THIRD RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT
GMAC COMMERCIAL FINANCE LLC
(AS LENDER AND AS AGENT)
and
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND CO-AGENT)
and
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME
(AS LENDERS),
with
JACO ELECTRONICS, INC.
NEXUS CUSTOM ELECTRONICS AND INTERFACE ELECTRONICS CORP.
and JACO DE MEXICO, INC.
and ANY GUARANTOR
(ALL AS LOAN PARTIES)
DECEMBER 22, 2003
TABLE OF CONTENTS
I. DEFINITIONS..............................................................................................2
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1.1. Accounting Terms................................................................................2
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1.2. General Terms...................................................................................2
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1.3. UCC Terms......................................................................................19
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1.4. Certain Matters of Construction................................................................19
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1.5. Joint and Several Liabilities..................................................................19
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II. ADVANCES, PAYMENTS......................................................................................19
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2.1. Revolving Advances.............................................................................19
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2.2. Procedure for Borrowing........................................................................20
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2.3. Disbursement of Advance Proceeds...............................................................22
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2.4. Intentionally Left Blank.......................................................................23
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2.5. Intentionally Left Blank.......................................................................23
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2.6. Maximum Revolving Advances.....................................................................23
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2.7. Repayment of Advances and Reduction of the Additional Availability Amount......................23
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2.8. Repayment of Excess Advances...................................................................24
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2.9. Statement of Account...........................................................................24
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2.10. Letters of Credit..............................................................................24
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2.11. Issuance of Letters of Credit..................................................................25
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2.12. Requirements For Issuance of Letters of Credit.................................................25
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2.13. Additional Payments............................................................................27
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2.14. Manner of Borrowing and Payment................................................................27
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2.15. Mandatory Prepayments..........................................................................29
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2.16. Use of Proceeds................................................................................29
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2.17. Defaulting Lender..............................................................................30
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III. INTEREST AND FEES.......................................................................................31
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3.1. Interest.......................................................................................31
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3.2. Letter of Credit Fees; Cash Collateral.........................................................31
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3.3. Loan Fees......................................................................................32
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3.4. Collateral Monitoring/Auditing Fees............................................................32
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3.5. Computation of Interest and Fees...............................................................33
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3.6. Maximum Charges................................................................................33
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3.7. Increased Costs................................................................................33
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3.8. Basis For Determining Interest Rate Inadequate or Unfair.......................................34
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3.9. Capital Adequacy...............................................................................35
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IV. COLLATERAL: GENERAL TERMS...............................................................................35
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4.1. Security Interest in the Collateral............................................................35
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4.2. Perfection of Security Interest................................................................35
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4.3. Disposition of Collateral......................................................................36
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4.4. Preservation of Collateral.....................................................................37
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4.5. Ownership of Collateral........................................................................37
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4.6. Defense of Agent's and Lenders' Interests......................................................38
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4.7. Books and Records..............................................................................38
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4.8. Financial Disclosure...........................................................................38
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4.9. Compliance with Laws...........................................................................39
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4.10. Inspection of Premises.........................................................................39
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4.11. Insurance......................................................................................39
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4.12. Failure to Pay Insurance.......................................................................41
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4.13. Payment of Taxes...............................................................................41
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4.14. Payment of Leasehold Obligations...............................................................41
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4.15. Receivables....................................................................................42
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4.16. Inventory......................................................................................44
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4.17. Maintenance of Equipment.......................................................................44
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4.18. Exculpation of Liability.......................................................................44
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4.19. Environmental Matters..........................................................................44
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4.20. Financing Statements...........................................................................46
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V. REPRESENTATIONS AND WARRANTIES..........................................................................46
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5.1. Authority......................................................................................47
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5.2. Formation and Qualification....................................................................47
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5.3. Survival of Representations and Warranties.....................................................47
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5.4. Tax Returns....................................................................................47
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5.5. Financial Statements...........................................................................48
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5.6. Corporate Name.................................................................................48
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5.7. O.S.H.A. and Environmental Compliance.........................................................49
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5.8. Solvency; No Litigation, Violation, Indebtedness or Default....................................49
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5.9. Patents, Trademarks, Copyrights and Licenses...................................................50
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5.10. Licenses and Permits...........................................................................51
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5.11. Default of Indebtedness........................................................................51
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5.12. No Default.....................................................................................51
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5.13. No Burdensome Restrictions.....................................................................51
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5.14. No Labor Disputes..............................................................................51
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5.15. Margin Regulations.............................................................................51
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5.16. Investment Company Act.........................................................................52
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5.17. Disclosure.....................................................................................52
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5.18. Intentionally Left Blank.......................................................................52
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5.19. Swaps. ........................................................................................52
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5.20. Conflicting Agreements.........................................................................52
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5.21. Application of Certain Laws and Regulations....................................................52
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5.22. Business and Property of Loan Parties..........................................................52
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5.23. Material Contracts.............................................................................52
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VI. AFFIRMATIVE COVENANTS...................................................................................53
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6.1. Payment of Fees................................................................................53
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6.2. Conduct of Business and Maintenance of Existence and Assets....................................53
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6.3. Violations.....................................................................................53
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6.4. Government Receivables.........................................................................53
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6.5. Execution of Supplemental Instruments..........................................................54
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6.6. Payment of Indebtedness........................................................................54
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6.7. Standards of Financial Statements..............................................................54
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6.8. Intentionally Left Blank.......................................................................54
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6.9. Financial Covenants............................................................................54
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6.10. Minimum Net Worth..............................................................................55
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6.11. Dissolution of Immaterial Subsidiaries.........................................................55
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VII. NEGATIVE COVENANTS......................................................................................55
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7.1. Merger, Consolidation, Acquisition and Sale of Assets..........................................55
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7.2. Creation of Liens..............................................................................55
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7.3. Guarantees.....................................................................................55
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7.4. Investments....................................................................................56
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7.5. Loans..........................................................................................56
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7.6. Capital Expenditures...........................................................................56
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7.7. Dividends and Distributions....................................................................56
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7.8. Indebtedness...................................................................................56
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7.9. Nature of Business.............................................................................56
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7.10. Transactions with Affiliates...................................................................57
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7.11. Leases. .......................................................................................57
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7.12. Subsidiaries...................................................................................57
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7.13. Fiscal Year and Accounting Changes.............................................................57
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7.14. Pledge of Credit...............................................................................57
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7.15. Amendment of Organizational Documents..........................................................57
