............................................................71
11.8. Agent's Right to Purchase Commitments...............................................................72
11.9. Right of Sale, Assignment, Participations...........................................................72
11.10. Amendment...........................................................................................75
11.11. Resignation of Agent; Appointment of Successor......................................................78
11.12. Audit and Examination Reports; Disclaimer by Lenders................................................78
11.13. Buyout Right........................................................................................79
SECTION 12. MISCELLANEOUS.......................................................................................80
12.1. Power of Attorney...................................................................................80
12.2. Indemnity...........................................................................................81
12.3. Sale of Interest....................................................................................82
12.4. Severability........................................................................................82
12.5. Successors and Assigns..............................................................................82
12.6. Cumulative Effect; Conflict of Terms................................................................82
12.7. Execution in Counterparts...........................................................................82
12.8. Notice..............................................................................................83
12.9. Consent.............................................................................................84
12.10. Credit Inquiries....................................................................................84
12.11. Time of Essence.....................................................................................84
12.12. Entire Agreement....................................................................................84
12.13. Interpretation......................................................................................85
12.14. Confidentiality.....................................................................................85
12.15. GOVERNING LAW; CONSENT TO FORUM.....................................................................85
12.16. WAIVERS BY BORROWERS................................................................................86
12.17. Advertisement.......................................................................................87
SECTION 13. THE TRANCHE B AGENT.................................................................................87
13.1. Authorization and Action............................................................................87
13.2. Tranche B Agent's Reliance, Etc.....................................................................88
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13.3. OCM and Affiliates..................................................................................89
13.4. Term Loan B Lender Credit Decision..................................................................89
13.5. Indemnification.....................................................................................89
13.6. Rights and Remedies to be Exercised by Tranche B Agent Only.........................................90
13.7. Agency Provisions Relating to Collateral............................................................90
13.8. Tranche B Agent's Right to Purchase Commitments.....................................................90
13.9. Resignation of Tranche B Agent; Appointment of Successor............................................91
13.10. Information Sharing.................................................................................91
13.11. Rights of Term Loan B Lenders.......................................................................91
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is
made as of this 15th day of January, 2004, by and among FLEET CAPITAL
CORPORATION ("Fleet"), a Rhode Island corporation with an office at Xxx
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, individually as a
Lender and as Agent ("Agent") for itself and any other financial institution
which is or becomes a party hereto (each such financial institution,
including Fleet, is referred to hereinafter individually as a "Lender"), the
LENDERS and each of FALCON PRODUCTS, INC., a Delaware corporation with its
chief executive office and principal place of business at 0000 Xxxxxxx
Xxxxxxxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("Falcon"), XXXXXX XXXXXXXX
INDUSTRIES, INC., a Delaware corporation with its chief executive office and
principal place of business at 0000 Xxxxxxx Xxxxxxxxxx Xxxxx, Xx. Xxxxx,
Xxxxxxxx 00000 ("Shelby"), and SELLERS & XXXXXXXXX INC., a New Jersey
corporation with its chief executive office and principal place of business
at 00 Xxxxx 0 Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("Sellers & Xxxxxxxxx").
Xxxxxx, Xxxxxx and Sellers & Xxxxxxxxx are hereafter referred to
collectively as "Borrowers" and individually as a "Borrower". Capitalized
terms used in this Agreement have the meanings assigned to them in Appendix
A, General Definitions. Accounting terms not otherwise specifically defined
herein shall be construed in accordance with GAAP consistently applied. This
Agreement amends and restates in its entirety that certain Loan and Security
Agreement dated as of June 3, 2003, as amended or otherwise modified to the
date hereof, among Agent, the financial institutions party thereto and
Borrowers (the "Original Loan Agreement").
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance
upon the representations and warranties made in, this Agreement and the
other Loan Documents, Lenders agree to make a Total Credit Facility of up to
$89,331,000 available to Borrowers upon a Borrower's request therefor, as
follows:
1.1. Loans.
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1.1.1. Revolving Credit Loans. Each Revolving Credit and
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Term Loan A Lender agrees, severally and not jointly, for so long
as no Default or Event of Default exists, to make Revolving Credit
Loans to Borrowers from time to time during the period from the
date hereof to but not including the last day of the Term, as
requested by Borrowers in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding
equal to the lesser of (i) such Revolving Credit and Term Loan A
Lender's Revolving Loan Commitment minus the product of such
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Revolving Credit and Term Loan A Lender's Revolving Loan Percentage
and the LC Amount minus the product of such Revolving Credit and
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Term Loan A Lender's Revolving Loan Percentage and reserves, if any
and (ii) the product of such Revolving Credit and Term Loan A
Lender's Revolving Loan Percentage and an amount equal to the
Borrowing Base at such time minus the LC Amount minus
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reserves, if any. The aggregate amount of the Revolving Loan
Commitments is $33,769,000. Agent shall have the right to establish
reserves in such amounts, and with respect to such matters, as
Agent shall deem necessary or appropriate in its reasonable credit
judgment, against the amount of Revolving Credit Loans which
Borrowers may otherwise request under this subsection 1.1.1
including without limitation with respect to (i) price adjustments,
damages, unearned discounts, returned products or other matters for
which credit memoranda are issued in the ordinary course of a
Borrower's business; (ii) potential dilution related to Accounts;
(iii) shrinkage, spoilage and obsolescence of a Borrower's
Inventory; (iv) slow moving Inventory; (v) other sums chargeable
against a Borrower's Loan Account as Revolving Credit Loans under
any section of this Agreement; (vi) amounts owing by a Borrower to
any Person to the extent secured by a Lien on, or trust over, any
Property of any Borrower (other than Permitted Liens described in
any of subsections 8.2.5(i), (iv), (v), (vi), (x), (xi), (xii) or
(xiii)); (vii) amounts owing by a Borrower in connection with
Product Obligations; (viii) an amount equal to then accrued and
unpaid interest on the Subordinated Note Debt, with such amount to
be adjusted on a monthly basis, on the last day of each calendar
month (provided, that such reserve shall be released at the time of
each payment of such interest); (ix) the Special Reserve; (x) the
Rebuild Reserve; and (xi) such other specific events, conditions or
contingencies as to which Agent, in its reasonable credit judgment,
determines reserves should be established from time to time
hereunder. Notwithstanding the foregoing, (a) the reserves
described in clauses (viii), (ix) and (x) above shall be
implemented and maintained by Agent unless otherwise agreed by
Required Lenders, (b) the reserves implemented under clause (x)
shall be released as necessary to permit replacement or repair of
the subject Property, as provided in subsection 3.3.1(a) or
subsection 8.2.9(iv), as applicable, (c) Agent shall not establish
any reserves in respect of any matters relating to any items of
Collateral that have been taken into account in determining
Eligible Inventory or Eligible Accounts, as applicable and (d) the
Special Reserve shall no longer be required and shall be terminated
upon the payment in full of Term Loan B. The Revolving Credit Loans
shall be repayable in accordance with the terms of the Revolving
Notes and shall be secured by all of the Collateral.
1.1.2. Overadvances. Insofar as Borrowers may request and
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Agent or Revolving Credit and Term Loan A Lenders (as provided
below) may be willing in their sole and absolute discretion to make
Revolving Credit Loans to Borrowers at a time when the unpaid
balance of Revolving Credit Loans plus the sum of the LC Amount
plus the amount of LC Obligations that have not been reimbursed by
Borrowers or funded with a Revolving Credit Loan, plus reserves,
exceeds, or would exceed with the making of any such Revolving
Credit Loan, the Borrowing Base (such Loan or Loans being herein
referred to individually as an "Overadvance" and collectively, as
"Overadvances"), Agent shall enter such Overadvances as debits in a
Borrower's Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest
as provided in this Agreement for Revolving Credit Loans generally.
Any Overadvance made pursuant to the terms
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hereof shall be made by all Revolving Credit and Term Loan A
Lenders ratably in accordance with their respective Revolving Loan
Percentages. Overadvances in the aggregate amount of $1,500,000 or
less may, unless a Default or Event of Default has occurred and is
continuing, be made in the sole and absolute discretion of Agent.
Overadvances in an aggregate amount of more than $1,500,000 but
less than $2,500,000 may, unless a Default or an Event of Default
has occurred and is continuing, be made in the sole and absolute
discretion of the Majority Lenders. Overadvances in an aggregate
amount of $2,500,000 or more and Overadvances to be made after the
occurrence and during the continuation of a Default or an Event of
Default shall require the consent of all Lenders. The foregoing
notwithstanding, in no event, unless otherwise consented to by all
Revolving Credit and Term Loan A Lenders, (w) shall any
Overadvances be outstanding for more than sixty (60) consecutive
days, (x) after all outstanding Overadvances have been repaid,
shall Agent or Revolving Credit and Term Loan A Lenders make any
additional Overadvances unless sixty (60) days or more have expired
since the last date on which any Overadvances were outstanding, (y)
shall Overadvances be outstanding on more than ninety (90) days
within any one hundred eighty day (180) period or (z) shall Agent
make Revolving Credit Loans on behalf of Revolving Credit and Term
Loan A Lenders under this subsection 1.1.2 to the extent such
Revolving Credit Loans would cause a Revolving Credit and Term Loan
A Lender's share of the Revolving Credit Loans to exceed such
Revolving Credit and Term Loan A Lender's Revolving Loan Commitment
minus such Revolving Credit and Term Loan A Lender's Revolving Loan
Percentage of the LC Amount.
1.1.3. Use of Proceeds. The Revolving Credit Loans shall
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be used solely (i) for the satisfaction of existing Indebtedness of
Falcon, (ii) for Borrowers' general operating capital needs in a
manner consistent with the provisions of this Agreement and all
applicable laws, and (iii) for other purposes permitted under this
Agreement.
1.1.4. Agent Loans. Upon the occurrence and during the
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continuance of an Event of Default, Agent, in its sole discretion,
may make Revolving Credit Loans on behalf of Revolving Credit and
Term Loan A Lenders, in an aggregate amount not to exceed $500,000,
if Agent, in its reasonable business judgment, deems that such
Revolving Credit Loans are necessary or desirable (i) to protect
all or any portion of the Collateral, (ii) to enhance the
likelihood, or maximize the amount of, repayment of the Loans and
the other Obligations, or (iii) to pay any other amount chargeable
to any Borrower pursuant to this Agreement, including without
limitation costs, fees and expenses as described in Sections 2.8
and 2.9 (hereinafter, "Agent Loans"); provided, that in no event
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shall (a) the maximum principal amount of the Revolving Credit
Loans exceed the aggregate Revolving Loan Commitments and (b)
Majority Lenders may at any time revoke Agent's authorization to
make Agent Loans. Any such revocation must be in writing and shall
become effective prospectively upon Agent's receipt thereof. Each
Revolving Credit and Term Loan A Lender shall be obligated to
advance its Revolving Loan Percentage of each Agent Loan. If Agent
Loans are made pursuant to the preceding sentence, then (a) the
Borrowing Base shall be
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deemed increased by the amount of such permitted Agent Loans, but
only for so long as Agent allows such Agent Loans to be
outstanding, and (b) all Revolving Credit and Term Loan A Lenders
that have committed to make Revolving Credit Loans shall be bound
to make, or permit to remain outstanding, such Agent Loans based
upon their Revolving Loan Percentages in accordance with the terms
of this Agreement.
1.2. Letters of Credit; LC Guaranties.
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1.2.1. Issuance of Letters of Credit and LC Guarantees.
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Agent agrees, for so long as no Default or Event of Default exists
and if requested by a Borrower, to, as requested by a Borrower, (i)
issue its, or cause to be issued by Bank or another Affiliate of
Agent, on the date requested by a Borrower, Letters of Credit for
the account of a Borrower or (ii) execute LC Guaranties by which
Agent, Bank, or another Affiliate of Agent, on the date requested
by a Borrower, shall guaranty the payment or performance by such
Borrower of its reimbursement obligations with respect to letters
of credit issued for a Borrower's account by other Persons;
provided that the LC Amount shall not exceed $7,500,000 at any
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time. No Letter of Credit or LC Guaranty may have an expiration
date after the last day of the Term.
1.2.2. Revolving Credit and Term Loan A Lender
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Participation. Immediately upon the issuance of a Letter of Credit
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or an LC Guaranty under this Agreement, each Revolving Credit and
Term Loan A Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse
or warranty, an undivided interest and participation therein equal
to the applicable LC Obligations multiplied by such Revolving
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Credit and Term Loan A Lender's Revolving Loan Percentage. Agent
will notify each Revolving Credit and Term Loan A Lender on a
weekly basis, or if determined by Agent, a more frequent basis,
upon presentation to it of a draw under a Letter of Credit or a
demand for payment under a LC Guaranty. On a weekly basis, or more
frequently if requested by Agent, each Revolving Credit and Term
Loan A Lender shall make payment to Agent in immediately available
funds, of an amount equal to such Revolving Credit and Term Loan A
Lender's pro rata share of the amount of any payment made by Agent
in respect to any Letter of Credit or LC Guaranty. The obligation
of each Revolving Credit and Term Loan A Lender to reimburse Agent
under this subsection 1.2.2 shall be unconditional, continuing,
irrevocable and absolute, except in respect of indemnity claims
arising out of Agent's willful misconduct. In the event that any
Revolving Credit and Term Loan A Lender fails to make payment to
Agent of any amount due under this subsection 1.2.2, Agent shall be
entitled to receive, retain and apply against such obligation the
principal and interest otherwise payable to such Revolving Credit
and Term Loan A Lender hereunder until Agent receives such payment
from such Revolving Credit and Term Loan A Lender or such
obligation is otherwise fully satisfied; provided, however, that
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nothing contained in this sentence shall relieve such Revolving
Credit and Term Loan A Lender of its obligation to reimburse the
Agent for such amount in accordance with this subsection 1.2.2.
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1.2.3. Reimbursement. Notwithstanding anything to the
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contrary contained herein, Borrowers, Agent and Revolving Credit
and Term Loan A Lenders hereby agree that all LC Obligations and
all obligations of each Borrower relating thereto shall be
satisfied by the prompt issuance of one or more Revolving Credit
Loans that are Base Rate Portions, which Borrowers hereby
acknowledge are requested and Revolving Credit and Term Loan A
Lenders hereby agree to fund. In the event that Revolving Credit
Loans are not, for any reason, promptly made to satisfy all then
existing LC Obligations, each Revolving Credit and Term Loan A
Lender hereby agrees to pay to Agent, on demand, an amount equal to
such LC Obligations multiplied by such Lender's Revolving Loan
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Percentage, and until so paid, such amount shall be secured by the
Collateral and shall bear interest and be payable at the same rate
and in the same manner as Base Rate Portions. In no event shall
Agent or any Revolving Credit and Term Loan A Lender make any
Revolving Credit Loan in respect of any Obligation that has already
been satisfied by any Borrower.
1.3. Term Loans.
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1.3.1. Term Loan A. Pursuant to the terms of the Original
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Loan Agreement, Revolving Credit and Term Loan A Lenders made a
loan to Borrowers that was designated as Term Loan A under the
Original Loan Agreement. Such Loan is referred to in this Agreement
as "Term Loan A". The outstanding principal balance of Term Loan A
on the date of this Agreement is $5,562,000. Term Loan A shall be
repayable in accordance with the terms of the Term A Notes and
shall be secured by all of the Collateral.
1.3.2. Term Loan B. Each Term Loan B Lender, severally and
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not jointly, agrees to make a term loan (collectively, the "Term
Loan B") to Borrowers on the Closing Date, in the aggregate
principal amount of such Term Loan B Lender's Term Loan B
Commitment, which shall be repayable in accordance with the terms
of the Term B Notes and shall be secured by all of the Collateral.
The aggregate amount of the Term Loan B Commitments is $50,000,000.
The proceeds of Term Loan B shall be used solely for the purposes
of paying in full on the Closing Date all principal, interest and
fees owing in connection with the Original Term Loan B, paying fees
and expenses incurred in connection with this Agreement and
repaying Revolving Credit Loans.
1.4. Borrowing Agent.
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For ease of administration of this Agreement, each
Borrower other than Falcon hereby appoints Falcon as the borrowing agent for
all Borrowers hereunder. In such capacity, Falcon will request all Revolving
Credit Loans to be made pursuant to Section 1.1, will request all Letters of
Credit and LC Guaranties to be issued pursuant to Section 1.2 and will
submit all LIBOR Requests with respect to obtaining any LIBOR Portion
pursuant to subsection 3.1.7, converting any Base Rate Portion into a LIBOR
Portion pursuant to subsection 3.1.8 or continuing any LIBOR Portion into a
subsequent Interest Period pursuant to subsection 3.1.9, in each case
pursuant to the procedures set forth in Section 3.1. Notwithstanding
anything to the
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contrary contained in this Agreement, no Borrower other than Falcon shall be
entitled to request any Revolving Credit Loans, Letters of Credit or LC
Guaranties or to submit any LIBOR Requests hereunder.
1.5. Effect of Amendment and Restatement; Waiver of
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Existing Events of Default.
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Upon the execution and delivery of this Agreement and the
repayment of Original Term Loan B, the Obligations (as defined in the
Original Loan Agreement) of the Borrowers previously governed by the
Original Loan Agreement (other than Original Term Loan B) shall continue in
full force and effect, but shall be governed by the terms and conditions set
forth in this Agreement. Such Obligations, together with any and all
additional liabilities incurred by the Borrowers hereunder or under any of
the Loan Documents, shall continue to be secured by, among other things, the
Collateral, whether now existing or hereafter acquired and wheresoever
located, all as more specifically set forth herein and in the Security
Documents. Each Borrower hereby reaffirms such Borrower's Obligations (as
defined in the Original Loan Agreement), liabilities, grants of security
interests, pledges and the validity of all covenants by such Borrower
contained in any and all Security Documents. The execution and delivery of
this Agreement shall not constitute a novation or, except with respect to
the repayment of the Original Term Loan B, repayment of the indebtedness
outstanding under the Original Loan Agreement. Each Borrower hereby
acknowledges and agrees that any and all references in any Loan Documents to
the Original Loan Agreement shall be deemed to be amended to refer to this
Agreement. Each Borrower hereby reaffirms its obligations, liabilities and
indebtedness arising under each of the Loan Documents existing on the date
hereof, in each case after giving effect to the provisions of the preceding
sentence. Lenders hereby waive the Existing Events of Default (as defined in
Waiver and Amendment No. 2 to Loan and Security Agreement dated as of
December 15, 2003 among the Lenders party to the Original Loan Agreement and
Borrowers). Other than as expressly set forth in the preceding sentence, the
Lenders do not waive any Event of Default or Defaults that are now in
existence or that may hereafter occur, or any rights or remedies that Agent,
Tranche B Agent and Lenders may have under the Loan Documents or applicable
law with respect thereto, all of which rights and remedies Agent, Tranche B
Agent and Lenders specifically reserve.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. Interest.
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2.1.1. Rates of Interest.
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(a) Interest shall accrue on the principal amount
of the Base Rate Revolving Portions and the Base Rate Term A
Portions outstanding at the end of each day at a fluctuating rate
per annum equal to the Applicable Margin then in effect plus the
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Base Rate. Said rate of interest shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate,
effective as of the opening of business on the day that any such
change in the Base Rate occurs. If a Borrower exercises its LIBOR
Option as provided in Section 3.1, interest shall accrue on the
principal
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amount of the LIBOR Revolving Portions and the LIBOR Term A
Portions outstanding at the end of each day at a rate per annum
equal to the Applicable Margin then in effect plus the LIBOR
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applicable to each LIBOR Portion for the corresponding Interest
Period.
(b) Interest shall accrue on the principal amount
of Term Loan B outstanding at the end of each day at a rate per
annum equal to 15.0%, and shall be payable as follows: a portion of
such interest equal to 6.0% per annum (the "Term Loan B Current Pay
Interest") shall be paid on a current basis as provided in
subsection 3.2.2(iii) and the balance of such interest equal to
9.0% per annum (the "Term Loan B PIK Interest") shall be added to
the outstanding principal balance of Term Loan B on the first day
of each month hereafter commencing on February 1, 2004 and shall be
paid as provided in subsection 3.2.2.
2.1.2. Default Rate of Interest. At the option of Agent or
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Majority Lenders, upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount
of all Revolving Credit and Term Loan A Loans shall bear interest
at a rate per annum equal to 2.0% plus the interest rate otherwise
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applicable thereto (the "Tranche A Default Rate"). At the option of
the Tranche B Agent or Majority Term Loan B Lenders, upon and after
the occurrence of an Event of Default, and during the continuation
thereof, the principal amount of Term Loan B shall bear interest at
a rate per annum equal to 4% plus the interest rate otherwise
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applicable thereto (the "Tranche B Default Rate"), and, thereupon
(during the continuation of such Event of Default), the Term Loan B
Current Pay Interest shall increase to 10% per annum.
2.1.3. Maximum Interest. In no event whatsoever shall the
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aggregate of all amounts deemed interest hereunder or under the
Notes and charged or collected pursuant to the terms of this
Agreement or pursuant to the Notes exceed the highest rate
permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement or the Notes are in contravention of
any such law, such provisions shall be deemed amended to conform
thereto (the "Maximum Rate"). If at any time, the amount of
interest paid hereunder is limited by the Maximum Rate, and the
amount at which interest accrues hereunder is subsequently below
the Maximum Rate, the rate at which interest accrues hereunder
shall remain at the Maximum Rate, until such time as the aggregate
interest paid hereunder equals the amount of interest that would
have been paid had the Maximum Rate not applied.
2.2. Computation of Interest and Fees.
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Interest, Letter of Credit and LC Guaranty fees and Unused
Line Fees hereunder shall be calculated daily and shall be computed on the
actual number of days elapsed over a year of three hundred sixty (360) days.
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2.3. Fee Letter.
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Borrowers shall jointly and severally pay to Agent,
certain fees and other amounts in accordance with the terms of the fee
letter of even date herewith among Borrowers and Agent (the "Fee Letter").
2.4. Letter of Credit and LC Guaranty Fees.
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Borrowers shall jointly and severally pay to Agent:
(a) for standby Letters of Credit and LC
Guaranties of standby letters of credit, for the ratable benefit of
Revolving Credit and Term Loan A Lenders, a per annum fee equal to
the Applicable Margin then in effect for LIBOR Revolving Portions
of the aggregate undrawn face amount of such Letters of Credit and
LC Guaranties outstanding from time to time during the term of this
Agreement, plus all normal and customary charges associated with
----
the issuance thereof, which fees and charges shall be deemed fully
earned upon issuance of each such Letter of Credit or LC Guaranty,
shall be due and payable in arrears on the first Business Day of
each month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason;
(b) for documentary Letters of Credit and LC
Guaranties of documentary letters of credit a fee, for the account
of Agent only, in accordance with Agent's documentary letter of
credit fee schedule then in effect plus all normal and customary
----
charges associated with the issuance and administration of each
such Letter of Credit or LC Guaranty (which fees and charges shall
be fully earned upon issuance, renewal or extension (as the case
may be) of each such Letter of Credit or LC Guaranty, shall be due
and payable in arrears on the first Business Day of each month, and
shall not be subject to rebate or proration upon the termination of
this Agreement for any reason); and
(c) with respect to all Letters of Credit and LC
Guaranties, for the account of Agent only, a per annum fronting fee
equal to 0.25% of the aggregate undrawn amount of such Letters of
Credit and LC Guaranties outstanding from time to time during the
term of this Agreement, which fronting fees shall be due and
payable monthly in arrears on the first Business Day of each month
and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
2.5. Unused Line Fee.
---------------
Borrowers shall jointly and severally pay to Agent, for
the ratable benefit of Revolving Credit and Term Loan A Lenders, a fee (the
"Unused Line Fee") equal to 0.50% per annum multiplied by the average daily
amount by which the Revolving Credit Maximum Amount exceeds the sum of (i)
the outstanding principal balance of the Revolving Credit Loans plus (ii)
----
the LC Amount plus (iii) the amount of the Special Reserve. The Unused Line
----
Fee shall be payable monthly in arrears on the first day of each month
hereafter.
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2.6. Prepayment Fee.
--------------
(a) At the effective date of termination of this
Agreement for any reason, any prepayment of Term Loan A pursuant to
subsection 3.3.5 or any reduction of the Revolving Loan Commitments
pursuant to subsection 3.3.6, Borrowers shall jointly and severally
pay to Agent, for the ratable benefit of Revolving Credit and Term
Loan A Lenders (in addition to the then outstanding principal,
accrued interest and other charges then due and owing under the
terms of this Agreement and any of the other Loan Documents and any
amounts then due and owing pursuant to subsection 3.2.5), as
liquidated damages for the loss of the bargain and not as a
penalty, an amount equal to (i) 1% of the sum of the aggregate
amount of the Revolving Loan Commitments then being reduced or
terminated and the outstanding amount of Term Loan A then being
prepaid, if such termination, prepayment or reduction occurs during
the first 12 month period of the Term (January 15, 2004 through
January 14, 2005) and (ii) 0.50% of the sum of the aggregate amount
of the Revolving Loan Commitments then being reduced or terminated
and the outstanding amount of Term Loan A then being prepaid, if
such termination, prepayment or reduction occurs during the second
12 month period of the Term (January 15, 2005 through January 14,
2006). If such termination, prepayment or reduction occurs on or
after January 15, 2006, no prepayment fee shall be payable for the
benefit of the Revolving Credit and Term Loan A Lenders.
(b) Upon any prepayment of the Term Loan B (other
than a mandatory prepayment pursuant to subsection 3.3.2 of the
Agreement) or upon the effective date of termination of this
Agreement for any reason, Borrowers shall pay to Tranche B Agent,
for the ratable benefit of the Term Loan B Lenders, as liquidated
damages for the loss of the bargain and not as a penalty, an amount
equal to the Term Loan B Prepayment Fee applicable at such time.
2.7. Audit Fees.
----------
Borrowers shall jointly and severally pay to Agent audit
fees in accordance with Agent's current schedule of fees in effect from time
to time in connection with audits of the books and records and Properties of
each Borrower and its Subsidiaries and such other matters as Agent shall
deem appropriate in its reasonable credit judgment, plus all reasonable
out-of-pocket expenses incurred by Agent in connection with such audits;
provided, that so long as no Event of Default has occurred and is
--------
continuing, Borrowers shall not be liable for such audit fees incurred in
connection with more than four (4) such audits during any fiscal year or in
excess of $100,000 in any fiscal year, whether such audits are conducted by
employees of Agent or by third parties hired by Agent; provided, further,
-------- -------
the limitation contained in the preceding proviso shall not restrict Agent's
right to conduct additional audits at Agent's expense. Such audit fees and
out-of-pocket expenses shall be payable on the first Business Day of the
month following the date of issuance by Agent of a request for payment
thereof to Falcon. Agent may, in its discretion, provide for the payment of
such amounts by making appropriate Revolving Credit Loans to Borrowers and
charging the applicable Loan Account therefor.
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2.8. Reimbursement of Expenses.
-------------------------
If, at any time or times regardless of whether or not an
Event of Default then exists, (a) Agent or Tranche B Agent incurs legal or
accounting expenses or any other out-of-pocket costs or expenses in
connection with (i) the negotiation and preparation of this Agreement or any
of the other Loan Documents, any amendment of or modification of this
Agreement or any of the other Loan Documents, or any syndication or
attempted syndication of the Obligations (including, without limitation,
printing and distribution of materials to prospective Lenders and all costs
associated with bank meetings, but excluding any closing fees paid to
Lenders in connection therewith) or (ii) the administration of this
Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; or (b) Agent or any Lender incurs legal or
accounting expenses or any other out-of-pocket costs or expenses in
connection with (i) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person) relating to the Collateral, this Agreement or any of the other Loan
Documents or any Borrower's, any of its Subsidiaries' or any Guarantor's
affairs; (ii) during the continuance of an Event of Default, any amendment
or modification of this Agreement or any of the other Loan Documents or the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) during the continuance
of an Event of Default, any attempt to enforce any rights of Agent or any
Lender against any Borrower or any other Person which may be obligated to
Agent or any Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (iv)
during the continuance of an Event of Default, any attempt to inspect,
verify, protect, preserve, restore, collect, sell, liquidate or otherwise
dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other out-of-pocket costs and expenses of Agent or any
Lender, as applicable, shall be charged to Borrowers on a joint and several
basis; provided, that no Borrower shall be responsible for such legal or
--------
accounting expenses and other out-of-pocket costs or expenses to the extent
incurred because of the gross negligence or willful misconduct of Agent or
any Lender. For purposes of this Section 2.8, each Term Loan B Lender, each
of its Affiliates that is a Term Loan B Lender, and each fund and account
managed by such Term Loan B Lender or one of its Affiliates, in each case
that is a Term Loan B Lender hereunder, shall be permitted to obtain
reimbursement for the costs and expenses of one counsel among them. All
amounts chargeable to Borrowers under this Section 2.8 shall be Obligations
secured by all of the Collateral, shall be payable on demand to Agent or
such Lender, as the case may be, and shall bear interest from the date such
demand is made until paid in full at the rate applicable to Base Rate
Portions from time to time. Borrowers shall also jointly and severally
reimburse Agent for expenses incurred by Agent in its administration of the
Collateral to the extent and in the manner provided in Sections 2.9 and 2.10
hereof.
2.9. Bank Charges.
------------
Borrowers shall jointly and severally pay to Agent, on
demand, for the account of Agent or any applicable Lender, any and all fees,
costs or expenses which Agent or such Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to any
Borrower or any other Person on behalf of any Borrower, by Agent or such
Lender, of proceeds of Loans made to any Borrower pursuant to this Agreement
and (ii) the
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depositing for collection by Agent or such Lender of any check or item of
payment received or delivered to Agent or such Lender on account of the
Obligations.
2.10. Collateral Protection Expenses; Appraisals.
------------------------------------------
All out-of-pocket expenses incurred in protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, and any and all excise, property, sales, and use taxes imposed
by any state, federal, or local authority on any of the Collateral or in
respect of the sale thereof shall be jointly and severally borne and paid by
Borrowers. If Borrowers fail to promptly pay any portion thereof when due,
Agent may, at its option, but shall not be required to, pay the same and
charge one or more Borrowers therefor. Agent may, at Borrowers' joint and
several expense, obtain appraisals from appraisers (who may be personnel of
Agent), stating the then current fair market value of all or any portion of
the real Property or personal Property of any Borrower or any of its
Domestic Subsidiaries (other than Inventory), which appraisals may be
obtained (a) at any time that an Event of Default is in existence, provided,
that if Agent does not obtain any such appraisal after request therefor by
Tranche B Agent, Tranche B Agent shall be entitled to obtain such appraisal
hereunder (at Borrowers' joint and several expense) and (b) at any time that
Agent, Tranche B Agent or any Lender determines that obtaining appraisals is
necessary in order for it to comply with applicable laws or regulations.
Additionally, Agent may, at Borrowers' joint and several expense, obtain
appraisals from appraisers (who may be personnel of Agent), stating the then
current fair market value of all or any portion of the Inventory of any
Borrower or any of its Domestic Subsidiaries, which appraisals may be
obtained (a) once in each calendar year, at Agent's determination, (b) at
any time (but no more often than once in each ninety (90) day period), that
an Event of Default is in existence, provided, that if Agent does not obtain
any such appraisal after request therefor by Tranche B Agent, Tranche B
Agent shall be entitled to obtain any such appraisal hereunder (at
Borrowers' joint and several expense) and (c) at any time that Agent,
Tranche B Agent or any Lender reasonably determines that obtaining such
appraisal is necessary in order for it to comply with applicable laws or
regulations.
2.11. Payment of Charges.
------------------
All amounts chargeable to any Borrower under this
Agreement shall be Obligations secured by all of the Collateral, shall be,
unless specifically otherwise provided, payable on demand and shall bear
interest from the date demand was made or such amount is due, as applicable,
until paid in full at the rate applicable to Base Rate Revolving Portions
from time to time.
2.12. Intentionally Omitted.
---------------------
2.13. No Deductions.
-------------
Any and all payments or reimbursements made hereunder
shall be made free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto; excluding, however, the following: taxes imposed on
the income (including gross receipts taxes, income taxes, franchise taxes,
branch
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profits taxes and similar taxes) of Agent or any Lender by the jurisdiction
under the laws of which Agent or any Lender is organized or doing business
or engaged in business, or any political subdivision thereof and taxes
imposed on its income by the jurisdiction of Agent's or such Lender's
applicable lending office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges or withholdings and
all liabilities with respect thereto, herein "Tax Liabilities"). If any
Borrower shall be required by law to deduct any such Tax Liabilities from or
in respect of any sum payable hereunder to Agent or any Lender, then the sum
payable hereunder shall be increased as may be necessary so that, after all
required deductions are made, Agent or such Lender receives an amount equal
to the sum it would have received had no such deductions been made;
provided, however, that no Borrower shall be required under this Section
-------- -------
2.13 to increase any sum payable to Agent or any Lender that is organized
under the laws of any jurisdiction other than the United States or any state
thereof (and shall be allowed to withhold, without gross-up, any Tax
Liabilities from or in respect of any sum payable thereunder to Agent or
such Lender) to the extent Agent or such Lender fails to establish a
complete exemption from United States federal withholding tax on all
interest payments hereunder.
2.14. Joint and Several Obligations.
-----------------------------
Each Borrower acknowledges that it is jointly and
severally liable for all of the Obligations and as a result hereby
unconditionally guaranties the full and prompt payment when due, whether at
maturity or earlier, by reason of acceleration or otherwise, and at all
times thereafter, of all Obligations of every kind and nature of each other
Borrower to Agent and Lenders and, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, joint or several, now or
hereafter existing, or due or to become due, and howsoever owned, held or
acquired by Agent or any Lender. Each Borrower agrees that if this guaranty,
or any Liens securing this guaranty, would, but for the application of this
sentence, be unenforceable under applicable law, this guaranty and each such
Lien shall be valid and enforceable to the maximum extent that would not
cause this guaranty or such Lien to be unenforceable under applicable law,
and this guaranty shall automatically be deemed to have been amended
accordingly at all relevant times.
Each Borrower hereby agrees that its obligations under
this guaranty shall be unconditional, irrespective of (a) the validity or
enforceability of the Obligations or any part thereof, or of any promissory
note or other document evidencing all or any part of the Obligations, (b)
the absence of any attempt to collect the Obligations from any other
Borrower or any Guarantor or other action to enforce the same, (c) the
waiver or consent by Agent or any Lender with respect to any provision of
any agreement, instrument or document evidencing or securing all or any part
of the Obligations, or any other agreement, instrument or document now or
hereafter executed by any other Borrower and delivered to Agent or any
Lender (other than a waiver, forgiveness or consent by Agent and Lenders
that reduces the amount of any of the Obligations), (d) the failure by Agent
or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or Collateral for
the Obligations, for its benefit, (e) Agent's or any Lender's election, in
any proceeding instituted under the United States Bankruptcy Code or any
other similar bankruptcy or insolvency legislation, of the application of
Section 1111(b)(2) of the United States Bankruptcy Code or any other similar
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bankruptcy or insolvency legislation, (f) any borrowing or grant of a
security interest by any Borrower as debtor-in-possession, under Section 364
of the United States Bankruptcy Code or any other similar bankruptcy or
insolvency legislation, (g) the disallowance, under Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code or any other similar bankruptcy or insolvency
legislation, of all or any portion of Agent's or any Lender's claim(s) for
repayment of the Obligations or (h) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a borrower
or a guarantor.
Each Borrower hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of receivership or
bankruptcy of any other Borrower, protest or notice with respect to the
Obligations owed by any other Borrower and all demands whatsoever with
respect thereto, and covenants that this guaranty will not be discharged,
except by complete and irrevocable payment and performance of the
Obligations. No notice to any Borrower or any other party shall be required
for Agent or any Lender to make demand hereunder. Such demand shall
constitute a mature and liquidated claim against the applicable Borrower.
During the existence of any Event of Default, Agent and Lenders may, at
their election, proceed directly and at once, without notice, against all or
any of the Borrowers to collect and recover the full amount or any portion
of the Obligations, without first proceeding against any other Borrower or
any other Person, or any security or collateral for the Obligations. During
the existence of an Event of Default, Agent and each Lender shall have the
exclusive right to determine the application of payments and credits, if any
from any Borrower, any other Person or any security or collateral for the
Obligations, on account of the Obligations or of any other liability of any
Borrower to Agent or any Lender.
