EXHIBIT 10.1
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This THIRD AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT dated as
of
July 13, 2009 (the "Agreement"), is executed by and among
KABLE MEDIA SERVICES,
INC., a Delaware corporation ("KMS"), KABLE
NEWS COMPANY, INC., an Illinois
corporation ("KNC"), KABLE DISTRIBUTION SERVICES, INC.,
a Delaware corporation
("KDS"), KABLE NEWS INTERNATIONAL, INC., a Delaware
corporation ("KINT"), KABLE
FULFILLMENT SERVICES, INC., a Delaware
corporation ("KFS"), PALM COAST DATA
HOLDCO, INC., a Delaware corporation ("PCD"),
PALM COAST DATA LLC, a Delaware
limited liability company ("PCD LLC"), KABLE PRODUCT
SERVICES, INC., a Delaware
corporation, formerly known as Kable Products
Services, Inc. ("KPS"), KABLE
SPECIALTY PACKAGING SERVICES LLC, a Delaware limited liability
company ("KSPS"),
and KABLE STAFFING RESOURCES LLC, a Delaware limited
liability company ("KSR")
(collectively, the "Borrowers"), and BANK OF AMERICA,
N.A., a national banking
association, as successor by merger with LaSalle Bank
National Association (the
"Lender").
R E C I T A L S:
-
- - - - - - -
A. The Lender and KMS, KNC,
KDS, KINT, KFS, PCD, PCD LLC, KABLE
NEWS
EXPORT, LTD., a Delaware corporation ("KEXP"), and KABLE
FULFILLMENT SERVICES OF
OHIO, INC., a Delaware corporation
("KFSO") (collectively, the "Initial
Borrowers") heretofore have been parties to the following
agreements, documents
and instruments: Second Amended and Restated Loan and
Security Agreement dated
as of January 16, 2007, as amended by that certain (i)
First Modification to
Loan Documents dated as of January 18, 2008 made by Initial
Borrowers, KPS and
Lender; (ii) Second Modification to Loan Documents
dated as of October 1, 2008
made by Borrowers, KEXP, KFSO and Lender; and (iii)
Third Modification to Loan
Documents dated as of April 27, 2009 made by Borrowers,
KEXP, KFSO and Lender
(the "Third Modification") and as amended, modified or supplemented
from time to
time (collectively, the "Existing Loan Agreement") and other
agreements dated as
of January 16, 2007.
B. The Borrowers have
requested that Lender restructure certain of
the
credit facilities and financial and other
covenants contained in the Existing
Loan Agreement and amend and restate the Existing
Loan Agreement on the terms
and conditions contained herein.
C. The Lender is willing
to do the same on the terms and subject to the
conditions contained herein and in
the other agreements, documents
and
instruments contemplated under the terms of this Agreement.
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NOW THEREFORE, in consideration of
the premises, and the mutual covenants
and agreements set forth herein, the Borrowers and the Lender agree
as follows:
A G R E E M E N T S:
- - - - - - - - - -
Section 1. DEFINITIONS.
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1.1 Defined Terms. For
the purposes of this Agreement, the
following
--------------
capitalized words and phrases shall have the meanings set forth
below.
"Account Debtor" shall mean any
Person who is and/or may become obligated
---------------
to any of the Borrowers under or on account of any of the
Accounts.
"Accounts" shall mean trade
accounts receivable of any of the Borrowers
--------
arising out of the bona fide sale of goods and/or performance of
services in the
ordinary course of such Borrower's business
which have been invoiced by such
Borrower.
"Acquisition" shall mean any transaction
or series of related transactions
-----------
for the purpose of or resulting, directly or indirectly, in
(a) the acquisition
of all or substantially all of
the assets of a Person, or of
all or
substantially all of any business or division of a
Person, (b) the acquisition
of in excess of 50% of the Capital
Securities of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger
or consolidation or
any other combination with another Person (other than a Person that
is already a
Subsidiary).
"Affiliate" of any Person shall mean
(a) any other Person which, directly
---------
or indirectly, controls or is controlled by or is under common
control with such
Person, (b) any officer or director of such Person, and (c)
with respect to the
Lender, any entity administered or managed by the
Lender, or an Affiliate or
investment advisor thereof and which is engaged in making,
purchasing, holding
or otherwise investing in commercial
loans. A Person shall be deemed to be
"controlled by" any other Person
if such Person possesses, directly
or
indirectly, power to direct or cause
the direction of the management and
policies of such Person whether by contract,
ownership of voting securities,
membership interests or otherwise.
"AMREP" shall mean AMREP Corporation, an
Oklahoma corporation.
-----
"Anderson News" shall mean Anderson News,
LLC.
-------------
"Applicable Margin" shall
mean, for any day, the rate per annum added to
------------------
the London Interbank Offered Rate, BBA LIBOR Daily Floating
Rate, or Prime Rate
to determine the Facility A Interest Rate and
Facility D Interest Rate. The
Applicable Margin shall be, with respect to
Prime Rate Loans, one hundred
seventy-five basis points (175 bps), and, with respect to the LIBOR
Loans, three
hundred twenty-five basis points (325 bps).
"Asset Disposition"
shall mean the sale, lease,
assignment or other
------------------
transfer for value (each a "Disposition") by the Borrowers to
any Person (other
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than any other Borrower or any Subsidiary that becomes a
Borrower) of any asset
or right of the Borrowers (including, the loss,
destruction or damage of any
thereof or any actual or threatened (in writing to the
Borrowers) condemnation,
confiscation, requisition, seizure or
taking thereof), other than (a) the
Disposition of any asset which is to be
replaced, and is in fact replaced,
within one hundred eighty (180) days with another asset performing
the same or a
similar function unless Borrowers reasonably decide
they no longer need it for
the continued operation of their business, (b) the sale or lease of
Inventory in
the ordinary course of business, (c) leases and licenses in
the ordinary course
of business, (d) Investments permitted under this Agreement,
(e) use of cash in
the ordinary course of business, (f) Restricted
Payments permitted under this
Agreement and (g) other Dispositions in any
fiscal year the net proceeds of
which do not in the aggregate exceed One Million Dollars
($1,000,000) provided,
--------
that the Borrowers may exceed such limit upon prior receipt
of written consent
thereto from the Lender.
"Average Senior Debt" means the
average daily Debt of Borrowers other than
--------------------
Subordinated Debt.
"Bankruptcy Code" shall mean the
United States Bankruptcy Code, as now
----------------
existing or hereafter amended.
"Bauer" shall mean
Heinrich Bauer Verlag Beteilgungs
GMBH, a German
-----
corporation authorized to do business in New Jersey.
"Bauer Accounts" shall mean all accounts
receivable of KDS from wholesalers
--------------
or other direct customers of KDS representing a right
to payment of a monetary
obligation as shown on KDS' statements to such
wholesalers or other customers
arising solely from the distribution,
sale or other disposition by KDS of
magazines provided by Bauer in connection with the Bauer
Distribution Agreement.
"Bauer Borrowing Base" shall mean an
amount equal to the lesser of (i) the
---------------------
Facility D Loan Commitment and (ii) 40% of
the unpaid amount (net of such
reserves and allowances as the Lender
deems necessary in its reasonable
discretion) of all Bauer Accounts which qualify
as either Eligible Domestic
Accounts or Eligible Foreign Accounts (at no time shall the Bauer
Borrowing Base
include any Eligible Accounts other than Bauer Accounts).
"Bauer Distribution Agreement" shall
mean the Distribution Agreement dated
-----------------------------
as of January 3, 2006 between
Bauer and KDS, as the same may be amended,
supplemented or otherwise modified from time to time.
"Bauer Event of Default" shall
mean a material default as defined in the
-----------------------
Bauer Distribution Agreement or
other default by KDS under the
Bauer
Distribution Agreement if it becomes the basis of
an Act of Enforcement (as
defined in the Intercreditor Agreement).
"BBA LIBOR Daily Floating Rate"
shall mean a fluctuating rate of interest
------------------------------
per annum equal to the BBA LIBOR, as published by Reuters (or other
commercially
available source providing quotations of
BBA LIBOR as selected by the Lender
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from time to time), as determined for each Business Day at
approximately 11:00
a.m. London time two (2) Business Days prior to the date in
question, for U.S.
Dollar deposits (for delivery on the first day of such
interest period) with a
one month term, as adjusted from time to time in the
Lender's sole discretion
for reserve requirements,
deposit insurance assessment rates
and other
regulatory costs. If the BBA LIBOR Daily Floating Rate is not
available at such
time for any reason, then the rate will be determined by such
alternate method
as reasonably selected by the Lender.
"Borrowing Base Certificate"
shall mean a certificate to be signed by the
---------------------------
Borrowers certifying to the accuracy of the Facility A
Borrowing Base and the
Bauer Borrowing Base, in form reasonably satisfactory to the
Lender.
"Business Day" shall mean any day other
than a Saturday, Sunday or a legal
------------
holiday on which banks are authorized or required to be
closed for the conduct
of commercial banking business in Chicago, Illinois or,
solely to establish the
London Interbank Offered Rate or the BBA LIBOR Daily
Floating Rate, in London,
England.
"Canadian Subsidiary" shall
mean Kable Distribution Services of Canada,
--------------------
Ltd., a corporation organized under the laws of the Province of
Ontario, Canada.
"Capital Expenditures" shall mean
all expenditures (including Capitalized
---------------------
Lease Obligations) which, in
accordance with GAAP, would be required to be
capitalized and shown on the consolidated balance sheet
of the Borrowers, but
excluding expenditures made in connection with (a) the replacement,
substitution
or restoration of assets to the extent financed (i) from
insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage
to the assets
being replaced or restored, or (ii) with awards of compensation
arising from the
taking by eminent domain or condemnation of the assets being
replaced, and (b)
the acquisition of KSPS of the assets of SPS1 and by KSR of the
assets of R1S.
"Capital Lease" shall mean, as
to any Person, a lease of any interest in
--------------
any kind of property or asset, whether real, personal
or mixed, or tangible or
intangible, by such Person, as lessee, that is, or should be, in
accordance with
Financial Accounting Standards Board Statement No. 13,
as amended from time to
time, or, if such statement is not then in effect, such statement
of GAAP as may
be applicable, recorded as a "capital lease" on the balance sheet
of such Person
prepared in accordance with GAAP.
"Capital Securities" shall
mean, with respect to any Person, all shares,
-------------------
interests, participations or other equivalents
(however designated, whether
voting or non-voting) of such Person's
capital, whether now outstanding or
issued or acquired after the date hereof, including
common shares, preferred
shares, membership interests in a limited liability company,
limited or general
partnership interests in a partnership or any other equivalent of
such ownership
interest.
"Capitalized Lease
Obligations" shall mean, as to any Person, all rental
-------------------------------
obligations of such Person, as lessee under a Capital Lease which
are or will be
required to be capitalized on the balance sheet of such Person.
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<PAGE>
"Cash Collateralize" shall
mean to deliver cash collateral to the Lender,
-------------------
to be held as cash collateral for outstanding
Letters of Credit, pursuant to
documentation reasonably satisfactory to the
Lender. Derivatives of such term
have corresponding meanings.