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7.16. Compliance with ERISA..........................................................................57
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7.17. Prepayment of Indebtedness.....................................................................58
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7.18. Intentionally Left Blank.......................................................................58
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7.19. State of Organization..........................................................................58
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7.20. Intentionally Left Blank.......................................................................58
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VIII. CONDITIONS PRECEDENT....................................................................................58
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8.1. Conditions to Initial Advances.................................................................58
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8.2. Conditions to Each Advance.....................................................................62
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8.3. Intentionally Left Blank.......................................................................63
IX. INFORMATION AS TO BORROWERS.............................................................................63
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9.1. Disclosure of Material Matters.................................................................63
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9.2. Schedules......................................................................................63
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9.3. Environmental Reports..........................................................................63
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9.4. Litigation.....................................................................................64
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9.5. Material Occurrences...........................................................................64
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9.6. Government Receivables.........................................................................64
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9.7. Annual Financial Statements....................................................................64
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9.8. Quarterly Financial Statements.................................................................65
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9.9. Monthly Financial Statements...................................................................65
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9.10. Other Reports..................................................................................66
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9.11. Additional Information.........................................................................66
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9.12. Projected Operating Budget.....................................................................66
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9.13. Variances From Operating Budget................................................................66
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9.14. Notice of Suits, Adverse Events................................................................66
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9.15. ERISA Notices and Requests.....................................................................67
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9.16. Additional Documents...........................................................................67
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X. EVENTS OF DEFAULT.......................................................................................67
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XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT..............................................................70
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11.1. Rights and Remedies............................................................................70
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11.2. Application of Proceeds........................................................................71
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11.3. Agent's Discretion.............................................................................71
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11.4. Setoff. .......................................................................................71
11.5. Rights and Remedies not Exclusive..............................................................71
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XII. WAIVERS AND JUDICIAL PROCEEDINGS........................................................................72
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12.1. Waiver of Notice...............................................................................72
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12.2. Delay. ......................................................................................72
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12.3. Jury Waiver....................................................................................72
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XIII. EFFECTIVE DATE AND TERMINATION..........................................................................72
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13.1. Term. ..................................................................................................72
13.2. Termination.............................................................................................73
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XIV. AGENT AND CO-AGENT......................................................................................73
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14.1. Appointment....................................................................................73
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14.2. Nature of Duties...............................................................................74
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14.3. Lack of Reliance on Agent and Resignation......................................................74
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14.4. Certain Rights of Agent........................................................................75
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14.5. Reliance.......................................................................................75
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14.6. Notice of Default..............................................................................75
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14.7. Indemnification................................................................................76
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14.8. Agent in its Individual Capacity...............................................................76
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14.9. Delivery of Documents..........................................................................76
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14.10. Loan Parties' Undertaking to Agent.............................................................77
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14.11 Co-Agent.......................................................................................77
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XV. GUARANTEE...............................................................................................77
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15.1. Guaranty.......................................................................................77
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15.2. Waivers. ......................................................................................77
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15.3. No Defense.....................................................................................77
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15.4. Guaranty of Payment............................................................................78
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15.5. Liabilities Absolute...........................................................................78
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15.6. Waiver of Notice...............................................................................79
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15.7. Agent's Discretion.............................................................................79
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15.8. Reinstatement..................................................................................79
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15.9. Action Upon Event of Default...................................................................80
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15.10. Statute of Limitations.........................................................................81
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15.11. Interest.......................................................................................81
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15.12. Guarantor's Investigation......................................................................81
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15.13. Termination....................................................................................82
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XVI. MISCELLANEOUS...........................................................................................82
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16.1. Governing Law..................................................................................82
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16.2. Entire Understanding; Amendments...............................................................82
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16.3. Successors and Assigns; Participations; New Lenders............................................84
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16.4. Application of Payments........................................................................86
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16.5. Indemnity......................................................................................86
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16.6. Notice. .......................................................................................87
16.7. Survival.......................................................................................88
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16.8. Waiver of Subrogation..........................................................................88
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16.9. Severability...................................................................................88
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16.10. Expenses.......................................................................................88
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16.11 Injunctive Relief..............................................................................89
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16.12. Consequential Damages.........................................................................89
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16.13. Captions......................................................................................89
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16.14 Counterparts; Telecopied Signatures...........................................................89
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16.15 Construction..................................................................................89
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16.16 Confidentiality; Sharing Information..........................................................90
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16.17 Publicity.....................................................................................90
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List of Exhibits and Schedules
Exhibits
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Exhibit A Borrowing Base Certificate
Exhibit B Ancillary Agreements
Exhibit 2.1(a) Revolving Credit Note(s)
Exhibit 5.5 Financial Projections
Exhibit 8.1(i) Financial Condition Certificate
Schedules
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Schedule 1.2(a) Immaterial Subsidiaries
Schedule 1.2(b) Leasehold Properties
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices Schedule 5.2(a) States of
Qualification and Good Standing
Schedule 5.2(b) Subsidiaries Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names Schedule 5.7 Environmental Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.23 Material Contracts
Schedule 7.2 Existing Liens
Schedule 7.8 Existing Indebtedness
vi
THIRD RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT
This Third Restated and Amended Loan and Security Agreement is made as of
December 22 , 2003 by and between GMAC COMMERCIAL FINANCE LLC (individually
"GMACCF"), having offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (as successor by merger to GMAC Commercial Credit LLC ("GMACCC"), which
was the successor in interest to BNY Financial Corporation and the Bank of New
York Commercial Corporation, "BNYCC"), for itself, as Lender, and as Agent
("Agent")for the financial institutions ("Lenders"), at any time parties to this
Agreement, and PNC BANK, NATIONAL ASSOCIATION, individually PNC as Co-Agent and
Lender and JACO ELECTRONICS, INC., ("Jaco"), a New York Corporation, having
offices at ▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇, NEXUS CUSTOM ELECTRONICS, INC.,
("Nexus"), a Delaware Corporation, having offices at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇, ▇▇▇▇▇, INTERFACE ELECTRONICS CORP., ("Interface"), a Massachusetts
Corporation, having offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ and JACO DE
MEXICO, INC. ("Jaco Mexico"), a Texas Corporation, having offices at ▇/▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇.,▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇. Jaco, Nexus, Interface and
Jaco Mexico each shall be referred to herein individually as a "Borrower" and
jointly and severally as the "Borrowers". This Third Restated and Amended Loan
and Security Agreement ("Restated Agreement") restates and replaces in its
entirety, without interruption or break in continuity, a certain Second Restated
and Amended Loan and Security Agreement, dated September 13, 1995, (as amended
and supplemented from time to time, the "Existing Agreement"), between BNYCC and
Jaco and Nexus (which restated and amended, without interruption or break in
continuity, the Second Restated and Amended Loan and Security Agreement, dated
April 25, 1995 which in turn restated and amended, without interruption or break
in continuity, the Loan and Security Agreement - Accounts Receivable Inventory
between BNYCC and Jaco dated January 20, 1989. All such restatements being made
without interruption or break in continuity and nothing contained in this
Restated Agreement shall impair, limit or affect the security interests
heretofore granted, pledged and/or assigned to the Agent as security for the
Obligations under the Existing Agreement and this Restated Agreement does not
constitute a novation of the Existing Agreement or the security interests
granted in connection therewith. The existing Obligations under the Existing
Agreement shall constitute Obligations under this Restated Agreement. Except as
herein specifically stated, all Ancillary Agreements and related documents and
agreements relating to the Existing Agreement (including but not limited to all
agreements, security agreements, pledges, guarantees, notes, mortgages and
uniform commercial code financing statements listed on the attached Exhibit "B")
in effect as of the date of this Restated Agreement shall remain in full force
and effect in accordance with their original terms as heretofore amended and all
references therein to the Existing Agreement shall be deemed to be references to
this Restated Agreement.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Loan Parties, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms.