Each Borrower hereby waives notice of acceptance of its
joint and several liability, notice of any and all Loans made under this
Agreement, notice of occurrence of any Event of Default, or of any demand
for any payment of any Obligations owed by any other Borrower under this
Agreement, notice of any action at any time taken or omitted by Agent,
Tranche B Agent or any Lender under or in respect of any of the Obligations,
any requirement of diligence and, generally, all formalities of every kind
in connection with this Agreement. Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment
of any of the Obligations hereunder, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence by Agent,
Tranche B Agent or any Lender at any time or times in respect of any default
by any Borrower in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent, Tranche B Agent or any Lender in respect of any of the
Obligations hereunder, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of such
Obligations or the addition, substitution or release, in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on
the part of Agent, Tranche B Agent or any Lender, including, without
limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder which might, but for the provisions of this Section 2.14, afford
grounds for terminating, discharging or releasing such Borrower, in whole or
in part, from any of its obligations under this Section 2.14, it being the
intention of each Borrower that, so long as any
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of the Obligations hereunder remain unsatisfied, the obligations of such
Borrower under this Section 2.14 shall not be discharged except by
performance and then only to the extent of such performance. Each Borrower
hereby waives all suretyship and similar defenses to its absolute and
unconditional liability on the Obligations. The obligations of each Borrower
under this Section 2.14 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any Borrower, Agent, Tranche B Agent or
any Lender. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower, Agent, Tranche B Agent
or any Lender.
Notwithstanding anything to the contrary set forth in this
Section 2.14, it is the intent of the parties hereto that the liability
incurred by each Borrower in respect of the Obligations of the other
Borrowers (and any Lien granted by each Borrower to secure such
Obligations), not constitute a fraudulent conveyance under Section 548 of
the United States Bankruptcy Code or a fraudulent conveyance or fraudulent
transfer under the provisions of any applicable law of any state or other
governmental unit ("Fraudulent Conveyance"). Consequently, each Borrower,
Agent and each Lender hereby agree that if a court of competent jurisdiction
determines that the incurrence of liability by any Borrower in respect of
the Obligations of any other Borrower (or any Liens granted by such Borrower
to secure such Obligations) would, but for the application of this sentence,
constitute a Fraudulent Conveyance, such liability (and such Liens) shall be
valid and enforceable only to the maximum extent that would not cause the
same to constitute a Fraudulent Conveyance, and this Agreement and the other
Loan Documents shall automatically be deemed to have been amended
accordingly.
SECTION 3. LOAN ADMINISTRATION.
3.1. Manner of Borrowing Revolving Credit Loans/LIBOR
------------------------------------------------
Option.
------
Borrowings under the credit facility established pursuant
to Section 1 hereof shall be as follows:
3.1.1. Loan Requests. A request for a Revolving Credit
-------------
Loan shall be made, or shall be deemed to be made, in the following
manner: (a) a Borrower may give Agent notice of its intention to
borrow, in which notice such Borrower shall specify the amount of
the proposed borrowing of a Revolving Credit Loan and the proposed
borrowing date, which shall be a Business Day, no later than 11:00
a.m. (Chicago, Illinois time) on the proposed borrowing date (or in
accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in
the case of a request for a LIBOR Revolving Portion), provided,
--------
however, that no such request may be made at a time when there
-------
exists a Default or an Event of Default; and (b) the becoming due
of any amount required to be paid under this Agreement, or the
Notes, whether as interest or for any other Obligation, shall be
deemed irrevocably to be a request by a Borrower for a Revolving
Credit Loan on the due date in the amount required to pay such
interest or other Obligation.
-14-
3.1.2. Disbursement. Each Borrower hereby irrevocably
------------
authorizes Agent to disburse the proceeds of each Loan requested,
or deemed to be requested, pursuant to subsection 3.1.1 as follows:
(i) the proceeds of each Revolving Credit Loan requested under
subsection 3.1.1(a) shall be disbursed by Agent in lawful money of
the United States of America in immediately available funds, in the
case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrowers, and in the case of each
subsequent borrowing, by wire transfer to such bank account as may
be agreed upon by Borrowers and Agent from time to time or
elsewhere if pursuant to a written direction from a Borrower and
(ii) the proceeds of each Revolving Credit Loan deemed requested
under subsection 3.1.1(b) shall be disbursed by Agent by way of
direct payment of the relevant interest or other Obligation. If at
any time any Loan is funded by Agent or Revolving Credit and Term
Loan A Lenders in excess of the amount requested or deemed
requested by Borrowers, Borrowers jointly and severally agree to
repay the excess to Agent immediately upon the earlier to occur of
(a) Borrowers' discovery of the error and (b) notice thereof to
Borrowers from Agent or any Revolving Credit and Term Loan A
Lender.
3.1.3. Payment by Revolving Credit and Term Loan A
-------------------------------------------
Lenders. Agent shall give to each Revolving Credit and Term Loan A
-------
Lender prompt written notice by facsimile, telex or cable of the
receipt by Agent from Borrowers of any request for a Revolving
Credit Loan. Each such notice shall specify the requested date and
amount of such Revolving Credit Loan, whether such Revolving Credit
Loan shall be subject to the LIBOR Option, and the amount of each
Revolving Credit and Term Loan A Lender's advance thereunder (in
accordance with its applicable Revolving Loan Percentage). Each
Revolving Credit and Term Loan A Lender shall, not later than 12:00
p.m. (Chicago time) on such requested date, wire to a bank
designated by Agent the amount of that Revolving Credit and Term
Loan A Lender's Revolving Loan Percentage of the requested
Revolving Credit Loan. The failure of any Revolving Credit and Term
Loan A Lender to make the Revolving Credit Loans to be made by it
shall not release any other Revolving Credit and Term Loan A Lender
of its obligations hereunder to make its Revolving Credit Loan.
Neither Agent nor any other Revolving Credit and Term Loan A Lender
shall be responsible for the failure of any other Revolving Credit
and Term Loan A Lender to make the Revolving Credit Loan to be made
by such other Revolving Credit and Term Loan A Lender. The
foregoing notwithstanding, Agent, in its sole discretion, may from
its own funds make a Revolving Credit Loan on behalf of any
Revolving Credit and Term Loan A Lender. In such event, the
Revolving Credit and Term Loan A Lender on behalf of whom Agent
made the Revolving Credit Loan shall reimburse Agent for the amount
of such Revolving Credit Loan made on its behalf, on a weekly (or
more frequent, as determined by Agent in its sole discretion)
basis. On each such settlement date, Agent will pay to each
Revolving Credit and Term Loan A Lender the net amount owing to
such Revolving Credit and Term Loan A Lender in connection with
such settlement, including without limitation amounts relating to
Loans, fees, interest and other amounts payable hereunder. The
entire amount of interest attributable to such Revolving Credit
Loan for the period from the date on which such Revolving Credit
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Loan was made by Agent on such Revolving Credit and Term Loan A
Lender's behalf until Agent is reimbursed by such Revolving Credit
and Term Loan A Lender, shall be paid to Agent for its own account.
3.1.4. Authorization. Each Borrower hereby irrevocably
-------------
authorizes Agent, in Agent's sole discretion, to advance to Falcon
or another Borrower, and to charge to the applicable Borrower's
Loan Account hereunder as a Revolving Credit Loan (which shall be a
Base Rate Portion), a sum sufficient to pay all interest accrued on
the Obligations during the immediately preceding month, to pay all
principal due and payable at any time and to pay all fees, costs
and expenses and other Obligations at any time owed by each
Borrower to Agent or any Lender hereunder.
3.1.5. Letter of Credit and LC Guaranty Requests. A
-----------------------------------------
request for a Letter of Credit or LC Guaranty shall be made in the
following manner: a Borrower may give Agent and Bank a written
notice of its request for the issuance of a Letter of Credit or LC
Guaranty, not later than 11:00 a.m. (Chicago, Illinois time), one
Business Day before the proposed issuance date thereof, in which
notice Borrowers shall specify the proposed issuer, issuance date
and format and wording for the Letter of Credit or LC Guaranty
being requested (which shall be satisfactory to Agent and the
Person being asked to issue such Letter of Credit or LC Guaranty);
provided, that no such request may be made at a time when there
--------
exists a Default or Event of Default. Such request shall be
accompanied by an executed application and reimbursement agreement
in form and substance reasonably satisfactory to Agent and the
Person being asked to issue the Letter of Credit or LC Guaranty, as
well as any required corporate resolutions or other documents
reasonably requested by Agent. In the event of any inconsistency or
conflict between any such application and reimbursement agreement
between a Borrower and Bank, and this Agreement, the terms and
provisions of this Agreement shall govern and control.
3.1.6. Method of Making Requests. As an accommodation to
-------------------------
Borrowers, unless a Default or an Event of Default is then in
existence, (i) Agent shall permit telephonic or electronic requests
for Revolving Credit Loans to Agent, (ii) Agent and Bank may, in
their discretion, permit electronic transmittal of requests for
Letters of Credit and LC Guaranties to them, and (iii) Agent may,
in Agent's discretion, permit electronic transmittal of
instructions, authorizations, agreements or reports to Agent.
Unless a Borrower specifically directs Agent or Bank in writing not
to accept or act upon telephonic or electronic communications from
such Borrower, neither Agent nor Bank shall have any liability to
any Borrower for any loss or damage suffered by any Borrower as a
result of Agent's or Bank's honoring, in good faith, of any
requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent
to Agent or Bank by any Borrower, and neither Agent nor Bank shall
have any duty to verify the origin of any such communication or the
authority of the Person sending it. Each telephonic request for a
Letter of Credit or LC Guaranty accepted by Agent and Bank
hereunder shall be promptly followed by a written confirmation of
such request from the applicable Borrower to Agent and Bank.
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3.1.7. LIBOR Portions. Provided that as of both the date
--------------
of the LIBOR Request and the first day of the Interest Period, no
Default or Event of Default exists, in the event any Borrower
desires to obtain a LIBOR Portion, such Borrower shall give Agent a
LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on
the third Business Day prior to the requested borrowing date. Each
LIBOR Request shall be irrevocable and binding on Borrowers. In no
event shall Borrowers be permitted to have outstanding at any one
time LIBOR Portions with more than six (6) different Interest
Periods.
3.1.8. Conversion of Base Rate Portions. Provided that as
--------------------------------
of both the date of the LIBOR Request and the first day of the
Interest Period, no Default or Event of Default exists, a Borrower
may, on any Business Day, convert any Base Rate Portion into a
LIBOR Portion. If a Borrower desires to convert a Base Rate
Portion, a Borrower shall give Agent a LIBOR Request no later then
11:00 a.m. (Chicago, Illinois time) on the third Business Day prior
to the requested conversion date. After giving effect to any
conversion of Base Rate Portions to LIBOR Portions, Borrowers shall
not be permitted to have outstanding at any one time LIBOR Portions
with more than six (6) different Interest Periods.
3.1.9. Continuation of LIBOR Portions. Provided that as of
------------------------------
both the date of the LIBOR Request and the first day of the
Interest Period, no Default or Event of Default exists, a Borrower
may, on any Business Day, continue any LIBOR Portions into a
subsequent Interest Period of the same or a different permitted
duration. If a Borrower desires to continue a LIBOR Portion, such
Borrower shall give Agent a LIBOR Request no later than 11:00 a.m.
(Chicago, Illinois time) on the second Business Day prior to the
requested continuation date. After giving effect to any
continuation of LIBOR Portions, Borrowers shall not be permitted to
have outstanding at any one time LIBOR Portions with more than six
(6) different Interest Periods. If a Borrower shall fail to give
timely notice of its election to continue any LIBOR Portion or
portion thereof as provided above, or if such continuation shall
not be permitted, such LIBOR Portion or portion thereof, unless
such LIBOR Portion shall be repaid, shall automatically be
converted into a Base Rate Portion at the end of the Interest
Period then in effect with respect to such LIBOR Portion.
3.1.10. Inability to Make LIBOR Portions. Notwithstanding
--------------------------------
any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for
any Revolving Credit and Term Loan A Lender (for purposes of this
subsection 3.1.10, the term "Revolving Credit and Term Loan A
Lender" shall include the office or branch where such Revolving
Credit and Term Loan A Lender or any corporation or bank then
controlling such Revolving Credit and Term Loan A Lender makes or
maintains any LIBOR Portions) to make or maintain its LIBOR
Portions, or if with respect to any Interest Period, Agent is
unable to determine the LIBOR relating thereto, or adverse or
unusual conditions in, or changes in applicable law relating to,
the London interbank market make it, in the reasonable judgment of
Agent, impracticable to fund therein any of the LIBOR Portions, or
make the projected
-17-
LIBOR unreflective of the actual costs of funds therefor to any
Revolving Credit and Term Loan A Lender, the obligation of Agent
and Revolving Credit and Term Loan A Lenders to make or continue
LIBOR Portions or convert Base Rate Portions to LIBOR Portions
hereunder shall forthwith be suspended during the pendency of such
circumstances and the applicable Borrower shall, if any affected
LIBOR Portions are then outstanding, promptly upon request from
Agent, convert such affected LIBOR Portions into Base Rate
Portions. Agent shall promptly notify Borrowers in writing if and
when the circumstances giving rise to such suspension no longer
apply.
3.2. Payments.
--------
Except where evidenced by notes or other instruments
issued or made by one or more Borrowers to any Lender and accepted by such
Lender specifically containing payment instructions that are in conflict
with this Section 3.2 (in which case the conflicting provisions of said
notes or other instruments shall govern and control), the Obligations shall
be payable as follows:
3.2.1. Principal.
---------
(a) Revolving Credit Loans. Principal on account of
----------------------
Revolving Credit Loans shall be jointly and severally payable by
Borrowers to Agent for the ratable benefit of Revolving Credit and
Term Loan A Lenders immediately upon the earliest of (i) the
receipt by Agent or any Borrower of any proceeds of any of the
Collateral (except as otherwise provided herein), including without
limitation pursuant to subsections 3.3.1, 3.3.2, 3.3.3, 3.4.2 and
6.2.4, to the extent of said proceeds, subject to Borrowers' rights
to reborrow such amounts in compliance with subsection 1.1.1
hereof; (ii) the occurrence of an Event of Default in consequence
of which Agent, Majority Lenders or Majority Term Loan B Lenders
(to the extent permitted under Section 10.2), elect to accelerate
the maturity and payment of the Obligations, or (iii) termination
of this Agreement pursuant to Section 4 hereof; provided, however,
-------- -------
that, if an Overadvance shall exist at any time, Borrowers shall,
on demand, jointly and severally repay the Overadvance. Each
payment (including principal prepayment) by a Borrower on account
of principal of the Revolving Credit Loans shall be applied first
to Base Rate Revolving Portions and then to LIBOR Revolving
Portions.
(b) Term Loan A. Principal on account of Term Loan A shall
-----------
be payable jointly and severally by Borrowers as follows: (i) as
required pursuant to subsections 3.3.1, 3.3.2 and 3.3.3, (ii) 13
consecutive quarterly installments, each in the amount of $223,000,
commencing on April 1, 2004, and (iii) a final installment in the
amount of the remaining principal balance of Term Loan A on June 3,
2007. Notwithstanding the foregoing, the entire unpaid principal
balance of Term Loan A shall be due and payable upon the
termination of this Agreement.
-18-
(c) Term Loan B. Principal on account of Term Loan B shall
-----------
be payable jointly and severally by Borrowers as follows: (i) as
required pursuant to subsections 3.3.1, 3.3.2 and 3.3.3, and (ii)
the amount of the remaining principal balance of Term Loan B on
June 3, 2007. Notwithstanding the foregoing, the entire unpaid
principal balance of Term Loan B shall be due and payable upon the
occurrence of an Event of Default in consequence of which Agent,
Majority Lenders or Majority Term Loan B Lenders (to the extent
permitted under Section 10.2), elect to accelerate the maturity and
payment of the Obligations or the termination of this Agreement.
3.2.2. Interest.
--------
(a) Base Rate Portion. Interest accrued on Base
-----------------
Rate Portions shall be due and payable on the earliest of (1) the
first calendar day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding
month, (2) the occurrence of an Event of Default in consequence of
which Agent, Majority Lenders or Majority Term Loan B Lenders (to
the extent permitted under Section 10.2) elect to accelerate the
maturity and payment of the Obligations or (3) termination of this
Agreement pursuant to Section 4 hereof.
(b) LIBOR Portion. Interest accrued on each LIBOR
-------------
Portion shall be due and payable on each LIBOR Interest Payment
Date and on the earlier of (1) the occurrence of an Event of
Default in consequence of which Agent, Majority Lenders or Majority
Term Loan B Lenders (to the extent permitted under Section 10.2)
elect to accelerate the maturity and payment of the Obligations or
(2) termination of this Agreement pursuant to Section 4 hereof.
(c) Term Loan B. Term Loan B Current Pay Interest
-----------
shall be due and payable on the earliest of (1) the first calendar
day of each month (for the immediately preceding month) computed
through the last calendar day of the preceding month, (2) the
occurrence of an Event of Default in consequence of which Agent,
Majority Lenders or Majority Term Loan B Lenders (to the extent
permitted under Section 10.2) elect to accelerate the maturity and
payment of the Obligations, or (3) termination of this Agreement
pursuant to Section 4 hereof. Term Loan B PIK Interest shall be due
and payable on the earliest of (A) the maturity of Term Loan B, (B)
the occurrence of an Event of Default in consequence of which
Agent, Majority Lenders or Majority Term Loan B Lenders (to the
extent permitted under Section 10.2) elect to accelerate the
maturity and payment of the Obligations, or (C) termination of this
Agreement pursuant to Section 4 hereof; provided, that
--------
notwithstanding the foregoing, Borrowers may elect to pay in cash
all or any portion of the Term Loan B PIK Interest accrued as of
the last day of any month, in each case so long as (i) Borrowers
are in compliance with the Fixed Charge Coverage Ratio covenant
contained in Section 8.3, determined as of the last day of the most
recent fiscal quarter on a pro forma basis, including such cash
interest payment in the calculation of Fixed Charges for such
period, (ii) Availability immediately after
-19-
making such prepayment is at least $5,000,000, and (iii) no Default
or Event of Default is in existence or would be caused thereby.
3.2.3. Costs, Fees and Charges. Costs, fees and charges
-----------------------
payable pursuant to this Agreement shall be jointly and severally
payable by Borrowers to Agent, as and when provided in Section 2 or
Section 3 hereof, as applicable, for payment to Agent or a Lender,
as applicable, or to any other Person designated by Agent or such
Lender in writing. Payments hereunder owing to Tranche B Agent or
any Term Loan B Lender shall be paid by Agent, upon receipt thereof
by Agent, to Tranche B Agent for distribution to Term Loan B
Lenders.
3.2.4. Other Obligations. The balance of the Obligations
-----------------
requiring the payment of money, if any, shall be jointly and
severally payable by Borrowers to Agent for distribution to
Lenders, as appropriate and pursuant to the application provisions
set forth herein, as and when provided in this Agreement, the Other
Agreements or the Security Documents, or on demand, whichever is
later.
3.2.5. Prepayment of/Failure to Borrow LIBOR Portions.
----------------------------------------------
Borrowers may prepay a LIBOR Portion only upon at least three (3)
Business Days prior written notice to Agent (which notice shall be
irrevocable). Borrowers shall jointly and severally pay to each
Revolving Credit and Term Loan A Lender, upon request of such
Revolving Credit and Term Loan A Lender, such amount or amounts as
shall be sufficient (in the reasonable opinion of such Revolving
Credit and Term Loan A Lender) to compensate such Revolving Credit
and Term Loan A Lender for any loss, cost, or expense incurred as a
result of: (i) any payment of a LIBOR Portion on a date other than
the last day of the Interest Period for such LIBOR Portion; (ii)
any failure by Borrowers to borrow a LIBOR Portion on the date
specified by Borrowers' LIBOR Request; or (iii) any failure by
Borrowers to pay a LIBOR Portion on the date for payment specified
in Borrowers' written notice. Without limiting the foregoing,
Borrowers shall jointly and severally pay to each Revolving Credit
and Term Loan A Lender a "yield maintenance fee" in an amount
computed as follows: the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a
bond equivalent) with a maturity date closest to the Interest
Period chosen pursuant to the LIBOR Portion as to which the
prepayment is made, shall be subtracted from the LIBOR in effect at
the time of prepayment. If the result is zero or a negative number,
there shall be no yield maintenance fee. If the result is a
positive number, then the resulting percentage shall be multiplied
by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days
remaining in the Interest Period chosen pursuant to the LIBOR
Portion as to which the prepayment is made. Said amount shall be
reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the LIBOR Portion as to
which prepayment is made. The resulting amount shall be the yield
maintenance fee due to the applicable Revolving Credit and Term
Loan A Lender upon the prepayment of a LIBOR Portion. If by reason
of an Event of Default, Agent, Majority Lenders or Majority Term
Loan B Lenders (to the extent permitted under
-20-
Section 10.2) elect to declare the Obligations to be immediately
due and payable, then any yield maintenance fee with respect to a
LIBOR Portion shall become due and payable in the same manner as
though Borrowers had exercised such right of prepayment.
3.3. Mandatory and Optional Prepayments.
----------------------------------
3.3.1. Proceeds of Sale, Loss, Destruction or Condemnation
---------------------------------------------------
of Collateral. Except for dispositions of assets permitted by
-------------
subsections 8.2.9(ii) and 8.2.9(iii) and except as provided in
subsection 8.2.9(v), if any Borrower or any of its Domestic
Subsidiaries sells any of its Property or if any of its Property is
lost or destroyed or taken by condemnation, the applicable Borrower
or Domestic Subsidiary shall, unless otherwise agreed by Required
Lenders, pay to Agent for the benefit of Lenders as and when
received by such Borrower or such Domestic Subsidiary and as a
mandatory prepayment of the Loans, as herein provided, a sum equal
to the proceeds (including insurance payments but net of costs and
taxes incurred in connection with such sale or event) received by
such Borrower or such Domestic Subsidiary from such sale, loss,
destruction or condemnation. To the extent that the Property sold,
lost, destroyed or condemned consists of Equipment, real Property,
or other Property other than Accounts or Inventory, the applicable
prepayment shall be applied, subject to Section 3.11, first, to
-----
Agent's costs and expenses relating to the relevant transaction,
second, to the installments of principal due under the Term A Notes
------
ratably, to be applied to future installment payments in inverse
order of maturity until paid in full, third, at Agent's option,
-----
either (i) to repay outstanding principal of Revolving Credit Loans
(but without permanently reducing the Revolving Loan Commitments);
provided, that the Special Reserve will be increased by the amount
--------
so applied to Revolving Credit Loans or (ii) to repay the principal
outstanding under the Term B Notes ratably, until paid in full,
fourth, if any Event of Default is in existence, to cash
------
collateralize the LC Amount (in the amount of 105% thereof), fifth,
-----
to repay any other Obligations then due and payable; provided, that
--------
(a) the Special Reserve shall be terminated after the Term B Notes
have been paid in full and (b) notwithstanding the foregoing, if
(1) on the date such prepayment is made no Event of Default is in
existence or would be caused thereby and (2) Availability
immediately after making such prepayment is equal to or greater
than $5,000,000, such prepayment shall be applied to the
Obligations, first, to Agent's costs and expenses relating to the
-----
relevant transaction, second, to the installments of principal due
------
under the Term A Notes ratably, to be applied to future installment
payments in inverse order of maturity until paid in full, third, to
-----
the principal outstanding under the Term B Notes ratably, until
paid in full, fourth, to reduce the outstanding principal balance
------
of the Revolving Credit Loans (but not to permanently reduce the
Revolving Loan Commitments), and fifth, to repay other Obligations
-----
then due and payable. To the extent that the Property sold, lost,
destroyed or condemned consists of Accounts or Inventory, the
applicable prepayment shall be applied, subject to Section 3.11, to
reduce the outstanding principal balance of the Revolving Credit
Loans, but shall not permanently reduce the Revolving Loan
Commitments. Notwithstanding the foregoing:
-21-
(a) If the proceeds of insurance (net of costs
and taxes incurred) with respect to any loss or destruction of
Equipment or real Property of any Borrower or any Domestic
Subsidiary (i) are less than $250,000, unless an Event of Default
is then in existence, Agent shall apply such amounts to reduce the
outstanding principal balance of the Revolving Credit Loans
(without permanently reducing the Revolving Loan Commitments), (ii)
are greater than or equal to $250,000 and less than $3,500,000,
unless an Event of Default is then in existence, such amounts shall
be provisionally applied to reduce the outstanding principal
balance of the Revolving Credit Loans (and a Rebuild Reserve shall
be created in the amount of such proceeds), until the earlier of
(1) Borrowers' decision not to repair or replace the damaged
Property (in which case such amount shall be applied to the
Obligations in the manner specified in the second sentence of this
subsection 3.3.1 until payment thereof in full) or (2) the
expiration of three hundred sixty-five (365) days from the receipt
of such amount, or (iii) are equal to or greater than $3,500,000,
and Borrowers have requested that Agent and Tranche B Agent both
agree to permit the applicable Borrower or Domestic Subsidiary to
repair or replace the damaged Property, such amounts shall be
provisionally applied to reduce the outstanding principal balance
of the Revolving Credit Loans (and a Rebuild Reserve shall be
created in the amount of such proceeds), until the earliest of (1)
Agent's and Tranche B Agent's decision with respect thereto, (2)
the expiration of one hundred twenty (120) days from the date of
such request, unless the applicable Borrower or Domestic Subsidiary
has commenced action to replace or rebuild the damaged Property, or
(3) the expiration of three hundred sixty-five (365) days from such
request. If Borrowers decide to repair or replace the applicable
Property under clause (ii) above or if both Agent and Tranche B
Agent agree, in their reasonable judgment, to permit any such
repair or replacement under clause (iii) above, the applicable
amount shall, unless an Event of Default is in existence, be
released from the Rebuild Reserve to the applicable Borrower or
Domestic Subsidiary as needed for use in replacing or repairing the
damaged Property during such three hundred sixty-five (365) day
period, with any remaining amount at the end of such three hundred
sixty-five (365) day period applied to the Obligations in the
manner specified in the second sentence of this subsection 3.3.1
until payment thereof in full; and in the case of clause (iii)
above, if either Agent or Tranche B Agent declines to permit any
such repair or replacement or fails to respond to Borrowers within
such three hundred sixty-five (365) day period, such amount shall
be released from the Rebuild Reserve and applied to the Obligations
in the manner specified in the second sentence of this subsection
3.3.1 until payment thereof in full.
(b) If any proceeds of insurance with respect to
any loss or destruction of Equipment or real Property of any
Foreign Subsidiary are repatriated to the United States, such
amounts (net of any costs or taxes incurred with respect thereto)
shall be applied to the Obligations as set forth in the second
sentence of subsection 3.3.1. If the proceeds of any sale or other
disposition of Property of any Foreign Subsidiary are repatriated
to the United States, such amounts (net any costs or taxes incurred
with respect thereto) shall be applied to the Obligations in the
manner
-22-
set forth for Property of such type in the second or third sentence
of this subsection 3.3.1, as applicable.
(c) If any sale of Collateral involves both Fixed
Assets and Other Assets or if such sale involves a sale of all or
substantially all of the capital stock or Properties of any
Borrower or any Subsidiary, or of any business line of such
Borrower or such Subsidiary, then the proceeds thereof will be
allocated as follows for the purposes of this subsection 3.3.1: (i)
first, to Accounts and Inventory, to the extent of the book value
thereof, (ii) second, to Equipment and real Property, to the extent
of the greater of the book value or fair market appraised value
thereof (if an appraisal reasonably acceptable to both Agent and
Tranche B Agent exists) and (iii) third, to goodwill. Subject to
Section 3.11, amounts so allocated to Accounts and Inventory shall
be applied to the Obligations as set forth in the third sentence of
subsection 3.3.1. Subject to Section 3.11, amounts so allocated to
Equipment and real Property shall be applied to the Obligations as
set forth in the second sentence of subsection 3.3.1. Subject to
Section 3.11, amounts so allocated to goodwill shall be applied to
the Obligations as set forth in the second sentence of subsection
3.3.1 (other than proviso (b) thereof); provided, that
--------
notwithstanding the foregoing, if (1) on the date the applicable
prepayment is made no Event of Default is in existence and (2)
Availability immediately after making such prepayment is equal to
or greater than $5,000,000, such prepayment shall be applied to the
Obligations, first, to Agent's costs and expenses relating to the
-----
relevant transaction, second, to the principal outstanding under
------
the Term B Notes ratably, until paid in full, third, to the
-----
installments of principal due under the Term A Notes ratably, to be
applied to future installment payments in inverse order of maturity
until paid in full, fourth, to reduce the outstanding principal
------
balance of the Revolving Credit Loans (but not to permanently
reduce the Revolving Loan Commitments), and fifth, to repay other
-----
Obligations then due and payable.
3.3.2. Excess Cash Flow Recapture. Borrowers
--------------------------
shall jointly and severally prepay the Loans in amounts equal to
Borrowers' Excess Cash Flow for each fiscal year of Borrowers
during the Term hereof commencing with the fiscal year ending
November 1, 2004, each such prepayment to be based upon, and made
within five (5) Business Days following the due date for delivery
by Borrowers to Agent of, the applicable annual financial
statements required by subsection 8.1.3(i) hereof. Subject to
Section 3.11, each such prepayment shall be applied to the Term
Loans, as follows: first, to installments of principal due under
the Term A Notes ratably, to be applied to future installment
payments in inverse order of maturity until paid in full, and
second, to principal outstanding under the Term B Notes ratably,
until paid in full. The Special Reserve shall be increased by any
amounts in respect of Borrowers' Excess Cash Flow that are applied
to the Revolving Credit Loans pursuant to Section 3.11; provided,
--------
that the Special Reserve shall be terminated after the Term B Notes
have been paid in full.
3.3.3. Other Mandatory Prepayments. If any
---------------------------
Borrower or any Subsidiary receives any proceeds from any tax
refunds, indemnity payments or pension plan
-23-
reversions, Borrowers shall jointly and severally pay to Agent for
the benefit of Lenders, when and as received by such Borrower or
such Subsidiary, and as a mandatory prepayment of the Obligations,
a sum equal to 100% of such proceeds of such tax refund, indemnity
payment or pension plan reversions. Any such prepayment shall be
applied to the Obligations in the manner specified in the third
sentence of subsection 3.3.1 until payment thereof in full.
3.3.4. LIBOR Portions. If the application of any payment
--------------
made in accordance with the provisions of this Section 3.3 at a
time when no Event of Default has occurred and is continuing would
result in termination of a LIBOR Portion prior to the last day of
the Interest Period for such LIBOR Portion, the amount of such
prepayment shall not be applied to such LIBOR Portion, but will, at
Borrowers' option, be held by Agent in a non-interest bearing
account at a Lender or another bank satisfactory to Agent in its
discretion, which account is in the name of Agent and from which
account only Agent can make any withdrawal, in each case to be
applied as such amount would otherwise have been applied under this
Section 3.3 at the earlier to occur of (i) the last day of the
relevant Interest Period or (ii) the occurrence of a Default or an
Event of Default.
3.3.5. Optional Prepayments. Borrowers may, at their
--------------------
option from time to time upon not less than three (3) Business
Days' prior written notice to Agent, prepay installments of the
Term A Notes, provided that the amount of any such prepayment is at
--------
least $500,000 and in integral multiples of $100,000 above
$500,000, and that such prepayments are made ratably with respect
to all Term A Notes. Each such prepayment shall be applied to the
installments of principal due under the Term A Notes in the inverse
order of maturity. Borrowers may, at their option from time to time
upon not less than three (3) Business Days' prior written notice to
Agent, prepay principal of the Term B Notes (on a ratable basis),
in minimum amounts of at least $500,000 and in integral multiples
of $100,000 above $500,000, in each case so long as (i) in the case
of partial prepayments of the Term B Notes only, Borrowers are in
compliance with the Fixed Charge Coverage Ratio covenant contained
in Section 8.3, determined as of the last day of the most recent
fiscal quarter on a pro forma basis, including the principal amount
of Term Loan B to be so prepaid in the calculation of fixed charges
for such period, (ii) Availability immediately after making such
prepayment is at least $5,000,000 and (iii) no Default or Event of
Default is in existence at the time of such prepayment or would be
caused by the making of such prepayment. In addition, Borrowers may
make only 2 partial prepayments of Term Loan B and the Term B Notes
in any calendar year and such partial prepayments may be made only
(a) once during the period from January 1 through January 31 of
each year and (b) once during the period from July 1 through August
1 of each year. Any such optional prepayment of Term A Notes and/or
Term B Notes under this subsection 3.3.5 shall be credited against
the amount of the mandatory prepayment required under subsection
3.3.2 for the fiscal year in which such optional prepayment was
made. Except for charges under subsection 3.2.5 applicable to
prepayments of LIBOR Term A Portions, and except for fees under
Section 2.6 applicable to
-24-
prepayments of the Term A Notes or Term B Notes, such prepayments
shall be without premium or penalty.
3.3.6. Optional Reductions of Revolving Loan Commitments.
-------------------------------------------------
Borrowers may, at their option from time to time but not more than
once in any 12-month period upon not less than three (3) Business
Days' prior written notice to Agent, terminate in whole or
permanently reduce ratably in part, the unused portion of the
Revolving Loan Commitments, provided, however, that (i) each such
partial reduction shall be in an amount of $2,000,000 or integral
multiples of $1,000,000 in excess thereof and (ii) the aggregate of
all optional reductions to the Revolving Loan Commitments may not
exceed $5,000,000 during any 12-month period or $10,000,000 during
the Term. Except for charges under subsection 3.2.5 applicable to
prepayments of LIBOR Revolving Portions and except for fees under
Section 2.6 applicable to reduction or termination of the Revolving
Loan Commitments, such reductions and terminations shall be without
premium or penalty.
3.3.7. No Term Loan Reborrowing. No amounts repaid or
------------------------
prepaid with respect to Term Loan A or Term Loan B may be
reborrowed.
3.4. Application of Payments and Collections.
---------------------------------------
3.4.1. Collections. All items of payment received by Agent
-----------
by 12:00 noon, Chicago, Illinois, time, on any Business Day shall
be deemed received on that Business Day. All items of payment
received after 12:00 noon, Chicago, Illinois, time, on any Business
Day shall be deemed received on the following Business Day. If as
the result of collections of Accounts as authorized by subsection
6.2.4 hereof or otherwise, a credit balance exists in any Loan
Account, such credit balance shall not accrue interest in favor of
Borrowers, but shall be disbursed to a Borrower or otherwise at a
Borrower's direction in the manner set forth in subsection 3.1.2,
upon a Borrower's request at any time, so long as no Default or
Event of Default then exists. Agent may at its option, offset such
credit balance against any of the Obligations upon and during the
continuance of an Event of Default.
3.4.2. Apportionment, Application and Reversal of
------------------------------------------
Payments. Principal and interest payments shall be apportioned
--------
ratably among Lenders (according to the unpaid principal balance of
the Loans to which such payments relate held by each Lender). All
payments hereunder shall be remitted to Agent. All proceeds of
equity obtained by any Borrower or any Subsidiary, all payments in
respect of Guaranty Agreements and all other cash obtained by any
Borrower or any Domestic Subsidiary shall be immediately deposited
into a Dominion Account. Except as provided in Section 3.11, all
proceeds of Collateral not relating to principal or interest of
specific Loans, or not constituting payment of specific fees, all
proceeds of Accounts, or, except as provided in Section 3.3.1,
other Collateral received by Agent, including without limitation
all amounts deposited in a Dominion Account, shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay
-----
any fees, indemnities, or expense reimbursements (other than
amounts related to Product Obligations) then
-25-
due to Agent or Lenders from any Borrower; second, to pay interest
------
due from Borrowers in respect of all Loans, including Agent Loans;
third, to pay or prepay principal of Agent Loans; fourth, to pay or
----- ------
prepay principal of the Revolving Credit Loans (other than Agent
Loans) and unpaid reimbursement in respect of Letter of Credit
Obligations; fifth, if an Event of Default is in existence, to pay
-----
an amount to Agent equal to all outstanding Letter of Credit
Obligations to be held as cash Collateral for such Obligations (in
the amount of 105% of the LC Amount); sixth, to the payment of
-----
principal then due in respect of Term Loan A; seventh, to the
-------
payment of principal then due in respect of Term Loan B; eighth, to
------
the payment of any other Obligation (other than amounts related to
Product Obligations) due to Agent or any Lender by any Borrower;
and ninth, to pay any amounts due with respect to Product
-----
Obligations. After the occurrence and during the continuance of an
Event of Default, Agent shall have the continuing exclusive right
to apply and reapply (without requiring any turnover) any and all
such payments and collections received at any time or times
hereafter by Agent or its agent against the Obligations, as set
forth in Section 3.11, notwithstanding any entry by Agent or any
Lender upon any of its books and records.
3.5. All Loans to Constitute One Obligation.
--------------------------------------
The Loans, the LC Amount and the other Obligations shall
constitute one general joint and several obligation of Borrowers, and shall
be secured by Agent's Lien upon all of the Collateral. All of the
Obligations are and shall be deemed to be pari passu with each other and
---- -----
none of the Revolving Credit Loans, Term Loan A, Term Loan B or any of the
other Obligations are or shall be deemed to be subordinate or junior in
right of payment to any other of such facilities or Obligations.