"Cash Equivalent Investment"
shall mean, at any time, (a) any evidence of
---------------------------
Debt, maturing not more than one year after such time,
issued or guaranteed by
the United States government or any agency
thereof, (b) commercial paper,
maturing not more than one year from the date of
issue, or corporate demand
notes, in each case (unless issued by the Lender or its
holding company) rated
at least A-l by Standard &
Poor's Ratings Services, a division
of The
McGraw-Hill Companies, Inc. or P-l by Moody's Investors
Service, Inc., (c) any
certificate of deposit, time deposit or banker's
acceptance, maturing not more
than one year after such time, or any overnight Federal
Funds transaction that
is issued or sold by the Lender or its
holding company (or by a commercial
banking institution that is a member of the
Federal Reserve System and has a
combined capital and surplus
and undivided profits of
not less than
$500,000,000), (d) any repurchase agreement
entered into with the Lender, or
other commercial banking institution of the
nature referred to in clause (c),
----------
which (i) is secured by a fully perfected security interest in any
obligation of
the type described in any of clauses (a)
through (c) above, and (ii) has a
------------
---
market value at the time such repurchase agreement is
entered into of not less
than 100% of the repurchase obligation of
the Lender, or other commercial
banking institution, thereunder, (e) money market accounts or
mutual funds which
invest primarily in assets satisfying the foregoing
requirements, and (f) other
short term liquid investments approved in writing by the
Lender.
"Change of Control"
shall mean the occurrence of any of the
following
------------------
events: (a) KMS shall cease to own and control, directly or
indirectly, 100% of
the outstanding Capital Securities of KDS; (b) KDS
shall cease to, directly or
indirectly, own and control 100% of each
class of the outstanding Capital
Securities of KINT; (c) KMS shall
cease to own and control, directly or
indirectly, 100% of the outstanding Capital
Securities of KNC; (d) KNC shall
cease to, directly or indirectly, own and
control 100% of each class of the
outstanding Capital Securities of KFS; (e) KMS shall
cease to own and control,
directly or indirectly, 100% of the outstanding Capital
Securities of KSR; (f)
KMS shall cease to own and
control, directly or indirectly, 100% of
the
outstanding Capital Securities of KSPS; or (g) the granting
by KMS, directly or
indirectly, of a security interest in its
ownership interest in any of the
Borrowers, which could result in a change in the identity of
the individuals or
entities in control of such Borrower.
For the purpose hereof, the terms
"control" or "controlling" shall mean the possession of the
power to direct, or
cause the direction of, the management
and policies of the Borrower(s) by
contract or voting of securities or ownership interests.
"Collateral" shall mean, with respect to
any Borrower, any and all of their
----------
respective property, of any kind or
description, tangible or intangible,
wheresoever located and whether now existing or
hereafter arising or acquired,
along with the products and proceeds therefrom,
including, but not limited to,
the following:
(a)
all property of, or for the account of,
such Borrower now or
hereafter coming into the
possession, control or custody of, or in transit
to, the Lender or
any agent or bailee for the Lender or
any parent,
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<PAGE>
Affiliate or Subsidiary of the Lender or
any participant with the Lender in
the Loans (whether for safekeeping,
deposit, collection, custody, pledge,
transmission or otherwise), including all
earnings, dividends, interest, or
other rights in
connection therewith and the products
and proceeds
therefrom, including the proceeds of
insurance thereon; and
(b) the
additional property of such Borrower, whether now existing
or
hereafter arising or acquired,
and wherever now or hereafter located,
together with all
additions and accessions
thereto, substitutions,
betterments and replacements therefor,
products and Proceeds therefrom, and
all of such Borrower's books and records
and recorded data relating thereto
(regardless of the medium of
recording or storage), together with all of
the Borrower's right, title
and interest in and to all computer software
required to utilize, create,
maintain and process any such records or data
on electronic media, identified and set
forth as follows:
(i) All Accounts and all Goods whose
sale, lease or other
disposition by such Borrower has given rise to Accounts and
have been
returned to,
or repossessed or stopped in transit by, such
Borrower,
or rejected
or refused by an Account Debtor;
(ii) All Inventory, including, without limitation, raw
materials,
work-in-process and finished goods;
(iii) All Goods (other than
Inventory), including, without
limitation, embedded software, Equipment,
vehicles, furniture and
Fixtures;
(iv) All Software and computer programs;
(v) All Securities, Investment Property,
Financial Assets and
Deposit
Accounts;
(vi) All Chattel Paper, Electronic Chattel Paper,
Instruments,
Documents,
Letter of Credit Rights, all proceeds of letters of credit,
Health-Care-Insurance Receivables,
Supporting Obligations, notes
secured by
real estate, Commercial Tort Claims, intellectual
property
including copyrights and General
Intangibles, including Payment
Intangibles;
and
(vii) All Proceeds (whether Cash Proceeds or Noncash Proceeds)
of
the
foregoing property, including, without limitation, all
insurance
policies and
proceeds of insurance payable by reason of loss or damage
to the
foregoing property, including unearned premiums, and of eminent
domain or
condemnation awards.
Notwithstanding the foregoing,
Collateral shall not include (A) any real
property of any of the Borrowers, (B) any property of or for
account of, or any
6
<PAGE>
Borrower's interest in the Capital
Securities of any other Borrower or any
Subsidiary of any Borrower, including the Canadian Subsidiary.
"Collateral Access Agreement" shall mean
an agreement in form and substance
---------------------------
reasonably satisfactory to the Lender pursuant to which a mortgagee
or lessor of
real property on which Collateral
is stored or otherwise located, or
a
warehouseman, processor or other bailee of Inventory or other
property owned by
the Borrowers, acknowledges the Liens of the Lender and waives any
Liens held by
such Person on such property, and, in the case of
any such agreement with a
mortgagee or lessor, permits the Lender
reasonable access to and use of such
real property following the occurrence and during the continuance
of an Event of
Default, to assemble, complete and sell
any collateral stored or otherwise
located thereon.
"Compliance
Certificate" shall mean a
Compliance Certificate in
------------------------
substantially the form of Exhibit A.
---------
"Contingent
Liability" and "Contingent
Liabilities" shall mean,
----------------------
------------------------
respectively, each obligation and
liability of the Borrowers and all such
obligations and liabilities of the Borrowers incurred pursuant to
any agreement,
undertaking or arrangement by which the Borrower: (a)
guarantees, endorses or
otherwise becomes or is contingently
liable upon (by direct or
indirect
agreement, contingent or otherwise, to
provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to
assure a creditor
against loss) the indebtedness, dividend, obligation or
other liability of any
other Person in any manner (other than by
endorsement of instruments in the
course of collection), including without limitation, any
indebtedness, dividend
or other obligation which may be issued or incurred at
some future time; (b)
guarantees the payment of dividends or other
distributions upon the shares or
ownership interest of any other Person;
(c) undertakes or agrees (whether
contingently or otherwise): (i) to purchase,
repurchase, or otherwise acquire
any indebtedness, obligation or liability of any other Person or
any property or
assets constituting security therefor, (ii) to advance or
provide funds for the
payment or discharge of any indebtedness, obligation or
liability of any other
Person (whether in the form of loans,
advances, stock purchases, capital
contributions or otherwise), or to maintain solvency,
assets, level of income,
working capital or other financial condition of any
other Person, or (iii) to
make payment to any other Person other than for value
received; (d) agrees to
lease property or to purchase securities, property or
services from such other
Person with the purpose or intent of assuring the owner of
such indebtedness or
obligation of the ability of
such other Person to make
payment of the
indebtedness or obligation; (e) to induce the issuance of, or in
connection with
the issuance of, any letter of credit for the benefit of such
other Person; or
(f) undertakes or agrees otherwise to assure a creditor against
loss. The amount
of any Contingent Liability shall (subject to any
limitation set forth herein)
be deemed to be the outstanding principal amount (or maximum
permitted principal
amount, if larger) of the indebtedness, obligation or other
liability guaranteed
or supported thereby.
"Debt" shall mean,
as to any Person, without
duplication, (a) all
----
indebtedness of such Person; (b) all borrowed money of
such Person (including
principal, interest, fees and charges),
whether or not evidenced by bonds,
debentures, notes or similar
instruments; (c) all obligations to pay
the
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<PAGE>
deferred purchase price of property or services; (d) all
obligations, contingent
or otherwise, with respect to the maximum face amount
of all letters of credit
(whether or not drawn), bankers' acceptances and similar
obligations issued for
the account of such Person (including the Letters
of Credit), and all unpaid
drawings in respect of such letters of credit, bankers'
acceptances and similar
obligations; (e) all indebtedness secured by any Lien
on any property owned by
such Person, whether or not such indebtedness has
been assumed by such Person
(provided, however, if such Person has not assumed or otherwise
become liable in
respect of such indebtedness, such
indebtedness shall be deemed to be in an
amount equal to fair market value of the property
subject to such Lien at the
time of determination); (f) the aggregate
amount of all Capitalized Lease
Obligations of such Person; (g) all
Contingent Liabilities of such Person,
whether or not reflected on its balance sheet; (h) all
Hedging Obligations of
such Person; (i) all Debt of any partnership of which
such Person is a general
partner unless it is non-recourse to the general
partner; and (j) all monetary
obligations of such Person under (i) a so-called synthetic,
off-balance sheet or
tax retention lease, or (ii) an agreement for the use or
possession of property
(other than an operating lease) creating obligations
that do not appear on the
balance sheet of such Person but which, upon the
insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of
such Person (without
regard to accounting treatment). Notwithstanding the
foregoing, Debt shall not
include (A) trade payables and
accrued expenses incurred by such Person in
accordance with customary practices and in the
ordinary course of business of
such Person, or (B) accumulated other
comprehensive loss with respect to any
unpaid liabilities relating to any Employee
Plan of any Borrower as would be
shown on a consolidated balance sheet of the
Borrowers prepared in accordance
with GAAP.
"Default Rate" shall mean a per
annum rate of interest equal to the Prime
-------------
Rate plus two percent (2.00%).
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"Depreciation" shall
mean the total amounts added to
depreciation,
------------
amortization, obsolescence, valuation and other proper reserves, as
reflected on
each of the Borrower's financial statements and
determined in accordance with
GAAP.
"EBITDA" shall mean, for any specified
period, the sum of the following for
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such period: (a) Net Income, plus (b) Interest
Charges; plus (c) federal and
state income taxes (including the
Illinois replacement tax); plus
(d)
Depreciation; plus (e) non-cash management
compensation expense; plus (f) all
other non-cash charges, in each case to the extent
included in determining Net
Income for such period. For purposes of determining compliance with
Section 10.3
of this Agreement as of the end of any fiscal quarter,
EBITDA for the 12-month
period ending at the end of any such fiscal quarter shall include
on a pro-forma
basis EBITDA of KSPS and KSR for any portion of
such 12-month period that is
prior to the acquisition by KSPS of the assets of SPS1 and by
KSR of the assets
of R1S. For the purposes hereof, EBITDA of KSPS and KSR for
the 12-month period
preceding such acquisition shall be
deemed to be $78,083.50 per
month,
accumulated ratably over such 12-month period. As
of April 30, 2009, for the
purposes of testing the Fixed Charge Covenant and
Leverage Ratio in Sections
10.2 and 10.3, respectively, hereof, EBITDA
shall be adjusted to exclude the
effect of a one-time write-off of the
Anderson News Accounts of up to Six
Million Five Hundred Thousand Dollars
($6,500,000). No amount recovered or
reversed by Borrowers of the Anderson
News Accounts after the foregoing
write-off shall be included in EBITDA for the purpose of Sections
10.3, Leverage
Ratio, and 10.4, EBITDA Covenant.