As used in this Agreement, the Note(s), any Other Document, or
any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP.
1.2. General Terms.
For purposes of this Agreement the following terms shall have
the following meanings:
"Account(s)" mean all present and future rights of any of
the Borrowers to payment of a monetary obligation, whether or not earned by
performance, which is not evidenced by chattel paper or an instrument, (1) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (2) for services rendered or to be rendered, (3) for a
secondary obligation incurred or to be incurred, or (4) arising out of the use
of a credit or charge card or information contained on or for use with the card.
"Accountants" shall have the meaning set forth in Section 9.7.
"Additional Availability Amount" shall mean the lesser of (x)
five (5%) percent of the net orderly liquidation value of Jaco Eligible
Inventory plus Nexus Eligible Inventory or (y) $750,000.00.
"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Rate Loan for any Interest Period a rate of interest equal to:
(a) the offered rate for deposits in U.S. dollars in
the London interbank market for the relevant Interest Period which is
published by the British Bankers' Association and currently appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the day which is
two (2) Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, that
if such a rate ceases to be available on that or any other source from
the British Bankers' Association, Adjusted LIBO Rate shall be a rate
per annum equal to the offered rate for deposits in U.S. dollars in the
London interbank market for the relevant Interest Period that appears
on Reuters Screen LIBO Page (or any successor page) as of 11:00 a.m.
(London time) on the day which is two (2) Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period, provided that if more than one rate is specified on
Reuters Screen LIBO Page, Adjusted LIBO Rate shall be a rate per annum
equal to the arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%); provided, however, that if, for
any reason, such a rate is not published by the British Bankers'
Association or available on the Reuters Screen LIBO Page, Adjusted LIBO
Rate shall be equal to a rate per annum equal to the average rate
(rounded upwards, if necessary, to the nearest 1/100 of 1%) at which
2
Agent determines that U.S. dollars in an amount comparable to the
amount of the applicable loans are being offered to prime banks at
approximately 11:00 a.m. (London time) on the day which is two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period for settlement in immediately
available funds by leading banks in the London interbank market
selected by Agent; divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day which is two (2) Business
Days prior to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System
or other governmental authority having jurisdiction with respect
thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) which are required to be maintained by a
member bank of the Federal Reserve System; such rate (if greater than
zero) to be rounded upward to the next whole multiple of one-sixteenth
of one percent (.0625%).
"Advances" shall mean and include the Revolving Advances and
Letters of Credit.
"Advance Rates" shall mean the Receivables Advance Rate, the
Inventory Advance Rate, the Jaco Inventory Advance Rate and the Nexus Inventory
Advance Rate.
"Affiliate" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 5% or more of the securities having ordinary voting power for the
election of directors of such Person, or (y) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and -----
assigns.
"Agreement" shall mean the Restated Agreement as defined in
the preamble of this agreement.
"Ancillary Agreements" shall mean all agreements, guarantees,
instruments, and documents including, without limitation, mortgages, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, trust agreements whether heretofore, concurrently, or hereafter
executed by or on behalf of Borrowers and delivered to Agent, relating to this
Restated Agreement or the Existing Agreement or to the transactions contemplated
by this Restated Agreement.
"Authority" shall have the meaning set forth in Section
4.19(d).
"Base Rate" shall mean, for any day, a rate per annum equal to
3
the higher of (i) the Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Borrower(s)" shall have the meaning as defined in the
preamble to the Agreement.
"Borrowers' Account" shall have the meaning set forth in
Section 2.9.
"Borrowers' Agent" shall mean Jaco.
"Borrowing Base Certificate" shall mean a certificate duly
executed by an officer of Borrowers' Agent appropriately completed in form and
substance acceptable to Agent, substantially in the form of Exhibit "A".
"Business Day" shall mean with respect to Eurodollar Rate
Loans, any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposit, in London, England and New York,
New York and with respect to all other matters, any day other than a day on
which commercial banks in New York are authorized or required by law to close.
"Capital Expenditures" shall mean, without duplication, all
expenditures (including deposits) for, or contracts for expenditures with
respect to any fixed assets or improvements, or for replacements, substitutions
or additions thereto, which have a useful life of more than one year, including
the direct or indirect acquisition of such assets by way of increased product or
service charges, offset items or otherwise.
"Capital Lease(s)" shall mean any lease of any property
(whether real, personal or mixed) that, in conformity with GAAP, should be
accounted for as a capital lease.
"Cash Equivalents" shall mean: (a) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within six (6) months from the date of
acquisition thereof; (b) commercial paper maturing no more than six (6) months
from the date issued and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇
Investors Service, Inc.; and (c) certificates of deposit or bankers' acceptances
maturing within six (6) months from the date of issuance thereof issued by, or
overnight reverse repurchase agreements from, any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having combined capital and surplus of not less than
$500,000,000 and whose debt obligations, or those of a holding company of which
it is a Subsidiary, are rated not less than A (or the equivalent rating) by a
nationally recognized investment rating agency and not subject to setoff rights
in favor of such bank.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss.9601 et seq.
4
"Change of Control" shall mean the ownership by any one
Person of more than forty (40%) percent of the common stock
----------------- of Jaco.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the PBGC or any environmental agency
or superfund), upon the Collateral, any Loan Party or any of its Affiliates.