3.6. Loan Account.
------------
Agent shall enter all Loans as debits to one or more loan
accounts (each, a "Loan Account") and shall also record in the appropriate
Loan Account all payments made by each Borrower on any Obligations and all
proceeds of Collateral which are finally paid to Agent, and may record
therein, in accordance with customary accounting practice, other debits and
credits, including interest and all charges and expenses properly chargeable
to each Borrower.
3.7. Statements of Account.
---------------------
Agent will account to Borrowers monthly with a statement
of Loans, charges and payments made pursuant to this Agreement during the
immediately preceding month, and such account rendered by Agent shall be
deemed final, binding and conclusive upon Borrowers absent demonstrable
error unless Agent is notified by Borrowers in writing to the contrary
within thirty (30) days of the date each accounting is received by
Borrowers. Such notice shall only be deemed an objection to those items
specifically objected to therein.
-26-
3.8. Increased Costs.
---------------
If any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force
of law) adopted or implemented after the date of this Agreement and having
general applicability to all banks or finance companies within the
jurisdiction in which any Lender operates (excluding, for the avoidance of
doubt, the effect of and phasing in of capital requirements or other
regulations or guidelines passed prior to the date of this Agreement), or
any interpretation or application thereof by any governmental authority
charged with the interpretation or application thereof, or the compliance of
such Lender therewith, shall:
(i) (1) subject such Lender to any tax with
respect to this Agreement (other than (a) any tax based on
or measured by net income or otherwise in the nature of a
net income tax, including, without limitation, any
franchise tax or any similar tax based on capital, net
worth or comparable basis for measurement and (b) any tax
collected by a withholding on payments and which neither
is computed by reference to the net income of the payee
nor is in the nature of an advance collection of a tax
based on or measured by the net income of the payee) or
(2) change the basis of taxation of payments to such
Lender of principal, fees, interest or any other amount
payable hereunder or under any Loan Documents (other than
in respect of (a) any tax based on or measured by net
income or otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable
basis for measurement and (b) any tax collected by a
withholding on payments and which neither is computed by
reference to the net income of the payee nor is in the
nature of an advance collection of a tax based on or
measured by the net income of the payee);
(ii) impose, modify or hold applicable any
reserve (except any reserve taken into account in the
determination of the applicable LIBOR), 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, any office of such
Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal
Reserve System; or
(iii) impose on such Lender or the London
interbank market any other condition with respect to any
Loan Document;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining Loans hereunder or the result of
any of the foregoing is to reduce the rate of return on such Lender's
capital as a consequence of its obligations hereunder, or the result of any
of the foregoing is to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans, then, in
any such case, Borrowers shall jointly and severally pay such Lender, not
later than sixty (60) days following its receipt of notice of the imposition
of such increased costs and the certification set forth below, such
additional amount as will compensate such Lender for such additional cost or
such reduction, as the case may be,
-27-
to the extent such Lender has not otherwise been compensated, with respect
to a particular Loan, for such increased cost as a result of an increase in
the Base Rate or the LIBOR. An officer of the applicable Lender shall
determine the amount of such additional cost or reduced amount using
reasonable averaging and attribution methods and shall certify the amount of
such additional cost or reduced amount to Borrowers, which certification
shall include a written explanation of such additional cost or reduction to
Borrowers. Such certification shall be conclusive absent demonstrable error.
If a Lender claims any additional cost or reduced amount pursuant to this
Section 3.8, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different lending office
or to file any certificate or document reasonably requested by Borrowers if
the making of such designation or filing would avoid the need for, or reduce
the amount of, any such additional cost or reduced amount and would not, in
the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.
3.9. Basis for Determining Interest Rate Inadequate.
----------------------------------------------
In the event that Agent or any Revolving Credit and Term
Loan A Lender shall have determined that:
(i) reasonable means do not exist for
ascertaining the LIBOR for any Interest Period; or
(ii) Dollar deposits in the relevant amount and
for the relevant maturity are not available in the London
interbank market with respect to a proposed LIBOR Portion,
or a proposed conversion of a Base Rate Portion into a
LIBOR Portion; then
Agent or such Revolving Credit and Term Loan A Lender shall give Borrowers
prompt written, telephonic or electronic notice of the determination of such
effect. If such notice is given, (i) any such requested LIBOR Portion shall
be made as a Base Rate Portion, unless Borrowers shall notify Agent no later
than 10:00 a.m. (Chicago, Illinois time) one (1) Business Day prior to the
date of such proposed borrowing that the request for such borrowing shall be
canceled or made as an unaffected type of LIBOR Portion, and (ii) any Base
Rate Portion which was to have been converted to an affected type of LIBOR
Portion shall be continued as or converted into a Base Rate Portion, or, if
Borrowers shall notify Agent, no later than 10:00 a.m. (Chicago, Illinois
time) one (1) Business Day prior to the proposed conversion, shall be
maintained as an unaffected type of LIBOR Portion. Agent shall give
Borrowers prompt notice if and when any such determination is no longer in
effect.
3.10. Sharing of Payments, Etc.
-------------------------
Subject to Section 3.11 and the other provisions of this
Agreement relating to the application of funds received by Agent and the
Lenders, if any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of any Loan made by it in excess of its ratable share of payments on
account of Loans made by all Lenders, such Lender shall forthwith purchase
from each other Lender such
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participation in such Loan as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each other Lender; provided,
--------
that if all or any portion of such excess payment is thereafter recovered
from such purchasing Lender, such purchase from each Lender shall be
rescinded and such Lender shall repay to the purchasing Lenders the purchase
price to the extent of such recovery, together with an amount equal to such
Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. Borrowers
agree that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.10 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of each Borrower in the amount of such participation.
Notwithstanding anything to the contrary contained herein, all purchases and
repayments to be made under this Section 3.10 shall be made through Agent.
Each Lender agrees with each other Lender that if an amount to be set off by
such Lender or an Affiliate of such Lender as described herein (other than
any amount held by such Lender or such Affiliate specifically as collateral
security for Indebtedness (other than the Obligations) of a Borrower or a
Subsidiary to such Lender) is to be applied by such Lender to Indebtedness
(other than the Obligations) of any Borrower or any Subsidiary to such
Lender, such amount shall be applied ratably to such other Indebtedness and
to the portion of the Obligations held by such Lender, and, as to the
portion of such amount applied to the Obligations, shall be subject to the
provisions of this Section 3.10 regarding purchases of participations.
3.11. Post Event of Default Allocation.
--------------------------------
3.11.1. Allocation. After the occurrence and during the
----------
continuance of an Event of Default under subsection 10.1.1,
subsection 10.1.3 caused by a breach of Section 8.3 or subsection
10.1.8 (collectively, "Key Defaults") of this Agreement (until the
act or omission constituting such Key Default is cured or such Key
Default is waived), Agent shall apply all proceeds of the
Collateral, including all amounts held in any Dominion Account,
subject to the provisions of this Agreement, all payments under
subsections 3.3.2 and 3.3.3 hereof, (i) first, ratably to pay any
-----
fees, expense reimbursements, indemnities and other amounts then
due to Agent (other than in respect of Product Obligations and
other than prepayment fees payable under subsection 2.6(a)) until
paid in full; (ii) second, ratably to pay any fees, expense
------
reimbursements and indemnities then due to Revolving Credit and
Term Loan A Lenders (other than prepayment fees payable under
subsection 2.6(a)) until paid in full; (iii) third, ratably to pay
-----
interest due in respect of Term Loan A and the Revolving Credit
Loans (other than Excess Advances) until paid in full; (iv) fourth,
------
ratably to pay the principal of Term Loan A and the Revolving
Credit Loans (other than Excess Advances) and unpaid reimbursements
in respect of Letter of Credit Obligations (other than Excess
Advances) until paid in full; (v) fifth, to the extent not funded
-----
by a Revolving Credit Loan, to pay any amounts Borrowers are
required to deposit with Agent pursuant to subsection 10.3.5 hereof
(other than Excess Advances); (vi) sixth, ratably to pay any
-----
amounts then due with respect to Product
-29-
Obligations up to an aggregate amount equal to the sum of (a) the
amount of obligations arising with respect to matters described in
clauses (i) and (ii) of the definition of the term "Product
Obligations"; provided, that the amount of such obligations in
--------
respect of outgoing ACH transactions shall not exceed $3,500,000 at
any time outstanding and (b) without duplication of clause (a), the
amount of any reserves related to Product Obligations imposed by
Agent pursuant to subsection 1.1.1; (vii) seventh, ratably to pay
-------
any fees, expense reimbursements, indemnities and other amounts
then due to Term Loan B Lenders (other than prepayment fees payable
under subsection 2.6(b)); eighth, ratably to pay interest due in
------
respect of Term Loan B until paid in full; ninth, ratably to pay
-----
the principal of Term Loan B until paid in full; tenth, ratably to
-----
pay prepayment fees owing to Term Loan A and Revolving Credit
Lenders under subsection 2.6(a)); eleventh, ratably to pay
--------
prepayment fees owing to Term Loan B Lenders under subsection
2.6(b)); and twelfth, to the ratable payment of all other
-------
Obligations then due and payable.
3.11.2. Rights of Holders of Term Loan B Obligations. One
--------------------------------------------
or more of the holders of Term Loan B Obligations may at any time
freely hold or from time to time acquire other Loans or commitments
to make other Loans hereunder and related rights and benefits
arising under this Agreement, including voting power as a Lender
entitled to be counted for purposes of determining whether an
action has been taken or approved by Majority Lenders or Required
Lenders, and as such shall be in all respects entitled to fully
participate in, enjoy and enforce all of the rights, privileges and
benefits accorded to the holders of such Loans and commitments to
make Loans to the extent of its interests in such Loans or
commitments, including the right to exercise such voting power and
otherwise act as it may see fit to protect and enhance its own
interests (including any potentially conflicting interest as a
holder of Term Loan B Obligations) on any basis elected by it,
without any limitation or restriction whatsoever.
3.11.3. Conflict of Terms. In the event of a direct
-----------------
conflict between the application provisions of this Section 3.11
and other provisions contained in any other Loan Document, it is
the intention of the parties hereto that all such application
provisions shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the event of
any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 3.11 shall
control and govern.
SECTION 4. TERM AND TERMINATION
4.1. Term of Agreement.
-----------------
Subject to Agent's and Revolving Credit and Term Loan A
Lenders' right to cease making Loans to Borrowers during the continuance of
any Default or Event of Default, this Agreement shall be in effect for the
period from the date hereof, through and including June 3, 2007 (the
"Term"), unless terminated as provided in Section 4.2 hereof.
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4.2. Termination.
-----------
4.2.1. Termination by Lenders. Agent may, and at the
----------------------
direction of Majority Lenders or Majority Term Loan B Lenders (to
the extent permitted under Section 10.2) shall, terminate this
Agreement without notice upon or after the occurrence and during
the continuance of an Event of Default.
4.2.2. Termination by Borrowers. Upon at least thirty (30)
------------------------
days prior written notice to Agent and Lenders, Borrowers may, at
their option, terminate this Agreement; provided, however, no such
-------- -------
termination shall be effective until Borrowers have paid or
collateralized to both Agent's and Tranche B Agent's reasonable
satisfaction all of the Obligations in immediately available funds,
all Letters of Credit and LC Guaranties have expired, terminated or
have been cash collateralized to Agent's reasonable satisfaction
and Borrowers have complied with Section 2.6 and subsection 3.2.5.
Any notice of termination given by Borrowers shall be irrevocable
unless all Lenders otherwise agree in writing and no Revolving
Credit and Term Loan A Lender shall have any obligation to make any
Loans or issue or procure any Letters of Credit or LC Guaranties on
or after the termination date stated in such notice. Borrowers may
elect to terminate this Agreement in its entirety only. No section
of this Agreement or type of Loan available hereunder may be
terminated singly.
4.2.3. Effect of Termination. All of the Obligations shall
---------------------
be immediately due and payable upon the termination date stated in
any notice of termination of this Agreement. All undertakings,
agreements, covenants, warranties and representations of Borrowers
contained in the Loan Documents shall survive any such termination
and Agent shall retain its Liens in the Collateral and Agent and
each Lender shall retain all of its rights and remedies under the
Loan Documents notwithstanding such termination until all
Obligations have been discharged or paid, in full, in immediately
available funds, including, without limitation, all Obligations
under Section 2.6 and subsection 3.2.5 resulting from such
termination. Notwithstanding the foregoing or the payment in full
of the Obligations, Agent shall not be required to terminate its
Liens in the Collateral unless, with respect to any loss or damage
Agent may incur as a result of dishonored checks or other items of
payment received by Agent from any Borrower or any Account Debtor
and applied to the Obligations, Agent shall, at its option, (i)
have received a written agreement reasonably satisfactory to Agent,
executed by Borrowers and by any Person whose loans or other
advances to any Borrower are used in whole or in part to satisfy
the Obligations, indemnifying Agent and each Lender from any such
loss or damage or (ii) have retained cash Collateral or other
Collateral for such period of time as Agent, in its reasonable
discretion, may deem necessary to protect Agent and each Lender
from any such loss or damage.
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SECTION 5. SECURITY INTERESTS
5.1. Security Interest in Collateral.
-------------------------------
To secure the prompt payment and performance to Agent,
Tranche B Agent and each Lender of the Obligations, each Borrower hereby
grants to Agent, for the benefit of itself, Tranche B Agent and each Lender
in accordance with the priorities set forth herein, a continuing Lien upon
all of such Borrower's assets, including all of the following Property and
interests in Property of such Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located, but
excluding any Excluded Property of such Borrower:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all
rights with respect thereto, including, any and all
licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications,
and any substitutions, replacements, additions or model
conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment
Intangibles and Software;
(xii) Goods (including all of its Equipment,
Fixtures and Inventory), and all accessions, additions,
attachments, improvements, substitutions and replacements
thereto and therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
-32-
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the
foregoing, all other personal property of any kind or
description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, or
evidencing, embodying, incorporating or referring to any of the foregoing,
and all Proceeds, products, offspring, rents, issues, profits and returns of
and from any of the foregoing.
5.2. Other Collateral.
----------------
5.2.1. Commercial Tort Claims. The applicable Borrower
----------------------
shall promptly notify Agent in writing upon incurring or otherwise
obtaining after the Closing Date a Commercial Tort Claim against
any third party with a value in excess of $250,000 or upon a
Responsible Officer obtaining knowledge of any other Commercial
Tort Claim against any third party and, upon request of Agent,
promptly enter into an amendment to this Agreement and do such
other acts or things reasonably deemed appropriate by Agent to give
Agent a security interest in any such Commercial Tort Claim. Each
Borrower represents and warrants that as of the date of this
Agreement, to its knowledge, it does not possess any Commercial
Tort Claims.
5.2.2. Other Collateral. The applicable Borrower shall
----------------
promptly notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of
Letter-of-Credit Rights or Electronic Chattel Paper with a value in
excess of $250,000 or upon a Responsible Officer obtaining
knowledge of any other such Collateral, and, upon the request of
Agent, promptly execute such other documents, and do such other
acts or things reasonably deemed appropriate by Agent to deliver to
Agent control with respect to such Collateral; promptly notify
Agent in writing upon acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Deposit Accounts or
Investment Property with a value in excess of $250,000 or upon a
Responsible Officer obtaining knowledge of any other such
Collateral and promptly execute such other documents, and do such
other acts or
-33-
things reasonably deemed appropriate by Agent to deliver to Agent
control with respect to such Collateral; promptly notify Agent in
writing upon acquiring or otherwise obtaining any Collateral after
the date hereof consisting of Documents or Instruments with a value
in excess of $250,000 or upon a Responsible Officer obtaining
knowledge of any other such Collateral and, upon the request of
Agent, will promptly execute such other documents, and do such
other acts or things reasonably deemed appropriate by Agent to
deliver to Agent possession of such Documents which are negotiable
and Instruments, and, with respect to nonnegotiable Documents, to
have such nonnegotiable Documents issued in the name of Agent; and
with respect to Collateral in the possession of a third party,
other than Certificated Securities and Goods covered by a Document,
upon Agent's request, use its best efforts to obtain an
acknowledgement from the third party that it is holding the
Collateral for the benefit of Agent.
5.3. Lien Perfection; Further Assurances.
-----------------------------------
Each Borrower shall, upon the request of Agent, execute
such instruments, assignments or documents as are necessary to perfect
Agent's Lien upon any of the Collateral, and take such other action as may
be required to perfect or to continue the perfection of Agent's Lien upon
the Collateral. Unless prohibited by applicable law, each Borrower hereby
authorizes Agent to execute and file any such financing statement,
including, without limitation, financing statements that indicate the
Collateral (i) as all assets of such Borrower or words of similar effect, or
(ii) as being of an equal or lesser scope, or with greater or lesser detail,
than as set forth in Section 5.1, on such Borrower's behalf. Each Borrower
also hereby ratifies its authorization for Agent to have filed in any
jurisdiction any like financing statements or amendments thereto if filed
prior to the date hereof. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Agent's request, each Borrower shall also promptly execute or cause to be
executed and shall deliver to Agent any and all documents, instruments and
agreements reasonably deemed necessary by Agent, to give effect to or carry
out the terms or intent of the Loan Documents.
5.4. Lien on Realty.
--------------
The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by Mortgages upon all
real Property of each Borrower or Domestic Subsidiary now or hereafter
owned, including without limitation any real Property purchased pursuant to
a purchase option, and upon Falcon's leased real Property located in
Belmont, Mississippi. Each Mortgage shall be executed by the applicable
Borrower or Domestic Subsidiary in favor of Agent. Each Mortgage shall be
duly recorded, at Borrowers' joint and several expense, in each office where
such recording is required to constitute a fully perfected first Lien on the
real Property covered thereby. Except to the extent Agent may not require
the following for any particular property, the applicable Borrower or
Subsidiary shall deliver to Agent, at Borrowers' joint and several expense,
mortgagee title insurance policies issued by a title insurance company
satisfactory to Agent, which policies shall be in form and substance
satisfactory to Agent and shall insure a valid first Lien in favor of Agent,
for the benefit of itself,
-00-
Xxxxxxx X Agent and the Lenders, on the Property covered by each Mortgage,
subject only to those exceptions reasonably acceptable to Agent and its
counsel. The applicable Borrower or Subsidiary shall deliver to Agent such
other documents, including, without limitation, as-built survey prints of
the real Property, as Agent and its counsel may reasonably request relating
to the real Property subject to the Mortgages.
5.5. Pledge of Securities.
--------------------
Each Borrower agrees to, or cause its applicable Domestic
Subsidiary to, execute a Pledge Agreement and such other agreements,
instruments and documents as both Agent and Tranche B Agent determine are
reasonably necessary, by which it pledges to Agent and grants to Agent a
Lien on (i) 100% of the Securities of each Domestic Subsidiary owned by such
Borrower or such Domestic Subsidiary, as the case may be, and (ii) 65% of
the Securities of each Foreign Subsidiary owned by such Borrower or such
Domestic Subsidiary, as applicable, designated by Agent from time to time.
On the Closing Date, Agent agrees not to so designate any Foreign Subsidiary
that has immaterial assets and operations. Agent further agrees not to so
designate Industrial Mueblera Xxxxxx Xxxxxxxx, S.A. de C.V., unless it
continues to have any material assets or operations after March 31, 2003.
SECTION 6. COLLATERAL ADMINISTRATION
6.1. General.
-------
6.1.1. Location of Collateral. All Collateral, other than
----------------------
Inventory in transit and motor vehicles, will at all times be kept
by a Borrower or one of its Subsidiaries at one or more of the
business locations set forth in Exhibit 6.1.1 hereto, as updated by
-------------
Borrowers providing prior written notice to Agent of any new
location.
6.1.2. Insurance of Collateral. Borrowers shall maintain
-----------------------
and pay for insurance upon all Collateral wherever located and with
respect to the business of each Borrower and each of its
Subsidiaries, covering casualty, hazard, public liability, workers'
compensation, business interruption and such other risks in such
amounts and with such insurance companies as are reasonably
satisfactory to Agent. Borrowers shall deliver certified copies of
such policies to Agent as promptly as practicable, with
satisfactory lender's loss payable endorsements, naming Agent as a
loss payee, assignee or additional insured, as appropriate, as its
interest may appear, showing only such other loss payees, assignees
and additional insureds as are satisfactory to Agent and with
respect to business interruption insurance, an executed collateral
assignment thereof. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than ten
(10) days' prior written notice to Agent in the event of
cancellation of the policy for nonpayment of premium and not less
than thirty (30) days' prior written notice to Agent in the event
of cancellation of the policy for any other reason whatsoever and a
clause specifying that the interest of Agent shall not be impaired
or invalidated by any act or neglect of any Borrower, any of its
Subsidiaries or the owner of the Property or by the occupation of
the premises for purposes more hazardous than are permitted by said
policy. Borrowers agree to
-35-
deliver to Agent, promptly as rendered, true copies of all reports
made in any reporting forms to insurance companies. All proceeds of
business interruption insurance (if any) of each Borrower and its
Subsidiaries shall be remitted to Agent for application to the
outstanding balance of the Revolving Credit Loans.
Unless Borrowers provide Agent with evidence of the
insurance coverage required by this Agreement, Agent may purchase
insurance at Borrowers' joint and several expense to protect
Agent's interests in the Properties of each Borrower and its
Subsidiaries. This insurance may, but need not, protect the
interests of each Borrower and its Subsidiaries. The coverage that
Agent purchases may not pay any claim that a Borrower or any
Subsidiary of such Borrower makes or any claim that is made against
a Borrower or any such Subsidiary in connection with said Property.
Borrowers may later cancel any insurance purchased by Agent, but
only after providing Agent with evidence that Borrowers and their
Subsidiaries have obtained insurance as required by this Agreement.
If Agent purchases insurance, Borrowers will be jointly and
severally responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with
the placement of insurance, until the effective date of the
cancellation or expiration of the insurance. The costs of the
insurance may be added to the Obligations. The costs of the
insurance may be more than the cost of insurance that Borrowers and
the Subsidiaries may be able to obtain on their own.
6.1.3. Protection of Collateral. None of Agent, Tranche B
------------------------
Agent and Lenders shall be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage
thereto (except for reasonable care in the custody thereof while
any Collateral is in Agent's, Tranche B Agent's or any Lender's
actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding
agency, or other person whomsoever, but the same shall be at
Borrowers' sole risk.
6.2. Administration of Accounts.
--------------------------
6.2.1. Records, Schedules and Assignments of Accounts.
----------------------------------------------
Each Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit
to Agent on such periodic basis as Agent shall request a sales and
collections report for the preceding period, in form acceptable to
Agent. Concurrently with the delivery of each Borrowing Base
Certificate described in subsection 8.1.4, or more frequently as
reasonably requested by Agent, from and after the date hereof,
Borrowers shall deliver to Agent a detailed aged trial balance of
all of each Borrower's Accounts, specifying the names, addresses,
face values, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"),
and upon Agent's request therefor, copies of proof of delivery and
the original copy of all documents, including, without limitation,
repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Agent shall
reasonably request.
-36-
6.2.2. Discounts, Allowances, Disputes. If a Borrower
-------------------------------
grants any discounts, allowances or credits that are not shown on
the face of the invoice for the Account involved, such Borrower
shall report such discounts, allowances or credits, as the case may
be, to Agent as part of the next required Schedule of Accounts.
6.2.3. Account Verification. Any of Agent's officers,
--------------------
employees or agents shall have the right, at any time or times
hereafter, in the name of Agent, any designee of Agent or a
Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, electronic
communication or otherwise. Each Borrower shall cooperate fully
with Agent in an effort to facilitate and promptly conclude any
such verification process.
6.2.4. Maintenance of Dominion Account. Each Borrower
-------------------------------
shall maintain a Dominion Account or Accounts pursuant to lockbox
and blocked account arrangements acceptable to Agent with such
banks as may be selected by such Borrower and be reasonably
acceptable to Agent. Each Borrower shall issue to any such banks an
irrevocable letter of instruction directing such banks to deposit
all payments or other remittances received in the lockbox and
blocked accounts to the Dominion Account for application on account
of the Obligations as provided in subsection 3.2.1. All funds
deposited in any Dominion Account shall immediately become the
property of Agent, for the ratable benefit of Lenders as provided
in this Agreement, and each Borrower shall obtain the agreement by
the applicable banks in favor of Agent to waive any recoupment,
setoff rights, and any security interest in, or against, the funds
so deposited. Agent assumes no responsibility for such lockbox and
blocked account arrangements, including, without limitation, any
claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
6.2.5. Collection of Accounts, Proceeds of Collateral.
----------------------------------------------
Each Borrower agrees that all invoices rendered and other requests
made by such Borrower for payment in respect of Accounts shall
contain a written statement directing payment in respect of such
Accounts to be paid to a lockbox established pursuant to subsection
6.2.4. To expedite collection, each Borrower shall endeavor in the
first instance to make collection of its Accounts for Agent. All
remittances received by each Borrower on account of Accounts,
together with the proceeds of any other Collateral, shall be held
as Agent's property, for its benefit and the benefit of Tranche B
Agent and Lenders as provided in this Agreement, by such Borrower
as trustee of an express trust for Agent's benefit and such
Borrower shall immediately deposit same in kind in the Dominion
Account. Agent retains the right at all times after the occurrence
and during the continuance of an Event of Default to notify Account
Debtors that each Borrower's Accounts have been assigned to Agent
and to collect each Borrower's Accounts directly in its own name,
or in the name of Agent's agent, and to charge the collection costs
and expenses, including attorneys' fees, jointly and severally to
Borrowers.
6.2.6. Taxes. If an Account includes a charge for any tax
-----
payable to any governmental taxing authority, Agent is authorized,
in its sole discretion, to pay the
-37-
amount thereof to the proper taxing authority for the account of
the applicable Borrower and to charge any Borrower therefor, except
for taxes that (i) are being actively contested in good faith and
by appropriate proceedings and with respect to which the applicable
Borrower maintains reasonable reserves on its books therefor and
(ii) would not reasonably be expected to result in any Lien other
than a Permitted Lien. In no event shall Agent, Tranche B Agent or
any Lender be liable for any taxes to any governmental taxing
authority that may be due by any Borrower.
6.3. Administration of Inventory.
---------------------------
Each Borrower shall keep records of its Inventory which
records shall be complete and accurate in all material respects. Each
Borrower shall furnish to Agent monthly Inventory reports on the tenth
Business Day of each fiscal month, for the preceding fiscal month, or more
frequently as reasonably requested by Agent, which reports will be in such
other format and detail as Agent shall reasonably request and shall include
a current list of all locations of such Borrower's Inventory. Each Borrower
shall maintain a fully costed perpetual Inventory system reasonable
acceptable to Agent with respect to its finished goods Inventory. Each
Borrower shall conduct a physical inventory no less frequently than annually
and shall provide to Agent a report based on each such physical inventory
promptly thereafter, together with such supporting information as Agent
shall reasonably request.
6.4. Records and Schedules of Equipment.
----------------------------------
Each Borrower shall keep records of its Equipment which
shall be complete and accurate in all material respects itemizing and
describing the kind, type, quality, quantity and book value of its Equipment
and all dispositions made in accordance with subsection 8.2.9 hereof, and
each Borrower shall, and shall cause each of its Domestic Subsidiaries to,
furnish Agent with a current schedule containing the foregoing information
on at least an annual basis and more often (but, unless an Event of Default
is in existence, not more frequently than once per calendar quarter) if
reasonably requested by Agent. Promptly after the request therefor by Agent,
each Borrower shall deliver to Agent any and all evidence of ownership, if
any, of any of its Equipment.
6.5. Payment of Charges.
------------------
All amounts chargeable to any Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was
made until paid in full at the rate applicable to Base Rate Revolving
Portions from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. General Representations and Warranties.
--------------------------------------
To induce Agent, Tranche B Agent and each Lender to enter
into this Agreement and to make advances hereunder, each Borrower warrants,
represents and covenants to Agent, Tranche B Agent and each Lender, on a
joint and several basis, that:
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7.1.1. Qualification. Each Borrower and each of its
-------------
Subsidiaries is a corporation, limited partnership or limited
liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization. Each Borrower and each of its Subsidiaries is duly
qualified and is authorized to do business and is in good standing
as a foreign limited liability company, limited partnership or
corporation, as applicable, in (a) as of the date hereof, each
state or jurisdiction listed on Exhibit 7.1.1 hereto and (b) all
-------------
states and jurisdictions in which the failure of such Borrower or
any of its Subsidiaries to be so qualified could reasonably be
expected to have a Material Adverse Effect.
7.1.2. Power and Authority. Each Borrower and each of its
-------------------
Domestic Subsidiaries is duly authorized and empowered to enter
into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate
or other relevant action and do not and will not (i) require any
consent or approval of the shareholders of such Borrower or any of
the shareholders, partners or members, as the case may be, of any
Subsidiary of such Borrower (other than any such consents or
approvals which have been obtained); (ii) contravene such
Borrower's or any of its Subsidiaries' charter, articles or
certificate of incorporation, partnership agreement, certificate of
formation, by-laws, limited liability agreement, operating
agreement or other organizational documents (as the case may be);
(iii) violate, or cause such Borrower or any of its Subsidiaries to
be in default under, any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
in effect having applicability to such Borrower or any of its
Subsidiaries, the violation of which could reasonably be expected
to have a Material Adverse Effect; (iv) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which such
Borrower or any of its Subsidiaries is a party or by which it or
its Properties may be bound or affected, including without
limitation any Subordinated Note Document, the breach of or default
under which could reasonably be expected to have a Material Adverse
Effect; or (v) result in, or require, the creation or imposition of
any Lien (other than Permitted Liens) upon or with respect to any
of the Properties now owned or hereafter acquired by such Borrower
or any of its Subsidiaries.
7.1.3. Legally Enforceable Agreement. This Agreement is,
-----------------------------
and each of the other Loan Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of each
Borrower and each of its Domestic Subsidiaries party thereto,
enforceable against it in accordance with its respective terms.
7.1.4. Capital Structure. Exhibit 7.1.4 hereto states, as
----------------- -------------
of the date hereof, (i) the correct name of each of the
Subsidiaries of each Borrower, its jurisdiction of incorporation or
organization and the percentage of its Voting Stock owned by such
Borrower, (ii) the name of each Borrower's and each of its
Subsidiaries' corporate or joint venture Affiliates and the nature
of the relationship, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and of each Subsidiary of
such
-39-
Borrower and (iv) the number of authorized, issued and treasury
Securities of each Borrower. Each Borrower has good title to all of
the Securities it purports to own of each of such Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens.
All such Securities have been duly issued and are fully paid and
non-assessable. As of the date hereof, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell any Securities or
obligations convertible into, or any powers of attorney relating to
any Securities of any Borrower or any of its Subsidiaries. Except
as set forth on Exhibit 7.1.4, as of the date hereof, there are no
-------------
outstanding agreements or instruments binding upon any of any
Borrower's or any of its Subsidiaries' partners, members or
shareholders, as the case may be, relating to the ownership of its
Securities.
7.1.5. Names; Organization. As of the date hereof, neither
-------------------
any Borrower nor any of its Subsidiaries has been known as or has
used any legal, fictitious or trade names except those listed on
Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5, as of
------------- -------------
the date hereof, during the ten-year period preceding the date
hereof, neither any Borrower nor any of its Subsidiaries has been
the surviving entity of a merger or consolidation or has acquired
all or substantially all of the assets of any Person. As of the
date hereof, each Borrower's and each of its Subsidiaries' state(s)
of incorporation or organization, Type of Organization and
Organizational I.D. Number is set forth on Exhibit 7.1.5. As of the
-------------
date hereof, the exact legal name of each Borrower and each of its
Subsidiaries is set forth on Exhibit 7.1.5.
-------------
7.1.6. Business Locations; Agent for Process. Each
-------------------------------------
Borrower's and each of its Subsidiary's chief executive office,
location of books and records and other places of business are as
listed on Exhibit 6.1.1 hereto, as updated from time to time by
-------------
Borrowers in accordance with the provisions of subsection 6.1.1.
During the one-year period preceding the date hereof, neither any
Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process, other than as listed on
Exhibit 6.1.1. All tangible Collateral is and will at all times be
-------------
kept by a Borrower and its Subsidiaries in accordance with
subsection 6.1.1. Except as shown on Exhibit 6.1.1, as of the date
-------------
hereof, no Inventory is stored with a bailee, processor,
distributor, warehouseman or similar party, nor is any Inventory
consigned to any Person. At no time is Inventory of Borrowers and
the Subsidiaries with an aggregate value in excess of $750,000
located with third party processors.
7.1.7. Title to Properties; Priority of Liens. Each
--------------------------------------
Borrower and each of its Subsidiaries has good, indefeasible and
marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and
good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens.
Each Borrower and each of its Subsidiaries has paid or discharged
all lawful claims which, if unpaid, might become a Lien against any
of such Borrower's or such Subsidiary's Properties that is not a
Permitted Lien, except for claims being contested in good faith by
appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with
-40-
GAAP, unless Agent has determined that such claims could reasonably
be expected to materially and adversely effect the Collateral or
the value thereof. The Liens granted to Agent under Section 5
hereof are first priority Liens, subject only to Permitted Liens.
7.1.8. Accounts. Agent may rely, in determining which
--------
Accounts are Eligible Accounts, on all statements and
representations made by each Borrower with respect to any Account
or Accounts. With respect to each of each Borrower's Accounts
arising in the ordinary course of business from the sale of goods
or the rendition of services, whether or not such Account is an
Eligible Account, unless otherwise disclosed to Agent in writing:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale
---- ----
and delivery of goods or rendition of services by such
Borrower, in the ordinary course of its business and in
accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and
forming a part of the contract between such Borrower and
the Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or
rendition of services, a copy of which has been furnished
or is available to Agent;
(iv) To the best of such Borrower's knowledge,
there are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or
tend to reduce the amount payable thereunder from the face
amount of the invoice and statements delivered or made
available to Agent with respect thereto;
(v) To the best of such Borrower's knowledge, the
Account Debtor thereunder (1) had the capacity to contract
at the time any contract or other document giving rise to
the Account was executed and (2) such Account Debtor is
Solvent; and
(vi) To the best of such Borrower's knowledge,
there are no proceedings or actions which are threatened
or pending against the Account Debtor thereunder which
might result in any material adverse change in such
Account Debtor's financial condition or the collectibility
of such Account.
7.1.9. Equipment. The Equipment of each Borrower and its
---------
Subsidiaries is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that
the operating efficiency thereof shall be maintained and preserved,
reasonable wear and tear excepted. Neither any Borrower nor any of
its Domestic Subsidiaries will permit any Equipment to become
affixed to any real
-41-
Property leased to any Borrower or any of its Domestic Subsidiaries
so that an interest arises therein under the real estate laws of
the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in
favor of and in form reasonably acceptable to Agent, and no
Borrower will permit any of the Equipment of any Borrower or any of
its Domestic Subsidiaries to become an accession to any personal
Property other than Equipment that is subject to first priority
(except for Permitted Liens) Liens in favor of Agent.
7.1.10. Financial Statements; Fiscal Year. The
---------------------------------
Consolidated and consolidating (showing all Borrowers and Domestic
Subsidiaries as a Consolidated entity and the Foreign Subsidiaries
on a consolidating basis) balance sheets of Falcon and its
Subsidiaries (including the accounts of all Subsidiaries of Falcon
and their respective Subsidiaries for the respective periods during
which a Subsidiary relationship existed) as of November 1, 2003,
and the related statements of income, changes in shareholder's
equity, and changes in financial position for the periods ended on
such dates, have been prepared in accordance with GAAP, and present
fairly in all material respects the financial positions of Falcon
and such Persons, taken as a whole, at such dates and the results
of Falcon's and such Person's operations, taken as a whole, for
such periods. As of the date hereof, since November 1, 2003, there
has been no material adverse change in the financial position of
Falcon and such other Persons, taken as a whole, as reflected in
the Consolidated balance sheet as of such date. As of the date
hereof, the fiscal year of Falcon and each of its Subsidiaries ends
on the Saturday closest to October 31st of each year.
7.1.11. Full Disclosure. The financial statements referred
---------------
to in subsection 7.1.10 hereof do not, nor does this Agreement or
any other written statement of any Borrower to Agent or any Lender
contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein or herein
not misleading. There is no fact which any Borrower has failed to
disclose to Agent or any Lender in writing which could reasonably
be expected to have a Material Adverse Effect.
7.1.12. Solvent Financial Condition. Each Borrower and
---------------------------
each of its Subsidiaries is, as of the date hereof, and, after
giving effect to the initial Loans to be made and the initial
Letters of Credit and LC Guaranties to be issued hereunder and all
related transactions, will be, Solvent.