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"Eligible Account" and "Eligible
Accounts" shall mean each Account and all
----------------
------------------
such Accounts (exclusive of sales, excise or other
similar taxes) owing to any
of the Borrowers which meets each of the following
requirements:
(a) it
is genuine in all respects and has
arisen in the ordinary
course of the Borrower's business
from (i) the performance of services by
the Borrowers, which services have
been fully performed, acknowledged and
accepted by the Account Debtor or
(ii) the sale, license, assignment or
lease of Goods or Software by the
Borrowers, including C.O.D. sales, which
Goods have been
completed in accordance with the
Account Debtor's
specifications (if any)
and delivered to and accepted by the
Account
Debtor, and the Borrowers
have possession of, or have delivered to the
Lender at the Lender's request,
shipping and delivery receipts evidencing
such delivery;
(b) it
is subject to a perfected (except in
the case of Eligible
Foreign Accounts), first
priority Lien in favor of the Lender and is not
subject to any other assignment, claim or
Lien;
(c) it is
the valid, legally enforceable and unconditional
obligation
of the Account Debtor
with respect thereto, and is not subject to
the
fulfillment of any condition whatsoever or
any counterclaim, credit (except
as provided in
subsection (h) of this definition),
trade or volume
discount, allowance, discount,
rebate or adjustment by the Account Debtor
with respect thereto, or
to any claim by such Account Debtor
denying
liability thereunder in whole
or in part and, with respect to any Account
other than a Account, the
Account Debtor has not refused to accept and/or
has not returned or offered to
return any of the Goods or services which
are the subject of such Account;
(d) the
Account Debtor with respect thereto is a resident or
citizen
of, and is located within, the United
States, Canada (other than Quebec or
Inuit), Australia, Belgium, the
Caribbean Islands of the Bahamas, Bermuda,
Cayman Islands, Jamaica
or Puerto Rico, France, the United
Kingdom,
Germany, Spain,
Switzerland, Norway, Portugal, Sweden,
Greece, Italy,
Singapore, Mexico or New
Zealand, unless the sale of goods or services
giving rise to such Account is on letter
of credit, banker's acceptance or
other credit support terms reasonably
satisfactory to the Lender;
(e) it is
not an Account (i) arising from a "sale on approval",
"sale
or return", "consignment",
or "guaranteed sale", or are subject to any
other repurchase or
return agreement or (ii) arising from a
"bill and
hold";
(f) it is
not an Account with respect to which
possession and/or
control of the goods sold
giving rise thereto is held,
maintained or
retained by the Borrower (or by any agent
or custodian of the Borrower) for
the account of, or subject to,
further and/or future direction from the
Account Debtor with respect thereto;
(g)
it arises out of contracts with
the United States or any
department, agency or
instrumentality thereof (including the branches of
9
<PAGE>
the United States
military) but only to the extent that such Accounts do
not exceed an aggregate face amount
of $1,000,000, unless the Borrowers
have assigned its right to payment
of such Account to the Lender pursuant
to the Assignment
of Claims Act of 1940, and
evidence (reasonably
satisfactory to the Lender) of
such assignment has been delivered to the
Lender, or any state,
county, city or other governmental body, or
any
department, agency or
instrumentality thereof (to the extent that
such
Accounts exceed an aggregate face amount
of $1,000,000);
(h) if the
Borrower maintains a credit limit for an Account
Debtor,
the aggregate dollar
amount of Accounts due from such Account
Debtor,
including such Account, does not exceed
such credit limit;
(i) if the
Account is evidenced by chattel paper or an instrument, the
originals of such chattel
paper or instrument shall have been endorsed
and/or assigned and delivered
to the Lender or, in the case of electronic
chattel paper, shall be in the
control of the Lender, in each case in a
manner satisfactory to the Lender;
(j) it is
an Account stated in a monthly
statement or an Account
invoiced (and dated as of such date) and,
in each case, sent to the Account
Debtor thereof within the Borrowers'
normal monthly billing cycle, but in
no event later than thirty (30) days after
the shipment and delivery to the
Account Debtor of the Goods giving
rise thereto or the performance of the
services giving rise thereto and (i) as to
KDS and its Subsidiaries which
is due and payable within ninety
(90) days past the original invoice date
(otherwise known as the monthly
statement date) thereof, (ii) in the case
of Accounts pertaining to KNC, KFS
and PCD LLC the Account is evidenced by
an invoice which is due and payable
within forty-five (45) days after the
invoice date and is no more
than sixty (60) days past the due date of the
invoice, and (iii) in the case of
Eligible Foreign Accounts, is evidenced
by an invoice which is due and
payable within one hundred and twenty (120)
days after the invoice date, in each
case according to the original terms
of sale;
(k) it is
not an Account with respect to an Account
Debtor that is
located in any
jurisdiction which has adopted
a statute or other
requirement with respect to
which any Person that obtains business from
within such jurisdiction must file a
notice of business activities report
or make any other required
filings in a timely manner in order to enforce
its claims in such jurisdiction's courts
unless (i) such notice of business
activities report has been duly and
timely filed or the Borrower is exempt
from filing such report and
has provided the Lender with
satisfactory
evidence of such exemption or (ii)
the failure to make such filings may be
cured retroactively by the Borrower for a
nominal fee;
(l)
the Account Debtor with respect
thereto is not any of the
Borrowers or an Affiliate of a
Borrower;
(m) such
Account does not arise out of a contract or order
which, by
its terms, forbids or makes void or
unenforceable the assignment thereof by
the Borrowers to the Lender and is
not unassignable to the Lender for any
other reason;
10
<PAGE>
(n)
there is no bankruptcy, insolvency or
liquidation proceeding
pending by or against the Account Debtor
with respect thereto, nor has the
Account Debtor suspended
business, made a general assignment for
the
benefit of creditors or failed to pay its
debts generally as they come due,
and/or no condition or event has occurred
having a material adverse effect
on the Account Debtor which
would require the Accounts of such Account
Debtor to be deemed uncollectible in
accordance with GAAP;
(o) it is
not owed by an Account Debtor with respect to which
thirty
percent (30.00%) or more of the
aggregate amount of outstanding Accounts
owed at such time by such Account Debtor
is classified as ineligible under
clause (j) of this definition;
(p) if the
aggregate amount of all Accounts owed by the Account Debtor
thereon exceeds thirty percent
(30.00%), of the aggregate amount of all
Accounts of such Borrowers at such
time, then all Accounts owed by such
Account Debtor to such
Borrowers in excess of such amount shall be deemed
ineligible; provided, that, upon the
combination of any two Account Debtors
who have Accounts owing to the Borrowers
by reason of a merger, acquisition
or otherwise, the Account Debtors shall be
treated as separate entities for
a period of three (3)
months for the purpose of determining
Eligible
Accounts pursuant to
this clause (p); provided, further,
that if the
aggregate amount of Accounts owed by such
Account Debtors during such three
(3) month period exceeds sixty
percent (60.00%) of the aggregate amount of
all Accounts of the Borrowers at such
time, then all Accounts owed by such
Account Debtors to the
Borrowers in excess of such amount shall be deemed
ineligible;
(q) it is an
Account otherwise eligible hereunder, to the
extent of
any excess of any reserve, as
calculated in accordance with the applicable
Borrowinig Base Certificate, created
by the Borrowers for future return of
Goods or any adjustments
in estimated returns of Goods as compared
to
actual returns of Goods to date;
(r) it is
an Account with respect to which the
Borrower is or may
become liable to the Account Debtor for
goods sold or services rendered by
such Account Debtor to any of
the Borrowers, but only to the extent in
excess of the Borrowers' then
aggregate liability to such Account Debtor;
and
(s) it does
not violate the negative covenants and does
satisfy the
affirmative covenants of the Borrowers
contained in this Agreement.
An Account which is at any time an
Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall
forthwith cease to be an
Eligible Account. Further, with respect to any
Account, if the Lender at any
time hereafter determines in its reasonable
discretion that the prospect of
payment or performance by the Account Debtor with respect
thereto is materially
impaired for any reason whatsoever, such Account shall
cease to be an Eligible
Account after notice of such determination is given to the
Borrowers.
11
<PAGE>
"Eligible Domestic Accounts"
shall mean all Eligible Accounts whereby the
----------------------------
Account Debtor is a resident or citizen of, and is
located within, the United
States or Canada (other than Quebec or Inuit).
"Eligible Foreign Accounts"
shall mean all Eligible Accounts whereby the
---------------------------
Account Debtor is a resident or citizen of and is
located within, Australia,
Belgium, the Caribbean Islands of the Bahamas, Bermuda,
Cayman Islands, Jamaica
or Puerto Rico, France, the United Kingdom, Germany, Spain,
Switzerland, Norway,
Portugal, Sweden, Greece, Italy, Singapore, Mexico or New
Zealand.
"Employee Plan" includes any pension,
stock bonus, employee stock ownership
-------------
plan, retirement, profit sharing, deferred compensation,
stock option, bonus or
other incentive plan, whether qualified or
nonqualified, or any disability,
medical, dental or other health plan, life
insurance or other death benefit
plan, vacation benefit plan, severance plan or
other employee benefit plan or
arrangement, including, without limitation, those
pension, profit-sharing and
retirement plans of the Borrowers described from time
to time in the financial
statements of the Borrowers and any pension plan, welfare
plan, defined benefit
plans (as defined in ERISA) or
any multiemployer plan,
maintained or
administered by any Borrower or to which
any Borrower is a party or has any
liability or by which any Borrower is bound.
"Environmental Laws" shall
mean all present or future federal, state or
-------------------
local laws, statutes, common law duties,
rules, regulations, ordinances and
codes, together with all administrative or judicial orders,
consent agreements,
directed duties, requests, licenses,
authorizations and permits of, and
agreements with, any governmental authority, in each case relating
to any matter
arising out of or relating to public
health and safety, or pollution
or
protection of the environment or
workplace, including any of the foregoing
relating to the presence, use, production,
generation, handling, transport,
treatment, storage, disposal,
distribution, discharge, emission,
release,
threatened release, control or cleanup of any Hazardous
Substance.
"Equipment" shall mean
"equipment" as defined in the UCC that is owned by
---------
any Borrower, including, without
limitation, any and all of such Borrower's
machinery, equipment, vehicles, fixtures,
furniture, computers, appliances,
tools, and other tangible personal property
(other than inventory), whether
located on such Borrower's premises or located elsewhere,
together with any and
all accessions, parts and appurtenances
thereto, whether presently owned or
hereafter acquired by such Borrower.
"ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default" shall mean any of the
events or conditions which are set
----------------
forth in Section 11 hereof.
----------
"Facility A Borrowing Base" shall mean an
amount equal to the lesser of (i)
-------------------------
the Facility A Loan Commitment and (ii)
the total of (a) 80% of the unpaid
12
<PAGE>
amount (net of such reserves and allowances as the Lender deems
necessary in its
reasonable discretion) of all Eligible
Domestic Accounts plus (b) 40% of the
unpaid amount (net of such reserves and allowances as the Lender
deems necessary
in its reasonable discretion) of all Eligible
Foreign Accounts (subject to a
maximum advance of US$3,000,000). At no time
shall Bauer Accounts qualify as
either Eligible Domestic Accounts or Eligible Foreign
Accounts for purposes of
Facility A Loans or the Facility A Borrowing Base.