"Closing Date" shall mean December 22, 2003 or such other date
as may be agreed to by the parties hereto.
"Co-Agent" shall mean PNC Bank, National Association.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
a. all Accounts (including but not limited to all Receivables);
b. all Equipment;
c. all General Intangibles;
d. all Inventory;
e. all Investment Property;
f. all Leasehold Interests;
g. all Subsidiary Stock;
h. all of Borrowers' present and future right, title and interest in and
to (1) goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing
any of the Receivables; (2) all of Borrowers' rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation
and repurchase; (3) all additional amounts due to Borrowers' from any
Customer relating to the Receivables; (4) other property, including
warranty claims, relating to any goods securing this Restated
Agreement; (5) all of Borrowers' contract rights, rights of payment
which have been earned under a contract right, instruments (including
all promissory notes), documents, chattel paper (including all
tangible and electronic chattel paper), warehouse receipts, deposit
accounts, money, securities and investment property
5
(including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or
commodity accounts), credit balances and other property of Borrowers'
now or hereafter held or received by or in-transit to Agent or any of
Lenders' Affiliates or at any other depository or other institution
from or for the account of Borrowers' whether for safekeeping, pledge,
custody, transmission, collection or otherwise; (6) if and when
obtained by Borrowers', all real and personal property of third
parties in which Borrowers' have been granted a lien or security
interest as security for the payment or enforcement of Receivables and
including deposits by and property of account debtors or other persons
securing the obligations of account debtors; (7) any other goods,
personal property or real property now owned or hereafter acquired in
which Borrowers' has expressly granted a security interest or may in
the future grant a security interest to Agent hereunder, or in any
amendment or supplement hereto or thereto, or under any other
agreement between Agent and/or Lenders' and Borrowers'; (8) all
letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights; and (9) all commercial tort
claims;
(i) all present and future supporting obligations and all present
and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Receivables and other Collateral,
including (i) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, (iii) goods
described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Receivables or
other Collateral, including returned, repossessed and reclaimed goods,
and (iv) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
(j) all guaranties, liens on real or personal property,
leases, and other agreements and property which in any way secure or
relate to (a), (b), (c), (d), (e), (f), (g), (h) or (i) above, or are
acquired for the purpose of securing and enforcing any item thereof;
(k) to the extent not otherwise described above, all Receivables,
all of Borrowers' ledger sheets, ledger cards, files, correspondence,
Records, books of account, business papers, computers, computer
software (whether owned by the Borrowers' or in which it has an
interest), computer programs, tapes, disks and documents relating to
(a), (b), (c), (d), (e), (f), (g), (h), (i) or (j) of this Paragraph;
and
(l) all proceeds and products of (a), (b), (c), (d), (e),
(f), (g), (h), (i), (j) or (k) in whatever form, including, but not
limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including
hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
"Commitment(s)" shall mean, as to any Lender, its obligation
to make Advances (including participating in Letters of Credit) in an aggregate
amount not to exceed at any one
6
time outstanding the amount set forth below such Lender's name on the signature
page hereof under the heading "Commitment", as same may be adjusted in
accordance with this Agreement.
"Commitment Percentage(s)" shall mean for any Lender, at any
time of determination thereof, the percentage equivalent of a fraction having
(a) as its numerator the Commitment of such Lender as in effect at such time and
(b) as its denominator the Commitments as in effect at such time.
"Commitment Transfer Supplement" shall mean a document in form
and substance satisfactory to Agent by which a Purchasing Lender purchases and
assumes a portion of the obligation of a Lender or Lenders to make Advances
under this Agreement.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Loan Party's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, with respect to
Revolving Advances, an Interest Rate per annum equal to (i) the Base Rate plus
three-quarters of one (.75%) percent or (ii) the Eurodollar Rate plus three (3%)
percent (provided however, that until the Additional Availability Amount is
reduced to zero, it shall mean the Eurodollar Rate plus three and one-quarter
(3.25%) percent).
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Loan Party, are treated as a
single employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or proposes to enter into any contract or other arrangement with any Loan
Party, pursuant to which such Loan Party is to deliver any personal property or
perform any services.
"Customs" shall mean the United States of America Customs
Department. -------
"Default" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section
3.1.
"Defaulting Lender" shall have the meaning set forth in
Section 2.17(a).
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h).
"Documentary Letters of Credit" shall mean all Letters of
Credit issued in connection with this Agreement to pay the purchase price for
Inventory purchased by the Borrowers.
7
"Documents" shall have the meaning set forth in Section
8.1(c).
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Domestic Rate Loan(s)" shall mean any Revolving Advance that
bears interest based upon the Base Rate.
"Early Reduction Date" shall have the meaning set forth in
Section 2.7(a).
"Early Reduction Fee" shall have the meaning set forth in
Section 2.7(a).
"Early Termination Date" shall have the meaning set forth in
Section 13.1.
"Early Termination Fee(s)" shall have the meaning set forth in
Section 13.1.
"EBITDA" shall mean, for any period, earnings before interest,
taxes, depreciation and amortization.
"Effective Additional Availability Amount" shall mean the
Additional Availability Amount as reduced, from time to time, on a consecutive
monthly basis by the greater of (i) an amount equal to $31,000 per month
commencing on the first day of the month following the month during which this
Agreement becomes effective, or (ii) such amount as the Borrowers' Agent shall
designate. Once reduced, such Effective Additional Availability Amount may not
be increased except with the consent of the Agent and the Lenders.
"Eligible Inventory" shall mean and include Inventory owned by
and in the possession of the Borrowers and located at premises of the Borrowers
listed on Schedule 4.5, valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in Agent's Reasonable Discretion,
obsolete, slow moving or unmerchantable and which Agent, in its Reasonable
Discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate including, without limitation,
whether the Inventory is subject to a perfected, first priority security
interest in favor of Agent and no other Lien and whether the Inventory conforms
to all standards imposed by any governmental agency, division or department
thereof which has regulatory authority over such goods or the use or sale
thereof.