7.1.13. Surety Obligations. Except as set forth on Exhibit
------------------ -------
7.1.13, as of the date hereof, neither any Borrower nor any of its
------
Subsidiaries is obligated as surety or indemnitor under any surety
or similar bond or other contract or has issued or entered into any
agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
7.1.14. Taxes. As of the date hereof, the federal tax
-----
identification number of each Borrower and Domestic Subsidiary of
each Borrower is shown on Exhibit 7.1.14 hereto. Each Borrower and
--------------
each of its Subsidiaries has filed all federal, state and
-42-
local tax returns and other reports relating to taxes it is
required by law to file, other than returns and reports with
respect to taxes in an aggregate amount not in excess of $250,000
at any time, and has paid, or made provision for the payment of,
all taxes, assessments, fees, levies and other governmental charges
upon it, its income and Properties as and when such taxes,
assessments, fees, levies and charges are due and payable, unless
and to the extent any thereof are being actively contested in good
faith and by appropriate proceedings and each Borrower and each of
its Subsidiaries maintains reasonable reserves on its books
therefor, other than taxes in an aggregate amount not in excess of
$250,000 at any time. The provision for taxes on the books of each
Borrower and its Subsidiaries is adequate for all years not closed
by applicable statutes, and for the current fiscal year.
7.1.15. Brokers. Except as shown on Exhibit 7.1.15 hereto,
------- --------------
there are no claims for brokerage commissions, finder's fees or
investment banking fees payable by Borrowers in connection with the
transactions contemplated by this Agreement.
7.1.16. Patents, Trademarks, Copyrights and Licenses. Each
--------------------------------------------
Borrower and each of its Subsidiaries owns, possesses or licenses
or has the right to use all the patents, trademarks, service marks,
trade names, copyrights, licenses and other Intellectual Property
necessary for the present and planned future conduct of its
business without any known conflict with the rights of others,
except for such conflicts as could not reasonably be expected to
have a Material Adverse Effect. All such patents, trademarks,
service marks, tradenames, copyrights, licenses, and other similar
rights as of the date hereof are listed on Exhibit 7.1.16 hereto.
--------------
As of the date hereof, no claim has been asserted to any Borrower
or any of its Subsidiaries which is currently pending that their
use of their Intellectual Property or the conduct of their business
does or may infringe upon the Intellectual Property rights of any
third party. To the knowledge of each Borrower and except as set
forth on Exhibit 7.1.16 hereto, as of the date hereof, no Person is
--------------
engaging in any activity that infringes in any material respect
upon any Borrower's or any of its Subsidiaries material
Intellectual Property. Except as set forth on Exhibit 7.1.16, each
--------------
Borrower's and each of its Subsidiary's (i) material United States
trademarks, service marks, and copyrights are registered with the
U.S. Patent and Trademark Office or in the U.S. Copyright Office,
as applicable and (ii) material license agreements and similar
arrangements relating to its Inventory (1) permits, and does not
restrict, the assignment by any Borrower or any of its Domestic
Subsidiaries to Agent, or any other Person designated by Agent, of
all of such Borrower's or such Domestic Subsidiary's, as
applicable, rights, title and interest pertaining to such license
agreement or such similar arrangement and (2) would permit the
continued use by such Borrower or such Domestic Subsidiary, or
Agent or its assignee, of such license agreement or such similar
arrangement and the right to sell Inventory subject to such license
agreement for a period of no less than six (6) months after a
default or breach of such agreement or arrangement. The
consummation and performance of the transactions and actions
contemplated by this Agreement and the other Loan Document,
including without limitation, the exercise by Agent of any of its
rights or remedies under Section 10, will not result in the
-43-
termination or impairment of any Borrower's or any Subsidiary's
ownership or rights relating to its Intellectual Property, except
for such Intellectual Property rights the loss or impairment of
which could not reasonably be expected to have a Material Adverse
Effect. Except as listed on Exhibit 7.1.16 and except as could not
--------------
reasonably be expected to have a Material Adverse Effect, (i)
neither any Borrower nor any of its Subsidiaries is in breach of,
or default under, any term of any license or sublicense with
respect to any of its Intellectual Property and (ii) to the
knowledge of each Borrower, no other party to such license or
sublicense is in breach thereof or default thereunder, and such
license is valid and enforceable.
7.1.17. Governmental Consents. Each Borrower and each of
---------------------
its Subsidiaries has, and is in good standing with respect to, all
governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to
continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as
now owned or leased by it, except where the failure to possess or
so maintain such rights could not reasonably be expected to have a
Material Adverse Effect.
7.1.18. Compliance with Laws. Each Borrower and each of
--------------------
its Subsidiaries has duly complied, and its Properties, business
operations and leaseholds are in compliance with, the provisions of
all federal, state and local laws, rules and regulations applicable
to such Borrower or such Subsidiary, as applicable, its Properties
or the conduct of its business, except for such non-compliance as
could not reasonably be expected to have a Material Adverse Effect,
and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries
under any such law, rule or regulation, except where such
noncompliance could not reasonably be expected to have a Material
Adverse Effect. Each Borrower and each of its Subsidiaries has
established and maintains an adequate monitoring system to insure
that it remains in compliance in all material respects with all
federal, state and local rules, laws and regulations applicable to
it. No Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. Section 201 et seq.), as amended.
-- ---
7.1.19. Restrictions. Neither any Borrower nor any of its
------------
Subsidiaries is a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit 7.1.19 hereto, none of which prohibit
--------------
the execution of or compliance with this Agreement or the other
Loan Documents by any Borrower or any of its Subsidiaries, as
applicable.
7.1.20. Litigation. Except as set forth on Exhibit 7.1.20
---------- --------------
hereto, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of each Borrower, threatened, against
or affecting any Borrower or any of its Subsidiaries, or the
business, operations, Properties, prospects, profits or condition
of any Borrower or any of its Subsidiaries which, singly or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect. Neither any Borrower nor any of its Subsidiaries is in
default with respect to any order, writ, injunction, judgment,
decree or rule of
-44-
any court, governmental authority or arbitration board or tribunal,
which, singly or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
7.1.21. No Defaults. No event has occurred and no
-----------
condition exists which would, upon or after the execution and
delivery of this Agreement or any Borrower's performance hereunder,
constitute a Default or an Event of Default. Except as described on
Exhibit 7.1.21, neither any Borrower nor any of its Subsidiaries is
--------------
in default in (and no event has occurred and no condition exists
which constitutes, or which the passage of time or the giving of
notice or both would constitute, a default in) the payment of any
Indebtedness to any Person for Money Borrowed in excess of
$500,000.
7.1.22. Leases. Exhibit 7.1.22 hereto is a complete
------ --------------
listing of all capitalized and operating personal property leases
of each Borrower and its Subsidiaries and all real property leases
of each Borrower and its Subsidiaries, in each case as of the date
hereof. Each Borrower and each of its Subsidiaries is in full
compliance with all of the terms of each of its respective
capitalized and operating leases, except where the failure to so
comply could not reasonably be expected to have a Material Adverse
Effect.
7.1.23. Pension Plans. As of the date hereof, except as
-------------
disclosed on Exhibit 7.1.23 hereto, neither any Borrower nor any of
--------------
its Subsidiaries has any Plan. Each Borrower and each of its
Subsidiaries is in compliance with the requirements of ERISA and
the regulations promulgated thereunder with respect to each Plan,
except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. No fact or situation
that could reasonably be expected to result in a material adverse
change in the financial condition of Borrowers and their
Subsidiaries taken as a whole exists in connection with any Plan.
Neither any Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.
7.1.24. Trade Relations. There exists no actual or, to
---------------
each Borrower's knowledge, threatened termination, cancellation or
limitation of, or any modification or change in, the business
relationship between any Borrower or any of its Subsidiaries and
any customer or any group of customers whose purchases individually
or in the aggregate are material to the business of such Borrower
and its Subsidiaries, or with any material supplier, except in each
case, where the same could not reasonably be expected to have a
Material Adverse Effect, and there exists no present condition or
state of facts or circumstances which would prevent any Borrower or
any of its Subsidiaries from conducting such business after the
consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been
conducted.
7.1.25. Labor Relations. Except as described on Exhibit
--------------- -------
7.1.25 hereto, as of the date hereof, neither any Borrower nor any
------
of its Subsidiaries is a party to any collective bargaining
agreement. There are no material grievances, disputes or
controversies with any union or any other organization of any
Borrower's or any of its
-45-
Subsidiaries employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union
or organization, except those that could not reasonably be expected
to have a Material Adverse Effect.
7.1.26. Common Enterprise. Borrowers are engaged in the
-----------------
businesses of the manufacturing of furniture for the commercial
market, as well as in certain other businesses. These operations
require financing on a basis such that the credit supplied can be
made available from time to time to Borrowers, as required for the
continued successful operation of Borrowers taken as a whole.
Borrowers have requested the Lenders to make credit available
hereunder for the purposes set forth herein and generally for the
purposes of financing the operations of Borrowers. Each Borrower
and each Subsidiary of each Borrower expects to derive benefit (and
the Board of Directors of each Borrower and each Subsidiary of each
Borrower has determined that such Borrower or Subsidiary may
reasonably be expected to derive benefit), directly or indirectly,
from a portion of the credit extended by Lenders hereunder, both in
its separate capacity and as a member of the group of companies,
since the successful operation and condition of each Borrower and
each Subsidiary of each Borrower is dependent on the continued
successful performance of the functions of the group as a whole.
Each Borrower acknowledges that, but for the agreement of each of
the other Borrowers to execute and deliver this Agreement, Agent
and Lenders would not have made available the credit facilities
established hereby on the terms set forth herein.
7.1.27. Disclosures re: Subordinated Note Indenture. As of
-------------------------------------------
the Closing Date, (a) all Restricted Subsidiaries and all
Unrestricted Subsidiaries are listed on Exhibit 7.1.27 hereto, (b)
--------------
all Subordinated Note Guarantors are listed on Exhibit 7.1.27, (c)
--------------
the aggregate amount applied by Borrowers and their Subsidiaries
during the period commencing on June 17, 1999 and ending on the
Closing Date to permanently repay Indebtedness for Money Borrowed
(and, if any such Indebtedness was revolving credit Indebtedness,
to reduce commitments with respect thereto) under a Credit Facility
as a result of asset dispositions is $150,500, and such reductions
are described on Exhibit 7.1.27 and (d) the aggregate amount of
--------------
investments made in Foreign Subsidiaries during the period
commencing on June 17, 1999 and ending on the Closing Date is 100
Hong Kong Dollars, and such Investments are described on Schedule
--------
7.1.27. Except as described on Exhibit 7.1.27, (i) other than the
------ --------------
loan facilities evidenced by this Agreement, there are no Credit
Facilities in existence, (ii) other than the Obligations, there is
no Designated Senior Debt in existence and (iii) this Agreement
constitutes the Credit Agreement for purposes of the Subordinated
Note Indenture and the Obligations constitute a Credit Facility and
Designated Senior Debt for purposes of the Subordinated Note
Indenture.
7.1.28. Non-Operating Subsidiaries. As of the date hereof,
--------------------------
none of Shelby FSC Corp., Madison Furniture Industries, Inc.,
Thonet International (UK) Limited, Fundiciones Tecnicas, S.A.,
Falcon de Baja California, S.A. de C.V., The Falcon Companies
International, Inc., The Falcon Companies HK Limited, or Falcon
-46-
Holdings, Inc., each a Subsidiary of Falcon, has any material
assets, operations, business, liabilities or contingent
liabilities.
7.1.29. Original Loan Agreement. Immediately prior to the
-----------------------
effectiveness of this Agreement, no Default or Event of Default,
each as defined in the Original Loan Agreement, is in effect under
the Original Loan Agreement, except to the extent the Existing
Events of Default referred to in Section 1.5 constitute Defaults or
Events of Default.
7.2. Continuous Nature of Representations and Warranties.
---------------------------------------------------
Each representation and warranty contained in this
Agreement and the other Loan Documents shall be continuous in nature and
shall remain accurate, complete and not misleading in all material respects
at all times during the term of this Agreement, except for changes in the
nature of a Borrower's or one of such Borrower's Subsidiary's business or
operations that would render the information in any exhibit attached hereto
or to any other Loan Document either inaccurate, incomplete or misleading,
so long as Majority Lenders or Required Lenders, as applicable pursuant to
subsection 11.10, have consented to such changes or such changes are
expressly permitted by this Agreement and except to the extent that such
representations and warranties relate solely to an earlier date. Without
limiting the generality of the foregoing, each Loan request made or deemed
made pursuant to subsection 3.1.1 hereof shall constitute each Borrower's
reaffirmation, as of the date of each such Loan request, of each
representation, warranty or other statement made or furnished to Agent or
any Lender by or on behalf of any Borrower, Subsidiary of such Borrower, or
any Guarantor in this Agreement, any of the other Loan Documents, or any
instrument, certificate or financial statement furnished in compliance with
or in reference thereto, except to the extent that such representations and
warranties relate solely to an earlier date.
7.3. Survival of Representations and Warranties.
------------------------------------------
All representations and warranties of each Borrower
contained in this Agreement or any of the other Loan Documents shall survive
the execution, delivery and acceptance thereof by Agent and each Lender and
the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. Affirmative Covenants.
---------------------
During the Term, and thereafter for so long as there are
any Obligations outstanding, Borrowers jointly and severally covenant that
they shall:
8.1.1. Visits and Inspections; Lender Meeting. Permit (i)
--------------------------------------
representatives of Agent, accompanied by representatives of Tranche
B Agent, and during the continuation of any Event of Default,
accompanied by representatives of any Lender, from time to time, as
often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of each
Borrower and each of its
-47-
Subsidiaries, inspect, audit and make extracts from its books and
records, and discuss with its officers, its employees and its
independent accountants, each Borrower's and each of its
Subsidiaries' business, assets, liabilities, financial condition,
business prospects and results of operations and (ii) appraisers
engaged pursuant to Section 2.10 (whether or not personnel of Agent
or Tranche B Agent), from time to time, as often as may be
reasonably requested, but only during normal business hours, to
visit and inspect the Properties of each Borrower and each of its
Subsidiaries, for the purpose of completing appraisals pursuant to
Section 2.10. Agent or such Lender, if no Default or Event of
Default then exists, shall give the applicable Borrower reasonable
prior notice of any such inspection or audit. Without limiting the
foregoing, Borrowers will participate and will cause their key
management personnel to participate in meetings with Agent and
Tranche B Agent and, at Borrower's request, Lenders, periodically
during each year, which meeting(s) shall be held at such times and
such places as may be reasonably requested by Agent and Tranche B
Agent.
8.1.2. Notices. Promptly notify Agent and Tranche B Agent
-------
in writing of the occurrence of any event or the existence of any
fact which renders any representation or warranty in this Agreement
or any of the other Loan Documents inaccurate, incomplete or
misleading in any material respect as of the date made or remade.
In addition, each Borrower agrees to provide Agent and Tranche B
Agent with prompt written notice of any change in the information
disclosed in any Exhibit hereto, in each case after giving effect
to the materiality limits and Material Adverse Effect
qualifications contained therein.
8.1.3. Financial Statements. Keep, and cause each
--------------------
Subsidiary to keep, adequate records and books of account with
respect to its business activities in which proper entries are made
in accordance with customary accounting practices reflecting all
its financial transactions; and cause to be prepared and furnished
to Agent and each Lender, the following, all to be prepared in
accordance with GAAP applied on a consistent basis, unless
Borrowers' certified public accountants concur in any change
therein and such change is disclosed to Agent and Lenders and is
consistent with GAAP:
(i) not later than ninety (90) days after the
close of each fiscal year of Borrowers, unqualified
(except for a qualification for a change in accounting
principles with which the accountant concurs) audited
financial statements of Borrowers and the Subsidiaries as
of the end of such year, on a Consolidated basis,
certified by a firm of independent certified public
accountants of recognized national standing selected by
Borrowers but reasonably acceptable to Agent and, within a
reasonable time thereafter a copy of any management letter
issued in connection therewith;
(ii) not later than thirty (30) days after the
end of each fiscal month hereafter, including the last
fiscal month of each fiscal year of Borrowers, unaudited
interim financial statements of Borrowers and the
Subsidiaries as of
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the end of such fiscal month and of the portion of the
fiscal year then elapsed, on a Consolidated and
consolidating basis (showing all Borrowers and Domestic
Subsidiaries as a Consolidated entity and the Foreign
Subsidiaries on a consolidating basis), certified by the
chief financial officer of Falcon as prepared in
accordance with GAAP and fairly presenting in all material
respects the financial position and results of operations
of Borrowers and the Subsidiaries for such fiscal month
and period subject only to changes from audit and year-end
adjustments and except that such statements need not
contain notes;
(iii) together with each delivery of financial
statements pursuant to clauses (i) and (ii) of this
subsection 8.1.3, a management report (1) setting forth in
comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the
corresponding figures from the most recent Projections for
the current fiscal year delivered pursuant to subsection
8.1.6 and (2) identifying the reasons for any significant
variations. The information above shall be presented in
reasonable detail and shall be certified by the chief
financial officer of Falcon to the effect that such
information fairly presents in all material respects the
results of operation and financial condition of Borrowers
and the Subsidiaries as at the dates and for the periods
indicated;
(iv) promptly after the sending or filing
thereof, as the case may be, copies of any proxy
statements, financial statements or reports which any
Borrower or any Subsidiary has made available to its
Securities holders and copies of any regular, periodic and
special reports or registration statements which any
Borrower or any Subsidiary files with the Securities and
Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities
exchange;
(v) upon request of Agent, copies of any annual
report to be filed with ERISA in connection with each
Plan; and
(vi) such other data and information (financial
and otherwise) as Agent or any Lender, from time to time,
may reasonably request, bearing upon or related to the
Collateral or any Borrower's or any Subsidiary's financial
condition or results of operations.
Concurrently with the delivery of the financial
statements described in clause (i) of this subsection 8.1.3,
Borrowers shall forward to Agent and Tranche B Agent a copy of the
accountants' letter to any Borrowers' management that is prepared
in connection with such financial statements. Concurrently with the
delivery of the financial statements described in paragraph (i) and
(ii) of this subsection 8.1.3, Borrowers shall cause to be prepared
and furnished to Agent and Tranche B Agent a Compliance Certificate
in the form of Exhibit 8.1.3 hereto executed by the chief financial
-------------
officer of Falcon (a "Compliance Certificate").
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8.1.4. Borrowing Base Certificates. On or before the
---------------------------
second Business Day of each week from and after the date hereof,
Borrowers shall deliver to Agent and Tranche B Agent, in form
acceptable to Agent, a Borrowing Base Certificate as of the last
day of the immediately preceding week, accompanied by weekly
backlog reports and such supporting materials as Agent shall
reasonably request from time to time. If Borrowers deem it
advisable, or if Agent shall request, Borrowers shall execute and
deliver to Agent Borrowing Base Certificates more frequently than
weekly.
8.1.5. Landlord, Processor and Storage Agreements. Provide
------------------------------------------
Agent with copies of all agreements between any Borrower or any
Domestic Subsidiary and any landlord, processor, distributor,
warehouseman or consignee which owns any premises at which any
Collateral may, from time to time, be kept. In respect of any lease
or warehousing arrangement existing on or entered into by a
Borrower or a Domestic Subsidiary after the Closing Date (other
than leases for showrooms or sales offices), Borrowers shall
provide Agent with landlord waivers or bailee letters with respect
to such leased premises. Such landlord waivers or bailee letters
shall be in a form supplied by Agent to Borrowers with such
reasonable revisions as are customarily accepted by Agent or by
similar financial institutions in similar financing transactions.
8.1.6. Projections. No later than the last day of each
-----------
fiscal year of Borrowers, deliver to Agent and Tranche B Agent
Projections of Borrowers and the Subsidiaries for the forthcoming
fiscal year, month by month, which shall be prepared on a
Consolidated basis and consistent with Borrowers' year-end
financial statements, and which shall include, without limitation,
a balance sheet, income statement and statement of cash flow.
8.1.7. Domestic Subsidiaries. Cause each Domestic
---------------------
Subsidiary, whether now or hereafter in existence, promptly upon
Agent's request therefor, and, in any event, contemporaneously with
the formation or acquisition of any such Domestic Subsidiary formed
or acquired after the date hereof, to execute and deliver to Agent
a Guaranty Agreement and a security agreement pursuant to which
such Domestic Subsidiary guaranties the payment of all Obligations
and grants to Agent a first priority Lien (subject only to
Permitted Liens) on all of its Properties of the types described in
Section 5. Additionally, the applicable Person shall execute and
deliver to Agent a Pledge Agreement pursuant to which such Person
grants to Agent a first priority Lien (subject only to Permitted
Liens) with respect to all of the issued and outstanding Securities
of each such Domestic Subsidiary owned by such Person.
8.1.8. Deposit and Brokerage Accounts. For each deposit
------------------------------
account or brokerage account that any Borrower at any time opens or
maintains, such Borrower shall, at Agent's request and option,
contemporaneously with the opening of such account, pursuant to an
agreement in form and substance reasonably satisfactory to Agent,
cause the depository bank or securities intermediary, as
applicable, to agree to comply at any time with instructions from
Agent to such depository bank or securities intermediary, as
applicable, directing the disposition of funds from time to time
-50-
credited to such deposit or brokerage account, without further
consent of such Borrower.
8.1.9. Updated Information. Promptly notify Agent in
-------------------
writing of (a) each state or jurisdiction in which any Borrower or
any Subsidiary qualifies to do business after the date hereof, (b)
the use by any Borrower or any Subsidiary of a legal, fictitious or
trade name not listed on Exhibit 7.1.5 hereto, (c) any change after
-------------
the date hereof in the tax identification number of any Borrower or
any Domestic Subsidiary, (d) the ownership by any Borrower or any
Subsidiary of any patent, trademark, service xxxx, tradename,
copyright, license or other similar rights not listed on Exhibit
-------
7.1.16, (e) the assertion by any Person of a claim against any
------
Borrower or any Subsidiary that its use of its Intellectual
Property or the conduct of its business does or may infringe upon
the Intellectual Property rights of any third party, (f) any change
after the date hereof in the list of capitalized and operating
personal property leases and real property leases of any Borrower
or any Subsidiary listed on Exhibit 7.1.22 hereto, (g) any change
--------------
after the date hereof in the list of Plans listed on Exhibit 7.1.23
--------------
hereto and (h) any change after the date hereof in the
representation contained in subsection 7.1.28; provided, that
--------
Borrowers shall only be required to provide the foregoing
information regarding the Foreign Subsidiaries at such time as such
information becomes known to a Responsible Officer.
8.1.10. Amendment to Czech Stock Pledge. Within thirty
-------------------------------
(30) days of the Closing Date, execute, deliver and register with
the Czech Securities Centre an amendment, in form and substance
reasonably satisfactory to Agent, to the pledge of the Securities
of Falcon Mimon A/S.
8.1.11. Amendments to Mexican and Danish Stock Pledges.
----------------------------------------------
Within ten (10) days of the Closing Date, execute and deliver
amendments, in form and substance reasonably satisfactory to Agent,
to the pledges of the Securities of Xxxx Europe A/S and Falcon xx
Xxxxxx, X.X. de C.V.
8.1.12. Madison Furniture Industries, Inc. Within ten (10)
----------------------------------
days of the Closing Date, deliver (a) evidence reasonably
satisfactory to Agent that Madison Furniture Industries, Inc.
("Madison") is validly existing and in good standing under the laws
of the State of Mississippi, (b) a ratification executed by Madison
of the Loan Documents to which Madison is a party in form and
substance reasonably satisfactory to Agent, and (c) a legal opinion
in form and substance reasonably satisfactory to Agent as to the
enforceability of the Loan Documents against Madison.
8.2. Negative Covenants.
------------------
During the Term, and thereafter for so long as there are
any Obligations outstanding, Borrowers jointly and severally covenant that
they shall not:
8.2.1. Mergers; Consolidations; Acquisitions; Structural
-------------------------------------------------
Changes. Merge or consolidate, or permit any Subsidiary to merge or
-------
consolidate, with any Person; nor,
-51-
without giving Agent at least ten (10) days prior written notice
thereof, change its or any Subsidiary's state of incorporation or
organization, Type of Organization or Organizational I.D. Number;
nor, without giving Agent at least ten (10) days prior written
notice thereof, change its or any Subsidiary's legal name; nor
acquire, nor permit any Subsidiary to acquire, all or any
substantial part of the Properties of any Person, except for:
(i) mergers or consolidations of any Borrower
(other than Falcon) or any Domestic Subsidiary of a
Borrower into a Borrower or a wholly-owned Domestic
Subsidiary of a Borrower;
(ii) mergers or consolidations of any Foreign
Subsidiary of a Borrower into any other Foreign Subsidiary
of a Borrower;
(iii) dissolution or liquidation of any Foreign
Subsidiary or Domestic Subsidiary; and
(iv) acquisitions of assets consisting of fixed
assets or real property that constitute Capital
Expenditures permitted under subsection 8.2.8.
8.2.2. Loans. Make, or permit any Subsidiary to make, any
-----
loans or other advances of money to any Person, including any
Foreign Subsidiary, except:
(i) salary, travel advances, advances against
commissions and other similar advances to employees in the
ordinary course of business;
(ii) extensions of trade credit in the ordinary
course of business;
(iii) deposits with financial institutions
permitted under this Agreement;
(iv) prepaid expenses and deposits with vendors
made in the ordinary course of business;
(v) loans by a Borrower or a Domestic Subsidiary
of a Borrower to a Borrower or to a Domestic Subsidiary of
a Borrower that is a Guarantor;
(vi) so long as no Event of Default is then in
existence, loans after the Original Closing Date by a
Borrower or a Domestic Subsidiary of a Borrower to a
Foreign Subsidiary of a Borrower the Securities of which
are subject to a Pledge Agreement, in an aggregate amount
at any time outstanding for all such Foreign Subsidiaries,
together with all equity investments made by a Borrower or
a Domestic Subsidiary of a Borrower after the Original
Closing Date in such Foreign Subsidiaries, not in excess
of $1,000,000 in any fiscal year or $2,500,000 during the
period since the Original Closing Date; and
-52-
(vii) loans by a Foreign Subsidiary of a Borrower
to another Foreign Subsidiary of a Borrower the Securities
of which are subject to a Pledge Agreement.
8.2.3. Total Indebtedness. Create, incur, assume, or
------------------
suffer to exist, or permit any Subsidiary to create, incur or
suffer to exist, any Indebtedness, except:
(i) Obligations owing to Agent or any Lender
under this Agreement or any of the other Loan Documents;
(ii) Indebtedness existing on the date of this
Agreement and listed on Exhibit 8.2.3 and any renewals,
-------------
extensions, refinancings or replacements thereof, but only
if (a) the principal amount of such new Indebtedness does
not exceed the principal amount of the existing
Indebtedness at the time of such transaction, and (b) such
new Indebtedness does not contain terms materially more
restrictive to Borrowers and their Subsidiaries than those
contained in the existing Indebtedness;
(iii) Subordinated Debt, including the
Convertible Subordinated Debt;
(iv) Permitted Purchase Money Indebtedness;
(v) Permitted Capital Lease Obligations;
(vi) contingent liabilities arising out of
endorsements of checks and other negotiable instruments
for deposit or collection in the ordinary course of
business;
(vii) guaranties of any Indebtedness permitted
under this subsection 8.2.3;
(viii) Indebtedness in respect of intercompany
loans permitted under subsections 8.2.2(v), (vi) and
(vii);
(ix) obligations to pay Rentals permitted by
subsection 8.2.19;
(x) to the extent not included above, trade
payables, accruals and accounts payable in the ordinary
course of business (in each case to the extent not overdue
or being contested in good faith by appropriate
proceedings being diligently conducted) not for Money
Borrowed;
(xi) Indebtedness (other than trade payables,
accruals and accounts payable permitted under clause (x))
of any Foreign Subsidiary in an aggregate amount for all
of the Foreign Subsidiaries not to exceed $7,500,000 at
any time outstanding; and
-53-
(xii) Indebtedness not included in paragraphs (i)
through (xi) above, which does not exceed at any time, in
the aggregate, the sum of $500,000.
8.2.4. Affiliate Transactions. Enter into, or be a party
----------------------
to, or permit any Subsidiary to enter into or be a party to, any
transaction with any Affiliate of any Borrower or any holder of
more than 5% of the Securities of any Borrower or any Subsidiary
(other than, subject to the limitations contained in subsections
8.2.2 and 8.2.12, any Borrower or any Subsidiary), including
without limitation any management, consulting or similar fees,
except (i) in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or such Subsidiary's business and
upon fair and reasonable terms which are fully disclosed to Agent
and are no less favorable to such Borrower or such Subsidiary than
would be obtained in a comparable arms-length transaction with a
Person not an Affiliate or Security holder of such Borrower, (ii)
other Affiliate transactions that are specifically permitted under
other provisions of this Agreement, (iii) the sale of Inventory by
a Borrower or a Borrower's Subsidiary to a Borrower or a Borrower's
Subsidiary, in a manner, at pricing and with payment terms no more
disadvantageous to the applicable Borrower than those currently in
effect, and (iv) as described on Exhibit 8.2.4 hereto.
-------------
8.2.5. Limitation on Liens. Create or suffer to exist, or
-------------------
permit any Subsidiary to create or suffer to exist, any Lien upon
any of its Property, income or profits, whether now owned or
hereafter acquired, except:
(i) Liens at any time granted in favor of Agent
for the benefit of Lenders, pursuant to the priorities
provided for herein;
(ii) Liens for taxes, assessments or governmental
charges (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due, or being contested in
the manner described in subsection 7.1.14 hereto, but only
if in Agent's reasonable judgment such Lien would not
reasonably be expected to adversely effect Agent's rights
or the priority of Agent's lien on any Collateral;
(iii) Liens arising in the ordinary course of the
business of such Borrower or any Subsidiary by operation
of law or regulation (such as statutory and common law
Liens of landlords, carriers, warehousemen, mechanics,
materialmen and suppliers), but only if payment in respect
of any such Lien is not at the time required (or is being
contested in good faith by appropriate proceedings being
diligently conducted, so long as the aggregate amount of
such payments being so contested does not exceed $250,000)
and such Liens do not, in the aggregate, materially
detract from the value of the Property of such Borrower or
any Subsidiary or materially impair the use thereof in the
operation of the business of such Borrower or any
Subsidiary;
(iv) Purchase Money Liens securing Permitted
Purchase Money Indebtedness;
-54-
(v) Liens securing Permitted Capital Lease
Obligations;
(vi) such other Liens as appear on Exhibit 8.2.5
-------------
hereto;
(vii) Liens incurred or deposits made in the
ordinary course of business in connection with (1)
worker's compensation, social security, unemployment
insurance and other like laws or (2) sales contracts,
leases, statutory obligations, work in progress advances,
bids, licenses, surety bonds, performance bonds and other
similar obligations not incurred in connection with the
borrowing of money or the payment of the deferred purchase
price of property;
(viii) reservations, covenants, zoning and other
land use regulations, title exceptions or encumbrances
granted in the ordinary course of business, affecting real
Property owned or leased by a Borrower or a Subsidiary;
provided, that such exceptions do not in the aggregate
--------
materially interfere with the use of such Property in the
ordinary course of such Borrower's or such Subsidiary's
business;
(ix) judgment Liens that do not give rise to an
Event of Default under subsection 10.1.15;
(x) Liens securing Indebtedness of Foreign
Subsidiaries permitted under subsection 8.2.3(xi);
(xi) Any interest of title of a lessor under, and
Liens arising from financing statements (or equivalent
filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this
Agreement;
(xii) Liens of a collection bank arising under
the Uniform Commercial Code (or similar provisions of
applicable law) on items in the course of collection;
(xiii) Liens of sellers of goods to any Borrower
or any Subsidiary arising under Article 2 of the Uniform
Commercial Code or similar provisions of applicable law in
the ordinary course of business, covering only the goods
sold and securing only the unpaid purchase price for such
goods and related expenses;
(xiv) leases, licenses or subleases granted to
others not interfering in any material respect with the
business of any Borrower or any Subsidiary, or adversely
effecting the Collateral;
(xv) normal and customary rights of setoff upon
cash deposits in favor of banks and other depository
institutions (subject to limitations on such rights
contained in any applicable control agreement or Dominion
Account agreement); and
-55-
(xvi) such other Liens as Required Lenders may
hereafter approve in writing.
8.2.6. Payments and Amendments of Certain Debt.
---------------------------------------
(i) make or permit any Subsidiary to make any
payment of any part or all of the Subordinated Note Debt
or take any other action or omit to take any other action
in respect of the Subordinated Note Debt, except in
accordance with the subordination provisions thereof;
provided, that at no time shall any Borrower or any
--------
Subsidiary (a) make any interest payment in respect of the
Subordinated Notes, except on any "Interest Payment Date"
(as defined in the Subordinated Note Indenture, as in
existence on the Closing Date), and then only to the
extent permitted under Articles 8 and 11 of the
Subordinated Note Indenture (as in existence on the
Closing Date), (b) make any redemption of the Subordinated
Notes under Article 3 of the Subordinated Note Indenture
(as in existence on the Closing Date), (c) permit to exist
conditions that would require any Borrower or any
Subsidiary to make any "Change of Control Offer" (as
defined in the Subordinated Note Indenture, as in
existence on the Closing Date) pursuant to Section 4.14 of
the Subordinated Note Indenture (as in existence on the
Closing Date) or (d) permit to exist conditions that would
require any Borrower or any Subsidiary to make any "Net
Proceeds Offer" (as defined in the Senior Note Indenture
as in existence on the Closing Date), pursuant to Section
4.05 of the Senior Note Indenture (as in existence on the
Closing Date);
(ii) make or permit any Subsidiary to make any
payment of any part or all of the Convertible Subordinated
Debt or take any other action or omit to take any action
in respect of the Convertible Subordinated Debt, except in
accordance with the subordination terms thereof; provided,
--------
that at no time shall any Borrower or any Subsidiary (a)
make any interest payment in respect of the Convertible
Subordinated Debentures, except on or after any "Interest
Payment Date" (as defined in the Convertible Subordinated
Debentures, as in existence on December 15, 2003), and
then only to the extent permitted under the subordination
terms of the Convertible Subordinated Debentures (as in
existence on December 15, 2003), or (b) make any
redemption of the Convertible Subordinated Debentures,
except by means of conversion to common stock Securities
of Falcon, or consent to any assignment, pledge, disposal
or other transfer of all or any portion of the Convertible
Subordinated Debt without the prior written consent of
Agent and Tranche B Agent except for assignments and
transfers to family members, trusts or other entities for
estate planning purposes;
(iii) make or permit any Subsidiary to make any
payment of any part or all of the Subordinated Debt (other
than Subordinated Note Debt and the Convertible
Subordinated Debt) or take any other action or omit to
take any other action in respect of the Subordinated Debt
(other than Subordinated Note
-56-
Debt and the Convertible Subordinated Debt), except in
accordance with the subordination provisions thereof; or
(iv) amend or modify any agreement, instrument or
document evidencing or relating to any Subordinated Debt,
except for the issuance of supplemental indentures from
time to time in order to add a Subsidiary as a
Subordinated Note Guarantor.
8.2.7. Distributions. Declare or make, or permit any
-------------
Subsidiary to declare or make, any Distributions, except for:
(i) Distributions by Falcon in an aggregate
amount of up to $1,500,000 in any fiscal year, so long as
(a) no Event of Default is in existence at the time of any
such Distribution or would be caused thereby, (b)
immediately after giving effect to such Distribution,
Availability is at least $5,000,000, (c) the Fixed Charge
Coverage Ratio determined on the last day of the most
recently completed fiscal month for the 12 fiscal month
period ending on such date, but including the pro forma
effect of such Distribution, is at least 1.25:1.0 and (d)
EBITDA for the 12 fiscal month period ending on the last
day of the most recently completed fiscal month is at
least $34,000,000;
(ii) Distributions by any Borrower (other than
Falcon) or any Subsidiary of a Borrower;
(iii) Distributions paid solely in Securities of
a Borrower or any Subsidiary; and
(iv) Distributions by Epic to repurchase, and/or
Distributions by Falcon to purchase, Epic's Securities
from current employees of Epic to the extent required by
the Stockholders Agreement of Epic dated June 7, 2000, as
in existence on the date hereof, with the proceeds of (a)
Revolving Credit Loans advanced hereunder, but only to the
extent that (1) no Event of Default is in existence at the
time of any such Distribution or would be caused thereby,
(2) immediately after giving effect to such Distribution,
Availability is at least $5,000,000 and (3) in the case of
any Distribution in excess of $7,000,000, EBITDA for the
twelve (12) fiscal month period ending on the last day of
the most recently completed fiscal month is at least
$34,000,000, (b) new equity permitted by this Agreement
and contributed to a Borrower or a Domestic Subsidiary or
(c) new Indebtedness for Money Borrowed permitted by this
Agreement and obtained by a Borrower or a Domestic
Subsidiary.