"Facility A Interest Rate"
shall have the meaning as set forth in Section
--------------------------
2.1(b) of this Agreement.
"Facility A Loan" and "Facility A
Loans" shall mean, respectively, each
---------------
----------------
direct advance and the aggregate of all such direct advances
made by the Lender
to the Borrowers under and pursuant to this Agreement,
as set forth in Section
-------
2.1 of this Agreement.
---
"Facility A Loan
Commitment" shall mean Twenty Million
and No/100ths
----------------------------
Dollars ($20,000,000), inclusive of the Letter of
Credit Commitment, as such
amount may be reduced or increased pursuant
to Section 2.1(d)(ii) and (iv)
-----------------------------
hereof.
"Facility A Maturity Date" shall
mean, the earlier of (i) May 1, 2010 and
-------------------------
(ii) the acceleration of such Loan upon the
occurrence of an Event of Default
affecting such Loan, unless extended by the Lender pursuant to any
modification,
extension or renewal note executed by the Borrowers and
accepted by the Lender
in its sole and absolute discretion in substitution for
a Facility A Revolving
Note.
"Facility A Revolving
Note" shall mean a revolving note in the form
of
---------------------------
Exhibit B hereto, dated as of the date hereof, in the
amount of the Facility A
---------
Loan Commitment and maturing on the Facility A Maturity
Date, duly executed by
the Borrowers and payable to the order of the Lender,
together with any and all
renewal, extension, modification or replacement notes
executed by the Borrowers
and delivered to the Lender and given in substitution therefor.
"Facility B Interest Rate" shall mean 6.4%
per annum.
------------------------
"Facility B Loan" shall mean the term
loan consolidating the aggregate of
---------------
all prior direct advances made by the Lender under the
Existing Loan Agreement,
as set forth in Section 2.2 of this Agreement.
"Facility B Loan
Commitment" shall mean Five Hundred Six
Thousand and
----------------------------
10/100ths Dollars ($506,000.10).
"Facility B Maturity Date" shall mean, the
earlier of (i) December 31, 2009
------------------------
and (ii) the acceleration of such Loan
upon the occurrence of an Event of
Default affecting such Loan, unless
extended by the Lender pursuant to any
modification, extension or renewal note executed by the
Borrowers and accepted
by the Lender in its sole and absolute discretion in substitution
for a Facility
B Term Note.
13
<PAGE>
"Facility B Term Note"
shall mean a term note in the form of Exhibit C
----------------------
---------
hereto, dated as of the date hereof, in the
amount of the Facility B Loan
Commitment and maturing on Facility B
Maturity Date, duly executed by the
Borrowers and payable to the order of the
Lender, together with any and all
renewal, extension, modification or replacement notes
executed by the Borrowers
and delivered to the Lender and given in substitution therefor.
"Facility C Interest Rate" shall
mean, for the Facility C Loan, a rate of
-------------------------
interest equal to 5.35% on the first $1,121,150
("Tranche 1") of the principal
amount of the Facility C Note and 4.79% on the remaining
$875,000.00 ("Tranche
2") of the principal amount of the Facility C
Note. The principal amount of
these Tranches 1 and 2 of the Facility C Note shall be
reduced pro tanto based
upon the original amortizations of Tranches 1 and 2.
"Facility C Loan" shall
mean the term loan made by the Lender to
the
----------------
Borrowers under and pursuant to this Agreement, as set
forth in Section 2.3 of
-----------
this Agreement.
"Facility C Loan
Commitment" shall mean One
Million Nine Hundred
------------------------------
Ninety-Sixty Thousand One Hundred Fifty and 00/100 Dollars
($1,996,150.00).
"Facility C Maturity Date" shall
mean, the earlier of (i) May 1, 2010 and
-------------------------
(ii) the acceleration of such Loan upon the
occurrence of an Event of Default
affecting such Loan, unless extended by the Lender pursuant to any
modification,
extension or renewal note executed by the Borrowers and
accepted by the Lender
in its sole and absolute discretion in substitution for a Facility
C Term Note.
"Facility C Term Note"
shall mean a term note in the form of Exhibit D
----------------------
---------
hereto, dated as of the date hereof, in the
amount of the Facility C Loan
Commitment and maturing on the Facility C Maturity
Date, duly executed by the
Borrowers and payable to the order of the
Lender, together with any and all
renewal, extension, modification or replacement notes
executed by the Borrowers
and delivered to the Lender and given in substitution therefor.
"Facility D Interest Rate"
shall have the meaning as set forth in Section
--------------------------
2.4(b) of this Agreement.
"Facility D Loan" and "Facility D
Loans" shall mean, respectively, each
---------------
----------------
direct advance and the aggregate of all such direct advances
made by the Lender
to the Borrowers under and pursuant to this Agreement,
as set forth in Section
-------
2.4 of this Agreement.
---
"Facility D Loan Commitment" shall mean
Five Million Dollars ($5,000,000),
--------------------------
as such amount may be reduced pursuant to Section 2.4 hereof.
-----------
"Facility D Maturity Date" shall
mean, the earlier of (i) May 1, 2010 and
-------------------------
(ii) the acceleration of such Loan upon the
occurrence of an Event of Default
affecting such Loan, unless extended by the Lender pursuant to any
modification,
extension or renewal note executed by the Borrowers and
accepted by the Lender
in its sole and absolute discretion in substitution for
a Facility D Revolving
Note.
14
<PAGE>
"Facility D Revolving
Note" shall mean a revolving note in the form
of
---------------------------
Exhibit E hereto, dated as of the date hereof, in the
amount of the Facility D
---------
Loan Commitment and maturing on the Facility D Maturity
Date, duly executed by
the Borrowers and payable to the order of the Lender,
together with any and all
renewal, extension, modification or replacement notes
executed by the Borrowers
and delivered to the Lender and given in substitution therefor.
"Funded Debt" shall mean, as
to any Person, all Debt of such Person that
------------
matures more than one year from the date of its
creation (or is renewable or
extendible, at the option of such Person, to a date more than one
year from such
date).
"GAAP" shall mean generally accepted
accounting principles set forth from
----
time to time in the opinions and pronouncements of
the Accounting Principles
Board and the American Institute of Certified Public
Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or
agencies with
similar functions of comparable stature and authority within the
U.S. accounting
profession), which are applicable to
the circumstances as of the date of
determination, provided, however, that interim
financial statements or reports
shall be deemed in compliance with GAAP despite the
absence of footnotes and
fiscal year-end adjustments as required by GAAP.
"Hazardous Substances" shall mean
(a) any petroleum or petroleum products,
---------------------
radioactive materials, asbestos in any form that is or
could become friable,
urea formaldehyde foam insulation,
dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b)
any chemicals, materials,
pollutant or substances defined as or included in the
definition of "hazardous
substances", "hazardous waste", "hazardous
materials", "extremely hazardous
substances", "restricted hazardous
waste", "toxic substances",
"toxic
pollutants", "contaminants", "pollutants" or words of similar
import, under any
applicable Environmental Law; and (c) any other chemical, material
or substance,
the exposure to, or release of which is prohibited, limited
or regulated by any
governmental authority or for which any duty or
standard of care is imposed
pursuant to, any Environmental Law.
"Hedging Agreement" shall mean
any interest rate, currency or commodity
------------------
swap agreement, cap agreement or collar
agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in
interest rates,
currency exchange rates or commodity prices.
"Hedging Obligation" shall mean,
with respect to any Person, any liability
-------------------
of such Person under any Hedging Agreement.
"Indemnified Party" and
"Indemnified Parties" shall mean, respectively,
------------------
--------------------
each of the Lender and any parent corporation,
Affiliate or Subsidiary of the
Lender, and each of their respective officers, directors,
employees, attorneys
and agents, and all of such parties and entities.
15
<PAGE>
"Intellectual Property" shall mean
the collective reference to all rights,
----------------------
priorities and privileges relating to
intellectual property, whether arising
under United States, multinational or
foreign laws or otherwise, including
copyrights, patents, service marks and
trademarks, and all registrations and
applications for registration therefor and all licensees
thereof, trade names,
domain names, technology, know-how and processes, and
all rights to sue at law
or in equity for any infringement or other
impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated as
-----------------------
of February 6, 2006, by and among
Lender, Bauer and KDS as amended by First
Amendment To Intercreditor Agreement dated as of April
27, 2006, and as may be
amended, modified or supplemented from time to time.
"Interest Charges" shall
mean, for any period, the sum
of: (a) all
-----------------
interest, charges and related expenses
payable with respect to that fiscal
period to a lender in connection with borrowed money or
the deferred purchase
price of assets that are treated as interest in accordance
with GAAP, plus (b)
----
the portion of Capitalized Lease Obligations with respect to
that fiscal period
that should be treated as interest in accordance with GAAP, plus
(c) all charges
----
paid or payable (without duplication) during that
period with respect to any
Hedging Agreements, plus (d) all debt,
discount and expense amortized or
required to be amortized in the determination of Net Income for
such period.
"Investment" shall mean, with
respect to any Person, any investment in
----------
another Person (other than a Borrower or a Subsidiary of a Borrower
that becomes
a Borrower under this Agreement), whether by
acquisition of any debt or equity
security, by making any loan or advance, by becoming obligated with
respect to a
Contingent Liability in respect of obligations of such other
Person (other than
travel and similar advances to employees in the
ordinary course of business);
provided, that any advance made to a
publisher in the ordinary course of
business in an amount not to exceed $1,500,000 in the
aggregate and $500,000 to
any one publisher shall not be considered an Investment
hereunder.
"KSR" shall mean Kable Staffing Resources
LLC, a Delaware limited liability
---
company.
"KSPS" shall mean
Kable Specialty Packaging Services LLC, a
Delaware
----
limited liability company.
"Lender Product Agreements"
shall mean those certain agreements entered
--------------------------
into from time to time by the Borrowers with the Lender or
any Affiliate of the
Lender concerning Lender Products.
"Lender Product
Obligations" shall mean all obligations,
liabilities,
----------------------------
contingent reimbursement obligations, fees, and expenses
owing by the Borrowers
to the Lender or any Affiliate of the Lender
pursuant to or evidenced by the
16
<PAGE>
Lender Product Agreements and irrespective of whether for the
payment of money,
whether direct or indirect, absolute or
contingent, due or to become due, now
existing or hereafter arising.
"Lender Products" shall mean
any service or facility extended to
the
----------------
Borrowers by the Lender or any Affiliate of the Lender,
including: (a) credit
cards, (b) credit card processing services, (c) debit cards, (d)
purchase cards,
(e) ACH Transactions, (f) cash management, including
controlled disbursement,
accounts or services, (g) Rate
Management Transactions or (h)
Hedging
Agreements.
"Letter of Credit" and "Letters of
Credit" shall mean any Letter of Credit
----------------
-----------------
issued on behalf of Borrowers in accordance with Section 2.7of this
Agreement.
"Letter of Credit Application" shall
mean, with respect to any request for
-----------------------------
the issuance of a Letter of Credit, a letter of credit
application in the form
being used by the Lender at the time of such request
for the type of Letter of
Credit requested.
"Letter of Credit Commitment" shall mean
Two Hundred Fifty Thousand Dollars
---------------------------
(US$250,000).