"Eligible Receivables" shall mean and include each Receivable
of the Borrowers arising in the ordinary course of the Borrowers' business and
which Agent, in its Reasonable Discretion, shall deem to be an Eligible
Receivable, based on such considerations as Agent may from time to time deem
appropriate. A Receivable shall not be deemed eligible unless such Receivable is
subject to Agent's first priority perfected security interest and no other Lien,
and is evidenced by an invoice or other documentary evidence satisfactory to
Agent. In addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by the Borrowers to an Affiliate of the
Borrowers or to a Person controlled by an Affiliate of the Borrowers;
8
(b) it is due or unpaid more than ninety (90) days after the original
invoice date;
(c) fifty percent (50%) or more of the Receivables from such Customer are
not deemed Eligible Receivables hereunder. Such percentage may, in
Agent's Reasonable Discretion, be increased or decreased from time to
time;
(d) any covenant, representation or warranty contained in this Agreement
with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property or
call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a
bankrupt or insolvent, (vi) file a petition seeking to take advantage of
any other law providing for the relief of debtors, (vii) acquiesce to, or
fail to have dismissed, any petition which is filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for
the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States of
America, unless the sale is on letter of credit, guaranty, acceptance
terms or is covered by credit insurance, in each case acceptable to
Agent in its Reasonable Discretion;
(g) the sale to the Customer is on a ▇▇▇▇-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase
or return basis or is evidenced by chattel paper;
(h) Agent believes, in its Reasonable Discretion, that collection of such
Receivable is insecure or that such Receivable may not be paid by
reason of the Customer's financial inability to pay;
(i) the Customer is the United States of America, or any department, agency
or instrumentality thereof, unless Borrowers assigns their right to
payment of such Receivable to Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and
41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped and
delivered to and accepted by the Customer or the services giving rise
to such Receivable have not been performed by the Borrowers and
accepted by the Customer or the Receivable otherwise does not represent
a final sale;
(k) the Receivables of the Customer exceed a credit limit determined by
Agent, in its Reasonable Discretion, to the extent such Receivable
exceeds such limit;
9
(l) the Receivable is subject to any offset, deduction, defense, dispute,
or counterclaim, the Customer is also a creditor or supplier of the
Borrowers or the Receivable is contingent in any respect or for any
reason;
(m) the Borrowers have made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts
or allowances are reflected in the calculation of the face value of
each respective invoice related thereto;
(n) shipment of the merchandise or the rendition of services has not been
completed;
(o) any return, rejection or repossession of the merchandise has occurred;
(p) such Receivable is not payable to the Borrowers;
(q) Receivables with respect to which the Customer is located in New
Jersey, Minnesota, or any other state denying creditors access to its
courts in the absence of a Notice of Business Activities Report or
other similar filing, unless the applicable Borrower is incorporated
under the laws of such state or has either qualified as a foreign
corporation authorized to transact business in such state or has filed
a Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year; or
(r) such Receivable is not otherwise satisfactory to Agent as determined in
good faith by Agent in the exercise of its Reasonable Discretion.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d).
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Loan Party all
of such Loan Party's goods (other than Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations promulgated
thereunder.
10
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher 1/100 of one percent (1%))
equal to the Adjusted LIBO Rate.
"Eurodollar Rate Loan(s)" shall mean a Revolving Advance
that at any time bears interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence and continuance
of any of the events set forth in Article X.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing Agreement" shall have the meaning as defined in the
preamble to this Agreement.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for such day on such
transactions received by The Bank of New York from three Federal funds brokers
of recognized standing selected by Agent.
"Fixed Charge Coverage Ratio" shall mean, during any period,
the ratio of (y) EBITDA minus unfunded Capital Expenditures to (x) the sum of
(i) interest, (ii) term debt repayments and other repayments of Indebtedness
(other than Obligations under this Agreement), (iii) taxes due for such period,
and (iv) required reductions of the Additional Availability Amount during such
period.
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"GAAP" shall mean generally accepted accounting principles
in the United States of America in effect from time to time.
"General Intangibles" shall mean and include as to each Loan
Party all of such Loan Party's general intangibles, whether now owned or
hereafter acquired including, without limitation, all payment intangibles,
choses in action, commercial tort claims, causes of action, corporate or other
business records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs and computer software, all claims under guaranties,
security interests or other security held by or granted to such Loan Party to
secure payment of any of the Receivables by a Customer, all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"GMACCF" shall have the meaning set forth in the preamble to this Agreement
and shall include its successors and assigns.
11
"Governmental Body" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"Guaranties" shall mean the plural of Guaranty.
"Guarantor" shall mean any Person who may hereafter guarantee
payment or performance of the whole or any part of the Obligations and
"Guarantors" means collectively all such Persons.
"Guaranty" shall mean the guaranty set forth in Article XV of
this Agreement and any other guaranty of the obligations of Borrowers executed
by a Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d).
"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Immaterial Subsidiaries" shall mean all Subsidiaries (as
listed on Schedule 1.2(a)) which individually and in the aggregate represent
less than one (1.0%) percent of the assets, and less than one (1.0%) percent of
the income of the Loan Parties on a consolidated basis during the most recent
ended fiscal year.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include (a) all indebtedness, debt and similar monetary obligations of such
Person whether direct or guaranteed; (b) all indebtedness for borrowed money;
(c) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (d) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (e) any obligation owed for all or
any part of the deferred purchase price of property or services if the purchase
price is due more than six (6) months from the date the obligation is incurred
or is evidenced by a note or similar written instrument; and (f) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person.
12
"Interest Period" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"Inventory" shall mean and include as to each Loan Party all
of such Loan Party's now owned or hereafter acquired goods, merchandise and
other personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Loan Party's business or used in selling or
furnishing such goods, merchandise and other personal property, all other
inventory of such Loan Party, and all documents of title or other documents
representing them.
"Inventory Advance Rate" shall have the meaning set forth in
the definition of Inventory Availability.
"Inventory Availability" shall mean the Revolving Advances
against Eligible Inventory, which Lenders may from time to time during the Term
make available to Borrowers, in an amount up to the lesser of (a) $17,000,000.00
(the "Inventory Sublimit") or (b) the sum of (i) 31% of Jaco's Eligible
Inventory (the "Jaco Inventory Advance Rate") plus (ii) 11.3% of Nexus's
Eligible Inventory (the "Nexus Inventory Advance Rate") or (c) eighty-five (85%)
percent of the net orderly liquidation value of such Jaco Eligible Inventory
plus Nexus Eligible Inventory (calculated as of the date of any calculation),
((the Jaco Inventory Advance Rate plus the Nexus Inventory Advance Rate (subject
to the limitation percentage described in (c) above) shall be referred to as the
"Inventory Advance Rate")). Such Inventory Advance Rate shall be calculated on
the cost of such Eligible Inventory, on a first-in first-out basis.
"Inventory Sublimit" shall have the meaning as stated in the
definition of Inventory Availability.