8.2.8. Capital Expenditures. Make Capital Expenditures
--------------------
(including, without limitation, by way of capitalized leases)
which, in the aggregate, as to all Borrowers and all of the
Subsidiaries, exceed (i) $6,400,000 during the 2004 fiscal year,
(ii) $6,400,000 during the 2005 fiscal year, (iii) $8,000,000
during the 2006 fiscal year or (iv) $8,000,000 during the 2007
fiscal year, except that 50% of the unused
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portion of the Capital Expenditure allowance for any fiscal year
may be carried over to the immediately succeeding fiscal year only,
to be used in such succeeding fiscal year after all of the Capital
Expenditure allowance for that year has been used.
8.2.9. Disposition of Assets. Sell, lease or otherwise
---------------------
dispose of any of, or permit any Subsidiary to sell, lease or
otherwise dispose of any of, its Properties, including any
disposition of Property as part of a sale and leaseback
transaction, to or in favor of any Person, except for:
(i) sales of Inventory in the ordinary course of
business;
(ii) transfers of Property by a Borrower or a
Subsidiary to a Borrower or a Domestic Subsidiary that is
also a Guarantor;
(iii) transfers of Property by a Foreign
Subsidiary to another Foreign Subsidiary whose Securities
are subject to a Pledge Agreement;
(iv) dispositions of investments described in
paragraphs (v), (vi), (vii) and (viii) of the definition
of the term "Restricted Investments";
(v) sales, leases or other dispositions of
Equipment or other fixed assets with a fair market value
of up to $750,000 in the aggregate in any one calendar
year, that are substantially worn, damaged or obsolete and
that are replaced with Equipment or other fixed assets of
like kind, function and value; provided, that (i) until so
--------
replaced, the proceeds of each such disposition shall be
applied against the Revolving Credit Loans (but shall not
permanently reduce the Revolving Loan Commitments), (ii) a
Rebuild Reserve shall be established in the amount
thereof, until such time as such amounts are to be used by
Borrowers to replace the Property sold, (iii) the
replacement Property shall be acquired within one hundred
eighty (180) days after the disposition of the Property to
be replaced and (iv) the replacement Property shall be
free and clear of Liens other than Permitted Liens that
are not Purchase Money Liens; and provided further, that
----------------
any such amount that it is not timely used to purchase
replacement Property as provided herein shall be applied
to the Obligations as provided in the second sentence of
subsection 3.3.1;
(vi) sales, leases and other dispositions of
Property with a fair market value of up to $750,000 in the
aggregate in any one calendar year, so long as (a) no
Default or Event of Default is then in existence or would
result from such transaction and (b) the proceeds thereof
are applied to the Obligations in accordance with
subsection 3.3.1;
(vii) sales, leases and other dispositions of
Property with a fair market value of greater than $750,000
in the aggregate in any one calendar year, but less than
or equal to $3,000,000 in the aggregate in any one
calendar year, so long as (a) no Default or Event of
Default is then in existence or
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would result from such transaction, (b) the proceeds
thereof are applied to the Obligations in accordance with
subsection 3.3.1 and (c) each of the Agent and Tranche B
Agent has consented in writing to such transaction; and
(viii) sales, leases and other dispositions of
Property with a fair market value in excess of $3,000,000
in the aggregate in any one calendar year, so long as (a)
no Default or Event of Default is then in existence or
would result from such transaction, (b) the proceeds
thereof are applied to the Obligations in accordance with
subsection 3.3.1 and (c) each Lender has consented in
writing to such transaction.
8.2.10. Securities of Subsidiaries. Permit any of its
--------------------------
Domestic Subsidiaries to issue any additional Securities except to
a Borrower or a Domestic Subsidiary and except for director's
qualifying Securities; or permit any of its Foreign Subsidiaries to
issue any additional Securities except to a Borrower or a
Subsidiary and except for director's qualifying Securities.
8.2.11. Xxxx-and-Hold Sales, Etc. Make, or permit any
-------------------------
Subsidiary to make, a sale to any customer on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, repurchase or
return or consignment basis, except for consignment sales of
Inventory that does not constitute Eligible Inventory with an
aggregate value not in excess of $250,000 at any time outstanding.
8.2.12. Restricted Investment. Make or have, or permit any
---------------------
Subsidiary of such Borrower to make or have, any Restricted
Investment.
8.2.13. Subsidiaries and Joint Ventures. Create, acquire
-------------------------------
or otherwise suffer to exist, or permit any Subsidiary of such
Borrower to create, acquire or otherwise suffer to exist, any
Subsidiary or joint venture arrangement not in existence as of the
date hereof.
8.2.14. Tax Consolidation. File or consent to the filing
-----------------
of any consolidated income tax return with any Person other than
the other Borrowers and the Subsidiaries of each Borrower.
8.2.15. Organizational Documents. Agree to, or suffer to
------------------------
occur, any amendment, supplement or addition to its or any
Subsidiary's charter, articles or certificate of incorporation,
certificate of formation, limited partnership agreement, bylaws,
limited liability agreement, operating agreement or other
organizational documents (as the case may be), that would
reasonably be expected to have a Material Adverse Effect.
8.2.16. Fiscal Year End. Change, or permit any Subsidiary
---------------
to change, its fiscal year end.
8.2.17. Negative Pledges. After the date hereof, enter
----------------
into any agreement (other than limitations on Foreign Subsidiaries
contained in any agreement or
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agreements evidencing Indebtedness of Foreign Subsidiaries
permitted under subsection 8.2.3(xi)), limiting the ability of such
Borrower or any Subsidiary to (i) voluntarily create Liens upon any
of its Property (other than limitations on junior Liens on Property
subject to Liens permitted by subsections 8.2.5(iv) and (v)); (ii)
pay dividends or make any other Distributions on its Securities;
(iii) make loans or advances to any Borrower or any Subsidiary; or
(iv) transfer any of its Property to any Borrower or any
Subsidiary.
8.2.18. Covenants re: Subordinated Note Indenture. Take
-----------------------------------------
any of the following actions, or permit any Subsidiary to take any
of the following actions: (i) designate any Indebtedness (other
than the Obligations) as Designated Senior Debt, (ii) enter into
any Credit Facility (other than the facility evidenced by this
Agreement), (iii) permit any Subsidiary to be newly designated or
redesignated as a Restricted Subsidiary or an Unrestricted
Subsidiary under the terms of the Subordinated Note Indenture
without having provided at least ten (10) days prior written notice
thereof to Agent or (iv) permit any Domestic Subsidiary to not be a
Subordinated Debt Guarantor for purposes of the Subordinated Note
Debt.
8.2.19. Leases. Become, or permit any Subsidiary to
------
become, a lessee under any operating lease (other than a lease
under which such Borrower or any Subsidiary is lessor) of Property
if the aggregate Rentals payable during any current or future
period of twelve (12) consecutive months under the lease in
question and all other leases under which Borrowers or any
Subsidiary is then lessee would exceed $4,500,000. The term
"Rentals" means, as of the date of determination, all payments
which the lessee is required to make by the terms of any lease.
8.3. Specific Financial Covenants.
----------------------------
During the Term, and thereafter for so long as there are
any Obligations outstanding, Borrowers covenant jointly and severally that,
unless otherwise consented to by Required Lenders, in writing, they shall
comply with all of the financial covenants set forth in Exhibit 8.3 hereto.
-----------
If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in this Agreement, and either the
Borrowers or the Required Lenders shall so request, Agent, the Lenders and
the Borrowers shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Borrowers and the Required Lenders);
provided, that until so amended, (i) such ratio or requirement shall
--------
continue to be computed in accordance with GAAP prior to such change therein
and (ii) the Borrowers shall provide to the Agent and the Lenders financial
statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or
any of the other Loan Documents, and without affecting in any manner the
rights of Agent or any Lender under the
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other sections of this Agreement, no Lender shall be required to make any
Loan, nor shall Agent be required to or issue or procure any Letter of
Credit or LC Guaranty unless and until each of the following conditions has
been and continues to be satisfied:
9.1. Documentation.
-------------
Agent shall have received, in form and substance
satisfactory to Agent and Tranche B Agent and its counsel, a duly executed
copy of this Agreement and the other Loan Documents, together with such
additional documents, instruments, opinions and certificates as Agent and
Tranche B Agent, each Lender and their counsel shall reasonably require in
connection therewith from time to time.
9.2. No Default.
----------
No Default or Event of Default shall exist.
9.3. Other Conditions.
----------------
Each of the conditions precedent set forth in the Loan
Documents shall have been satisfied.
9.4. Availability.
------------
Agent shall have determined that immediately after Lenders
have made the initial Loans and after Agent has issued or procured the
initial Letters of Credit and LC Guaranties contemplated hereby, and
Borrowers have paid (or, if accrued, treated as paid), all closing costs
incurred in connection with the transactions contemplated hereby,
Availability shall not be less than $5,000,000.
9.5. No Litigation.
-------------
No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the consummation of the transactions
contemplated hereby.
9.6. Term B Fees.
-----------
Borrowers shall have paid the closing fee provided for in
Section 4 of the commitment letter dated December 31, 2003 addressed to
Falcon from OCM.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. Events of Default.
-----------------
The occurrence of one or more of the following events
shall constitute an "Event of Default":
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10.1.1. Payment of Obligations. Borrowers shall fail to
----------------------
pay any of the Obligations hereunder or under any Note constituting
principal on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise); or Borrowers shall fail
to pay any of the other Obligations hereunder or under any Note
within three (3) Business Days after the due date thereof (whether
due at stated maturity, on demand, upon acceleration or otherwise).
10.1.2. Misrepresentations. Any representation, warranty
------------------
or other statement made or furnished to Agent or any Lender by or
on behalf of any Borrower, any Subsidiary or any Guarantor in this
Agreement, any of the other Loan Documents or any instrument,
certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any
material respect when made, furnished or reaffirmed pursuant to
Section 7.2 hereof.
10.1.3. Breach of Specific Covenants. Any Borrower shall
----------------------------
fail or neglect to perform, keep or observe any covenant contained
in Section or subsection 5, 6, 8.1 (except 8.1.3 and 8.1.6), 8.2 or
8.3 hereof on the date that such Borrower is required to perform,
keep or observe such covenant or shall fail or neglect to perform,
keep or observe any covenant contained in Section 8.1.3 or 8.1.6
hereof within five (5) days following the date on which Borrowers
are required to perform, keep or observe such covenant.
10.1.4. Breach of Other Covenants. Any Borrower shall fail
-------------------------
or neglect to perform, keep or observe any covenant contained in
this Agreement (other than a covenant which is dealt with
specifically elsewhere in Section 10.1 hereof) and the breach of
such other covenant is not cured to Agent's satisfaction within
thirty (30) days after the sooner to occur of Borrowers' receipt of
notice of such breach from Agent or the date on which such failure
or neglect first becomes known to any officer of any Borrower.
10.1.5. Default Under Security Documents or Other
-----------------------------------------
Agreements. Any event of default shall occur under, or any
----------
Borrower, any Subsidiary or any Guarantor shall default in the
performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents, or the Other
Agreements and such default shall continue beyond any applicable
grace or cure period.
10.1.6. Other Defaults. (a) There shall occur any default
--------------
or event of default on the part of any Borrower, any Subsidiary or
any Guarantor under any agreement, document or instrument to which
such Borrower, such Subsidiary or such Guarantor is a party or by
which such Borrower, such Subsidiary or such Guarantor or any of
its Property is bound, evidencing or relating to any Indebtedness
for Money Borrowed (other than the Obligations) or any Indebtedness
under any operating lease, in any case with an outstanding
principal balance or total remaining amount of payments, as
applicable, in excess of $500,000, if the payment or maturity of
such Indebtedness for
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Money Borrowed or operating lease, as applicable, is or could be
accelerated in consequence of such event of default or demand for
payment of such Indebtedness for Money Borrowed or operating lease,
as applicable, is made or could be made in accordance with the
terms thereof, unless and until such event is cured or waived, (b)
any default or event of default (other than the event of default
under the Subordinated Note Indenture described in Exhibit 7.1.21
--------------
hereto) occurs under the Subordinated Debt Documents, unless and
until such event is cured or waived, or (c) the Trustee under the
Subordinated Note Indenture or any holder of Subordinated Notes
shall have taken any enforcement action in respect of the event of
default under the Subordinated Note Indenture described in Exhibit
-------
7.1.21 hereto.
------
10.1.7. Uninsured Losses. Any material loss, theft, damage
----------------
or destruction of any portion of the Collateral having a fair
market value of $500,000, in the aggregate, if not fully covered
(subject to such deductibles and self-insurance retentions as Agent
shall have permitted) by insurance.
10.1.8. Insolvency and Related Proceedings. Any Borrower,
----------------------------------
any Subsidiary or any Guarantor shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed
by or against any Borrower, any Subsidiary or any Guarantor under
applicable bankruptcy laws (if an involuntary proceeding against
any Borrower, any Subsidiary or any Guarantor the continuation of
such proceeding for more than sixty (60) days), or any Borrower,
any Subsidiary or any Guarantor shall make any offer of settlement,
extension or composition to their respective unsecured creditors
generally.
10.1.9. Business Disruption; Condemnation. There shall
---------------------------------
occur a cessation of a substantial part of the business of any
Borrower, any Subsidiary or any Guarantor for a period which
materially adversely affects such Borrower's, such Subsidiary's or
such Guarantor's capacity to continue its business on a profitable
basis; or any Borrower, any Subsidiary or any Guarantor shall
suffer the loss or revocation of any material license or permit now
held or hereafter acquired by such Borrower, such Subsidiary or
such Guarantor which is necessary to the continued or lawful
operation of its business; or any Borrower, any Subsidiary or any
Guarantor shall be enjoined, restrained or in any way prevented by
court, governmental or administrative order from conducting all or
any material part of its business affairs; or any material lease or
agreement pursuant to which any Borrower, any Subsidiary or any
Guarantor leases, uses or occupies any Property shall be canceled
or terminated prior to the expiration of its stated term, except
any such lease or agreement the cancellation or termination of
which could not reasonably be expected to have a Material Adverse
Effect; or any material portion of the Collateral shall be taken
through condemnation or the value of such Property shall be
impaired through condemnation.
10.1.10. Change of Ownership. (a) any Person or affiliated
-------------------
group of Persons other than Xxxxxxxx X. Xxxxxx, the spouse, lineal
descendants and spouses of lineal descendants of Xxxxxxxx X.
Xxxxxx, the estates of one or more of the foregoing individuals and
trusts established solely for the benefit of one or more of the
foregoing individuals, shall own and control, beneficially and of
record either (i) in
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excess of 51% of the issued and outstanding Voting Stock of Falcon
or (ii) a sufficient percentage of the issued and outstanding
Voting Stock of Falcon to control the board of directors of Falcon,
(b) Falcon shall cease to own and control, beneficially and of
record (directly or indirectly), 100% of the issued and outstanding
Securities and Voting Stock of each of the other Borrowers and each
of the Domestic Subsidiaries other than Epic, (c) Falcon shall
cease to own and control, beneficially and of record (directly or
indirectly), at least 80% of the issued and outstanding Securities
and Voting Stock of Epic, (d) Falcon shall cease to own and
control, beneficially and of record (directly or indirectly), the
same percentage of the issued and outstanding Securities and Voting
Stock of each of the Foreign Subsidiaries that Falcon owns
(directly or indirectly) on the Closing Date, or (e) a "Change of
Control" (as defined in the Subordinated Note Indenture, as in
existence on the Closing Date) shall occur.
10.1.11. ERISA. A Reportable Event shall occur which, in
-----
Agent's reasonable determination, constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan
or for the appointment by the appropriate United States district
court of a trustee for any Plan, or if any Plan shall be terminated
or any such trustee shall be requested or appointed, or any
Borrower, any Subsidiary or any Guarantor is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to
a Multiemployer Plan resulting from such Borrower's, such
Subsidiary's or such Guarantor's complete or partial withdrawal
from such Plan and, in each case, any such event could reasonably
be expected to have a Material Adverse Effect.
10.1.12. Challenge to Agreement. Any Borrower, any
----------------------
Subsidiary or any Guarantor, or any Affiliate of any of them, shall
challenge or contest in any action, suit or proceeding the validity
or enforceability of this Agreement or any of the other Loan
Documents, the legality or enforceability of any of the Obligations
or the perfection or priority of any Lien granted to Agent.
10.1.13. Repudiation of or Default Under Guaranty
----------------------------------------
Agreement. Any Guarantor shall revoke or attempt to revoke the
---------
Guaranty Agreement signed by such Guarantor, or shall repudiate
such Guarantor's liability thereunder or shall be in default under
the terms thereof.
10.1.14. Criminal Forfeiture. Any Borrower, any Subsidiary
-------------------
or any Guarantor shall be criminally indicted or convicted under
any law that could lead to a forfeiture of any material Property of
such Borrower, such Subsidiary or such Guarantor.
10.1.15. Judgments. Any money judgments, writ of
---------
attachment or similar processes (collectively, "Judgments") are
issued or rendered against any Borrower, any Subsidiary or any
Guarantor, or any of their respective Property (i) in the case of
money judgments, in an amount of $100,000 or more for any single
judgment, attachment or process or $250,000 or more for all such
judgments, attachments or
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processes in the aggregate, in each case in excess of any
applicable insurance with respect to which the insurer has admitted
liability, and (ii) in the case of non-monetary Judgments, such
Judgment or Judgments (in the aggregate) could reasonably be
expected to have a Material Adverse Effect, in each case which
Judgment is not stayed, released or discharged within thirty (30)
days.
10.1.16. Key Officer. If either Xxxxxxxx X. Xxxxxx or
-----------
Xxxxx X. Xxxxxx shall cease to function in his current capacity as
an executive officer of Falcon and shall not be replaced with a
Person or Persons reasonably satisfactory to Agent and Tranche B
Agent within one hundred twenty (120) days thereafter.
10.2. Acceleration of the Obligations.
-------------------------------
(a) Upon or at any time after the occurrence and
during the continuance of an Event of Default, (i) the Revolving
Loan Commitments shall, at the option of Agent or Majority Lenders
be terminated and/or (ii) Agent or Majority Lenders may, and,
subject to Section 10.2(c), at the request of Majority Term Loan B
Lenders, Agent shall, terminate this Agreement and/or declare all
or any portion of the Obligations at once due and payable without
presentment, demand protest or further notice by Agent or any
Lender, and Borrowers shall forthwith pay to Agent, the full amount
of such Obligations, provided, that upon the occurrence of an Event
--------
of Default specified in subsection 10.1.8 hereof, the Revolving
Loan Commitments shall automatically be terminated and all of the
Obligations shall become automatically due and payable, in each
case without declaration, notice or demand by Agent or any Lender.
(b) Agent shall take such action with respect to
any Default or Event of Default as shall be directed by the
Majority Lenders; provided, that unless and until Agent shall have
--------
received such directions, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and
in the best interests of Agent and Lenders, including any action
(or the failure to act) pursuant to the Loan Documents.
Notwithstanding the foregoing, after the occurrence of one of the
events described in clauses (A), (B) or (C) of Section 10.2(c), or
after the expiration of any applicable Action Standstill Period,
Majority Term Loan B Lenders shall have the right to direct Agent
to (i) terminate this Agreement and/or accelerate all or any
portion of the Obligations as provided in Section 10.2(a), (ii)
commence and pursue a general strategy of liquidating the Property
of Borrowers, (iii) issue a blocking notice with respect to any
Subordinated Debt and (iv) otherwise direct enforcement action, in
each case in the absence of any such direction from Majority
Lenders. Agent shall promptly pursue such actions as directed by
Majority Term Loan B Lenders in good faith and in a commercially
reasonable manner.
(c) Notwithstanding anything herein contained to
the contrary, the Majority Term Loan B Lenders shall not make any
request to exercise rights under Section 10.2(a) or (b), unless (A)
the Revolving Credit and Term Loan A Termination
-65-
Date has occurred, (B) the Revolving Loan Commitments have been
terminated, (C) any of the Obligations have been accelerated
(including, without limitation, by reason of an Event of Default
specified in subsection 10.1.8 in accordance with Section 10.2(a)),
(D) a Level 1 Event of Default is in existence and shall have
continued for a period of thirty (30) or more days after an Action
Notice has been received by Agent, without being cured by Borrowers
(or Revolving Credit and Term Loan A Lenders, directly or
indirectly through Borrowers) or (E) a Xxxxx 0 Event of Default is
in existence and shall have continued for a period of ninety (90)
or more days after an Action Notice has been received by Agent
without being cured by Borrowers (or Revolving Credit and Term Loan
A Lenders directly or indirectly through Borrowers).
10.3. Other Remedies.
--------------
Upon the occurrence and during the continuance of an Event
of Default, Agent shall have and may exercise from time to time the
following other rights and remedies:
10.3.1. All of the rights and remedies of a secured party
under the UCC or under other applicable law, and all other legal
and equitable rights to which Agent or Lenders may be entitled, all
of which rights and remedies shall be cumulative and shall be in
addition to any other rights or remedies contained in this
Agreement or any of the other Loan Documents, and none of which
shall be exclusive.
10.3.2. The right to take immediate possession of the
Collateral, and to (i) require each Borrower and each of its
Subsidiaries to assemble the Collateral, at Borrower's joint and
several expense, and make it available to Agent at a place
designated by Agent which is reasonably convenient to both parties,
and (ii) enter any premises where any of the Collateral shall be
located and to keep and store the Collateral on said premises until
sold (and if said premises be the Property of any Borrower or any
Subsidiary, Borrower agrees not to charge, or permit any Subsidiary
to charge, Agent for storage thereof).
10.3.3. Subject to subsection 11.13, the right to sell or
otherwise dispose of all or any Collateral in its then condition,
or after any further manufacturing or processing thereof, at public
or private sale or sales, with such notice as may be required by
law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Agent may, at Agent's
option, disclaim any and all warranties regarding the Collateral in
connection with any such sale. Each Borrower agrees that ten (10)
days' written notice to such Borrower or any of its Restricted
Subsidiaries of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall
be at such locations as Agent may designate in said notice. Agent
shall have the right to conduct such sales on any Borrower's or any
of its Subsidiaries' premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with
applicable law. Agent shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Agent, on behalf of Lenders,
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may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of
such purchase price, may set off the amount of such price against
the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for
collection, as provided in Section 3.11. If any deficiency shall
arise, each Borrower and each Guarantor shall remain jointly and
severally liable to Agent and Lenders therefor.
10.3.4. To the maximum extent such Borrower has the lawful
right to do so, Agent is hereby granted a license or other right to
use, without charge, (a) each Borrower's and each Subsidiary's
labels, patents, copyrights, licenses, rights of use of any name,
trade secrets, tradenames, trademarks and advertising matter, or
any Property of a similar nature, as it pertains to the Collateral,
in completing, advertising for sale and selling any Collateral and
(b) each Borrower's and each Subsidiary's rights under all licenses
and all franchise agreements shall inure to Agent's benefit.
10.3.5. Agent may, at its option, require Borrowers to
deposit with Agent funds equal to 105% of the LC Amount and, if
Borrowers fail to promptly make such deposit, Agent may advance
such amount as a Revolving Credit Loan (whether or not an
Overadvance is created thereby). Each such Revolving Credit Loan
shall be secured by all of the Collateral and shall constitute a
Base Rate Portion. Any such deposit or advance shall be held by
Agent as a reserve to fund future payments on such LC Guaranties
and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of
Credit have been drawn upon or expired, any amount remaining in
such reserve shall be applied against any outstanding Obligations,
or, if all Obligations have been indefeasibly paid in full,
returned to Borrowers.
10.4. Set Off and Sharing of Payments.
-------------------------------
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default, each Lender is hereby authorized by
each Borrower at any time or from time to time, with prior written consent
of Agent and with reasonably prompt subsequent notice to such Borrower (any
prior or contemporaneous notice to such Borrower being hereby expressly
waived) to set off and to appropriate and to apply any and all (i) balances
held by such Lender at any of its offices for the account of such Borrower
or any of its Subsidiaries (regardless of whether such balances are then due
to such Borrower or its Subsidiaries), and (ii) other property at any time
held or owing by such Lender to or for the credit or for the account of such
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations. Each Borrower agrees, to the fullest extent permitted by law,
that any Lender may exercise its right to set off with respect to amounts in
excess of its pro rata share of the Obligations and upon doing so shall
deliver such excess to Agent for the benefit of all Lenders in accordance
with the priorities set forth herein. Any such setoff shall be subject to
the provisions of Section 3.10.
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10.5. Remedies Cumulative; No Waiver.
------------------------------
All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of each Borrower contained
in this Agreement and the other Loan Documents, or in any document referred
to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to Agent or any Lender or
contained in any other agreement between any Lender and such Borrower or
between Agent and such Borrower heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
such Borrower herein contained. The failure or delay of Agent or any Lender
to require strict performance by any Borrower of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements, Liens,
rights, powers, and remedies shall continue in full force and effect until
all Loans and other Obligations owing or to become owing from such Borrower
to Agent and each Lender have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of any
Borrower contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Borrower under this Agreement or any
other Loan Documents shall be deemed to have been suspended or waived by
Lenders, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized
representative of Agent and Majority Lenders, Majority Term Loan B Lenders,
Required Lenders or all Lenders (in any case, as applicable) and directed to
Borrowers.
SECTION 11. THE AGENT; CERTAIN PROVISIONS RELATING TO LENDERS
11.1. Authorization and Action.
------------------------
Each Lender hereby appoints and authorizes Agent to take
such action on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto.
Each Lender hereby acknowledges that Agent shall not have by reason of this
Agreement assumed a fiduciary relationship in respect of any Lender. In
performing its functions and duties under this Agreement, Agent shall act
solely as agent of Lenders and shall not assume, or be deemed to have
assumed, any obligation toward, or relationship of agency or trust with or
for, any Borrower. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including without limitation
enforcement and collection of the Notes), Agent may, but shall not be
required to, exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of Majority
Lenders, whenever such instruction shall be requested by Agent or required
hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders;
provided, that Agent shall be fully justified in failing or refusing to take
--------
any action which exposes Agent to any liability or which is contrary to this
Agreement, the other Loan Documents or applicable law, unless Agent is
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indemnified to its satisfaction by the other Lenders against any and all
liability and expense which it may incur by reason of taking or continuing
to take any such action. If Agent seeks the consent or approval of Majority
Lenders, Majority Term Loan B Lenders, or a greater or lesser number of
Lenders as required in this Agreement, with respect to any action hereunder,
Agent shall send notice thereof to each Lender and shall notify each Lender
at any time that Majority Lenders, Majority Term Loan B Lenders, or such
greater or lesser number of Lenders have instructed Agent to act or refrain
from acting pursuant hereto.
11.2. Agent's Reliance, Etc.
----------------------
Neither Agent, any Affiliate of Agent, nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality
of the foregoing, Agent: (i) may treat each Lender party hereto as the
holder of Obligations until Agent receives written notice of the assignment
or transfer or such lender's portion of the Obligations signed by such
Lender and in form reasonably satisfactory to Agent; (ii) may consult with
legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants
or experts, (iii) makes no warranties or representations to any Lender and
shall not be responsible to any Lender for any recitals, statements,
warranties or representations made in or in connection with this Agreement
or any other Loan Documents; (iv) shall not have any duty beyond Agent's
customary practices in respect of loans in which Agent is the only lender,
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or the other Loan Documents
on the part of any Borrower, to inspect the property (including the books
and records) of any Borrower, to monitor the financial condition of any
Borrower or to ascertain the existence or possible existence or continuation
of any Default or Event of Default; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (vi) shall not be liable to any Lender for any action taken, or
inaction, by Agent upon the instructions of Majority Lenders, Majority Term
Loan B Lenders or a greater or lesser number of Lenders, as required
pursuant to Section 11.1 hereof or refraining to take any action pending
such instructions; (vii) shall not be liable for any apportionment or
distributions of payments made by it in good faith pursuant to Section 3
hereof; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by
telephone, facsimile, telegram, cable or telex) believed in good faith by it
to be genuine and signed or sent by the proper party or parties; and (ix)
may assume that no Event of Default has occurred and is continuing, unless
Agent has actual knowledge of the Event of Default, has received notice from
a Borrower or a Borrower's independent certified public accounts stating the
nature of the Event of Default, or has received notice from a Lender stating
the nature of the Event of Default and that such Lender considers the Event
of Default to have occurred and to be continuing. In the event any
apportionment or distribution
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described in clause (vii) above is determined to have been made in error,
the sole recourse of any Person to whom payment was due but not made shall
be to recover from the recipients of such payments any payment in excess of
the amount to which they are determined to have been entitled.
11.3. Fleet and Affiliates.
--------------------
With respect to its commitment hereunder to make Loans,
Fleet shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though
it were not Agent; and the terms "Lender," "Lenders", "Revolving Credit and
Term Loan A Lenders", "Majority Lenders", "Required Lenders" and, if
applicable, "Majority Term Loan B Lenders", shall, unless otherwise
expressly indicated, include Fleet in its individual capacity as a Lender.
Fleet and its Affiliates may lend money to, and generally engage in any kind
of business with, each Borrower, and any Person who may do business with or
own Securities of each Borrower, in each case, to the extent not in
violation of this Agreement, all as if Fleet were not Agent and without any
duty to account therefor to any other Lender.
11.4. Lender Credit Decision.
----------------------
Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the financial
statements referred to herein and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement. Agent shall not have any duty or responsibility,
either initially or on an ongoing basis, to provide any Lender with any
credit or other similar information regarding any Borrower.
11.5. Indemnification.
---------------
Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers), in accordance with their respective Aggregate
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted
by Agent under this Agreement; provided, that no Lender shall be liable for
--------
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share, as set forth above, of any out-of-pocket expenses
(including attorneys' fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiation, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement and each other
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Loan Document, to the extent that Agent is not reimbursed for such expenses
by Borrowers. The obligations of Lenders under this Section 11.5 shall
survive the payment in full of all Obligations and the termination of this
Agreement. If after payment and distribution of any amount by Agent to
Lenders, any Lender or any other Person, including any Borrower, any
creditor of any Borrower, a liquidator, administrator or trustee in
bankruptcy, recovers from Agent any amount found to have been wrongfully
paid to Agent or disbursed by Agent to Lenders, then Lenders, in accordance
with their respective Aggregate Percentages, shall reimburse Agent for all
such amounts.
11.6. Rights and Remedies to be Exercised by Agent Only.
-------------------------------------------------
Each Lender agrees that, except as set forth in Sections
10.2 and 10.4, no Lender shall have any right individually (i) to realize
upon the security created by this Agreement or any other Loan Document, (ii)
to enforce any provision of this Agreement or any other Loan Document that
does not run directly to the benefit of such Lender, or (iii) directly to
make demand of any Borrower under this Agreement or any other Loan Document.
11.7. Agency Provisions Relating to Collateral.
----------------------------------------
Each Lender authorizes and ratifies Agent's entry into
this Agreement and the Security Documents for the benefit of Lenders. Each
Lender agrees that any action taken by Agent with respect to the Collateral
in accordance with the provisions of this Agreement or the Security
Documents, and the exercise by Agent of the powers set forth herein or
therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders. Agent is hereby
authorized on behalf of all Lenders, without the necessity of any notice to
or further consent from any Lender to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and
maintain perfected Agent's Liens upon the Collateral, for its benefit and
the ratable benefit of Lenders. Lenders hereby irrevocably authorize Agent,
at its option and in its discretion, to release any Lien granted to or held
by Agent upon any Collateral (i) upon termination of the Agreement and
payment and satisfaction of all Obligations; or (ii) constituting property
being sold or disposed of if Borrowers certify to Agent that the sale or
disposition is made in compliance with subsection 8.2.9 hereof, as it may be
amended from time to time (and Agent may rely conclusively on any such
certificate, without further inquiry); or (iii) constituting property in
which no Borrower owned any interest at the time the Lien was granted or at
any time thereafter; or (iv) subject to subsection 11.13, in connection with
any foreclosure sale or other enforcement action with respect to Collateral
or in connection with the other exercise by Agent of remedies hereunder, in
each case after the occurrence and during the continuation of an Event of
Default or (v) if approved, authorized or ratified in writing by Agent at
the direction of all Lenders. Upon request by Agent at any time, Lenders
will confirm in writing Agent's authority to release particular types or
items of Collateral pursuant hereto. Agent shall have no obligation
whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by any Borrower or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent herein or
pursuant to the Security Documents have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any
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particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of its rights, authorities and powers granted or
available to Agent in this Section 11.7 or in any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, but consistent with the provisions of
this Agreement, including given Agent's own interest in the Collateral as a
Lender and that Agent shall have no duty or liability whatsoever to any
Lender, except as otherwise provided herein. Each Borrower and each Lender
agrees that Agent shall be the joint and several creditor of each and every
obligation of Borrower towards each Lender under the Loan Documents, and
that, accordingly, Agent will have its own independent right to demand
performance by each Borrower of those obligations.
11.8. Agent's Right to Purchase Commitments.
-------------------------------------
Agent shall have the right, but shall not be obligated, at
any time upon written notice to any Lender and with the consent of such
Lender, which may be granted or withheld in such Lender's sole discretion,
to purchase for Agent's own account all of such Lender's interests in this
Agreement, the other Loan Documents and the Obligations, for the face amount
of the outstanding Obligations owed to such Lender, including without
limitation all accrued and unpaid interest and fees.
11.9. Right of Sale, Assignment, Participations.
-----------------------------------------
Each Borrower hereby consents to any Lender's
participation, sale, assignment, transfer or other disposition, at any time
or times hereafter, of this Agreement and any of the other Loan Documents,
or of any portion hereof or thereof, including, without limitation, such
Lender's rights, title, interests, remedies, powers, and duties hereunder or
thereunder subject to the terms and conditions set forth below:
11.9.1. Sales, Assignments.
------------------
(a) Each Revolving Credit and Term Loan A Lender
hereby agrees that, with respect to any sale or assignment by it
(i) no such sale or assignment shall be for an amount of less than
$5,000,000, (ii) each such sale or assignment shall be made on
terms and conditions which are customary in the industry at the
time of the transaction, (iii) Agent and, in the absence of an
Event of Default, Borrowers, must consent, such consent not to be
unreasonably withheld, to each such assignment to a Person that is
not an original signatory to this Agreement, (iv) the assigning
Revolving Credit and Term Loan A Lender shall pay to Agent a
processing and recordation fee of $3,500 and any out-of-pocket
attorneys' fees and expenses incurred by Agent in connection with
any such sale or assignment and (v) Agent, the assigning Revolving
Credit and Term Loan A Lender and the assignee Revolving Credit and
Term Loan A Lender shall each have executed and delivered an
Assignment and Acceptance Agreement. After such sale or assignment
has been consummated (x) the assignee Revolving Credit and Term
Loan A Lender thereupon shall become a "Lender" and a "Revolving
Credit and Term Loan A Lender" for all purposes of this
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Agreement and (y) the assigning Revolving Credit and Term Loan A
Lender shall have no further liability for funding the portion of
Revolving Loan Commitments assumed by such other Revolving Credit
and Term Loan A Lender.
(b) Each Term Loan B Lender hereby agrees that,
with respect to any sale or assignment by it (i) no such sale or
assignment shall be for an amount of less than $3,000,000 (except
that no such minimum amount shall apply to an assignment by a Term
Loan B Lender to an Affiliate of such Term Loan B Lender or a fund
or account managed by such Term Loan B Lender or an Affiliate of
such Term Loan B Lender), (ii) each such sale or assignment shall
be made on terms and conditions which are customary in the industry
at the time of the transaction, (iii) Tranche B Agent and, in the
absence of an Event of Default, Borrowers must consent, such
consent not to be unreasonably withheld, to each such assignment to
a Person that is not an original signatory to this Agreement
(except that no consent of Tranche B Agent or Borrowers shall be
required in connection with as assignment by a Term Loan B Lender
to an Affiliate of such Term Loan B Lender or a fund or account
managed by such Term Loan B Lender or an Affiliate of such Term
Loan B Lender), (iv) the assigning Term Loan B Lender shall pay to
Agent a processing and recordation fee of $3,500 (except that no
such fee shall be required in connection with an assignment by a
Term Loan B Lender to an Affiliate of such Term Loan B Lender or a
fund or account managed by such Term Loan B Lender or an Affiliate
of such Term Loan B Lender) and any out-of-pocket attorneys' fees
and expenses incurred by Agent in connection with any such sale or
assignment, and (iv) the assigning Term Loan B Lender and the
assignee Term Loan B Lender shall each have executed and delivered
an Assignment and Acceptance Agreement. After such sale or
assignment has been consummated (x) the assignee Term Loan B Lender
thereupon shall become a "Lender" and a "Term Loan B Lender" for
all purposes of this Agreement and (y) the assigning Term Loan B
Lender shall have no further liability for funding the portion of
Term Loan B Commitments assumed by such other Term Loan B Lender.