"Letter of Credit Fee Rate" means 1.5% per
annum.
-------------------------
"Letter of Credit Maturity Date" shall
mean the Facility A Maturity Date.
------------------------------
"Letter of Credit Obligations" shall
mean, at any time, an amount equal to
-----------------------------
the aggregate of the original face amounts of all
Letters of Credit minus the
sum of (i) the amount of any reductions in
the original face amount of any
Letter of Credit which did not result from a draw thereunder, (ii)
the amount of
any payments made by the Lender with respect to any draws made
under a Letter of
Credit for which the Borrowers have reimbursed the
Lender, (iii) the amount of
any payments made by the Lender with respect to any draws made
under a Letter of
Credit which have been converted to a Facility A
Loan as set forth in Section
-------
2.5 and (iv) the portion of any issued but expired
Letter of Credit which has
---
not been drawn by the beneficiary thereunder. For
purposes of determining the
outstanding Letter of Credit Obligations at any time, the Lender's
acceptance of
a draft drawn on the Lender pursuant to a Letter of
Credit shall constitute a
draw on the applicable Letter of Credit at the time of such
acceptance.
"Liabilities" shall mean at all times all
liabilities of the Borrowers that
-----------
would be shown as such on a
balance sheet of the Borrowers
prepared in
accordance with GAAP.
"LIBOR Interest Period" shall mean, as to
any London Interbank Offered Rate
---------------------
Loan, a period of one, two, three or six months commencing on
a Business Day as
selected by the Borrowers pursuant to
this Agreement, as the case may be;
provided that:
--------
(a) if any
LIBOR Interest Period would otherwise end on a day that
is
not a Business Day, such
LIBOR Interest Period shall be extended to the
following Business Day unless
the result of such extension would be to
17
<PAGE>
carry such LIBOR Interest
Period into another calendar month, in which
event such Interest Period shall end on
the preceding Business Day;
(b) any
LIBOR Interest Period that begins on a day for which there
is
no numerically corresponding
day in the calendar month at the end of such
Interest Period shall end on the last
Business Day of the calendar month at
the end of suchi Interest Period; and
(c)
the Borrowers may not select any
LIBOR Interest Period for a
Facility A Loan or Facility D Loan beyond
the scheduled Maturity Date.
"LIBOR Loan" or "LIBOR Loans" shall
mean that portion, and collectively
---------- ------------
those portions, of the aggregate outstanding principal balance of
the Facility A
Loans or the Facility D Loans, as applicable,
that bear interest at a London
Interbank Offered Rate or BBA LIBOR Daily Floating Rate.
"Lien" shall mean, with respect to any
Person, any interest granted by such
----
Person in any real or personal property, asset or
other right owned or being
purchased or acquired by such Person (including, without
limitation, an interest
in respect of a Capital Lease) which
secures payment or performance of any
obligation and shall include any mortgage, lien,
encumbrance, title retention
lien, charge or other security
interest of any kind, whether arising
by
contract, as a matter of law, by judicial process or otherwise.
"Loan Documents" shall mean each of the
agreements, documents, instruments
--------------
and certificates set forth in Section 3.1
hereof, and any and all such other
-----------
instruments, documents, certificates and agreements
from time to time executed
and delivered by the Borrowers or any of their Affiliates for the
benefit of the
Lender pursuant to any of the foregoing,
and all amendments, restatements,
supplements and other modifications thereto.
"Loans" shall mean,
collectively, all Facility A Loans, the Facility
B
-----
Loan, the Facility C Loan, all Facility D Loans
and all other extensions of
credit made by the Lender to the Borrowers and all Letter of Credit
Obligations,
under and pursuant to this Agreement.
"Lockbox" shall have the meaning set forth
in Section 6.8 hereof.
-------
-----------
"Lockbox Account" shall have the meaning
set forth in Section 6.8 hereof.
---------------
-----------
"Lockbox Agreement" shall mean the Master
Cash Management Service Agreement
-----------------
and Supplement to the Master Cash Management
Service Agreement Re: Wholesale
Lockbox and Lockbox Related Services dated as of April 6, 2005.
"London Interbank Offered Rate"
shall mean, with respect to any applicable
------------------------------
LIBOR Interest Period, the rate per annum equal to BBA
LIBOR, as published by
Reuters (or other commercially available
source providing quotations of BBA
LIBOR as selected by Lender from time to time)
at approximately 11:00 a.m.
London time two (2) Business Days before the commencement of
the LIBOR Interest
18
<PAGE>
Period, for deposits in U.S. Dollars
(for delivery on the first day of such
LIBOR Interest Period) with a term equivalent to such LIBOR
Interest Period. If
such rate is not available at such time for any reason,
then the rate for that
LIBOR Interest Period will be determined by such alternate
method as reasonably
selected by Lender.
"Master Letter of Credit
Agreement" shall mean, at any time, with respect
----------------------------------
to the issuance of Letters of Credit, a Master Letter of Credit
Agreement in the
form being used by the Lender at such time.
"Material Adverse Effect" shall mean (a) a
material adverse change in, or a
-----------------------
material adverse effect upon, the
assets, business, properties, condition
(financial or otherwise) or results of operations of
the Borrowers taken as a
whole which, if quantifiable, does or would be reasonably
expected to result in
a reduction in retained earnings of more than Three Million Dollars
($3,000,000)
after taking into account all deductions, credits, or other tax
benefits allowed
with respect to the event (b) a material
impairment of the ability of the
Borrowers to perform any of the Obligations under any of the Loan
Documents, or
(c) a material adverse effect on (i) any substantial
portion of the Collateral
of the Borrowers, (ii) the legality, validity, binding effect
or enforceability
against the Borrowers of any of the Loan
Documents, (iii) the perfection or
priority of the Liens on any substantial portion of the
Collateral granted to
the Lender under any Loan Document by
the Borrowers, or (iv) the rights or
remedies of the Lender with respect to the Borrowers under any Loan
Document.
"Maturity Date" shall mean, collectively,
the Facility A Maturity Date, the
-------------
Facility B Maturity Date, the Facility C Maturity Date, the
Facility D Maturity
Date and Letter of Credit Maturity Date.
"Net Income" shall mean, with respect to
the Borrowers for any period, the
----------
consolidated net income (or loss) of the Borrowers for such period
as determined
in accordance with GAAP, excluding any gains or
losses (within the meaning of
GAAP) from Asset Dispositions, any extraordinary gains
or losses and any gains
or losses from discontinued operations (within the meaning of
GAAP).
"Non-Excluded Taxes"
shall have the meaning set forth in
Section 2.8
-------------------
------------
hereof.
"Non-Utilization Fee"
shall have the meaning set forth in
Subsections
--------------------
-----------
2.1(e) and 2.4(e) hereof.
-----------------
"Note" and "Notes" shall mean,
respectively, each of and collectively, the
---- -----
Facility A Revolving Note, the Facility B Term
Note, the Facility C Term Note
and the Facility D Revolving Note.
"Obligations" shall mean the Loans,
as evidenced by any Note, all interest
-----------
accrued thereon (including interest which
would be payable as post-petition
interest in connection with any bankruptcy or similar proceeding,
whether or not
permitted as a claim thereunder), any
fees due the Lender hereunder, any
expenses incurred by the Lender hereunder and any and all
other liabilities and
19
<PAGE>
obligations of the Borrowers to the Lender under
this Agreement and any other
Loan Document, including any
reimbursement obligations of the Borrowers in
respect of Letters of Credit and surety bonds, all
Hedging Obligations of the
Borrowers existing or entered onto during the term of this
Agreement which are
owed to the Lender or any Affiliate of the
Lender, and all Lender Product
Obligations of the Borrowers existing or entered
into during the term of this
Agreement, all in each case howsoever created,
arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter
existing, or due or
to become due, together with any and all renewals or extensions
thereof.
"Obligor" shall mean the Borrowers, any
accommodation endorser, third party
-------
pledgor, or any other party other than the
Principal Shareholder liable with
respect to the Obligations.
"OFAC" shall have the meaning specified in
Section 8.3 of this Agreement.
----
"Organizational
Identification Number" means, with
respect to each
----------------------------------------
Borrower, the organizational identification number assigned
to such Borrower by
the applicable governmental unit or agency of the
jurisdiction of organization
of such Borrower.
"Other Taxes" shall mean any present or
future stamp or documentary taxes
-----------
or any other excise or property taxes, charges or
similar levies which arise
from the execution, delivery, enforcement or registration of,
or otherwise with
respect to, this Agreement or any of the other Loan Documents.
"Permitted Business" shall
mean any business conducted by one or more of
-------------------
the Borrowers on the date of this agreement and all other
businesses reasonably
related thereto.
"Permitted Liens" shall mean (a) Liens for
federal or other material Taxes,
---------------
assessments or other governmental
charges not at the time delinquent
or
thereafter payable without penalty or
being contested in good faith by
appropriate proceedings and, in each
case, for which the affected Person
maintains adequate reserves in accordance with GAAP and
in respect of which no
Lien has been filed; (b) Liens arising in the ordinary course
of business (such
as (i) Liens of carriers, warehousemen, lessors,
mechanics and materialmen and
other similar Liens, and (ii) Liens in the form of deposits
or pledges incurred
in connection with worker's compensation,
unemployment compensation and other
types of social security (excluding Liens arising under
ERISA) or in connection
with surety bonds, bids, performance bonds and similar obligations)
for sums not
overdue or being contested in good faith by
appropriate proceedings and not
involving any advances or borrowed money or
the deferred purchase price of
property or services, which do not in the aggregate
materially detract from the
value of the property or assets of the Borrowers or
materially impair the use
thereof in the operation of the Borrower's business and, in each
case, for which
it maintains adequate reserves in accordance with GAAP
and in respect of which
no Lien has been filed; (c) Liens described on
Schedule 9.2 as of the closing
------------
date and the replacement, extension or renewal of any
such Lien upon or in the
same property subject thereto arising
out of the extension, renewal or
replacement of the Debt secured
thereby (without increase in the
amount
thereof); (d) attachments, appeal bonds, judgments and other
similar Liens, for
sums not exceeding Five Hundred
Thousand and 00/100 Dollars ($500,000.00)
20
<PAGE>
arising in connection with court proceedings,
provided the execution or other
--------
enforcement of such Liens is effectively stayed and the
claims secured thereby
are being actively contested in good faith and by appropriate
proceedings and to
the extent such judgments or awards do not constitute an
Event of Default under
Section 11.8 hereof; (e) easements, rights of way,
restrictions, minor defects
------------
or irregularities in title and other
similar Liens not interfering in any
material respect with the ordinary conduct of the business of the
Borrowers; (f)
subject to the limitation set forth
in Section 9.1(e), Liens arising
in
---------------
connection with Capitalized Lease
Obligations (and attaching only to the
property being leased and products and proceeds
thereof); (g) subject to the
limitation set forth in Section 9.1(e), Liens
that constitute purchase money
---------------
security interests on any property securing
Debt incurred for the purpose of
financing all or any part of the cost of acquiring such
property, provided that
--------
any such Lien attaches to such
property within twenty (20) days of the
acquisition thereof and attaches solely to the property so
acquired; (h) Liens
granted to the Lender hereunder and under the
Loan Documents; (i) usual and
customary rights of set off; (j) other
Liens which in the aggregate secure
Obligations not exceeding Five Hundred Thousand and 00/100 Dollars
($500,000.00)
and (k) Liens covering the Bauer Accounts
and their proceeds securing the
obligations of KDS under the Bauer Distribution Agreement.