"Investment Property" shall mean and include as to each Loan
Party, all such Loan Parties' now owned or hereafter acquired securities other
than securities of Immaterial Subsidiaries (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
contracts, commodities accounts, stocks, mutual fund shares, money market shares
and U.S. Government securities.
"Issuer" shall mean any Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms thereof (it being agreed that so
long as GMACCF shall be Agent or a Lender, then the Issuer shall be General
Motors Acceptance Corporation ("GMAC).
"Jaco Eligible Inventory" shall mean the Eligible Inventory of
Jaco.
"Jaco Inventory Advance Rate" shall have the meaning set forth
in the definition of Inventory Availability.
"Leasehold Interests" shall mean all of each Loan Party's
right, title and interest in and to the premises located in and to the premises
as described in Schedule 1.2(b).
13
"Lender" and "Lenders" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which
becomes a transferee, successor or assign of any Lender.
"Lender Default" shall have the meaning set forth in Section
2.17(a).
"Letter of Credit Application" shall have the meaning set
forth in Section 2.11.
"Letter of Credit Fees" shall have the meaning set forth in
Section 3.2.
"Letter(s) of Credit" shall have the meaning set forth in
Section 2.10.
"Letter(s) of Credit Sublimit" shall have the meaning set
forth in Section 2.10.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the UCC or comparable
law of any jurisdiction.
"Loan Parties on a Consolidated Basis" shall mean the
consolidation in accordance with GAAP of the accounts or other items of Loan
Parties and their respective Subsidiaries.
"Loan Party" shall mean, individually, each Borrower and each
Guarantor, and "Loan Parties" shall mean, collectively, the Borrowers and the
Guarantors.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the condition, operations, assets, business or prospects of Jaco or the
Loan Parties taken as a whole, (b) any Loan Party's ability to pay the
Obligations in accordance with the terms thereof, or the terms of any Guaranty
as applicable, (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Agent's and each Lender's rights and remedies under this
Agreement and the Other Documents.
"Maximum Loan Amount" shall mean $50,000,000.
"Monthly Advances" shall have the meaning set forth in Section
3.1.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" shall mean all amounts, which would be included
under share holders equity on a consolidated balance sheet of the Loan Parties,
determined in accordance with GAAP, excluding any reductions due to impairment
of good will.
"Nexus Eligible Inventory" shall mean the Eligible Inventory
of Nexus.
14
"Nexus Inventory Advance Rate" shall have the meaning set
forth in the definition of Inventory Availability.
"Non-Defaulting Lenders" shall have the meaning set forth in
Section 2.17(b).
"Note" or "Notes" shall mean, the Revolving Credit Note(s).
---- -----
"Obligation(s)" shall mean and include all loans, all
advances, debts, liabilities, obligations, covenants and duties owing by
Borrowers to Lenders (or any corporation that directly or indirectly controls or
is controlled by or is under common control with the Agent and/or any Lenders)
of every kind and description (whether or not evidenced by any note or other
instrument and whether or not for the payment of money or the performance or
non-performance of any act), direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
including, without limitation, any debt, liability or obligation owing from
Borrowers to others which Lenders may have obtained by assignment or otherwise
and further including, without limitation, all interest, charges or any other
payments Borrowers are required to make by law or otherwise arising under or as
a result of this Restated Agreement and the Ancillary Agreements, together with
all reasonable expenses and reasonable attorneys' fees chargeable to Borrowers'
account or incurred by Agent in connection with Borrowers' account whether
provided for herein or in any Ancillary Agreement.
"Original Term" shall have the meaning set forth in Section
13.1.
"Other Documents" shall mean the Note(s), the Questionnaire,
any Guaranty and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed by any
Loan Party and/or delivered to Agent or any Lender in respect of the
transactions contemplated by this Agreement (including but not limited to the
Ancillary Agreements).
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly, at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Participant" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender and in form and substance conforming to Section 16.3(b) hereof.
"Payment Office" shall mean initially ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowers and to each Lender to be the
Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
15
"Permitted Encumbrances" shall mean (a) Liens in favor of
Agent for the benefit of Agent, Lenders and/or any Issuer, which, in each case,
secure Obligations; (b) Liens for taxes, assessments or other governmental
charges not delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been taken by Loan
Parties; provided, that, the Lien shall have no effect on the priority of the
Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5, the existence
of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker's compensation, social security or similar laws, or
under unemployment insurance; (e) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of any Loan Party's business; (f) judgment Liens
that have been stayed or bonded and mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of any Loan Party's business with
respect to obligations which are not due or which are being contested in good
faith by the applicable Loan Party; (g) Liens placed upon fixed assets hereafter
acquired to secure a portion of the purchase price thereof, provided that (x)
any such lien shall not encumber any other property of the Loan Parties and (y)
the aggregate amount of Indebtedness secured by such Liens incurred as a result
of such purchases during any fiscal year shall not exceed the amount provided
for in Section 7.6; and (h) Liens disclosed on Schedule 7.2.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Loan Parties or any member
of the Controlled Group or any such Plan to which any Loan Party or any member
of the Controlled Group is required to contribute on behalf of any of its
employees.
"Pledge Agreement" shall mean the General Security Agreement
relating to the Subsidiary Stock.
"Prime Rate" means the prime commercial lending rate of The
Bank of New York as publicly announced in New York, New York to be in effect
from time to time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate. This rate of interest is
determined from time to time and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged to any particular class or category of customers.
"Pro Forma Financial Statements" shall have the meaning set
forth in Section 5.5(b).
"Purchasing Lender" shall have the meaning set forth in
Section 16.3(c).
16
"Questionnaire" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Loan Parties and delivered
to Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Loan Party's right,
title and interest in and to the owned and leased premises identified on
Schedule 4.19.
"Reasonable Discretion" shall mean the discretion of the Agent
applied in a reasonable commercial manner.
"Receivables" shall mean and include, as to each Loan Party,
all of such Loan Party's Accounts (including, without limitation, all
health-care insurance receivables), contract rights, instruments (including
promissory notes and other instruments evidencing Indebtedness owed to Loan
Parties by their Affiliates), documents, chattel paper (whether tangible or
electronic), general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations owing to such Loan Party arising out of or in
connection with the sale, lease or other disposition of Inventory or the
rendition of services, all guarantees and other security therefore, whether
secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in
the definition of Receivable Availability.
"Receivable Availability" shall mean Revolving Advances
against Eligible Receivables which Lenders may, from time to time during the
term of this Agreement, make available to Borrowers, in an amount up to 85%
("Receivable Advance Rate") of the net face amount of Borrowers' Eligible
Receivables.