(c) Borrowers authorize Agent, and Agent agrees,
to maintain, or cause to be maintained at its offices, a listing of
the name and address of each Term Loan B Lender and the Term Loan B
Commitment of, and principal amount of the Term Loan B owing to
such Term Loan B Lender from time to time ("Registered Loans"). The
entries in such listing shall be conclusive and binding for all
purposes, absent manifest error, and Borrowers, Agent, Tranche B
Agent and Lenders shall treat each Person whose name is so listed
as a Term Loan B Lender hereunder for all purposes of this
Agreement.
(d) A Registered Loan (and the registered note,
if any, evidencing the same) may be assigned or sold in whole or in
part only by registration of such assignment or sale in the listing
kept by Agent (and each registered note shall expressly so
provide). Any assignment or sale of all or part of such Registered
Loan (and the registered note, if any, evidencing the same) may be
effected only by registration of such assignment or sale in the
listing kept by Agent, together with the surrender of the
registered note, if any, evidencing the same duly endorsed by (or
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accompanied by a written instrument of assignment or sale duly
executed by) the holder of such registered note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more
new registered notes in the same aggregate principal amount shall
be issued to the designated assignee(s) or transferee(s). Prior to
the registration of assignment or sale of any Registered Loan (and
the registered note, if any, evidencing the same), Agent and
Tranche B Agent shall treat the Person in whose name such
Registered Loan (and the registered note, if any, evidencing the
same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
11.9.2. Participations.
--------------
(a) Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending
institution (a "Participant"), provided that (i) no such
--------
participation shall be for an amount of less than $2,500,000 (or
$1,000,000, in the case of Term Loan B, except that no such minimum
amount shall apply to a participation by a Term Loan B Lender to an
Affiliate of such Term Loan B Lender or to a fund or account
managed by such Term Loan B Lender or an Affiliate of such Term
Loan B Lender), (ii) no Participant shall thereby acquire any
direct rights under this Agreement, (iii) no Participant shall be
granted any right to consent to any amendment, except to the extent
any of the same pertain to (1) reducing the aggregate principal
amount of, or interest rate on, or fees applicable to, any Loan,
(2) extending the final stated maturity of any Loan or the stated
maturity of any portion of any payment of principal of, or interest
or fees applicable to, any of the Loans, (3) any amendment that
pursuant to the terms of subsection 11.10 requires the vote of all
Lenders or (4) any amendment to subsection 8.2.8 or Section 8.3;
provided, that the rights described in this subclause (2) shall not
--------
be deemed to include the right to consent to any amendment with
respect to or which has the effect of requiring any mandatory
prepayment of any portion of any Loan or any amendment or waiver of
any Default or Event of Default, (iv) no sale of a participation in
extensions of credit shall in any manner relieve the originating
Lender of its obligations hereunder, (v) the originating Lender
shall remain solely responsible for the performance of such
obligations, (vi) Borrowers and Agent shall continue to deal solely
and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement
and the other Loan Documents, (vii) in no event shall any financial
institution purchasing the participation grant a participation in
its participation interest in the Loans without the prior written
consent of Agent, and, in the absence of an Event of Default,
Borrowers, which consents shall not unreasonably be withheld
(except that no such consent shall be required in connection with
any such participation by a Term Loan B Lender to an Affiliate of
such Term Loan B Lender or to a fund or account managed by a Term
Loan B Lender or an Affiliate of such Term Loan B Lender) and
(viii) all amounts payable by Borrowers hereunder shall be
determined as if the originating Lender had not sold any such
participation.
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(b) In the event that any Term Loan B Lender
sells participations in its Term Loan B Loan, such Term Loan B
Lender shall maintain a listing on which it enters the name of all
participants in the Registered Loans held by it. A Registered Loan
(and the registered note, if any, evidencing the same) may be
participated in whole or in part only by registration of such
participation in such participant listing (and each registered note
shall expressly so provide). Any participation of such Registered
Loan (and the registered note, if any, evidencing the same) may be
effected only by the registration of such participation in such
participant listing.
11.9.3. Certain Agreements of Borrowers. Each Borrower
-------------------------------
agrees that (i) it will use its best efforts to assist and
cooperate with each Lender in any manner reasonably requested by
such Lender to effect the sale of participation in or assignments
of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents and making members
of management available at reasonable times to meet with and answer
questions of potential assignees and Participants; and (ii) subject
to the provisions of Section 12.14 hereof, such Lender may disclose
credit information regarding each Borrower to any potential
Participant or assignee.
11.9.4. Non U.S. Resident Transferees. If, pursuant to
-----------------------------
this Section 11.9, any interest in this Agreement or any Loans is
transferred to any transferee which is organized under the laws of
any jurisdiction other than the United States or any state thereof,
the transferor Lender shall cause such transferee (other than any
Participant), and may cause any Participant, concurrently with and
as a condition precedent to the effectiveness of such transfer, to
(i) represent to the transferor Lender (for the benefit of the
transferor Lender, Agent, and Borrowers) that under applicable law
and treaties no taxes will be required to be withheld by Agent,
Borrowers or the transferor Lender with respect to any payments to
be made to such transferee in respect of the interest so
transferred, (ii) furnish to the transferor Lender, Agent and
Borrowers either United States Internal Revenue Service Form W-8BEN
or United States Internal Revenue Service Form W-8ECI (wherein such
transferee claims entitlement to complete exemption from United
States federal withholding tax on all interest payments hereunder),
and (iii) agree (for the benefit of the transferor Lender, Agent
and Borrowers) to provide the transferor Lender, Agent and
Borrowers a new Form W-8BEN or Form W-8ECI upon the obsolescence of
any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and
amendments duly executed and completed by such transferee, and to
comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
11.10. Amendment.
---------
No amendment or waiver of any provision of this Agreement
(including without limitation, any waiver of any Event of Default or
Default) or any other Loan Document (including without limitation any Note),
nor consent to any departure by any Borrower therefrom, shall in any event
be effective unless the same shall be in writing and
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signed by Majority Lenders and Borrowers, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver or consent
--------
shall be effective, unless:
(i) in writing and signed by each Lender, do any of the
following: (1) increase any Lender's Term Loan A Commitment or Term Loan B
Commitment, (2) reduce the number of Revolving Credit and Term Loan A
Lenders and/or Term Loan B Lenders which shall be required for Lenders, any
class of Lenders or any Lender to take any action hereunder, (3) release or
discharge any Person liable for the performance of any obligations of any
Borrower hereunder or under any of the Loan Documents, (4) amend any
provision of this Agreement that requires the consent of all Lenders or
consent to or waive any breach thereof, (5) amend the definitions of the
terms "Majority Lenders", "Majority Term Loan B Lenders" or "Required
Lenders", (6) amend Section 3.11 or this Section 11.10, (7) reduce the
amount of the Special Reserve or the Rebuild Reserve, (8) share the Lien of
the Collateral with any other obligations of any Borrower, (9) release or
subordinate Agent's Lien on any Collateral to the extent not permitted
pursuant to Section 11.7, or (10) amend, modify, waive or consent to any
departure from the amortization schedule or any mandatory or required
prepayment (whether or not scheduled) of the principal of Term Loan A;
(ii) in writing and signed by all Revolving Credit and
Term Loan A Lenders and Majority Term Loan B Lenders, do any of the
following: (1) increase the aggregate Loan Commitments or any Revolving
Credit and Term Loan A Lender's Revolving Loan Commitment, except that, so
long as no Event of Default is then in existence, the aggregate Revolving
Loan Commitments (and the pro rata Revolving Loan Commitment of each
Revolving Credit and Term Loan A Lender) and, therefore, the aggregate Loan
Commitments, may be increased by up to $5,000,000 with the prior written
consent of all of Revolving Credit and Term Loan A Lenders, (2) increase the
amount of Overadvances permitted under subsection 1.1.2 or the amount of
Agent Loans permitted under subsection 1.1.4, (3) increase any advance
percentage contained in the definition of the term "Borrowing Base", (4)
amend the definitions of the terms "Borrowing Base", "Eligible Account" or
"Eligible Inventory" in a manner that increases the amount of Revolving
Credit Loans available thereunder, (5) amend the definitions of the terms
"Term Loan B", "Term B Note" or "Term Loan B Commitment" or (6) increase the
aggregate fees and interest rates applicable to the Revolving Credit Loans
or Term Loan A (other than in connection with the imposition of the Tranche
A Default Rate) by an aggregate amount in excess of 200 basis points during
any one year period;
(iii) in writing and signed by Required Lenders, do any of
the following: (1) increase any interest rate payable hereunder in respect
of Term Loan B (including the Tranche B Default Rate), (2) amend, modify or
waive any Default or Event of Default under, or grant any consent under any
of Section or subsection 1.1.1(viii), (ix) or (x), clause (a) of the second
to last sentence of 1.1.1, the last sentence of 1.1.2, the first sentence of
1.1.4, 1.3.2, 2.2, 2.6(b), 2.8 (as it relates to Tranche B Agent and Tranche
B Lenders), 2.10, 3.2.1, 3.2.2, 3.3.1, 3.3.2, 3.3.3, 3.3.5, 3.3.7, 3.4.2,
3.5, 3.10, 4, 5, 6.1.1, 6.2.4 (with respect to Borrowers' obligation to
maintain Dominion Accounts), 7.1.2, 7.1.3, 7.1.4, 7.1.5, 7.1.6, 7.1.7,
7.1.10, 7.1.11, 7.1.14, 7.1.16, 7.1.17, 7.1.18, 7.1.19, 7.1.20, 7.1.21,
7.1.25, 7.1.26, 7.1.27,
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7.2, 7.3, 8.1.1, 8.1.2, 8.1.3, 8.1.4, 8.1.6, 8.1.7, 8.1.11, 8.1.12, 8.2,
8.3, 9 (as it relates to the Loans made on the Closing Date), 10, 11.1,
11.6, 11.7, 11.9.1(b), (c) or (d), 11.9.2, 11.13 and 13;
(iv) in writing and signed by all Revolving Credit and
Term Loan A Lenders, do any of the following: (1) decrease any interest rate
payable hereunder in respect of Term Loan A or the Revolving Credit Loans
(including the Tranche A Default Rate), (2) reduce the principal of, or
interest on, any amount payable hereunder in respect of Term Loan A or the
Revolving Credit Loans, or under any Term A Note or Revolving Note, other
than those payable only to Fleet in its capacity as Agent, which may be
reduced by Fleet unilaterally, or (3) postpone any date fixed for any
payment of principal of, or interest on, any amounts payable hereunder in
respect of Term Loan A or the Revolving Credit Loans or under any Term A
Note or Revolving Note, other than those payable only to Fleet in its
capacity as Agent, which may be postponed by Fleet unilaterally;
(v) in writing and signed by each Term Loan B Lender
affected thereby, do any of the following: (1) decrease any interest rate
payable hereunder in respect of Term Loan B (including the Tranche B Default
Rate) or change the composition between Term Loan B Current Pay Interest and
Term Loan B PIK Interest, (2) reduce the principal of, interest on, or any
amount payable hereunder, or any fees payable hereunder, in respect of Term
Loan B, or under any Term B Note or (3) postpone any date fixed for any
payment of principal of, or interest on, any amounts payable hereunder in
respect of Term Loan B or under any Term B Note;
(vi) in writing and signed by Agent in addition to the
Lenders required above to affect the rights or duties of Tranche B Agent
under this Agreement, any Note or any other Loan Document;
(vii) in writing and signed by Tranche B Agent in addition
to the Lenders required above to affect the rights or duties of Agent under
this Agreement, any Note or any other Loan Document; and
(viii) no amendment or waiver of any provision of this
Agreement, the Notes or any other Loan Document or any consent to any
departure by Borrowers therefrom, which requires or includes a voting
threshold other than Majority Lenders shall be effective unless signed by
Lenders constituting at least the necessary number or percentage of Lenders
required hereby for any such amendment, waiver, departure or consent.
If a fee is to be paid by Borrowers in connection with any
waiver or amendment hereunder, the agreement evidencing such amendment or
waiver may, at the discretion of Agent (but shall not be required to),
provide that only Lenders executing such agreement by a specified date may
share in such fee (and in such case, such fee shall be divided among the
applicable Lenders on a pro rata basis without including the interests of
any Lenders who have not timely executed such agreement). Notwithstanding
the foregoing, in connection with each amendment, waiver or consent agreed
to pursuant to this subsection 11.10 to which the consent of no Term Loan B
Lender is required, the Term Loan B
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Lenders shall be entitled to receive a fee or interest, as applicable, equal
to 150% of the total compensation (including fees and increases in interest)
received by the consenting Lenders in connection therewith, payable in the
same manner and form as such compensation, to be allocated among the Term
Loan B Lenders on a pro rata basis.
11.11. Resignation of Agent; Appointment of Successor.
----------------------------------------------
Subject to the appointment of a successor Agent in the
manner set forth below, and the acceptance of such appointment by such
successor Agent, Agent may resign as Agent by giving not less than thirty
(30) days' prior written notice to Lenders and Borrowers. If Agent shall
resign under this Agreement, then, (i) subject to the consent of Borrowers
(which consent shall not be unreasonably withheld and which consent shall
not be required during any period in which a Default or an Event of Default
exists), Majority Lenders shall appoint from among Lenders a successor agent
for Lenders or (ii) if a successor agent shall not be so appointed and
approved within the thirty (30) day period following Agent's notice to
Lenders and Borrowers of its resignation, then Agent shall appoint a
successor agent who shall serve as Agent until such time as Majority Lenders
appoint a successor agent, subject to Borrowers' consent as set forth above.
Upon its appointment, such successor agent shall succeed to the rights,
powers and duties of Agent and the term "Agent" shall mean such successor
effective upon its appointment, and the former Agent's rights, powers and
duties as Agent shall be terminated without any other or further act or deed
on the part of such former Agent or any of the parties to this Agreement.
After the resignation of any Agent hereunder, the provisions of this Section
11 shall inure to the benefit of such former Agent and such former Agent
shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while it was an Agent
under this Agreement. Notwithstanding the foregoing, simultaneously with the
payment in full in cash of all Obligations other than Obligations in respect
of Term Loan B, Agent at such time shall be deemed to have resigned and the
Tranche B Agent shall be appointed as Agent hereunder, effective upon such
payment.
11.12. Audit and Examination Reports; Disclaimer by Lenders.
----------------------------------------------------
By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each audit
or examination report (each a "Report" and collectively, "Reports")
prepared by or on behalf of Agent;
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained
in any Report;
(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific
information regarding each
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Borrower and will rely significantly upon each Borrower's books and
records, as well as on representations of each Borrower's
personnel;
(d) agrees to keep all Reports confidential and strictly
for its internal use, and not to distribute except to its
participants, or use any Report in any other manner, in accordance
with the provisions of Section 12.14; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i)
to hold Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection
with any loans or other credit accommodations that the indemnifying
Lender has made or may make to any Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of any Borrower; and (ii) to pay and protect,
and indemnify, defend and hold Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including
attorney's fees and expenses) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through
the indemnifying Lender.
11.13. Buyout Right.
------------
(a) If Agent proposes a sale, lease or other
disposition of Collateral pursuant to Section 11.7, including
without limitation a sale of all or substantially all of the
Collateral, Agent shall first provide Tranche B Agent with a
written Sale Notice. No such sale, lease or other disposition shall
be consummated unless Agent does not receive a written Buyout
Notice from Tranche B Agent within ten (10) Business Days after
Tranche B Agent's receipt of the Sale Notice, or, if such Buyout
Notice has been timely received by Agent, if Tranche B Agent (and
any other Persons acceptable to Tranche B Agent) fails to
consummate a Buyout within ten (10) Business Days after Agent's
receipt of the Buyout Notice. Any Buyout Notice given by Tranche B
Agent shall be irrevocable. The failure of Tranche B Agent to
timely deliver a Buyout Notice or consummate a Buyout in any
instance shall constitute a waiver by Tranche B Agent of its rights
under this subsection 11.13(a) with respect to the particular sale,
lease or other disposition in question. In addition, if Tranche B
Agent fails to timely consummate a Buyout that is the subject of a
Buyout Notice, Agent and Revolving Credit and Term Loan A Lenders
shall be entitled to bring legal action against Tranche B Agent for
equitable relief (including specific performance) in respect
thereof.
(b) Tranche B Agent shall have the right to
deliver to Agent a Buyout Notice (i) within forty-five (45) days
after the commencement of an Action Standstill Period or (ii)
within five (5) Business Days after the Revolving Credit and Term
Loan A Lenders have suspended the Revolving Credit Loans or have
ceased to
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make Revolving Credit Loan advances to Borrowers pursuant
to subsection 1.1.1, and, within ten (10) Business Days after
delivery to Agent of any such Buyout Notice, to consummate a
Buyout. Any Buyout Notice given by Tranche B Agent shall be
irrevocable. The failure of Tranche B Agent to timely deliver a
Buyout Notice or consummate a Buyout in any instance shall
constitute a waiver by Tranche B Agent of its rights under this
subsection 11.13(b). In addition, if Tranche B Agent fails to
timely consummate a Buyout that is the subject of a Buyout Notice,
Agent and Revolving Credit and Term Loan A Lenders shall be
entitled to bring legal action against Tranche B Agent for
equitable relief (including specific performance) in respect
thereof. Notwithstanding anything to the contrary contained herein,
Agent shall be entitled to pursue any enforcement action available
to Agent under the Loan Documents and applicable law regardless of
Tranche B Agent's rights under this subsection 11.13(b) or the
receipt by Agent of a Buyout Notice.
(c) Upon consummation of a Buyout, Agent will
assign all of its Liens to Tranche B Agent and resign as Agent
hereunder and Tranche B Agent will succeed to the role as Agent.
(d) If Tranche B Agent consummates a Buyout and,
within one hundred eighty (180) days thereafter, receives a
sufficient amount in repayment of the Obligations (whether by
virtue of sale of the Obligations, a sale of Collateral or other
Property, the refinance of the Obligations or otherwise) to repay
all then-outstanding fees, costs, expenses, principal and interest
included within the Obligations (other than prepayment fees), then
any additional amount received will be paid first to Agent, for the
pro rata benefit of Revolving Credit and Term Loan A Lenders, for
application against the prepayment fee pursuant to subsection
2.6(a) that would have been payable if the Buyout had constituted a
repayment by Borrowers of the applicable Obligations prior to
application against any prepayment fee that may be owing to any
other Person in respect thereof.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney.
-----------------
Each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower's true and lawful attorney (and agent-in-fact), solely with respect
to the matters set forth in this Section 12.1, and Agent, or Agent's agent,
may, without notice to any Borrower and in such Borrower's or Agent's name,
but at the cost and expense of such Borrower:
12.1.1. At such time or times as Agent or said agent, in
its sole discretion, may determine, endorse such Borrower's name on
any checks, notes, acceptances, drafts, money orders or any other
evidence of payment or proceeds of the Collateral which come into
the possession of Agent or under Agent's control.
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12.1.2. At such time or times upon or after the occurrence
and during the continuance of an Event of Default (provided that
the occurrence of an Event of Default shall not be required with
respect to clauses (iv), (vi), (ix) and (x) below), as Agent or its
agent in its sole discretion may determine: (i) demand payment of
the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise
all of such Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise,
discharge or release any of the Accounts or other Collateral or any
legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or
times as Agent deems advisable, and at Agent's option, with all
warranties regarding the Collateral disclaimed; (iv) take control,
in any manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign such Borrower's name to a
proof of claim in bankruptcy or similar document against any
Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the
Collateral; (vi) receive and open all mail received by Agent and
addressed to such Borrower, (vii) notify postal authorities to
change the address for delivery thereof to such address as Agent
may designate; (viii) endorse the name of such Borrower upon any of
the items of payment or proceeds relating to any Collateral and
deposit the same to the account of Agent on account of the
Obligations; (ix) endorse the name of such Borrower upon any
chattel paper, document, instrument, invoice, freight xxxx, xxxx of
lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (x) use such Borrower's
stationery and sign the name of such Borrower to verifications of
the Accounts and notices thereof to Account Debtors; (xi) use the
information recorded on or contained in any data processing
equipment and Computer Hardware and Software relating to the
Accounts, Inventory, Equipment and any other Collateral; (xii) make
and adjust claims under policies of insurance; and (xiii) do all
other acts and things necessary, in Agent's reasonable
determination, to fulfill such Borrower's obligations under this
Agreement.
The power of attorney granted hereby shall constitute a
power coupled with an interest and shall be irrevocable.
12.2. Indemnity.
---------
Borrowers hereby agree to jointly and severally indemnify
Agent, Tranche B Agent and each Lender (and each of their Affiliates) and
hold Agent, Tranche B Agent and each Lender (and each of their Affiliates)
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by any such Person (including
reasonable attorneys fees and legal expenses) as the result of such
Borrower's failure to observe, perform or discharge such Borrower's duties
hereunder. In addition, Borrowers shall jointly and severally defend Agent,
Tranche B Agent and each Lender (and each of their Affiliates) against and
save it harmless from all claims of any Person with respect to the
Collateral (except those resulting from the gross negligence or intentional
misconduct of any such indemnified Person). Without limiting the generality
of the foregoing, these indemnities shall extend to any loss, damage, cost,
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expense or liability incurred by Agent, Tranche B Agent or any Lender (or
any of their Affiliates) or any claim asserted against Agent, Tranche B
Agent or any Lender (or any of their Affiliates) by any Person, directly or
indirectly arising out of or attributable to (i) the use, generation,
storage, release, threatened release, discharge, disposal or presence of any
solid or hazardous waste on, under or about the Collateral or (ii) any
Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the obligation of
each Borrower under this Section 12.2 shall survive the payment in full of
the Obligations and the termination of this Agreement.
12.3. Sale of Interest.
----------------
No Borrower may sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations,
or any portion thereof, including, without limitation, such Borrower's
rights, title, interests, remedies, powers, and duties hereunder or
thereunder.
12.4. Severability.
------------
Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
12.5. Successors and Assigns.
----------------------
This Agreement, the Other Agreements and the Security
Documents shall be binding upon and inure to the benefit of the successors
and assigns of Borrower, Agent and each Lender permitted under Section 11.9
hereof.
12.6. Cumulative Effect; Conflict of Terms.
------------------------------------
The provisions of the Other Agreements and the Security
Documents are hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in Section 3.2 hereof and except as provided in
any of the other Loan Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is
in direct conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern
and control.
12.7. Execution in Counterparts.
-------------------------
This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and
the same instrument.
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12.8. Notice.
------
Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing,
and be sent by registered or certified mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been
validly served, given, delivered or received immediately when delivered
against receipt, one Business Day after deposit with an overnight courier
or, in the case of facsimile notice, when sent, addressed as follows:
If to Agent or Fleet: Fleet Capital Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Goldberg, Kohn, Bell, Black,
Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to any Borrower: c/o Falcon Products, Inc.
0000 Xxxxxxx Xxxxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxx Xxxxxx LLP
One XX Xxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Tranche B Agent: OCM Principal Opportunities Fund II, L.P.
c/o Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx and Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
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With a copy to: Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
If to any other Lender, at its address indicated on the signature
pages hereof or in a notice to Borrowers of an assignment of a
Note,
or to such other address or facsimile number as each party may designate for
itself by notice given in accordance with this Section 12.8; provided,
--------
however, that any notice, request or demand to or upon Agent or a Lender
-------
pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be effective until
received by Agent or such Lender.
12.9. Consent.
-------
Whenever Agent's, Majority Lenders', Majority Term Loan B
Lenders', Required Lenders', or all Lenders' consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or
event, except as otherwise specifically provided herein, Agent, Majority
Lenders, Majority Term Loan B Lenders, Required Lenders or all Lenders, as
applicable, shall be authorized to give or withhold such consent in their
sole and absolute discretion and to condition its consent upon the giving of
additional Collateral security for the Obligations, the payment of money or
any other matter.
12.10. Credit Inquiries.
----------------
Each Borrower hereby authorizes and permits Agent and each
Lender to respond to usual and customary credit inquiries from third parties
concerning such Borrower or any of its Subsidiaries.
12.11. Time of Essence.
---------------
Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.12. Entire Agreement.
----------------
This Agreement and the other Loan Documents, together with
all other instruments, agreements and certificates executed by the parties
in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or implied, oral
or written.
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12.13. Interpretation.
--------------
No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated
such provision.
12.14. Confidentiality.
---------------
Agent and each Lender shall hold all nonpublic information
obtained pursuant to the requirements of this Agreement in accordance with
Agent's and such Lender's customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices and in any event may make disclosure reasonably required by a
prospective participant or assignee in connection with the contemplated
participation or assignment or as required or requested by any governmental
authority or representative thereof or pursuant to legal process and shall
require any such participant or assignee to agree to comply with this
Section 12.14.
12.15. GOVERNING LAW; CONSENT TO FORUM.
-------------------------------
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED
IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT THE PERFECTION, THE EFFECT OF
--------
THE PERFECTION OR NON-PERFECTION AND THE PRIORITY OF THE SECURITY INTERESTS
AND LIENS CREATED BY THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED,
CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE APPLICABLE JURISDICTION AND THAT IF ANY OF THE COLLATERAL SHALL BE
LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS.
AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER,
AGENT OR ANY LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE
CIRCUIT COURT OF XXXX COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN
DIVISION, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWERS ON THE ONE HAND AND AGENT OR ANY LENDER
ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS
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AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
----- --- ----------
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF
ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
12.16. WAIVERS BY BORROWERS.
--------------------
EACH BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH
AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON
WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD; (III) NOTICE
PRIOR TO AGENT'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR, TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ANY BOND OR SECURITY WHICH MIGHT
BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT'S
REMEDIES; (IV) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (V) NOTICE OF
ACCEPTANCE HEREOF AND (VI) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM
OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
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DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT
TO AGENT'S AND EACH LENDER'S ENTERING INTO THIS AGREEMENT AND THAT AGENT AND
EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS
WITH SUCH BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.17. Advertisement.
-------------
Each Borrower hereby authorizes each of Agent, Tranche B
Agent and each Lender to publish the name of such Borrower and the amount of
the credit facility provided hereunder in any "tombstone" or comparable
advertisement which Agent, Tranche B Agent or such Lender, as applicable,
elects to publish.
SECTION 13. THE TRANCHE B AGENT
13.1. Authorization and Action.
------------------------
Each Term Loan B Lender hereby appoints and authorizes
Tranche B Agent to take such action on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Tranche B Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. Each Term Loan B Lender hereby
acknowledges that Tranche B Agent shall not have by reason of this Agreement
assumed a fiduciary relationship in respect of any Term Loan B Lender. In
performing its functions and duties under this Agreement, Tranche B Agent
shall act solely as agent of Term Loan B Lenders and shall not assume, or be
deemed to have assumed, any obligation toward, or relationship of agency or
trust with or for, any Borrower. As to any matters not expressly provided
for by this Agreement and the other Loan Documents, Tranche B Agent may, but
shall not be required to, exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
Majority Term Loan B Lenders, whenever such instruction shall be requested
by Tranche B Agent or required hereunder, or a greater or lesser number of
Term Loan B Lenders if so required hereunder, and such instructions shall be
binding upon all Term Loan B Lenders; provided, that Tranche B Agent shall
--------
be fully justified in failing or refusing to take any action which exposes
Tranche B Agent to any liability or which is contrary to this Agreement, the
other Loan Documents or applicable law, unless Tranche B Agent is
indemnified to its satisfaction by the other Term Loan B Lenders against any
and all liability and expense which it may incur by reason of taking or
continuing to take any such action. If Agent seeks the consent or approval
of Majority Term Loan B Lenders, or a greater or lesser number of Term Loan
B Lenders as required in this Agreement, with respect to any action
hereunder, Tranche B Agent shall send notice thereof
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to each Term Loan B Lender and shall notify each Term Loan B Lender at any
time that Majority Term Loan B Lenders, or such greater or lesser number of
Lenders have instructed Agent to act or refrain from acting pursuant hereto.
13.2. Tranche B Agent's Reliance, Etc.
--------------------------------
Neither Tranche B Agent, any Affiliate of Tranche B Agent,
nor any of their respective directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or them under or
in connection with this Agreement or the other Loan Documents, except for
its or their own gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, Tranche B Agent: (i) may treat each Term
Loan B Lender party hereto as the holder of Obligations until Tranche B
Agent receives written notice of the assignment or transfer or such lender's
portion of the Obligations signed by such Term Loan B Lender and in form
reasonably satisfactory to Tranche B Agent; (ii) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts, (iii) makes no warranties or representations to any Term Loan B
Lender and shall not be responsible to any Term Loan B Lender for any
recitals, statements, warranties or representations made in or in connection
with this Agreement or any other Loan Documents; (iv) shall not have any
duty beyond Tranche B Agent's customary practices in respect of loans in
which Tranche B Agent is the only lender, to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions
of this Agreement or the other Loan Documents on the part of any Borrower,
to inspect the property (including the books and records) of any Borrower,
to monitor the financial condition of any Borrower or to ascertain the
existence or possible existence or continuation of any Default or Event of
Default; (v) shall not be responsible to any Term Loan B Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument
or document furnished pursuant hereto or thereto; (vi) shall not be liable
to any Term Loan B Lender for any action taken, or inaction, by Tranche B
Agent upon the instructions of Term Loan B Lenders, Majority Term Loan B
Lenders or a greater or lesser number of Term Loan B Lenders, as required
pursuant to Section 13.1 hereof or refraining to take any action pending
such instructions; (vii) shall not be liable for any apportionment or
distributions of payments made by it in good faith pursuant to Section 3
hereof; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by
telephone, facsimile, telegram, cable or telex) believed in good faith by it
to be genuine and signed or sent by the proper party or parties; and (ix)
may assume that no Event of Default has occurred and is continuing, unless
Tranche B Agent has actual knowledge of the Event of Default, has received
notice from a Borrower or a Borrower's independent certified public accounts
stating the nature of the Event of Default, or has received notice from a
Term Loan B Lender stating the nature of the Event of Default and that such
Term Loan B Lender considers the Event of Default to have occurred and to be
continuing. In the event any apportionment or distribution described in
clause (vii) above is determined to have been made in error, the sole
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recourse of any Person to whom payment was due but not made shall be to
recover from the recipients of such payments any payment in excess of the
amount to which they are determined to have been entitled.
13.3. OCM and Affiliates.
------------------
With respect to its commitment hereunder to make Loans,
OCM shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it
were not Tranche B Agent; and the terms "Lender," "Lenders", "Required
Lenders" and, "Majority Term Loan B Lenders", shall, unless otherwise
expressly indicated, include OCM in its individual capacity as a Term Loan B
Lender. OCM and its Affiliates may lend money to, and generally engage in
any kind of business with, each Borrower, and any Person who may do business
with or own Securities of each Borrower, in each case, to the extent not in
violation of this Agreement, all as if OCM were not Tranche B Agent and
without any duty to account therefor to any other Term Loan B Lender.
13.4. Term Loan B Lender Credit Decision.
----------------------------------
Each Term Loan B Lender acknowledges that it has,
independently and without reliance upon Tranche B Agent or any other Term
Loan B Lender and based on the financial statements referred to herein and
such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Term
Loan B Lender also acknowledges that it will, independently and without
reliance upon Tranche B Agent or any other Term Loan B Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement. Tranche B Agent shall not have any duty or
responsibility, either initially or on an ongoing basis, to provide any Term
Loan B Lender with any credit or other similar information regarding any
Borrower.
13.5. Indemnification.
---------------
Term Loan B Lenders agree to indemnify Tranche B Agent (to
the extent not reimbursed by Borrowers), in accordance with their respective
Aggregate Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Tranche B Agent in any way
relating to or arising out of this Agreement or any other Loan Document or
any action taken or omitted by Tranche B Agent under this Agreement;
provided, that no Term Loan B Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Tranche B Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Term Loan B Lender agrees to reimburse Tranche B Agent promptly upon
demand for its ratable share, as set forth above, of any out-of-pocket
expenses (including attorneys' fees) incurred by Tranche B Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiation, legal
proceedings or
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otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement and each other Loan Document, to the extent that
Tranche B Agent is not reimbursed for such expenses by Borrowers. The
obligations of Term Loan B Lenders under this Section 13.5 shall survive the
payment in full of all Obligations and the termination of this Agreement. If
after payment and distribution of any amount by Tranche B Agent to Term Loan
B Lenders, any Term Loan B Lender or any other Person, including any
Borrower, any creditor of any Borrower, a liquidator, administrator or
trustee in bankruptcy, recovers from Tranche B Agent any amount found to
have been wrongfully paid to Tranche B Agent or disbursed by Tranche B Agent
to Term Loan B Lenders, then Term Loan B Lenders, in accordance with their
respective Aggregate Percentages, shall reimburse Tranche B Agent for all
such amounts.
13.6. Rights and Remedies to be Exercised by Tranche B
------------------------------------------------
Agent Only.
-----------
Each Term Loan B Lender agrees that no Term Loan B Lender
shall have any right individually (i) to realize upon the security created
by this Agreement or any other Loan Document, (ii) to enforce any provision
of this Agreement or any other Loan Document that does not run directly to
the benefit of such Term Loan B Lender, or (iii) to make demand of Borrower
under this Agreement or any other Loan Document.
13.7. Agency Provisions Relating to Collateral.
----------------------------------------
Each Term Loan B Lender authorizes and ratifies Tranche B
Agent's entry into this Agreement for the benefit of Term Loan B Lenders.
Each Term Loan B Lender agrees that any action directed by Tranche B Agent
with respect to the Collateral in accordance with the provisions of this
Agreement and the exercise by Tranche B Agent of the powers set forth herein
or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Term Loan B Lenders.
Tranche B Agent shall have no obligation whatsoever to any Term Loan B
Lender or to any other Person to assure that the Collateral exists or is
owned by any Borrower or is cared for, protected or insured or has been
encumbered or that the Liens granted to Agent herein or pursuant to the
Security Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity.
13.8. Tranche B Agent's Right to Purchase Commitments.
-----------------------------------------------
Tranche B Agent shall have the right, but shall not be
obligated, at any time upon written notice to any Term Loan B Lender and
with the consent of such Term Loan B Lender, which may be granted or
withheld in such Term Loan B Lender's sole discretion, to purchase for
Tranche B Agent's own account all of such Term Loan B Lender's interests in
this Agreement, the other Loan Documents and the Obligations, for the face
amount of the outstanding Obligations owed to such Term Loan B Lender,
including without limitation all accrued and unpaid interest and fees.
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13.9. Resignation of Tranche B Agent; Appointment of
----------------------------------------------
Successor.
---------
Subject to the appointment of a successor Tranche B Agent
in the manner set forth below and the acceptance of such appointment by such
successor Tranche B Agent, Tranche B Agent may resign as Tranche B Agent by
giving not less than thirty (30) days' prior written notice to Term Loan B
Lenders and Borrowers. If Tranche B Agent shall resign under this Agreement,
then, (i) subject to the consent of Borrowers (which consent shall not be
unreasonably withheld and which consent shall not be required during any
period in which a Default or an Event of Default exists), Majority Term Loan
B Lenders shall appoint from among Term Loan B Lenders a successor agent for
Term Loan B Lenders or (ii) if a successor agent shall not be so appointed
and approved within the thirty (30) day period following Tranche B Agent's
notice to Term Loan B Lenders and Borrowers of its resignation, then Tranche
B Agent shall appoint a successor agent who shall serve as Agent until such
time as Majority Term Loan B Lenders appoint a successor agent, subject to
Borrowers' consent as set forth above. Upon its appointment, such successor
agent shall succeed to the rights, powers and duties of Tranche B Agent and
the term "Tranche B Agent" shall mean such successor effective upon its
appointment, and the former Tranche B Agent's rights, powers and duties as
Tranche B Agent shall be terminated without any other or further act or deed
on the part of such former Tranche B Agent or any of the parties to this
Agreement. After the resignation of any Tranche B Agent hereunder, the
provisions of this Section 13 shall inure to the benefit of such former
Tranche B Agent and such former Tranche B Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or
not taken by it while it was an Tranche B Agent under this Agreement.
13.10. Information Sharing.
-------------------
Tranche B Agent agrees to provide each Term Loan B Lender,
as promptly as reasonably practicable after receipt thereof by Tranche B
Agent, with copies of each notice received by Tranche B Agent under
subsection 8.1.2, each accountants' letter or Compliance Certificate
received by Tranche B Agent under subsection 8.1.3, each Borrowing Base
Certificate received by Tranche B Agent under subsection 8.1.4, the
Projections received by Tranche B Agent under subsection 8.1.6 and any other
material information requested by such Term Loan B Lender from time to time.