"Permitted Perfection Limitations" shall
mean a limitation on the perfected
--------------------------------
status of Collateral to the extent that (a) perfection would
require a notation
on the records of the issuer of title (such as
motor vehicle titles) and no
notation is requested or made or (b) the laws of a
jurisdiction outside of the
United States of America governs the issue of perfection.
"Person" shall mean any
natural person, partnership, limited
liability
------
company, limited liability partnership, corporation, trust, joint
venture, joint
stock company, association, unincorporated organization, government
or agency or
political subdivision thereof, or other entity, whether acting in
an individual,
fiduciary or other capacity.
"Prime Loan" or "Prime Loans" shall
mean that portion, and collectively
---------- ------------
those portions, of the aggregate outstanding principal balance of
the Loans that
bear interest at the Prime Rate.
"Prime Rate" shall mean the
floating per annum rate of interest which at
----------
any time, and from time to time, shall be most recently
announced by the Lender
as its Prime or Base Rate, which is not intended to be
the Lender's lowest or
most favorable rate of interest at any one
time. The effective date of any
change in the Prime Rate shall for purposes hereof be the date the
Prime Rate is
changed by the Lender. The Lender shall not be
obligated to give notice of any
change in the Prime Rate.
"Principal Shareholder" shall
mean American Republic Investment Co., a
----------------------
Delaware corporation.
"R1S" shall mean Resource One
Staffing, LLC, an Ohio limited liability
---
company.
21
<PAGE>
"Rate Management
Transaction" shall mean any transaction
(including an
-----------------------------
agreement with respect thereto) now existing or
hereafter entered into between
Borrower and Lender which is a rate swap, basis swap, forward
rate transaction,
commodity swap, commodity option, equity or equity index
swap, equity or equity
index option, bond option, interest rate option,
foreign exchange transaction,
cap transaction, floor transaction, collar
transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option
or any other similar transaction (including any
option with respect to any of
these transactions) or any combination thereof,
whether linked to one or more
interest rates, foreign currencies, commodity
prices, equity prices or other
financial measures.
"Regulatory Change" shall mean
the introduction of, or any change in any
------------------
applicable law, treaty, rule, regulation or guideline
or in the interpretation
or administration thereof by any governmental authority
or any central bank or
other fiscal, monetary or other authority having jurisdiction over
the Lender or
its lending office.
"SPS1" shall mean Service Parts Supply
Corp., an Ohio Corporation.
----
"Senior Debt" means all Debt of Borrowers
other than Subordinated Debt.
-----------
"Subordinated Debt" shall mean
that portion of the Debt of the Borrowers
------------------
which is subordinated to the Obligations in a manner
reasonably satisfactory to
the Lender, including, but not
limited to, right and time of payment
of
principal and interest.
"Subsidiary" and "Subsidiaries" shall
mean, respectively, with respect to
---------- ------------
any Person, each and all such corporations, partnerships,
limited partnerships,
limited liability companies, limited liability
partnerships, joint ventures or
other entities of which or in which such Person owns,
directly or indirectly,
such number of outstanding Capital Securities as
have more than fifty percent
(50.00%) of the ordinary voting power for
the election of directors or other
managers of such corporation, partnership,
limited liability company or other
entity. Unless the context otherwise requires,
each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Borrower.
"Taxes" shall mean any and all
present and future taxes, duties, levies,
-----
imposts, deductions, assessments, charges
or withholdings, and any and all
liabilities (including interest and penalties and other additions
to taxes) with
respect to the foregoing.
"UCC" shall mean the
Uniform Commercial Code in effect in the state of
---
Illinois from time to time.
"United States Treasury
Securities" means actively traded United States
-----------------------------------
Treasury bonds, bills and notes.
"Unmatured Event of Default" shall mean
any event which, with the giving of
--------------------------
notice, the passage of time or both, would constitute an Event of
Default.
22
<PAGE>
"Voidable Transfer" shall have
the meaning set forth in Section 13.22
------------------
--------------
hereof.
"Wholly-Owned Subsidiary"
shall mean any Subsidiary of which or in which
------------------------
one or more of the Borrowers own, directly or
indirectly, one hundred percent
(100%) of the Capital Securities of such Subsidiary.
1.2 Accounting Terms. Any accounting terms
used in this Agreement which are
----------------
not specifically defined herein shall have the meanings
customarily given them
in accordance with GAAP. Calculations
and determinations of financial and
accounting terms used and not otherwise specifically
defined hereunder and the
preparation of financial statements to be
furnished to the Lender pursuant
hereto shall be made and prepared, both as to classification
of items and as to
amount, in accordance with GAAP as used in
the preparation of the financial
statements of the Borrowers on the date of this
Agreement except as otherwise
required by changes in GAAP. If any
changes in accounting principles or
practices from those used in the preparation of
the financial statements are
hereafter occasioned by the promulgation of rules,
regulations, pronouncements
and opinions by or required by the Securities
and Exchange Commission, the
Financial Accounting Standards Board or the
American Institute of Certified
Public Accountants (or any
successor thereto or agencies
with similar
functions), which results in a material change in
the method of accounting in
the financial statements required to be furnished to the
Lender hereunder or in
the calculation of financial covenants, standards
or terms contained in this
Agreement, the parties hereto agree to enter into good
faith negotiations to
amend such provisions so as equitably to reflect
such changes to the end that
the criteria for evaluating the financial
condition and performance of the
Borrowers will be the same after such changes as they were
before such changes;
and if the parties fail to agree on the
amendment of such provisions, the
Borrowers will furnish financial statements in accordance with such
changes, but
shall provide calculations for all financial
covenants, perform all financial
covenants and otherwise observe all financial standards and
terms in accordance
with applicable accounting principles and practices in effect
immediately prior
to such changes. Calculations with respect to financial covenants
required to be
stated in accordance with applicable
accounting principles and practices in
effect immediately prior to such changes shall be reviewed
and certified by the
Borrower's accountants. Calculations of all
accounting items included within
each financial covenant or other determination set forth in this
Agreement shall
be on a consolidated basis for the Borrowers.
1.3 Other Terms Defined in
UCC. All other capitalized words and phrases
---------------------------
used herein and not otherwise
specifically defined herein shall have
the
respective meanings assigned to such terms in the
UCC, to the extent the same
are used or defined therein.
1.4 Other Interpretive Provisions.
-----------------------------
(a)
The meanings of defined terms are
equally applicable to the
singular and plural forms of
the defined terms. Whenever the context so
requires, the neuter gender includes the
masculine and feminine, the single
number includes the plural,
and vice versa, and in particular the word
"Borrower" shall be so construed.
23
<PAGE>
(b)
Section and Schedule references are to
this Agreement unless
otherwise specified. The words "hereof",
"herein" and "hereunder" and words
of similar import when used in this
Agreement shall refer to this Agreement
as a whole and not to any particular
provision of this Agreement
(c)
The term "including" is not limiting,
and means "including,
without limitation".
(d) In
the computation of periods of time from a specified
date to a
later specified date, the word "from"
means "from and including"; the words
"to" and "until" each mean "to but
excluding", and the word "through" means
"to and including".
(e)
Unless otherwise expressly provided
herein, (i) references to
agreements (including
this Agreement and the other Loan Documents)
and
other contractual
instruments shall be deemed to include all
subsequent
amendments, restatements,
supplements and other modifications thereto, but
only to the extent such
amendments, restatements, supplements and
other
modifications are not
prohibited by the terms of any Loan Document, and
(ii) references to any
statute or regulation shall be
construed as
including all statutory and
regulatory provisions amending, replacing,
supplementing or interpreting such statute
or regulation.
(f) To the
extent any of the provisions of the other Loan
Documents
are inconsistent with the terms of
this Agreement, the provisions of this
Agreement shall govern.
(g)
This Agreement and the other Loan
Documents may use several
different limitations,
tests or measurements to regulate the
same or
similar matters.
All such limitations, tests and
measurements are
cumulative and each shall be performed in
accordance with its terms.
Section 2. COMMITMENT OF THE LENDER.
------------------------
2.1 Facility A Loans.
----------------
(a) Facility
A Loan Commitment. Subject to the terms and conditions of
--------------------------
this Agreement and the other
Loan Documents, and in reliance upon
the
representations and warranties of the
Borrowers set forth herein and in the
other Loan Documents, the
Lender agrees to make such Facility A Loans at
such times as the Borrowers may from
time to time request until, but not
including, the Facility
A Maturity Date, and in such amounts
as the
Borrowers may from time
to time request; provided, however, that
the
-------- -------
aggregate principal balance of all
Facility A Loans outstanding at any time
shall not exceed the Facility A
Borrowing Base. Facility A Loans made by
the Lender may be repaid and,
subject to the terms and conditions hereof,
borrowed again up to, but not including
the Facility A Maturity Date unless
24
<PAGE>
the Facility A Loans are otherwise
accelerated, terminated or extended as
provided in this
Agreement. The Facility A Loans shall be
used by the
Borrowers for general working capital
needs, including, but not limited to,
costs and expenses associated
with the consolidation of the fulfillment
business in Florida.
(b) Facility
A Interest Rate. The following
interest rate options
-------------------------
shall be available for
all Facility A Loans (the "Facility A
Interest
Rate"):
(1)
London Interbank Offered Rate Option. A fluctuating interest
rate
------------------------------------
per annum (fixed during the applicable LIBOR
Interest Period)
equal to the sum of: (A) the London Interbank Offered
Rate plus
----
(B) the Applicable Margin then in effect; or
(2)
BBA LIBOR Daily Floating Rate Option.
A fluctuating rate of
---------------------------------------
interest per annum equal to the sum of: (A) BBA
LIBOR plus (b)
----
the Applicable Margin then in effect; or
(3)
Prime Rate Option. A fluctuating interest rate per annum for
each
-----------------
day equal to the sum of: (A) the Prime Rate of
the Lender, in
effect from time to time
(such interest rate to
change
immediately upon any change in the
Prime Rate) plus (B) the
----
Applicable Margin then in effect.
(c)
Facility A Loan Interest and
Payments. Except as otherwise
-----------------------------------------
provided in this Section,
the principal amount of the Facility A Loans
outstanding from time to
time shall bear interest at the
applicable
Facility A Interest
Rate. Accrued and unpaid interest on
the unpaid
principal balance of all
Facility A Loans outstanding from time to time
which bear interest at the Prime Rate or
the BBA LIBOR Daily Floating Rate
shall be due and payable
monthly, in arrears, commencing on the
last
Business Day of July, 2009 and
continuing on the last Business Day of each
calendar month thereafter, and on the
Facility A Maturity Date. Accrued and
unpaid interest on the unpaid
principal balance of all Facility A Loans
outstanding from time to time which
bear interest at the London Interbank
Offered Rate shall be
payable on the last Business Day of each
LIBOR
Interest Period (provided, however,
that for LIBOR Interest Periods of six
months, accrued interest shall be paid on
the dates which are three and six
months from the first day of such LIBOR
Interest Period), commencing on the
first such date to
occur after the date hereof, on
the date of any
principal repayment of a
Loan bearing interest at the London Interbank
Offered Rate and on the Facility A
Maturity Date. Any amount of principal
or interest on the Facility A Loans which
is not paid when due, whether at
stated maturity, by acceleration or
otherwise, shall bear interest payable
on demand at the Default Rate.