"Release" shall have the meaning set forth in Section 5.7(c).
"Reportable Event" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least
fifty-one (51%) percent of the Advances and, if no Advances are outstanding,
shall mean Lenders holding fifty-one (51%) percent of the Commitment
Percentages.
"Reserves" shall mean such reserves as Agent may, in its sole
and absolute discretion, deem proper and necessary from time to time.
"Restated Agreement" shall have the meaning ascribed thereto
in the preamble to this Agreement.
"Revolving Advances" shall mean Advances other than Letters of
Credit.
17
"Revolving Credit Note(s)" shall mean the promissory note(s)
referred to in Section 2.1(a).
"Settlement Date" shall mean the Closing Date and thereafter
Friday of each week unless such day is not a Business Day in which case it shall
be the next succeeding Business Day.
"Standby Letters of Credit" shall mean all Letters of Credit
issued in connection with this Agreement as a credit enhancement for certain
Indebtedness of Borrowers.
"Subsidiary" shall mean, with respect to any Person, a
corporation or other entity whose shares of stock or other ownership interests
having ordinary voting power (other than stock or other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by such
Person.
"Subsidiary Stock" shall mean all of the issued and
outstanding shares of stock owned by Jaco of Nexus, a Delaware corporation and
Interface, a Massachusetts corporation.
"Term" shall mean the period commencing on the Closing Date
and ending on the Termination Date.
"Termination Date" shall have the meaning set forth in Section
13.1.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Loan Party
or any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Loan Party or any member of the Controlled Group
from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present
on the Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. ▇▇.▇▇. 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Maximum Loan Amount or (ii) the
Formula Amount, minus (b) the sum of (i) the outstanding amount of Advances plus
(ii) all amounts due and owing to Borrowers' trade creditors which are
outstanding beyond normal trade terms, plus (iii) fees and expenses for which
Borrowers is liable but which have not been paid or charged to Borrowers'
Account, plus (iv) Reserves.
18
"Week" shall mean the time period commencing with the opening
of business on a Monday and ending on the end of business the following Sunday.
1.3. UCC Terms.
All terms used herein and defined in the UCC shall have the
meaning given therein unless otherwise defined herein.
1.4. Certain Matters of Construction.
The terms "herein", "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision. Each reference to a Section, an Exhibit or a
Schedule shall be deemed to refer to a Section, an Exhibit or a Schedule, as
applicable, of this Agreement unless otherwise specified. Any pronoun used shall
be deemed to cover all genders. Wherever appropriate in the context, terms used
herein in the singular also include the plural and vice versa. All references to
statutes (including the UCC) and related regulations shall include any
amendments of same and any successor statutes and regulations. Unless otherwise
provided, all references to any instruments or agreements to which Agent is a
party, including, without limitation, references to any of the Other Documents,
shall include any and all modifications or amendments thereto and any and all
extensions or renewals thereof, and the preamble to this Agreement shall be
incorporated into this Agreement and shall bean integral and operative part of
this Agreement.
1.5. Joint and Several Liabilities.
All Borrowers shall be jointly and severally liable for all
Obligations.
II. ADVANCES, PAYMENTS.
2.1. Revolving Advances.
(a) Subject to the terms and conditions set forth in this Agreement (including,
without limitation, Section 2(b) below) and the Ancillary Agreements, each
Lender, severally and not jointly, will make Revolving Advances to Borrowers in
aggregate amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of (x) the Maximum Loan Amount minus (ii) the aggregate
face amount of outstanding Letters of Credit minus (iii) Effective Additional
Availability Amount minus (iv) Reserves and (y) an amount equal to the sum of:
19
(i) Receivables Availability, plus
(ii) Inventory Availability, plus
(iii) Effective Additional Availability Amount, minus
(iv) the amount of any outstanding Letters of Credit, minus
(v) Reserves.
The sum of 2.1(a)(y)(i) plus 2.1(a)(y)(ii) plus 2.1(a)(y)(iii) minus
2.1(a)(y)(iv) and minus 2.1(a)(y)(v) shall be referred to as the "Formula
Amount". Provided however, that in the event that at any time the sum of
Sections 2.1(a)(y)(i), plus 2.1(a)(y)(ii) plus 2.1(a)(y)(iii) minus
2.1(a)(y)(iv) and minus 2.1(a)(y)(v) exceed the Maximum Loan Amount then the
Formula Amount shall be limited to the Maximum Loan Amount. The Revolving
Advances hereunder shall otherwise be evidenced by and subject to the terms and
conditions set forth in a Secured Promissory Note(s) in substantially the form
of the note attached hereto as Schedule 2.1(a) ("Revolving Credit Note(s)"). The
Borrowers hereby agree to execute and deliver a Revolving Credit Note to each
Lender in the amount of such Lender's Commitment on the Closing Date.
(b) Discretionary Rights. The Advance Rates may be increased (subject to Section
16.2(b)) or decreased by Agent at any time and from time to time in the exercise
of its Reasonable Discretion. The Borrowers consent to any such increases or
decreases and acknowledges that decreasing the Advance Rates or increasing the
Reserves may limit or restrict Advances requested by Borrowers.
(c) Intentionally Left Blank
2.2. Procedure for Borrowing.
(a) Borrowers may notify Agent prior to 11:00 a.m. (New York time), either in
writing or by telephonic notice received by an officer of the Agent, on a
Business Day of the Borrowers' request to incur, on that day, a Revolving
Advance hereunder. All such loans shall be deemed to be Domestic Rate Loans
until the Agent shall receive a request to convert such Domestic Rate Loans into
Eurodollar Rate Loans in accordance with the provisions hereof, provided
however, that if the original request by the Borrowers was for a Eurodollar Rate
Loan, such Advance shall be a Domestic Rate Loan for the first three (3)
Business Days thereof and converted into a Eurodollar Rate Loan on the third day
in accordance with the provision of Section 2.2(b) below. Any amount required to
be paid as interest hereunder, or as fees or other charges under this Agreement
or any other agreement with Agent, Lenders and/or any Issuer, or with respect to
any other Obligation, which shall become due, shall be deemed a request for an
Advance as of the date such payment is due, in the amount required to pay in
full such interest, fee, charge or Obligation under this Agreement or any other
agreement with Agent, Lenders and/or any Issuer and such request shall be
irrevocable. All telephone requests shall be confirmed in writing on the same
day as a request is made under this paragraph and all requests shall be made
only by the Borrowers' Agent.