13.11. Rights of Term Loan B Lenders.
-----------------------------
Except as otherwise expressly set forth in this Agreement,
Tranche B Agent shall not have the right to amend, modify, waive or consent
to any departure from any provision of this Agreement or any other Loan
Document on behalf of any Term Loan B Lender or exercise any other right or
remedy afforded to any Term Loan B Lender on behalf of any such Term Loan B
Lender.
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IN WITNESS WHEREOF, this Agreement has been duly executed
on the day and year specified at the beginning of this Agreement.
FALCON PRODUCTS, INC.
By_____________________________________
Title__________________________________
XXXXXX XXXXXXXX INDUSTRIES, INC.
By_____________________________________
Title__________________________________
SELLERS & XXXXXXXXX INC.
By_____________________________________
Title__________________________________
FLEET CAPITAL CORPORATION, as Agent
and as a Revolving Credit and Term
Loan A Lender
By_____________________________________
Title__________________________________
Revolving Loan Commitment: $33,769,000
Term Loan A Commitment: $5,562,000
Signature Pages to Loan Agreement
OCM PRINCIPAL OPPORTUNITIES FUND II,
L.P., as a Term Loan B Lender and as
Tranche B Agent
By: Oaktree Capital Management, LLC
Its General Partner
By_________________________________
Title______________________________
By_________________________________
Title______________________________
Address: c/o Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx and
Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Term Loan B Commitment: $50,000,000
Signature Pages to Loan Agreement
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and Security
Agreement dated as of January 15, 2004, by and among FLEET CAPITAL
CORPORATION, individually and as Agent, the other financial institutions
which are or become parties thereto and FALCON PRODUCTS, INC., XXXXXX
XXXXXXXX INDUSTRIES, INC., and SELLERS & XXXXXXXXX INC., (a) the terms
Account, Certificated Security, Chattel Paper, Commercial Tort Claims,
------- --------------------- ------------- ----------------------
Deposit Account, Document, Electronic Chattel Paper, Equipment, Financial
--------------- -------- ------------------------ --------- ---------
Asset, Fixture, General Intangibles, Goods, Instruments, Inventory,
----- ------- ------------------- ----- ----------- ---------
Investment Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds,
------------------- ----------------------- ------------------- --------
Security, Security Entitlement, Software, Supporting Obligations, Tangible
-------- -------------------- -------- ---------------------- --------
Chattel Paper and Uncertificated Security have the respective meanings
------------- -----------------------
assigned thereto under the UCC; (b) all terms reflecting Collateral having
the meanings assigned thereto under the UCC shall be deemed to mean such
Property, whether now owned or hereafter created or acquired by any Borrower
or in which such Borrower now has or hereafter acquires any interest; (c)
capitalized terms which are not otherwise defined have the respective
meanings assigned thereto in said Loan and Security Agreement; and (d) the
following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated
--------------
under or on account of any Account, Contract Right, Chattel Paper
or General Intangible.
Action Notice - a written notice from Majority Term Loan B
-------------
Lenders to Agent stating that a Level 1 Event of Default or a Level
2 Event of Default is in existence (and identifying such Level 1
Event of Default or Level 2 Event of Default) and that an Action
Standstill Period is being commenced.
Action Standstill Period - the thirty (30) or ninety (90)
------------------------
day period, as applicable, commenced with the receipt by Agent of
any Action Notice, as described in subsection 10.2(c) of the
Agreement.
Affiliate - a Person (other than a Subsidiary): (i) which
---------
directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, a Person;
(ii) which beneficially owns or holds 5% or more of any class of
the Voting Stock of a Person; or (iii) 5% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or held
by a Person or a Subsidiary of a Person.
Agent - Fleet Capital Corporation in its capacity as agent
-----
for the Lenders under the Agreement and any successor in that
capacity appointed pursuant to subsection 11.11 of the Agreement.
Agent Loans - as defined in subsection 1.1.4 of the
-----------
Agreement.
Aggregate Percentage - with respect to each Lender, the
--------------------
percentage equal to the quotient of (i) such Lender's Loan
Commitment divided by (ii) the aggregate of all Loan Commitments.
-------
Agreement - the Loan and Security Agreement referred to in
---------
the first sentence of this Appendix A, all Exhibits thereto and
this Appendix A, as each of the same may be amended from time to
time.
Applicable Margin - the percentages set forth below with
-----------------
respect to the Base Rate Revolving Portion, the Base Rate Term A
Portion, the LIBOR Revolving Portion and the LIBOR Term A Portion:
Base Rate Revolving Portion 1.00%
Base Rate Term A Portion 1.25%
LIBOR Revolving Portion 3.00%
LIBOR Term A Portion 3.25%
; provided, if on the first anniversary of the Closing Date no Key
--------
Default has occurred during the period from the Closing Date to
such anniversary date, effective as of such anniversary date, the
Applicable Margin will instead be the following percentages:
Base Rate Revolving Portion 0.75%
Base Rate Term A Portion 1.00%
LIBOR Revolving Portion 2.75%
LIBOR Term A Portion 3.00%
Assignment and Acceptance Agreement - an assignment and
-----------------------------------
acceptance agreement in form and content reasonably acceptable to
Agent pursuant to which a Lender assigns to another Lender all or
any portion of any of such Lender's Revolving Loan Commitment, Term
Loan A Commitment or Term Loan B Commitment and/or Loans, as
permitted pursuant to the terms of this Agreement.
Availability - the amount of additional money which
------------
Borrowers are entitled to borrow from time to time as Revolving
Credit Loans, such amount being the difference derived when the sum
of (i) the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Agent or any Revolving
Credit and Term Loan A Lender may have paid for the account of any
Borrower pursuant to any of the Loan Documents and which have not
been reimbursed by Borrowers), (ii) the LC Amount, (iii) any
reserves, and (iv) the aggregate amount of the trade payables of
each Borrower and each Subsidiary that are outstanding more than
thirty (30) days past the due date thereof, is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater
than the Borrowing Base, Availability is 0.
Bank - Fleet National Bank.
----
A-2
Base Rate - the rate of interest announced or quoted by
---------
Bank from time to time as its prime rate for commercial loans,
whether or not such rate is the lowest rate charged by Bank to its
most preferred borrowers; and, if such prime rate for commercial
loans is discontinued by Bank as a standard, a comparable reference
rate designated by Bank as a substitute therefor shall be the Base
Rate.
Base Rate Portion - a Base Rate Term A Portion or a Base
-----------------
Rate Revolving Portion.
Base Rate Revolving Portion - that portion of the
---------------------------
Revolving Credit Loans that is not subject to a LIBOR Option.
Base Rate Term A Portion - that portion of Term Loan A
------------------------
that is not subject to a LIBOR Option.
Borrowing Base - as at any date of determination thereof,
--------------
an amount equal to the lesser of:
(i) the Revolving Credit Maximum Amount; or
(ii) an amount equal to the sum of:
(a) 85% of the net amount of Eligible
Accounts outstanding at such date;
plus
----
(b) the least of (i) $17,500,000, (ii)
the sum of (A) 70% of the value of
Eligible Inventory consisting of
finished goods at such date, plus
----
(B) 40% of the value of Eligible
Inventory consisting of work in
process at such date, plus (C) 25%
----
of Eligible Inventory consisting of
raw materials at such date, or
(iii) the sum of (A) 85% of the net
orderly liquidation percentage of
each category or type of Eligible
Inventory consisting of finished
goods and raw materials at such
date, plus (B) 75% of the net
----
orderly liquidation percentage of
each category or type of Eligible
Inventory consisting of work in
process at such date; provided,
--------
that in no event shall the portion
of the Borrowing Base predicated on
Eligible Inventory consisting of
(x) finished goods exceed
$7,500,000, (y) raw materials
exceed $7,500,000 or (z)
work-in-process exceed $6,000,000.
For purposes hereof, (1) the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which may,
at Agent's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time, (2) the amount of
Eligible Inventory shall be determined on a first-in,
A-3
first-out, lower of cost or market basis in accordance with GAAP,
and (3) the net orderly liquidation percentage of each category or
type of Eligible Inventory shall be determined by Hilco Appraisal
Services LLC or another appraiser reasonably acceptable to Majority
Lenders and shall be as reflected in the most recent Inventory
appraisal delivered to Agent under this Agreement. In addition, for
purposes of computing the amount of the Borrowing Base, the gross
amount of Eligible Accounts shall be reduced by the aggregate
amount of cash proceeds of Eligible Accounts received by any
Borrower but not yet applied to specific Eligible Accounts.
Borrowing Base Certificate - a certificate by a
--------------------------
responsible officer of Falcon, substantially in the form of Exhibit
-------
8.1.4 (or another form reasonably acceptable to Agent) setting
-----
forth the calculation of the Borrowing Base, including a
calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to Agent. All calculations of the
Borrowing Base, in connection with the preparation of any Borrowing
Base Certificate shall originally be made by Falcon and certified
to Agent; provided, that Agent shall have the right to review and
--------
adjust, in the exercise of its reasonable credit judgment, any such
calculation after giving notice thereof to Falcon, (1) to reflect
its reasonable estimate of declines in value of any of the
Collateral described therein, and (2) to the extent that Agent
determines that such calculation is not in accordance with this
Agreement.
Business Day - any day excluding Saturday, Sunday and any
------------
day which is a legal holiday under the laws of the State of
Wisconsin, the State of Connecticut, or the State of Illinois or is
a day on which banking institutions located in either of such
states are closed.
Buyout - the purchase by Tranche B Agent (and such other
------
Persons as are acceptable to Tranche B Agent) at face amount, of
100% of the Obligations, other than (a) any prepayment fees payable
to Revolving Credit and Term Loan A Lenders pursuant to subsection
2.6(a) and (b) any Obligations in respect of Term Loan B or
otherwise owing to any Term Loan B Lender.
Buyout Notice - a written notice by Tranche B Agent to
-------------
Agent stating that Tranche B Agent wishes to exercise its option to
consummate a Buyout, and setting forth the basis on which Tranche B
Agent is entitled to exercise such Buyout right.
Capital Expenditures - expenditures made or liabilities
--------------------
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a
useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness
----------------------------
represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with
GAAP.
A-4
Closing Date - the date on which all of the conditions
------------
precedent in Section 9 of the Agreement are satisfied or waived and
the initial Loan is made or the initial Letter of Credit or LC
Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property
----------
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Compliance Certificate - as defined in subsection 8.1.3 of
----------------------
the Agreement.
Computer Hardware and Software - all of each Borrower's
------------------------------
rights (including rights as licensee and lessee) with respect to
(i) computer and other electronic data processing hardware,
including all integrated computer systems, central processing
units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer
hardware; (ii) all Software and all software programs designed for
use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system
software, utilities and application programs in any form (source
code and object code in magnetic tape, disk or hard copy format or
any other listings whatsoever); (iii) any firmware associated with
any of the foregoing; and (iv) any documentation for hardware,
Software and firmware described in clauses (i), (ii) and (iii)
above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP
------------
of the accounts or other items as to which such term applies.
Contract Right - any right of any Borrower to payment
--------------
under a contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by performance.
Convertible Subordinated Debentures - the 12% Junior
-----------------------------------
Subordinated Convertible Debentures due 2010 issued by Falcon on
December 15, 2003, as the same may be amended, modified or
supplemented from time to time.
Convertible Subordinated Debt - Falcon's Indebtedness for
-----------------------------
Money Borrowed in the aggregate principal amount of $4,150,000
incurred pursuant to the Convertible Subordinated Debentures.
Credit Agreement - as defined in the Subordinated Note
----------------
Indenture, as in existence on the Closing Date.
Credit Facilities - as defined in the Subordinated Note
-----------------
Indenture, as in existence on the Closing Date.
A-5
Current Assets - at any date means the amount at which all
--------------
of the current assets of a Person would be properly classified as
current assets shown on a balance sheet at such date in accordance
with GAAP.
Default - an event or condition the occurrence of which
-------
would, with the lapse of time or the giving of notice, or both,
become an Event of Default.
Default Rate - the Tranche A Default Rate or the Tranche B
------------
Default Rate, as applicable.
Derivative Obligations - every obligation of a Person
----------------------
under any forward contract, futures contract, exchange contract,
swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreement), the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices.
Designated Senior Debt - as defined in the Subordinated
----------------------
Note Indenture, as in existence on the Closing Date.
Distribution - in respect of any Person means and
------------
includes: (i) the payment of any dividends or other distributions
on Securities of such Person (except distributions in such
Securities) and (ii) the redemption or acquisition of Securities of
such Person, including the acquisition of Securities of Epic by
Falcon, as the case may be, unless made contemporaneously from the
net proceeds of the sale of Securities.
Domestic Subsidiary - any now or hereafter existing
-------------------
Subsidiary of any Borrower that is incorporated under the laws of a
State of the United States or the District of Columbia.
Dominion Account - a special bank account or accounts of
----------------
Agent established by a Borrower pursuant to subsection 6.2.4 of the
Agreement at banks selected by such Borrower, but acceptable to
Agent in its reasonable discretion, and over which Agent shall have
sole and exclusive access and control for withdrawal purposes.
Eligible Account - an Account arising in the ordinary
----------------
course of the business of a Borrower from the sale of goods or
rendition of services which Agent, in its reasonable credit
judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible
Account if:
(i) it arises out of a sale made or services
rendered by a Borrower to a Subsidiary of a Borrower or an
Affiliate of Borrower or to a Person controlled by an
Affiliate of a Borrower and does not arise from
installation work or constitute a retainage; or
(ii) it remains unpaid more than ninety (90) days
after the original invoice date shown on the invoice; or
A-6
(iii) the total unpaid Accounts of the Account
Debtor exceed 20% of the net amount of all Eligible
Accounts, but only to the extent of such excess; or
(iv) any covenant, representation or warranty
contained in the Agreement with respect to such Account
has been breached; or
(v) the Account Debtor is also a creditor or
supplier of a Borrower or any Subsidiary of a Borrower or
has provided an advance deposit in respect of any order to
a Borrower or any Subsidiary of a Borrower, or the Account
Debtor has disputed liability with respect to such
Account, or the Account Debtor has made any claim with
respect to any other Account due from such Account Debtor
to a Borrower or any Subsidiary of a Borrower, or the
Account otherwise is or may become subject to right of
setoff by the Account Debtor, provided, that any such
--------
Account shall be eligible to the extent such amount
thereof exceeds such contract, deposit, dispute, claim,
setoff or similar right; or
(vi) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted
or hereafter amended, or made an assignment for the
benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or
other application for relief under the federal bankruptcy
laws, as now constituted or hereafter amended, has been
filed against the Account Debtor, or if the Account Debtor
has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; or
(vii) it arises from a sale made or services
rendered to an Account Debtor outside the United States,
unless the sale is either (1) to an Account Debtor located
in Ontario or any other province of Canada in which the
Personal Property Security Act has been adopted in
substantially the same form as currently in effect in
Ontario or (2) on letter of credit, guaranty or acceptance
terms, in each case acceptable to Agent in its reasonable
credit judgment; or
(viii) (1) it arises from a sale to the Account
Debtor on a xxxx-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment, or any
other repurchase or return basis; or (2) it is subject to
a reserve established by a Borrower for potential returns
or refunds, to the extent of such reserve; or
(ix) the Account Debtor is the United States of
America or any department, agency or instrumentality
thereof, unless the applicable Borrower
A-7
assigns its right to payment of such Account to Agent, in
a manner satisfactory to Agent, in its reasonable credit
judgment, so as to comply with the Assignment of Claims
Act of 1940 (31 U.S.C. Section 203 et seq., as amended);
-- ---
or
(x) it is not at all times subject to Agent's
duly perfected, first priority security interest or is
subject to a Lien that is not a Permitted Lien; or
(xi) the goods giving rise to such Account have
not been delivered to and accepted by the Account Debtor
or the services giving rise to such Account have not been
performed by the applicable Borrower and accepted by the
Account Debtor or the Account otherwise does not represent
a final sale; or
(xii) the Account is evidenced by chattel paper
or an instrument of any kind, or has been reduced to
judgment; or
(xiii) a Borrower or a Subsidiary of a Borrower
has made any agreement with the Account Debtor for any
extension, compromise, settlement or modification of the
Account or deduction therefrom, except for discounts or
allowances which are made in the ordinary course of
business for prompt payment and which discounts or
allowances are reflected in the calculation of the face
value of each invoice related to such Account; or
(xiv) 25% or more of the Accounts owing from the
Account Debtor are not Eligible Accounts hereunder; or
(xv) a Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof; or
(xvi) it represents service charges, late fees or
similar charges; or
(xvii) it consists of installation charges or
fees;
(xviii) the applicable Borrower was required to
post a performance or other surety bond (other than a bid
bond) in connection with such Account; or
(ix) it is not otherwise acceptable to Agent in
its reasonable credit judgment.
Eligible Inventory - Inventory of a Borrower (other than
------------------
packaging materials and supplies, shipping containers, tooling,
samples, displays and literature) which Agent, in its reasonable
credit judgment, deems to be Eligible Inventory. Without limiting
the generality of the foregoing, no Inventory shall be Eligible
Inventory if:
(i) it is not raw materials, work in process or
finished goods which meet the specifications of the
purchase order or contract for such Inventory, if any; or
A-8
(ii) it is not in good, new and saleable
condition; or
(iii) it is slow-moving, obsolete or
unmerchantable; or
(iv) it does not meet all standards imposed by
any governmental agency or authority; or
(v) it does not conform in all material respects
to any covenants, warranties and representations set forth
in the Agreement; or
(vi) it is not at all times subject to Agent's
duly perfected, first priority security interest or is
subject to a Lien that is not a Permitted Lien; or
(vii) it is not situated at a location in
compliance with the Agreement, provided that Inventory
--------
situated at a location not owned by a Borrower will be
Eligible Inventory only if Agent has received a
satisfactory landlord's agreement, bailee's letter or
processor's letter, as applicable, with respect to such
location; or
(viii) it is located outside of the continental
United States of America; or
(ix) it is in transit; or
(x) it is work in process Inventory of Sellers &
Xxxxxxxxx; or
(xi) it is not otherwise acceptable to Agent in
its reasonable credit judgment.
Environmental Laws - all federal, state and local laws,
------------------
rules, regulations, ordinances, orders and consent decrees relating
to health, safety and environmental matters.
Epic - Epic Furniture Group, Inc.
----
ERISA - the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the
----------------
Agreement.
Excess Advance - any Revolving Credit Loan advanced by
--------------
Agent or any Lender at a time when Availability (calculated without
reference to clause (iv) of the definition of such term) is zero
and Agent is not permitted to make any additional Overadvances
under subsection 1.1.2 of the Agreement.
Excess Cash Flow - with respect to any fiscal year of
----------------
Borrowers, commencing with the fiscal year ending November 1, 2004,
30% of the amount equal to the result
A-9
of (i) EBITDA for such period, minus (ii) Interest Expense paid or
required to be paid in cash during such period, minus (iii) the
non-financed portion of Capital Expenditures made during such
period, minus (iv) income taxes paid or required to be paid in cash
during such period, minus (v) scheduled principal payments on
Indebtedness made or required to be made during such period, minus
(vi) cash payments made during such period in respect of non-cash
reserves taken in prior periods, minus (vii) Distributions made
during such period.
Excluded Property - with respect to any Person, (a) any
-----------------
Property which is subject to a Purchase Money Lien permitted by
subsection 8.2.5(iv) of the Agreement or a Permitted Capital Lease
Obligation permitted by subsection 8.2.5(v) of the Agreement, in
any case pursuant to agreements that prohibit such Person from
granting any other Liens in such Property, (b) any Property leased
by such Person (as lessee) under a lease to the extent such lease
prohibits such Person from granting any Liens on such Property, (c)
any general intangible, instrument, software, license, permit,
lease, contract, governmental approval or franchise (but not the
proceeds thereof), if the grant of a Lien in such general
intangible, instrument, software, license, permit, lease, contract,
governmental approval or franchise in the manner contemplated by
the Loan Documents is prohibited by the terms of such general
intangible, instrument, software, license, permit, lease, contract,
governmental approval or franchise and would result in the
termination of such general intangible, instrument, software,
license, permit, lease, contract, governmental approval or
franchise, but only to the extent that any such prohibition is not
rendered ineffective pursuant to the Uniform Commercial Code or any
other applicable law, (d) "intent-to-use" trademarks at all times
prior to the first use thereof, whether by the actual use thereof
in commerce, the recording of a statement of use with the United
States Patent and Trademark Office or otherwise, and, (e) any
Securities of any Foreign Subsidiary owned by such Person to the
extent they exceed 65% of the outstanding Securities of such
Foreign Subsidiary owned by such Person.
Fee Letter - as defined in Section 2.3 of the Agreement.
----------
Fixed Assets - Equipment and real Property of each
------------
Borrower and each Subsidiary.
Foreign Subsidiary - any Subsidiary that is not a Domestic
------------------
Subsidiary.
GAAP - generally accepted accounting principles in the
----
United States of America in effect from time to time.
Guarantors - each Person who now or hereafter guarantees
----------
payment or performance of the whole or any part of the Obligations.
Guaranty Agreements - each guaranty now or hereafter
-------------------
executed by any Guarantor.
A-10
Indebtedness - as applied to a Person means, without
------------
duplication:
(i) all items which in accordance with GAAP would
be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person as at
the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease
Obligations;
(ii) all obligations of other Persons which such
Person has guaranteed;
(iii) all reimbursement obligations in connection
with letters of credit or letter of credit guaranties
issued for the account of such Person;
(iv) Derivative Obligations; and
(v) in the case of Borrowers (without
duplication), the Obligations.
Insolvency Proceeding - any proceeding commenced by or
---------------------
against any Person under any provision of the United States
Bankruptcy Code, as amended, or any successor statute or under any
other applicable bankruptcy or insolvency law, assignments for the
benefit of creditors, formal or informal moratoria, compositions,
or extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
Intellectual Property - all past, present and future:
---------------------
trade secrets, know-how and other proprietary information;
trademarks, internet domain names, service marks, trade dress,
trade names, business names, designs, logos, slogans (and all
translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers,
and the goodwill of the business relating thereto and all
registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the
world; copyrights (including copyrights for computer programs) and
copyright registrations or applications for registrations which
have heretofore been or may hereafter be issued throughout the
world and all tangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patent
applications and patents; industrial design applications and
registered industrial designs; license agreements related to any of
the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code,
data, databases and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to xxx for all
past, present and future infringements of any of the foregoing; all
other intellectual property; and all common law and other rights
throughout the world in and to all of the foregoing.
Intellectual Property Security Agreements - collectively,
-----------------------------------------
each Trademark Security Agreement, Patent Security Agreement,
Copyright Security Agreement or similar agreement now or hereafter
executed by any Person, whereby such Person
A-11
grants to Agent, for the benefit of itself and Lenders, as security
for the Obligations, a Lien upon any portion of the Intellectual
Property of such Person.
Interest Period - as applicable to any LIBOR Portion, a
---------------
period commencing on the date such LIBOR Portion is advanced,
continued or converted, and ending on the date which is one (1)
month, two (2) months, three (3) months, or six (6) months later,
as may then be requested by a Borrower; provided, that (i) any
--------
Interest Period which would otherwise end on a day which is not a
Business Day shall end in the next preceding or succeeding Business
Day as is Agent's custom in the market to which such LIBOR Portion
relates, as communicated to Borrowers from time to time; (ii) there
remains a minimum of one (1) month, two (2) months, three (3)
months or six (6) months (depending upon which Interest Period a
Borrower selects) in the Term, unless Borrowers and Lenders have
agreed to an extension of the Term beyond the expiration of the
Interest Period in question; and (iii) all Interest Periods of the
same duration which commence on the same date shall end on the same
date.
Key Default - as defined in subsection 3.11.1 of the
-----------
Agreement.
LC Amount - at any time, the aggregate undrawn face amount
---------
of all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Agent or any
-----------
Affiliate of Agent shall guaranty the payment or performance by a
Borrower of its reimbursement obligation under any letter of
credit.
LC Obligations - Any Obligations that arise from any draw
--------------
against any Letter of Credit or against any letter of credit
supported by an LC Guaranty.
Letter of Credit - any standby or documentary letter of
----------------
credit issued by Agent or any Affiliate of Agent for the account of
a Borrower.
Level 1 Event of Default - either (a) an Event of Default
------------------------
under any of (i) subsection 10.1.1 of the Agreement (other than in
respect of an Overadvance), (ii) subsection 10.1.1 of the
Agreement, due to the failure by Borrowers to repay an Overadvance
that exceeds the applicable limits set forth in subsection 1.1.2 or
the repayment of which has been demanded by Agent or Majority
Lenders, (iii) subsection 10.1.3 of the Agreement, due to a breach
of subsection 8.3 of the Agreement, (iv) subsection 10.1.3 of the
Agreement due to a breach of subsection 8.1.11 of the Agreement, or
(v) subsection 10.1.3 of the Agreement, due to a beach of either
subsection 8.1.3(i) or (ii) of the Agreement, or the failure of
Borrowers to timely deliver any Compliance Certificate required
pursuant to subsection 8.1.3 of the Agreement (in each case, after
expiration of the applicable cure period contained in subsection
10.1.3 of the Agreement) or (b) the refusal of Revolving Credit and
Term Loan A Lenders to fund two successive requests by Borrowers
for Revolving Credit Loans, Letters of Credit or LC Guaranties.
X-00
Xxxxx 0 Xxxxx of Default - an Event of Default other than
------------------------
a Level 1 Event of Default.
LIBOR - as applicable to any LIBOR Portion, for the
-----
applicable Interest Period, the rate per annum (rounded upward, if
necessary, to the nearest 1/8 of one percent) as determined on the
basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such Interest Period which appears on
the Telerate page 3750 as of 11:00 a.m. (London time) on the day
that is two (2) London Banking Days preceding the first day of such
Interest Period; provided, however, if the rate described above
-------- -------
does not appear on the Telerate System on any applicable interest
determination date, the LIBOR shall be the rate (rounded upwards as
described above, if necessary) for deposits in U.S. dollars for a
period substantially equal to the Interest Period on the Reuters
Page "LIBO" (or such other page as may replace the LIBO Page on
that service for the purpose of displaying such rates), as of 11:00
a.m. (London Time), on the day that is two (2) London Banking Days
prior to the first day of such Interest Period. If both the
Telerate and Reuters systems are unavailable, then the rate for
that date will be determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such
Interest Period which are offered by four (4) major banks in the
London interbank market at approximately 11:00 a.m. (London time),
on the day that is two (2) London Banking Days preceding the first
day of such Interest Period as selected by Agent. The principal
London office of each of the major London banks so selected will be
requested to provide a quotation of its U.S. dollar deposit offered
rate. If at least two (2) such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for
that date will be determined on the basis of the rates quoted for
loans in U.S. dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in
New York City at approximately 11:00 a.m. (New York City time), on
the day that is two (2) London Banking Days preceding the first day
of such Interest Period. In the event that Agent is unable to
obtain any such quotation as provided above, it will be determined
that LIBOR pursuant to a Interest Period cannot be determined. In
the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Percentage with respect to LIBOR deposits of
Bank then for any period during which such Reserve Percentage shall
apply, LIBOR shall be equal to the amount determined above divided
by an amount equal to 1 minus the Reserve Percentage.
LIBOR Interest Payment Date - the first day of each
---------------------------
calendar month during and immediately following the applicable
Interest Period.
LIBOR Option - the option granted pursuant to Section 3.1
------------
of the Agreement to have the interest on all or any portion of the
principal amount of the Revolving Credit Loans or Term Loan A based
on the LIBOR.
LIBOR Portion - a LIBOR Revolving Portion or a LIBOR Term
-------------
A Portion.
A-13
LIBOR Request - a notice in writing (or by telephone
-------------
confirmed electronically or by telecopy or other facsimile
transmission on the same day as the telephone request) from a
Borrower to Agent requesting that interest on a Revolving Credit
Loan or all or any portion of Term Loan A be based on the LIBOR,
specifying: (i) the first day of the Interest Period (which shall
be a Business Day); (ii) the length of the Interest Period; (iii)
whether the LIBOR Portion is a new Loan, a conversion of a Base
Rate Portion, or a continuation of a LIBOR Portion, and (iv) the
dollar amount of the LIBOR Revolving Portion or LIBOR Term A
Portion, which shall be in an amount not less than $1,000,000 or an
integral multiple of $100,000 in excess thereof.
LIBOR Revolving Portion - that portion of the Revolving
-----------------------
Credit Loans specified in a LIBOR Request (including any portion of
Revolving Credit Loans which is being borrowed by a Borrower
concurrently with such LIBOR Request) which, as of the date of the
LIBOR Request specifying such LIBOR Revolving Portion, has met the
conditions for basing interest on the LIBOR in Section 3.1 of the
Agreement and the Interest Period of which has not terminated.
LIBOR Term A Portion - that portion of Term Loan A
--------------------
specified in a LIBOR Request which, as of the date of the LIBOR
Request specifying such LIBOR Term A Portion, has met the
conditions for basing interest on the LIBOR in Section 3.1 of the
Agreement and the Interest Period of which has not terminated.
Lien - any interest in Property securing an obligation
----
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on common law, statute or
contract. The term "Lien" shall also include rights of seller under
conditional sales contracts or title retention agreements,
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of
the Agreement, a Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - each loan account established on the books
------------
of Agent pursuant to Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount
---------------
of such Lender's Revolving Loan Commitment, plus such Lender's Term
----
Loan A Commitment, plus such Lender's Term Loan B Commitment.
----
Loan Documents - the Agreement, the Other Agreements and
--------------
the Security Documents.
Loans - all loans and advances of any kind made by Agent,
-----
any Lender, or any Affiliate of Agent or any Lender, pursuant to
the Agreement.
A-14
London Banking Day - any date on which commercial banks
------------------
are open for business in London, England.
Majority Lenders - Revolving Credit and Term Loan A
----------------
Lenders holding 66 2/3% or more of the outstanding Term Loan A and
the Revolving Loan Commitments determined on a combined basis; and
following the termination of the Revolving Loan Commitments,
Revolving Credit and Term Loan A Lenders holding 51% or more of the
outstanding Term Loan A, Revolving Credit Loans, LC Amounts and LC
Obligations not yet reimbursed by Borrowers or funded with a
Revolving Credit Loan; provided, that (i) in each case, if there
--------
are 2 or less Revolving Credit and Term Loan A Lenders with
outstanding Revolving Credit Loans, LC Amounts, unfunded and
unreimbursed LC Obligations or Revolving Loan Commitments, all
Revolving Credit and Term Loan A Lenders shall be required to
constitute Majority Lenders; and (ii) prior to termination of the
Revolving Loan Commitments, if any Revolving Credit and Term Loan A
Lender breaches its obligation to fund any requested Revolving
Credit Loan, for so long as such breach exists, its voting rights
hereunder shall be calculated with reference to its outstanding
Revolving Loans, LC Amounts and unfunded and unreimbursed LC
Obligations, rather than its Revolving Loan Commitment.
Majority Term Loan B Lenders - as of any date Term Loan B
----------------------------
Lenders holding 51% or more of the outstanding Term Loan B.
Material Adverse Effect - (i) a material adverse effect on
-----------------------
the business, condition (financial or otherwise), operation,
performance or properties of Borrowers and their Subsidiaries taken
as a whole, (ii) a material adverse effect on the rights and
remedies of Agent or Lenders under the Loan Documents, or (iii) the
material impairment of the ability of Borrowers and the Domestic
Subsidiaries, taken as a whole, to perform their obligations
hereunder or under any Loan Document.
Money Borrowed - means, (i) Indebtedness arising from the
--------------
lending of money by any Person to any Borrower or any Subsidiary;
(ii) Indebtedness, whether or not in any such case arising from the
lending by any Person of money to any Borrower or any Subsidiary,
(1) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (2) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or
(3) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and
(v) Indebtedness of any Borrower or any Subsidiary under any
guaranty of obligations that would constitute Indebtedness for
Money Borrowed under clauses (i) through (iii) hereof, if owed
directly by a Borrower or any Subsidiary. Money Borrowed shall not
include trade payables or accrued expenses.
Mortgages - (i) the Real Property Deed of Trust,
---------
Assignment of Rents, Security Agreement and Fixture Filing executed
by Shelby on or about the Original
A-15
Closing Date in favor of Agent, for the benefit of itself and
Lenders, by which Shelby has granted to Agent, as security for the
Obligations, a Lien upon the real Property of Shelby located at 000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, (ii) the
Leasehold and Fee Deed of Trust, Assignment of Rents and Security
Agreement executed by Falcon on or about the Original Closing Date
in favor of Agent, for the benefit of itself and Lenders, by which
Falcon has granted to Agent, as security for the Obligations, a
Lien upon the leased and owned real Property of Falcon located at
00 Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000, (iii) the Deed of
Trust, Assignment of Rents and Security Agreement executed by
Shelby on or about the Original Closing Date in favor of Agent, for
the benefit of itself and Lenders, by which Shelby has granted to
Agent, as security for the Obligations, a Lien upon the real
Property of Shelby located at 0000 Xxxxxxx 00, Xxxxxx, Xxxxxxxxxxx
00000, (iv) the Real Property Mortgage and Security Agreement
executed by Falcon on or about the Original Closing Date in favor
of Agent, for the benefit of itself and Lenders, by which Falcon
has granted to Agent, as security for the Obligations, a Lien upon
the real property of Falcon located at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, and (v) all other mortgages, deeds of
trust and comparable documents now or at any time hereafter
securing the whole or any part of the Obligations, in each case as
the same may be amended or otherwise modified from time to time.
Multiemployer Plan - has the meaning set forth in Section
------------------
4001(a)(3) of ERISA.
Notes - the Revolving Notes, the Term A Notes and the Term
-----
B Notes.
Obligations - all Loans, all LC Obligations and all other
-----------
advances, debts, liabilities, obligations, covenants and duties,
together with all interest, fees and other charges thereon, owing,
arising, due or payable from each Borrower to Agent or Tranche B
Agent, for its own benefit, from each Borrower to Agent or Tranche
B Agent for the benefit of any Lender, from each Borrower to any
Lender and from each Borrower to Bank or any other Affiliate of
Agent or Tranche B Agent, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument,
arising under the Agreement or any of the other Loan Documents (or
any agreements evidencing the Product Obligations), whether direct
or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now
existing or hereafter arising and however acquired, and including
without limitation any Product Obligations owing to Agent, Bank or
any Affiliate of Bank or Agent.
OCM - OCM Principal Opportunities Fund II, L.P., a
---
Delaware limited partnership.
Organizational I.D. Number - with respect to any Person,
--------------------------
the organizational identification number assigned to such Person by
the applicable governmental unit or agency of the jurisdiction of
organization of such Person.
A-16
Original Closing Date - June 5, 2003.
---------------------
Original Loan Agreement - as defined in the preamble to
-----------------------
the Agreement.
Original Term Loan B - Term Loan B under and as defined in
--------------------
the Original Loan Agreement.
Other Agreements - any and all agreements, instruments and
----------------
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by any Borrower, any
Subsidiary, any Guarantor or any other third party and delivered to
Agent or any Lender in respect of the transactions contemplated by
the Agreement.
Other Assets - all Properties of each Borrower and each
------------
Subsidiary, other than Fixed Assets.
Overadvance - as defined in subsection 1.1.2 of the
-----------
Agreement.
Permitted Capital Lease Obligations - Capitalized Lease
-----------------------------------
Obligations of Borrowers and the Subsidiaries incurred after the
Original Closing Date, the aggregate amount of which, when
aggregated with the aggregate amount of all Capitalized Lease
Obligations of Borrowers and the Subsidiaries at the time
outstanding, does not exceed $2,000,000. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases (as opposed to operating leases)
shall be computed as a Capitalized Lease Obligation.
Permitted Liens - any Lien of a kind specified in
---------------
subsection 8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
-------------------------------------
Indebtedness of any Borrower or any Subsidiary of any Borrower
incurred after the Original Closing Date which is secured by a
Purchase Money Lien and the principal amount of which, when
aggregated with the principal amount of all other such Indebtedness
of Borrowers and the Subsidiaries at the time outstanding, does not
exceed $2,000,000.
Person - an individual, partnership, corporation, limited
------
liability company, joint stock company, land trust, business trust,
or unincorporated organization, or a government or agency or
political subdivision thereof.
Plan - an employee benefit plan now or hereafter
----
maintained for employees of any Borrower or any Subsidiary that is
covered by Title IV of ERISA.