25
<PAGE>
(d) Facility
A Loan Principal Payments.
----------------------------------
(i) Facility A Loan Mandatory Payments.
All Facility A Loans
------------------------------------
hereunder shall be repaid by the Borrowers on the Facility A
Maturity
Date
for Facility A Loans, unless payable
sooner pursuant to the
provisions
of this Agreement. In the event the aggregate
outstanding
principal balance of all Facility A
Loans and Letter of Credit
Obligations hereunder exceeds the Facility
A Borrowing Base, the
Borrowers shall, without notice or demand of any
kind, immediately
make
such repayments of the Facility A Loans or
take such other
actions as
are satisfactory to the Lender as shall be
necessary to
eliminate such excess. Also, if the Borrowers
choose not to convert
any
Facility A Loan which is a LIBOR Loan to a Prime Loan as
provided
in Section
2.5(a), then such Facility A Loan shall be due and
payable
--------------
as provided
therein, all without further demand, presentment, protest
or notice of
any kind, all of which are hereby waived by the Borrower.
(ii) Optional Prepayments. Subject to Section 2.5
hereof, the
---------------------
Borrowers
may from time to time prepay the Facility A Loans, in
whole
or in part,
without any prepayment penalty whatsoever, provided
that
any
prepayment of the entire principal balance shall
include accrued
interest on
such Facility A Loans to the date of such prepayment.
(iii) Voluntary Reductions or Termination of the Facility A
Loan
-----------------------------------------------------------
Commitment. The Borrowers may from time to
time on at least five
----------
Business
Days' prior written notice received by the Lender permanently
reduce the
Facility A Loan Commitment to an amount not less than
the
amounts then outstanding under
any Facility A Loans plus the
----
outstanding amount of all Letter of
Credit Obligations. Any such
reduction shall be in an amount not less than
$100,000 or a higher
integral multiple of $50,000. Concurrently with any
reduction of the
Facility A Loan
Commitment to zero, the Borrowers
shall pay all
interest on
the Facility A Loans, all Non-Utilization
Fees and all
letter of
credit fees and shall Cash Collateralize in full all Letters
of Credit
Obligations.
(iv) Borrowers' Right to Increase the Facility A Loan
Commitment.
-----------------------------------------------------------
Subject to
the conditions described below, the Borrowers shall have
a
one time
right on at least five Business Days' prior written notice to
increase the
Facility A Loan Commitment dollar for dollar by the same
amount that
the Borrowers concurrently decrease the Facility
D Loan
Commitment pursuant to Section 2.4(d)(ii) hereof.
Any such increase
shall be in
an amount not less than $100,000 or a
higher integral
multiple of $50,000 and shall not exceed Two
Million Five Hundred
Thousand Dollars ($2,500,000). To effect
such an increase in the
Facility A Loan Commitment, Borrowers
shall have met each of the
following conditions to the satisfaction of
Lender: (A) delivered a
26
<PAGE>
fully
executed amended and restated Facility A
Revolving Note and
Facility D Revolving Note in
the form of Exhibits B and
E,
-------------------
respectively, having an aggregate principal
amount of not to exceed
$25,000,000, (B) a
certificate from each of
the Borrowers
substantially in the form of Exhibit 2.1(d)(iv).
(e) Non-Utilization Fee.
The Borrowers agree to pay to the
Lender a
--------------------
non-utilization fee equal to one-half of one percent (0.50%) of the
total of (a)
the Facility A Loan Commitment, minus (b) the sum of
(i) the daily average of
-----
the aggregate principal amount of all Facility A Loans
outstanding, plus (ii)
----
the daily average of the aggregate amount of the Letter of
Credit Obligations.
The non-utilization fee shall be
(A) calculated on the basis of a
year
consisting of 360 days, (B) paid for the actual number of days
elapsed, and (C)
payable quarterly in arrears on the last day of each March,
June, September and
December, commencing on September 30, 2009 and on the Facility A
Maturity Date.
2.2 Facility B Loan.
---------------
(a) Facility
B Loan Commitment. Subject to the terms and conditions of
--------------------------
this Agreement and the other
Loan Documents, and in reliance upon
the
representations and warranties of the
Borrowers set forth herein and in the
other Loan Documents, the Lender
agrees to make a Facility B Loan equal to
the Facility B Loan
Commitment. The Facility B Loan shall be available to
the Borrowers in a single principal
advance on such date as the conditions
set forth in Section 3 shall have been
satisfied or waived. The Facility B
Loan shall be used by the Borrowers
for consolidating the aggregate unpaid
amount of all prior direct advances
made by the Lender in connection with
the Facility B Loan under the Existing
Loan Agreement. Subject to Section
2.5 hereof, the Facility B
Loan may be prepaid in whole or in part at any
time without penalty, but
shall be due in full on the Facility B Maturity
Date, unless the credit
extended under the Facility B Loan is otherwise
accelerated, terminated or extended as
provided in this Agreement.
(b) Facility
B Loan Interest and Principal Payments. The
outstanding
------------------------------------------------
principal balance of the Facility B
Loan shall be repaid in equal monthly
installments of principal each in the
amount of Eighty-Four Thousand Three
Hundred Thirty-Three and 33/100
Dollars ($84,333.33) plus interest at the
Facility B Interest Rate, beginning
on the last Business Day of July 2009,
and continuing on the
last day of each month thereafter, with a
final
payment of all
outstanding principal and accrued
interest due on the
Facility B Maturity Date.
Principal amounts repaid on the Facility B Term
Note may not be borrowed again. Any
amount of principal or interest on the
Facility B Loan which is not paid when
due, whether at stated maturity, by
acceleration or otherwise,
shall bear interest payable on demand at the
Default Rate.
(c) Facility
B Loan Optional Prepayments. Provided that no
Event of
--------------------------------------
Default then exists under this
Agreement or the Loans, the Borrowers may
voluntarily prepay the
principal balance of the Facility B Loan, in whole
or in part, without any prepayment
penalty whatsoever, at any time on or
27
<PAGE>
after the date hereof.
Each prepayment of the Facility B Loan shall
be
applied to the scheduled
installments of the Facility B Loan in inverse
order of maturity.
2.3 Facility C Loan.
---------------
(a) Facility
C Loan Commitment. Subject to the terms and conditions of
--------------------------
this Agreement and the other
Loan Documents, and in reliance upon
the
representations and warranties of the
Borrowers set forth herein and in the
other Loan Documents, the Lender
agrees to make a Facility C Loan equal to
the Facility C Loan
Commitment. The Facility C Loan shall be available to
the Borrowers in a single principal
advance on such date as the conditions
set forth in Section 3 shall have been
satisfied or waived. The Facility C
Loan shall be used by the Borrowers
for consolidating the aggregate unpaid
amount of all prior direct advances
made by the Lender in connection with
the Facility C Loan under the Existing
Loan Agreement. The Facility C Loan
may be prepaid in whole or in part at any
time without penalty, but shall
be due in full on the Facility C Maturity
Date, unless the credit extended
under the Facility C Loan is otherwise
accelerated, terminated or extended
as provided in this Agreement.
(b) Facility
C Loan Interest and Principal Payments. The
outstanding
------------------------------------------------
principal balance of the Facility C
Loan shall be repaid in equal monthly
installments of
principal each in the amount of Sixty Four Thousand
Two
Hundred Twenty Five and 00/100
Dollars ($64,225.00) plus interest at the
----
Facility C Interest Rate, beginning
on the last Business Day of July 2009,
and continuing on the last Business
Day of each month thereafter, with a
final payment of all outstanding
principal and accrued interest due on the
Facility C Maturity Date.
Principal amounts repaid on the Facility C Term
Note may not be borrowed again. Any
amount of principal or interest on the
Facility C Loan which is not paid when
due, whether at stated maturity, by
acceleration or otherwise,
shall bear interest payable on demand at the
Default Rate.
(c) Facility
C Loan Optional Prepayments. Provided that no
Event of
--------------------------------------
Default then exists under this
Agreement or the Loans, the Borrowers may
voluntarily prepay the
principal balance of the Facility C Loan, in whole
or in part, without any prepayment
penalty whatsoever, at any time on or
after the date hereof.
Each prepayment of the Facility C Loan shall
be
applied to the scheduled
installments of the Facility C Loan in inverse
order of maturity.
(d) One Loan
or Advance. The Facility C Loan shall
constitute one
--------------------
obligation secured by the Lender's Lien in
the Borrowers' Collateral and by
all other Liens now or hereafter granted
by the Borrowers to the Lender.
2.4 Facility D Loans.
----------------
(a) Facility
D Loan Commitment. Subject to the terms and conditions of
--------------------------
this Agreement and the other
Loan Documents, and in reliance upon
the
representations and warranties of the
Borrowers set forth herein and in the
28
<PAGE>
other Loan Documents, the
Lender agrees to make such Facility D Loans at
such times as the Borrowers may from
time to time request until, but not
including, the Facility
D Maturity Date, and in such amounts
as the
Borrowers may from time
to time request; provided, however, that
the
--------
-------
aggregate principal balance of all
Facility D Loans outstanding at any time
shall not exceed the Bauer
Borrowing Base. Facility D Loans made by the
Lender may be repaid
and, subject to the terms and conditions
hereof,
borrowed again up to, but not including
the Facility D Maturity Date unless
the Facility D Loans are otherwise
accelerated, terminated or extended as
provided in this
Agreement. The Facility D Loans shall be
used by the
Borrowers for the
purpose of financing payments
under the Bauer
Distribution Agreement.
(b) Facility
D Interest Rate. The following
interest rate options
-------------------------
shall be available for
all Facility D Loans (the "Facility D
Interest
Rate"):
(1)
London Interbank Offered Rate Option. A fluctuating interest
rate
------------------------------------
per annum (fixed during the applicable LIBOR
Interest Period)
equal to the sum of: (A) the London Interbank Offered
Rate plus
----
(B) the Applicable Margin then in effect; or
(2)
BBA LIBOR Daily Floating Rate Option.
A fluctuating rate of
---------------------------------------
interest per annum equal to the sum of: (A) BBA
LIBOR plus (b)
----
the Applicable Margin then in effect; or
(3)
Prime Rate Option. A fluctuating interest rate per annum for
each
-----------------
day equal to the sum of: (A) the Prime Rate of
the Lender, in
effect from time to time
(such interest rate to
change
immediately upon any change in the
Prime Rate) plus (B) the
----
Applicable Margin then in effect.
(c)
Facility D Loan Interest and
Payments. Except as otherwise
-----------------------------------------
provided in this Section,
the principal amount of the Facility D Loans
outstanding from time to
time shall bear interest at the
applicable
Facility D Interest
Rate. Accrued and unpaid interest on
the unpaid
principal balance of all
Facility D Loans outstanding from time to time
which bear interest at the Prime Rate or
the BBA LIBOR Daily Floating Rate
shall be due and payable
monthly, in arrears, commencing on the
last
Business Day of July 2009 and
continuing on the last Business Day of each
calendar month thereafter, and on the
Facility D Maturity Date. Accrued and
unpaid interest on the unpaid
principal balance of all Facility D Loans
outstanding from time to time which
bear interest at the London Interbank
Offered Rate shall be
payable on the last Business Day of each
LIBOR
Interest Period (provided, however,
that for LIBOR Interest Periods of six
months, accrued interest shall be paid on
the dates which are three and six
months from the first day of such LIBOR
Interest Period), commencing on the
first such date to
occur after the date hereof, on
the date of any
principal repayment of
Loan bearing interest at the London
Interbank
Offered Rate and on the Facility D
Maturity Date. Any amount of principal
or interest on the Facility D Loans which
is not paid when due, whether at
stated maturity, by acceleration or
otherwise, shall bear interest payable
on demand at the Default Rate.
29
<PAGE>
(d) Facility
D Loan Principal Payments.
----------------------------------
(i) Facility D Loan Mandatory Payments.
All Facility D Loans
------------------------------------
hereunder shall be repaid by the Borrowers on the Facility D
Maturity
Date,
unless payable sooner pursuant to the
provisions of this
Agreement.
In the event the aggregate outstanding principal balance of
all Facility
D Loans exceeds the Bauer Borrowing Base, the
Borrowers
shall,
without notice or demand of any kind, immediately
make such
repayments of the Facility D Loans or take such other
actions as are
satisfactory to the Lender as shall be necessary
to eliminate such
excess. Also, if the Borrowers choose not to
convert any Facility D
Loan which
is a LIBOR Loan to a Prime Loan as provided in Section 2.5,
-----------
then
such Facility D Loan shall be due and
payable as provided
therein, all
without further demand, presentment, protest or notice of
any kind,
all of which are hereby waived by the Borrower.
(ii) Optional Prepayments; Voluntary Reductions or Termination
of
------------------------------------------------------------
the
Facility D Loan Commitment. Subject to Section 2.5
hereof, the
--------------------------------
Borrowers
may from time to time prepay the Facility D Loans, in
whole
or in part,
without any prepayment penalty whatsoever, provided
that
any
prepayment of the entire principal balance shall
include accrued
interest on
such Facility D Loans to the date of such prepayment. The
Borrowers
may from time to time on at least five Business Days'
prior
written
notice received by the Lender permanently reduce the
Facility
D Loan
Commitment to an amount not less
than the amounts then
outstanding
under all Facility D Loans. Any such reduction shall be in
an amount
not less than $100,000 or a higher integral
multiple of
$50,000. Concurrently with any
reduction of the Facility D Loan
Commitment to zero, the Borrowers
shall pay all interest on the
Facility D
Loans and Non-Utilization Fees.
(e)
Non-Utilization Fee. The Borrowers agree to pay to the
Lender a
--------------------
non-utilization fee equal to
one-half of one percent (0.50%) of the total
of (a) the Facility D Loan
Commitment, minus (b) the daily average of the
-----
aggregate principal
amount of all Facility D Loans
outstanding. The
non-utilization fee
shall be (A) calculated on the
basis of a year
consisting of 360 days, (B) paid for the
actual number of days elapsed, and
(C) payable quarterly
in arrears on the last day of each March,
June,
September and December,
commencing on September 30, 2009 and
on the
Facility D Maturity Date.
2.5 Additional LIBOR Loan Provisions.
--------------------------------
(a) LIBOR
Loan Prepayments. Notwithstanding anything to the
contrary
----------------------
contained herein, the principal balance of
any Loan bearing interest at the
London Interbank Offered Rate may not be
prepaid in whole or in part except
on the last Business Day of the applicable
LIBOR Interest Period. If, for
any reason, a Loan bearing interest at the
London Interbank Offered Rate is
paid prior to the last Business Day of any
LIBOR Interest Period, whether
30
<PAGE>
voluntary, involuntary, by
reason of acceleration or otherwise, each such
prepayment will be
accompanied by the amount of accrued interest on
the
amount prepaid and any and all
costs, expenses, penalties and charges
incurred by the Lender as a result of the
early termination or breakage of
such a Loan, plus the amount, if any, by
which (i) the additional interest
which would have been payable during the
LIBOR Interest Period on such Loan
had it not been prepaid,
exceeds (ii) the interest which would have been
recoverable by the Lender by placing
the amount prepaid on deposit in the
domestic certificate of deposit
market, the eurodollar deposit market, or
other appropriate money
market selected by the Lender, for a
period
starting on the date on which it was
prepaid and ending on the last day of
the LIBOR Interest Period for
such Loan. The amount of any such loss or
expense payable by the Borrowers to
the Lender under this section shall be
determined in the Lender's sole
discretion based upon the assumption that
the Lender funded
its loan commitment for such Loans in
the London
Interbank Eurodollar
market and using any reasonable
attribution or
averaging methods which
the Lender deems appropriate and
practical;
provided, however, that the Lender
is not obligated to accept a deposit in
------------------
the London Interbank
Eurodollar market in order to charge interest on a
LIBOR Loan at the London Interbank Offered
Rate or BBA LIBOR Daily Floating
Rate.
(b)
LIBOR Unavailability. If the Lender determines in
it reasonable
---------------------
good faith judgment
(which determination shall be conclusive,
absent
manifest error) that (i) the making
or maintenance of any LIBOR Loan would
violate any applicable law, rule,
regulation or directive, whether or not
having the force of
law, (ii) United States dollar
deposits in the
principal amount, and
for periods equal to term of the LIBOR Loans
for
funding any LIBOR Loan are not available
in the London Interbank Eurodollar
market in the ordinary course of business,
(iii) by reason of circumstances
affecting the London Interbank
Eurodollar market, adequate and fair means
do not exist for ascertaining
the London Interbank Offered Rate or BBA
LIBOR Daily Floating Rate to be
applicable to the relevant LIBOR Loan, or
(iv) the London Interbank
Offered Rate or BBA LIBOR Daily Floating Rate
does not accurately reflect
the cost to the Lender of a LIBOR Loan, the
Lender shall promptly
notify the Borrowers thereof and, so long as the
foregoing conditions continue, none of the
Loans may be advanced as a LIBOR
Loan thereafter. In addition, at the
Borrowers' option, each existing LIBOR
Loan shall be
immediately (i) converted to a Prime Loan
on the next
Business Day (in the case of a Loan
bearing interest at the BBA LIBOR Daily
Floating Rate) or the last Business Day of
the then existing LIBOR Interest
Period (in the case of a Loan
bearing interest at the London
Interbank
Offered Rate), or (ii) due and
payable on the next Business Day (in the
case of a Loan bearing interest at
the BBA LIBOR Daily Floating Rate) or
the last Business Day of the then
existing LIBOR Interest Period (in the
case of a Loan bearing
interest at the London Interbank Offered
Rate),
without further demand, presentment,
protest or notice of any kind, all of
which are hereby waived by the
Borrowers.
(c)
Regulatory Change. In addition, if, after
the date hereof, a
------------------
Regulatory Change shall,
in the reasonable good faith judgment of the
Lender, make it unlawful
for the Lender to make or maintain the LIBOR
Loans, then the Lender shall
promptly notify the Borrowers and none of the
31
<PAGE>
Loans may be advanced as a
LIBOR Loan thereafter. In addition, at
the
Borrowers' option, each
existing LIBOR Loan shall be immediately
(i)
converted to a Prime Loan on the
next Business Day (in the case of a Loan
bearing interest at the BBA LIBOR Daily
Floating Rate) or the last Business
Day of the then existing
LIBOR Interest Period (in the case of a Loan
bearing interest at the London
Interbank Offered Rate), or (ii) due and
payable on the next Business Day (in the
case of a Loan bearing interest at
the BBA LIBOR Daily Floating
Rate) or the last Business Day of the then
existing LIBOR Interest Period (in
the case of a Loan bearing interest at
the London Interbank Offered
Rate), without further demand, presentment,
protest or notice of any
kind, all of which are hereby waived by
the
Borrowers.
(d) LIBOR
Indemnity. If any Regulatory Change, or
compliance by the
---------------
Lender or any Person
controlling the Lender with any request or directive
of any governmental authority,
central bank or comparable agency (whether
or not having the force of law) issued,
promulgated or enforced on or after
January 16, 2007
shall (a) impose, modify or
deem applicable any
assessment, reserve, special deposit
or similar requirement against assets
held by, or deposits in or for
the account of or loans by, or any other
acquisition of funds or
disbursements by, the Lender; (b) subject
the
Lender or any LIBOR Loan to
any tax, duty, charge, stamp tax or fee or
change the basis of taxation
of payments to the Lender of principal
or
interest due from the
Borrowers to the Lender hereunder (other
than a
change in the taxation of the
overall net income of the Lender); or (c)
impose on the Lender any other
condition regarding such LIBOR Loan or the
Lender's funding thereof, and the Lender
shall determine in the exercise of
its reasonable
good faith judgment (which
determination shall be
conclusive, absent manifest
error) that the result of the foregoing is to
increase the cost
to, or to impose a cost on, the
Lender or such
controlling Person of making
or maintaining such LIBOR Loan or to reduce
the amount of principal or interest
received by the Lender hereunder, then
the Borrowers shall pay to
the Lender or such controlling
Person, on
demand, such additional
amounts as the Lender shall, from time to time,
determine are sufficient to
compensate and indemnify the Lender for such
increased cost or reduced amount;
provided, however, that (i) the Lender
-------- -------
provides Borrowers
notice thereof within thirty (30)
days of such
Regulatory Change or applicable request or
directive and (ii) if the Lender
or such controlling
Person could mitigate the amount by
changing its
lending office or taking similar action,
it will do so as long as there are
no detrimental consequences to the Lender
or such controlling Person.
2.6 Interest and Fee Computation;
Collection of Funds. Except as otherwise
--------------------------------------------------
set forth herein, all interest and fees shall be
calculated on the basis of a
year consisting of 360 days and shall be paid for
the actual number of days
elapsed. Principal payments submitted in funds not
immediately available shall
continue to bear interest until
collected. If any payment to be made by the
Borrowers hereunder or under any Note shall
become due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day and
such extension of time shall be included in computing any interest
in respect of
such payment. Notwithstanding anything to the
contrary contained herein, the
final payment due under any of the Loans must be made by wire
transfer or other
immediately available funds. All payments made by
the Borrowers hereunder or
32
<PAGE>
under any of the Loan Documents shall be made without setoff,
counterclaim, or
other defense. To the extent permitted by applicable law, all
payments hereunder
or under any of the Loan Documents
(including any payment of principal,
interest, or fees) to, or for the benefit, of any
Person shall be made by the
Borrowers free and clear of, and without
deduction or withholding for, or
account of, any taxes now or hereinafter imposed by any taxing
authority.
2.7 Letters of
Credit. Subject to the terms and
conditions of this
-------------------
Agreement and upon (i) the execution by the Borrowers and the
Lender of a Master
Letter of Credit Agreement in form and substance
reasonably acceptable to the
Lender (together with all amendments, modifications and
restatements thereof,
the "Master Letter of Credit Agreement"), and (ii) the execution
and delivery by
the Borrowers, and the acceptance by
the Lender, in its sole and absolute
discretion, of a Letter of Credit Application,
the Lender agrees to issue for
the account of the Borrowers such Letters of Credit in the
standard form of the
Lender and otherwise in form and substance reasonably
acceptable to the Lender,
from time to time during the term of this Agreement, provided that
the Letter of
Credit Obligations may not at any time exceed the
Letter of Credit Commitment
and provided further, that no Letter of C