Pledge Agreements - (i) the Pledge Agreement executed by
-----------------
Falcon on or about the Original Closing Date in favor of Agent, for
the benefit of itself and Lenders, by which Falcon has granted to
Agent, as security for the Obligations, a Lien on 100% of the
Securities of each of Xxxx Furniture Corporation ("Xxxx"), Falcon
A-17
Holdings, Inc., The Falcon Companies International, Inc. and
Shelby, 80% of the Securities of Epic and 65% of the Securities of
Falcon Products China Limited, (ii) the Pledge Agreement executed
by Shelby on or about the Original Closing Date in favor of Agent,
for the benefit of itself and Lenders, by which Shelby has granted
to Agent, as security for the Obligations, a Lien on 100% of the
Securities of each of Sellers and Madison Furniture Industries,
Inc., (iii) the Pledge Agreement executed by Xxxx on or about the
Original Closing Date in favor of Agent, for the benefit of itself
and Lenders, by which Xxxx has granted to Agent, as security for
the Obligations, a Lien on 100% of the Securities of Xxxxxxx
Industries, Inc., (iv) Agreement on Pledge of Book Entered Shares
executed by Falcon on or about the Original Closing Date in favor
of Agent, for the benefit of itself and Lenders, by which Falcon
has granted to Agent, as security for the Obligations, a Lien on
65% of the Securities of Falcon Mimon A.S., (v) the Share Pledge
Agreement executed by Xxxx on or about the Original Closing Date in
favor of Agent, for the benefit of itself and Lenders, by which
Xxxx has granted to Agent, as security for the Obligations, a Lien
on 65% of the Securities of Xxxx Europe A/S, (vi) the Stock Pledge
Contract executed by Falcon on or about the Original Closing Date
in favor of Agent, as security for the Obligations, a Lien on 65%
of the Securities of Falcon xx Xxxxxx, X.X. de C.V., and (vii) all
other pledge agreements and comparable documents now or at any time
hereafter securing the whole or any part of the Obligations, in
each case as amended or otherwise modified from time to time.
Product Obligations - every obligation of Borrower under
-------------------
and in respect of any one or more of the following types of
services or facilities extended to any Borrower by Bank, Agent or
any Affiliate of Bank or Agent: (i) cash management or related
services including the automatic clearing house transfer of funds
for the account of any Borrower pursuant to agreement or overdraft,
(ii) cash management, including controlled disbursement services
and (iii) Derivative Obligations.
Projections - Borrowers' forecasted Consolidated (i)
-----------
balance sheets, (ii) profit and loss statements, and (iii) cash
flow statements, all prepared on a consistent basis with the
historical financial statements of Borrowers and the Subsidiaries,
together with appropriate supporting details and a statement of
underlying assumptions.
Property - any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
---------------------------
Indebtedness (other than the Obligations and Capitalized Lease
Obligations) for the payment of all or any part of the purchase
price of any Fixed Assets, (ii) any Indebtedness (other than the
Obligations and Capitalized Lease Obligations) incurred at the time
of or within ten (10) days prior to or after the acquisition of any
Fixed Assets for the purpose of financing all or any part of the
purchase price thereof, and (iii) any renewals, extensions,
refinancings or replacements thereof, but not any increases in the
principal amounts thereof outstanding at the time.
A-18
Purchase Money Lien - a Lien upon fixed assets which
-------------------
secures Purchase Money Indebtedness, but only if such Lien shall at
all times be confined solely to the Fixed Assets the purchase price
of which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien and the proceeds thereof.
Rebuild Reserve - a reserve created under subsection 1.1.1
---------------
of the Agreement in the amount of (a) all proceeds of insured
losses or destruction to Equipment or real Property being held by
Agent pursuant to subsection 3.3.1(a) pending possible repair or
replacement of such Property subject to the original loss or
destruction and (b) all proceeds of dispositions under subsection
8.2.9(iv) being held by Agent pending possible replacement of the
Property subject to the disposition.
Rentals - as defined in subsection 8.2.19 of the
-------
Agreement.
Reportable Event - any of the events set forth in Section
----------------
4043(c) of ERISA.
Required Lenders - Majority Lenders and Majority Term Loan
----------------
B Lenders.
Reserve Percentage - the maximum aggregate reserve
------------------
requirement (including all basic, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve
System against "Euro-currency Liabilities" as defined in Regulation
D.
Responsible Officer - the chief executive officer,
-------------------
president or chief financial officer of Falcon.
Restricted Investment - any investment made in cash or by
---------------------
delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property
except the following:
(i) investments by a Borrower or a Subsidiary of
a Borrower, to the extent existing on the Original Closing
Date, in one or more Subsidiaries of such Person;
(ii) so long as no Event of Default is then in
existence, investments after the Original Closing Date by
a Borrower or a Domestic Subsidiary of a Borrower in a
Foreign Subsidiary of a Borrower (as loans or equity
investments) the Securities of which are subject to a
Pledge Agreement, in an aggregate amount after the
Original Closing Date for all Foreign Subsidiaries not in
excess of $1,000,000 in any fiscal year or $2,500,000
during the period since the Original Closing Date;
(iii) Property to be used in the ordinary course
of business;
(iv) Current Assets arising from the sale of
goods and services in the ordinary course of business of
any Borrower or any Subsidiary;
A-19
(v) investments in direct obligations of the
United States of America, or any agency thereof or
obligations guaranteed by the United States of America,
provided that such obligations mature within one year from
--------
the date of acquisition thereof;
(vi) investments in certificates of deposit
maturing within one year from the date of acquisition and
fully insured by the Federal Deposit Insurance
Corporation;
(vii) investments in commercial paper given the
highest rating by a national credit rating agency and
maturing not more than two hundred seventy (270) days from
the date of creation thereof;
(viii) investments in money market, mutual or
similar funds having assets in excess of $100,000,000 and
the investments of which are limited to investment grade
securities;
(ix) intercompany loans permitted under
subsections 8.2.2(v), (vi) and (vii) of the Agreement;
(x) investments existing on the date hereof and
listed on Exhibit 8.2.12 hereto;
--------------
(xi) deposit and other bank accounts maintained
by a Borrower or a Subsidiary in the ordinary course of
business, subject, in the case of deposit accounts of a
Borrower or a Domestic Subsidiary, to Dominion Account
agreements reasonably acceptable to Agent;
(xii) other investments in an aggregate amount of
up to $50,000 at any time outstanding;
(xiii) intercompany accounting entries made in
respect of sales of Inventory and collections of Accounts
in the ordinary course of business;
(xiv) investments by Foreign Subsidiaries in
other Foreign Subsidiaries whose Securities are subject to
a Pledge Agreement; and
(xv) investments otherwise expressly permitted
pursuant to the Agreement.
Restricted Subsidiary - as defined in the Subordinated
---------------------
Note Indenture, as in existence on the Closing Date.
Revolving Credit and Term Loan A Lenders - any Lender with
----------------------------------------
a Revolving Loan Commitment or a Term Loan A Commitment or that
holds any portion of the Revolving Credit Loans or Term Loan A.
A-20
Revolving Credit and Term Loan A Obligations - all
--------------------------------------------
Obligations other than Term Loan B Obligations.
Revolving Credit and Term Loan A Termination Date - the
-------------------------------------------------
first date (a) the Loans (other than the Term Loan B) have been
repaid in full and the Revolving Loan Commitments have been
terminated, (b) all other Obligations (other than the Obligations
in respect of the Term Loan B and other than indemnification claims
that have not yet been asserted) and the Revolving Loan Commitments
have been terminated under the Agreement and the other Loan
Documents have been completely discharged, and (c) all Letter of
Credit Obligations have been cash collateralized, canceled or
backed by standby letters of credit in accordance with this
Agreement (in an amount equal to 105% of the LC Amount).
Revolving Credit Loan - a Loan made by any Revolving
---------------------
Credit and Term Loan A Lender pursuant to Section 1.1 of the
Agreement.
Revolving Credit Maximum Amount - $33,769,000, as such
-------------------------------
amount may be reduced from time to time pursuant to the terms of
the Agreement.
Revolving Loan Commitment - with respect to any Lender,
-------------------------
the amount of such Lender's Revolving Loan Commitment pursuant to
subsection 1.1.1 of the Agreement, as set forth below such Lender's
name on the signature page hereof or any Assignment and Acceptance
Agreement executed by such Lender.
Revolving Loan Percentage - with respect to each Revolving
-------------------------
Credit and Term Loan A Lender, the percentage equal to the quotient
of such Revolving Credit and Term Loan A Lender Lender's Revolving
Loan Commitment divided by the aggregate of all Revolving Loan
------- --
Commitments.
Revolving Notes - the Secured Promissory Notes to be
---------------
jointly and severally executed by Borrowers on or about the Closing
Date in favor of each Revolving Credit and Term Loan A Lender to
evidence the Revolving Credit Loans, which shall be in the form of
Exhibit 1.1 to the Agreement, together with any replacement or
-----------
successor notes therefor.
Sale Notice - a written notice by Agent to Tranche B Agent
-----------
stating that a sale, lease or other disposition of Collateral is
proposed pursuant to subsection 11.7 of the Agreement, and in each
case, providing available general details of such transaction.
Security - all shares of stock, partnership interests,
--------
membership interests, membership units or other ownership interests
in any other Person and all warrants, options or other rights to
acquire the same.
Security Documents - the Guaranty Agreements, the
------------------
Mortgages, the Pledge Agreements, the Intellectual Property
Security Agreements, and all other instruments and agreements now
or at any time hereafter securing the whole or any part of the
Obligations.
A-21
Senior Debt - as defined in the Subordinated Note
-----------
Indenture, as in existence on the Closing Date.
Solvent - as to any Person, that such Person (i) owns
-------
Property whose fair saleable value is greater than the amount
required to pay all of such Person's Indebtedness (including
contingent debts), (ii) is able to pay all of its Indebtedness as
such Indebtedness matures and (iii) has capital sufficient to carry
on its business and transactions and all business and transactions
in which it is about to engage.
Special Reserve - a permanent reserve created under
---------------
subsection 1.1.1 of the Agreement in an aggregate amount equal to
the sum of (i) all mandatory prepayments applied against the
Revolving Credit Loans pursuant to the second sentence of
subsection 3.3.1 of the Agreement, and (ii) all mandatory
prepayments in respect of Excess Cash Flow applied to the Revolving
Credit Loans, pursuant to Section 3.11 of the Agreement.
Subordinated Debt - the Subordinated Notes and any other
-----------------
Indebtedness of any Borrower or any Subsidiary that is subordinated
to the Obligations in a manner reasonably satisfactory to Agent,
and contains terms, including without limitation, payment terms,
reasonably satisfactory to Required Lenders.
Subordinated Note Debt - Falcon's Indebtedness for Money
----------------------
Borrowed in the aggregate outstanding amount of $150,000,000
incurred pursuant to the Subordinated Note Documents.
Subordinated Note Documents - the Subordinated Note
---------------------------
Indenture, the Subordinated Notes and each other agreement,
instrument or document now or hereafter evidencing or relating to
the Subordinated Note Debt.
Subordinated Note Guarantors - the "Guarantors" as defined
----------------------------
in the Subordinated Note Indenture, as in existence on the Closing
Date.
Subordinated Note Indenture - the Indenture dated as of
---------------------------
June 17, 1999 among Falcon, as Issuer, certain Subsidiaries of
Falcon, as Guarantors and the Bank of New York, as Trustee, as
amended, modified or supplemented through the date hereof and as it
may be hereafter amended, modified or supplemented from time to
time.
Subordinated Notes - the 11 3/8% Senior Subordinated Notes
------------------
due June 15, 2009, Series B, issued by Falcon pursuant to the
Subordinated Note Indenture and the other Subordinated Note
Documents.
Subsidiary - any Person of which another Person owns,
----------
directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.
Term - as defined in Section 4.1 of the Agreement.
----
A-22
Term A Notes - the Secured Promissory Notes to be executed
------------
by Borrower on or about the Closing Date in favor of each
applicable Revolving Credit and Term Loan A Lender to evidence its
Term Loan A, which shall be in the form of Exhibit 1.3(A) to the
--------------
Agreement, together with any replacement or successor notes
therefor.
Term B Notes - the Secured Promissory Notes to be executed
------------
by Borrower on or about the Closing Date in favor of each
applicable Term Loan B Lender to evidence its Term Loan B, which
shall be in the form of Exhibit 1.3(B) to the Agreement, together
--------------
with any replacement or successor notes therefor.
Term Loan A - the Loan described in subsection 1.3.1 of
-----------
the Agreement.
Term Loan A Commitment - with respect to each Revolving
----------------------
Credit and Term Loan A Lender, the amount of such Revolving Credit
and Term Loan A Lender's Term Loan A Commitment, as set forth below
such Revolving Credit and Term Loan A Lender's name on the
signature pages hereof or any Assignment and Acceptance Agreement
executed by such Lender, minus all Term Loan A payments paid to
-----
such Revolving Credit and Term Loan A Lender.
Term Loan B - the Loan described in subsection 1.3.2 of
-----------
the Agreement.
Term Loan B Commitment - with respect to each Term Loan B
----------------------
Lender, the amount of such Term Loan B Lender's Term Loan B
Commitment pursuant to subsection 1.3.2 of the Agreement, as set
forth below such Term Loan B Lender's name on the signature pages
hereof or any Assignment and Acceptance Agreement executed by such
Term Loan B Lender, minus all Term Loan B payments paid to such
-----
Term Loan B Lender.
Term Loan B Current Pay Interest - as defined in
--------------------------------
subsection 2.1.1 of the Agreement.
Term Loan B Lender - any Lender with a Term Loan B
------------------
Commitment or that holds any portion of Term Loan B.
Term Loan B Obligations - all interest and principal due
-----------------------
with respect to Term Loan B and all other amounts due Term Loan B
Lenders under the Agreement or any other Loan Document.
Term Loan B PIK Interest - as defined in subsection 2.1.1
------------------------
of the Agreement.
Term Loan B Prepayment Fee - (a) with respect to any
--------------------------
prepayment of Term Loan B that is made on or prior to the date
which is eighteen (18) months after the Closing Date, an amount
equal to 10% of the amount prepaid, (b) with respect to any
prepayment of Term Loan B that is made after the date which is
eighteen (18) months after the Closing Date but on or prior to the
date which is twenty-four (24) months after the Closing Date, an
amount equal to 5% of the amount prepaid, and (c) with
A-23
respect to any prepayment of Term Loan B that is made after the
date which is twenty-four (24) months after the Closing Date, zero.
Term Loans - Term Loan A and Term Loan B.
----------
Total Credit Facility - $89,331,000, as reduced from time
---------------------
to time pursuant to the terms of the Agreement.
Tranche A Default Rate - as defined in subsection 2.1.2 of
----------------------
the Agreement.
Tranche B Agent - OCM, in its capacity as Tranche B Agent
---------------
for the Term Loan B Lenders under the Agreement and any successor
in that capacity appointed pursuant to subsection 13.9 of the
Agreement.
Tranche B Default Rate - as defined in subsection 2.1.2 of
----------------------
the Agreement.
Type of Organization - with respect to any Person, the
--------------------
kind or type of entity by which such Person is organized, such as a
corporation or limited liability company.
UCC - the Uniform Commercial Code as in effect in the
---
State of Illinois on the date of this Agreement, as it may be
amended or otherwise modified.
Unrestricted Subsidiary - as defined in the Subordinated
-----------------------
Note Indenture, as in existence on the Closing Date.
Unused Line Fee - as defined in Section 2.5 of the
---------------
Agreement.
Voting Stock - Securities of any class or classes of a
------------
corporation, limited partnership or limited liability company or
any other entity the holders of which are ordinarily, in the
absence of contingencies, entitled to vote with respect to the
election of corporate directors (or Persons performing similar
functions).
OTHER TERMS. All other terms contained in the Agreement
-----------
shall have, when the context so indicates, the meanings provided for by the
UCC to the extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein",
-------------------------------
"hereof" and "hereunder" and other words of similar import refer to the
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement.
All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All
references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
A-24
LIST OF EXHIBITS
Exhibit 1.1 Form of Revolving Note
Exhibit 1.3(A) Form of Term A Note
Exhibit 1.3(B) Form of Term B Note
Exhibit 6.1.1 Business Locations
Exhibit 7.1.1 Jurisdictions in which each Borrower and each
Subsidiary is Authorized to do Business
Exhibit 7.1.4 Capital Structure of each Borrower and each
Subsidiary
Exhibit 7.1.5 Names; Organization
Exhibit 7.1.13 Surety Obligations
Exhibit 7.1.14 Tax Identification Numbers of each Borrower and
each Restricted Subsidiary
Exhibit 7.1.15 Brokers' Fees
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Right to Incur Debts
Exhibit 7.1.20 Litigation
Exhibit 7.1.21 Defaults
Exhibit 7.1.22 Capitalized and Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Relations
Exhibit 7.1.27 Disclosures re: Subordinated Note Indenture
Exhibit 8.1.3 Form of Compliance Certificate
Exhibit 8.1.4 Form of Borrowing Base Certificate
Exhibit 8.2.3 Existing Indebtedness
Exhibit 8.2.4 Affiliate Transactions
Exhibit 8.2.5 Permitted Liens
Exhibit 8.2.12 Permitted Investments
Exhibit 8.3 Financial Covenants
List of Exhibits
EXHIBIT 1.1
FORM OF REVOLVING NOTE
Exhibit 1.1 - Page 1
EXHIBIT 1.3(A)
FORM OF TERM A NOTE
Exhibit 1.3(A) - Page 1
EXHIBIT 1.3(B)
FORM OF TERM B NOTE
Exhibit 1.3(B) - Page 1
EXHIBIT 8.1.3
COMPLIANCE CERTIFICATE
[------------------------]
------------------, ---
Fleet Capital Corporation, as Agent
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Falcon Products, Inc. ("Falcon"), gives this certificate
to Fleet Capital Corporation, in its capacity as Agent ("Agent") in
accordance with the requirements of subsection 8.1.3 of that certain Amended
and Restated Loan and Security Agreement dated January 15, 2004 among
Falcon, Xxxxxx Xxxxxxxx Industries, Inc. and Sellers & Xxxxxxxxx Inc.
(collectively, "Borrowers"), Agent and the Lenders party thereto ("Loan
Agreement"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan
Agreement.
1. Falcon hereby certifies that, based upon the balance
sheets and statements of income of Borrowers and the Subsidiaries for the
[__________] period ending _______________, ____, copies of which are
attached hereto, and as demonstrated in the attached covenant compliance
certificate:
(i) Capital Expenditures during the period and
for the fiscal year to date total $__________ and $__________,
respectively.
(ii) The Fixed Charge Coverage Ratio as of the
last day of the period is ______:1.00. [TO BE ADDED ONLY AT FISCAL
QUARTER END DATES BEGINNING JANUARY 31, 2004].
(iii) EBITDA for the period of twelve (12)
consecutive fiscal months ending on the last day of the period was
$_________. [TO BE ADDED ONLY AT FISCAL QUARTER END DATES BEGINNING
JANUARY 31, 2004].
(iv) Domestic EBITDA for the fiscal quarter
ending on the last of the period was _____% of EBITDA. [TO BE ADDED
ONLY AT FISCAL QUARTER END DATES BEGINNING JANUARY 31, 2004].
(v) The ratio of Consolidated Secured Funded Debt
to EBITDA for the period of twelve (12) consecutive fiscal months
ending on the last day of the
Exhibit 8.1.3 - Page 1
period is ______:1.00. [TO BE ADDED ONLY AT FISCAL QUARTER END
DATES BEGINNING JANUARY 31, 2004].
2. No Default exists on the date hereof, other than:
__________________ ________________________________________________ [IF
NONE, SO STATE]; and
3. No Event of Default exists on the date hereof, other
than __________ ____________________________________________________ [IF
NONE, SO STATE].
Very truly yours,
FALCON PRODUCTS, INC.
By: _______________________________
Chief Financial Officer
Exhibit 8.1.3 - Page 2
EXHIBIT 8.1.4
FORM OF BORROWING BASE CERTIFICATE
Attached
Exhibit 8.1.4 - Page 1
FLEET CAPITAL Borrowing Certificate
Customer Name: Falcon Products, Inc.
Assignment #:
Report Date:
------------------------------------------------------------------------------------------------------------------------------------
INVENTORY LOAN #
ACCOUNTS RECEIVABLE LOAN # FAL00 Dates covered: ______________
Dates covered: ______________ COLLATERAL FAL05
------------------------------------------------------------------------------------------------------------------------------------
1. BEGINNING BALANCE _____________ 1. BEGINNING BALANCE _____________
------------------------------------------------------------------------------------------------------------------------------------
2. Sales (+) 2. Adjustments (+) _____________
------------------------------------------------------------------------------------------------------------------------------------
3. Credit Memos (-) 3. Adjustments (-)
------------------------------------------------------------------------------------------------------------------------------------
4. Adjustments (+) _____________ 4. CURRENT BALANCE _____________
------------------------------------------------------------------------------------------------------------------------------------
5. Adjustments (-) 5. Ineligibles _____________
------------------------------------------------------------------------------------------------------------------------------------
6. Net Collections (-) 6. Eligible Collateral (4-5) _____________
------------------------------------------------------------------------------------------------------------------------------------
7. Discounts (-) 7. Eligible Inventory @ 28.53% _____________
------------------------------------------------------------------------------------------------------------------------------------
8. Overpayments, Misc. Cash (+) 8. Less Reserve
------------------------------------------------------------------------------------------------------------------------------------
9. Unapplied Cash (-) 9. QUALIFIED INVENTORY _____________
------------------------------------------------------------------------------------------------------------------------------------
10. CURRENT BALANCE _____________ 10. AVAILABILITY = # 7 OR $17,500,000 _____________
------------------------------------------------------------------------------------------------------------------------------------
11. Ineligible _____________
------------------------------------------------------------------------------------------------------------------------------------
12. Eligible Collateral (10-11) _____________
------------------------------------------------------------------------------------------------------------------------------------
13. Eligible A/R @ 85% _____________
------------------------------------------------------------------------------------------------------------------------------------
14. Less Reserve
------------------------------------------------------------------------------------------------------------------------------------
15. QUALIFIED COLLATERAL _____________
------------------------------------------------------------------------------------------------------------------------------------
16. AVAILABILITY = #15 OR LESSER OF $33,769,000 _____________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
LOAN
------------------------------------------------------------------------------------------------------------------------------------
17. BEGINNING BALANCE ______
------------------------------------------------------------------------------------------------------------------------------------
18. Cash (Checks/ACH) (-) ______
------------------------------------------------------------------------------------------------------------------------------------
19. Cash (Wire) (-) ______
------------------------------------------------------------------------------------------------------------------------------------
20. Adjustments (-/+) (circle one) ______
------------------------------------------------------------------------------------------------------------------------------------
21. Advance (+) ______
------------------------------------------------------------------------------------------------------------------------------------
22. CURRENT REVOLVING LOAN BALANCE @ ______
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL AVAILABILITY = LESSER OF 16 + 10 OR $33,769,000 _____________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CREDIT LINE _____________
------------------------------------------------------------------------------------------------------------------------------------
QUALIFIED AVAILABILITY _____________
------------------------------------------------------------------------------------------------------------------------------------
Less Total Revolving Loan Balance _____________
------------------------------------------------------------------------------------------------------------------------------------
Less Letters of Credit _____________
------------------------------------------------------------------------------------------------------------------------------------
Exhibit 8.1.4 - Page 2
REMAINING AVAILABILITY _____________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Explanation:
------------------------------------------------------------------------------------------------------------------------------------
The foregoing information is delivered to Fleet Capital Prepared by:
in accordance with an Amended and Restated Loan and -------------------------------------------------------
Security Agreement among the lenders party thereto, Title: Date:
Fleet Capital Corporation, Falcon Products, Inc., Shelby -------------------------------------------------------
Xxxxxxxx Industries, Inc. and Sellers & Xxxxxxxxx Inc. Approved by:
dated: January 15, 2004. -------------------------------------------------------
I hereby certify that the information contained herein is true Title: Date:
and correct as of the dates shown herein. Nothing contained herein shall -------------------------------------------------------
constitute a waiver, modification, or limitation of any of the terms or
conditions set forth in the referenced Loan and Security Agreement.
BRACKETS ARE NOT NECESSARY FOR NEGATIVE NUMBERS
-----------------------------------------------
UNLESS WHAT YOU WANT IS DIFFERENT THAN WHAT FIELD INDICATES.
WE BUILD RELATIONSHIPS
Exhibit 8.1.4 - Page 3
[FLEET CAPITAL LOGO]
A/R INELIGIBLES
--- -----------
====================================================================================================================================
Client Name: Falcon Industries, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Client Number: FAL00
------------------------------------------------------------------------------------------------------------------------------------
Date:
====================================================================================================================================
Total Current / Dating 1 - 30 31 - 60 61 - 90 91 - 120 Over 120
------------------------------------------------------------------------------------------------------------------------------------
Aging Summary
------------------------------------------------------------------------------------------------------------------------------------
Percent to Gross
====================================================================================================================================
Following is a listing of the ineligible accounts receivable as of: __________
====================================================================================================================================
[ ] RECEIVABLES INELIGIBLE BY REASON OF AGE:
------------------------------------------------------------------------------------------------------------------------------------
[ ] Invoice amounts over 90 days old (2) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Current accounts with substantial past due balances (i.e. crossed aged balance) ___% (3) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] RECEIVABLES INELIGIBLE FOR OTHER REASONS:
------------------------------------------------------------------------------------------------------------------------------------
[ ] Due from debtors who are suppliers or creditors (commonly known as "Contra Items") (4)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Due from affiliates and/or subsidiaries (5)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Due from officers and/or employees (5)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Due from debtors contingently on guaranteed sales and/or consignments (5)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Aged Credit Balances > 90 days old (5) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Due from other than U.S. or Canadian debtors (5) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Government Purchases < 90 days old (5) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Amounts ineligible for reasons other than above - see list below:
------------------------------------------------------------------------------------------------------------------------------------
A.) Installation A/R $____________
------------------------------------------------------------------------------------------------------------------------------------
B.) Deposits on Hold $____________
------------------------------------------------------------------------------------------------------------------------------------
C.) Accrued Cash Receipts $____________
------------------------------------------------------------------------------------------------------------------------------------
D.)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Total amounts ineligible for reasons other than above (5) $____________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL (5) $____________
------------------------------------------------------------------------------------------------------------------------------------
[ ] TOTAL RECEIVABLES INELIGIBLE FOR BORROWING PURPOSES [(2), (3), (4), (5)] $____________
------------------------------------------------------------------------------------------------------------------------------------
Exhibit 8.1.4 - Page 4
----------------------------------------------------------------------------------------------------------
[ ] PREVIOUS INELIGIBLE RECEIVABLES FOR BORROWING PURPOSES: $0.00
------------------------------------------------------------------------------------------------------------------------------------
[ ] DIFFERENCE: $____________
====================================================================================================================================
Loan Servicing Admin.: Date:
------------------------------------------------------------------------------------------------------------------------------------
Loan Officer: Date Adjusted:
====================================================================================================================================
Exhibit 8.1.4 - Page 5
[FLEET CAPITAL LOGO]
INVENTORY INELIGIBLES
--------- -----------
====================================================================================================================================
Client Name: Falcon Industries, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Client Number: FAL05
------------------------------------------------------------------------------------------------------------------------------------
Date:
====================================================================================================================================
---------------------------------------------------------
Finished Goods $________
---------------------------------------------------------
Work in Process $________
---------------------------------------------------------
Raw Materials $________
---------------------------------------------------------
Total Inventory $________
====================================================================================================================================
Following is a listing of the ineligible inventory as of: _________
====================================================================================================================================
[ ] INELIGIBLE INVENTORY:
------------------------------------------------------------------------------------------------------------------------------------
[ ] Slow Moving/Obsolete Inventory (1) $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Consigned Stock (1) $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] In-Transit (1) $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Packaging & Supplies (1) $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Inventory located at Outside locations (1) $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] Miscellaneous $___________
------------------------------------------------------------------------------------------------------------------------------------
---------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
[ ] Total amounts ineligible for reasons other than above (2) $___________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
[ ] TOTAL INVENTORY INELIGIBLE FOR BORROWING PURPOSES [(1), (2)] $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] PREVIOUS INELIGIBLE INVENTORY FOR BORROWING PURPOSES: $___________
------------------------------------------------------------------------------------------------------------------------------------
[ ] DIFFERENCE: $___________
====================================================================================================================================
Loan Servicing Admin.: Date:
------------------------------------------------------------------------------------------------------------------------------------
Loan Officer: Date Adjusted:
====================================================================================================================================
Exhibit 8.1.4 - Page 6
INVENTORY SUMMARY
------------------------------------------------------------------------------------------------------------------------------------
FYE _______ Prior Month Current _______
------------------------------------------------------------------------------------------------------------------------------------
Inventory Breakdown $$$ % $$$ % $$$ %
------------------------------------------------------------------------------------------------------------------------------------
Raw Materials
Packaging 0 0 0 0 0 0
Miscellaneous 0 0 0 0 0 0
Work In Process 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Finished Goods 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Gross Inventory 0 100% 0 100% 0 100%
=========================================================================================
Reconciling Items 0 0 0 0 0 0
Net Inventory Per
-----------------------------------------------------------------------------------------
Balance Sheet 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Inventory Type Gross Prime
Inventory Ineligible Inventory Advance % Availability
------------------------------------------------------------------------------------------------------------------------------------
Raw ___________ ___________ ___________ ____% ___________
Wip ___________ ___________ ___________ ____% ___________
Packaging - - - ____% -
Miscellaneous - - - ____% -
Finished Goods ___________ ___________ ___________ ____% ___________
========================================================================================================
Totals ___________ ___________ ___________ ____% ___________
------------------------------------------------------------------------------------------------------------------------------------
Exhibit 8.1.4 - Page 7
EXHIBIT 8.3
FINANCIAL COVENANTS
DEFINITIONS
Consolidated Funded Debt - with respect to the Borrowers and their
------------------------
Subsidiaries, the sum, without duplication, of (a) the aggregate amount of
Indebtedness of the Borrowers and their Subsidiaries, on a Consolidated
basis, for or in respect of (i) the borrowing of money or the obtaining of
credit, including the issuance of notes or bonds, (ii) the deferred purchase
price of assets (other than trade payables incurred in the ordinary course
of business), (iii) any synthetic leases or any Capitalized Leases, and (iv)
the amount, if any, by which the sum of the maximum drawing amount of all
letters of credit outstanding exceeds $5,000,000 plus (b) Indebtedness of
the type referred to in clause (a) of another Person guaranteed by the
Borrowers or any of their Subsidiaries.
Consolidated Secured Funded Debt - with respect to the Borrowers
--------------------------------
and their Subsidiaries all Consolidated Funded Debt which is secured by a
lien on any of the assets of the Borrowers and their Subsidiaries.
EBITDA - with respect to any period, without duplication, the total
------
of the following for the Borrowers and their Subsidiaries on a Consolidated
basis, each calculated for such period: (a) net income determined in
accordance with GAAP; plus, to the extent included in the calculation of net
income, (b) the sum of (i) income taxes paid or accrued during such period;
(ii) interest expense paid or accrued during such period, (iii) amortization
and depreciation during such period (as reduced by deferred financing fees
amortized during such period), (iv) non-operating or non-recurring non-cash
losses, and (v) Specified Refinancing Fees and Expenses; less, to the extent
included in the calculation of net income, (c) the sum of (i) gains from
sales or other dispositions of assets (other than sales of Inventory in the
normal course of business); and (ii) non-operating or non-recurring gains,
but not net of non-operating or non-recurring cash losses. For purposes of
this Agreement, EBITDA shall be deemed to be (a) $5,333,000 for the fiscal
quarter ended on or about Xxxxx 00, 0000, (x) $6,281,000 for the fiscal
quarter ended on or about July 31, 2003, and (c) $3,050,000 for the fiscal
quarter ended on or about October 31, 2003.
Fixed Charge Coverage Ratio - with respect to any period, the ratio
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of (a) the result of (i) EBITDA for such period, minus (ii) non-financed
Capital Expenditures made during such period, minus (iii) income taxes paid
or required to be paid in cash during such period to (b) the sum of (i)
Interest Expense paid or required to be paid in cash during such period,
plus (ii) principal payments made or required to be made during such period
on Consolidated Funded Debt (including the principal portion of Capitalized
Lease Obligations, but excluding (I) principal payments of revolving credit
facilities, whether foreign or domestic, (II) principal payments made with
proceeds of equity issuances, asset sales, and/or insurance recoveries and
(III) the repayment of Original Term Loan B), plus (iii) Distributions made
during such period, plus (iv) cash contributions to pension plans in excess
of pension expense during such period all
Exhibit 8.3 - Page 1
as determined for Borrowers and their Subsidiaries on a Consolidated basis
in accordance with GAAP.
Interest Expense - with respect to any period, the sum of (a) cash
----------------
interest expense paid or accrued for such period, including without
limitation the interest portion of Capitalized Lease Obligations plus the
Letter of Credit and LC Guaranty fees owing for such period, plus (b) other
financing costs during such period, including, without limitation and
without duplication, commitment fees, termination fees, amendment fees,
unused line fees, all as determined for Borrowers and their Subsidiaries on
a Consolidated basis and in accordance with GAAP, but excluding Specified
Refinancing Fees and Expenses.
Specified Refinancing Fees and Expenses - all of the following up
---------------------------------------
to an aggregate amount not exceeding $6,500,000: (a) the prepayment fee paid
in connection with the prepayment of Original Term Loan B; (b) pay-in-kind
interest paid in connection with the prepayment of Original Term Loan B; (c)
the commitment fees paid to the Term Loan B Lenders in connection with the
closing of this Agreement; (d) fees paid to First Albany Corporation in
connection with the closing of this Agreement; (e) the closing fee paid to
Fleet in connection with the closing of this Agreement; and (f)
out-of-pocket professional fees and expenses paid or reimbursed by Borrowers
in connection with the closing of this Agreement.
FINANCIAL COVENANTS
I. FIXED CHARGE COVERAGE
Borrowers will not permit the Fixed Charge Coverage Ratio,
determined as of the end of each fiscal quarter set forth in the table below
for the period of four consecutive fiscal quarters then ending, to be less
than the ratio set forth opposite such quarter end date:
4 fiscal quarter period ended on or about 1/31/04 0.60
4 fiscal quarter period ended on or about 4/30/04 0.60
4 fiscal quarter period ended on or about 7/31/04 0.70
4 fiscal quarter period ended on or about 10/31/04 1.05
4 fiscal quarter period ended on or about 1/31/05 1.10
4 fiscal quarter period ended 4/30/05 and each 1.30
quarterly covenant test period thereafter
Provided that, for each of the four fiscal quarter periods ending on or
about January 31, 2004 and April 30, 2004, (i) Interest Expense for such
period shall be deemed to be $17,000,000, (ii) principal payments made or
required to be made during such period shall be deemed to be $1,100,000 plus
the amount of voluntary principal payments made during such period but not
including the repayment of Original Term Loan B, and (iii) the amount of
income taxes for such period shall be deemed to be $400,000.
Exhibit 8.3 - Page 2
II. EBITDA
As tested on a quarterly rolling/trailing 12 month basis must be
equal to or greater than the amounts set forth below:
4 fiscal quarter period ended on or about 1/31/04 $15,000,000
4 fiscal quarter period ended on or about 4/30/04 $15,000,000
4 fiscal quarter period ended on or about 7/31/04 $19,000,000
4 fiscal quarter period ended on or about 10/31/04 $25,000,000
4 fiscal quarter period ended on or about 1/31/05 $27,000,000
4 fiscal quarter period ended on or about 4/30/05 $30,500,000
4 fiscal quarter period ended on or about 7/31/05 $31,357,000
4 fiscal quarter period ended on or about 10/31/05 $33,000,000
4 fiscal quarter period ended on or about 1/31/06 $35,000,000
4 fiscal quarter period ended on or about 4/30/06 $35,000,000
4 fiscal quarter period ended on or about 7/31/06 $35,500,000
4 fiscal quarter period ended on or about 10/31/06 $36,000,000
and each quarterly covenant test period thereafter
III. CONSOLIDATED SECURED FUNDED DEBT TO EBITDA
Borrowers will not permit the ratio, determined as of the end of
each fiscal quarter set forth in the table below of (a) Consolidated Secured
Funded Debt to (b) EBITDA for the period of four consecutive fiscal quarters
then ending, to exceed the ratio set forth opposite such quarter end date:
Period ended 1/31/04 4.60
Period ended 4/30/04 4.25
Period ended 7/31/04 4.00
Period ended 10/31/04 3.00
Period ended 1/31/05 2.75
Period ended 4/30/05 2.25
Period ended 7/31/05 and each quarterly covenant 2.00
test period thereafter
IV. MINIMUM DOMESTIC EBITDA
Borrowers will not, for any fiscal quarter, permit the EBITDA
directly generated by Borrowers and their Domestic Subsidiaries to be less
than 87.5% of the EBITDA of Borrowers and their Subsidiaries.
Exhibit 8.3 - Page 3