20
(b) Notwithstanding the provisions of (a) above, in the event the Borrowers
desire to obtain a Eurodollar Rate Loan, Borrowers shall give Agent at least
three (3) Business Days prior written notice, specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the type of borrowing
and the amount on the date of such Advance to be borrowed, which amount shall be
in a minimum amount of $1,000,000 and in integral multiples of $100,000 in
excess thereof, and (iii) the duration of the first Interest Period therefore.
Interest Periods for Eurodollar Rate Loans shall be for one, two or three
months. At no time shall there be more than five (5) Eurodollar Rate Loan
tranches outstanding at any one time during the Term hereof and the maximum
amount of Eurodollar Rate Loans outstanding, at any time, shall not exceed
$40,000,000. No Eurodollar Rate Loan shall be made available to the Borrowers
during the continuance of an Event of Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date
such Eurodollar Rate Loan is made and shall end on such date as Borrowers may
elect as set forth in (b)(iii) above provided that the exact length of each
Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the Termination Date.
(d) Borrowers shall elect the initial Interest Period applicable to a Eurodollar
Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b)
or by its notice of conversion given to Agent pursuant to Section 2.2(e), as the
case may be. Borrowers shall elect the duration of each succeeding Interest
Period by giving irrevocable written notice to Agent of such duration not less
than three (3) Business Days prior to the last day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely
notice of the Interest Period elected by Borrowers, Borrowers shall be deemed to
have elected to convert to a Domestic Rate Loan subject to Section 2.2(e).
(e) Provided that no Event of Default shall have occurred and be continuing, the
Borrowers may, on the last Business Day of the then current Interest Period
applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with
respect to Domestic Rate Loans, convert any such loan into a loan of another
type in the same aggregate principal amount provided that any conversion of a
Eurodollar Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If the
Borrowers desire to convert a loan, Borrowers shall give Agent not less than
three (3) Business Days' prior written notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefore. After giving effect to each such conversion, there shall not
be outstanding, at any time, more than five (5) Eurodollar Rate Loan tranches
and such tranches shall not exceed $40,000,000, in the aggregate.
(f) At its option and upon three (3) Business Days' prior written notice, the
Borrowers may prepay the Eurodollar Rate Loans in whole at any time or in part
21
from time to time, without premium or penalty, but with accrued interest on the
principal being prepaid to the date of such repayment. The Borrowers shall
specify the date of prepayment of Advances which are Eurodollar Rate Loans and
the amount of such prepayment. In the event that any prepayment of a Eurodollar
Rate Loan is required or permitted on a date other than the last Business Day of
the then current Interest Period with respect thereto, the Borrowers and each
other Loan Party shall indemnify Agent and Lenders therefore in accordance with
Section 2.2(g).
(g) Each Loan Party shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses (including but not limited to any
breakage fees) or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by the Borrowers in
the payment of the principal of or interest on any Eurodollar Rate Loan or
failure by the Borrowers to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
lenders of funds obtained by it in order to make or maintain its Eurodollar Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by Agent or any Lender to Borrowers shall be
conclusive absent manifest error.
(h) Notwithstanding any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this
Section 2.2(h), the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder, as the
case may be, shall forthwith be cancelled and Borrowers shall, if any affected
Eurodollar Rate Loans are then outstanding, promptly upon request from Agent,
either pay all such affected Eurodollar Rate Loans or convert such affected
Eurodollar Rate Loans into loans of another type. If any such payment or
conversion of any Eurodollar Rate Loan is made on a day that is not the last day
of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall
pay Agent, upon Agent's request, such amount or amounts as may be necessary to
compensate Lenders for any loss or expense sustained or incurred by Lenders in
respect of such Eurodollar Rate Loan as a result of such payment or conversion,
including (but not limited to) any interest or other amounts payable by Lenders
to lenders of funds obtained by Lenders in order to make or maintain such
Eurodollar Rate Loan. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrowers shall be
conclusive absent manifest error.
2.3. Disbursement of Advance Proceeds.
All Advances shall be disbursed from whichever office or other
place Agent may designate from time to time and, together with any and all other
Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers'
Account on Agent's books. During the Term, Borrowers may use the Advances by
borrowing, prepaying and reborrowing, all in accordance with the terms and
conditions hereof. The proceeds of each Advance requested by Borrowers or deemed
to have been requested by Borrowers under Section 2.2(a) shall, with respect to
requested Advances to the extent Lenders make such Advances, be made available
to the Borrowers on the day so requested by way of credit to the Borrowers'
operating account with Agent, in immediately available federal funds or other
immediately available funds or, with respect to Advances deemed to have been
requested by the Borrowers, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
22
2.4. Intentionally Left Blank
2.5. Intentionally Left Blank
2.6. Maximum Revolving Advances.
The aggregate balance of Revolving Advances plus the aggregate
amount of Letters of Credit outstanding at any time plus the Effective
Additional Availability Amount shall not exceed the lesser of (a) Maximum Loan
Amount or (b) the Formula Amount. The Letters of Credit outstanding at any time
shall not exceed the Letters of Credit Sublimit. The Inventory Availability, for
purposes of calculating the Formula Amount, shall at no time exceed the
Inventory Sublimit.
2.7. Repayment of Advances and Reduction of the Additional Availability Amount.
(a) The Revolving Advances shall be due and payable in full on the Termination
Date subject to earlier prepayment as herein provided. Borrowers may permanently
reduce the Maximum Loan Amount, from time to time, on no less than thirty (30)
days notice to Agent, without premium or penalty (except as provided immediately
below in this paragraph), (subject in any event to Section 2.8) and further
subject to the payment of the Early Termination Fee provided for in Section 13.1
of this Agreement if the Maximum Loan Amount is permanently reduced to zero,
which event shall be deemed to be an early termination of the Agreement and the
date of such reduction shall be deemed to be the Early Termination Date referred
to in Section 13.1 of this Agreement. If the Maximum Loan Amount is reduced to
an amount greater than zero prior to the Termination Date, on the date of such
reduction (an "Early Reduction Date") the Loan Parties shall pay to the Agent,
for the benefit of the Lenders, an "Early Reduction Fee" on such Early Reduction
Date in an amount equal to (x) two (2.0%) percent of such reduction of the
Maximum Loan Amount if such Early Reduction Date occurs on or after the Closing
Date but prior to and including the date immediately preceding the first
anniversary of the Closing Date and (y) one (1.0%) percent of the reduction of
the Maximum Loan Amount if such Early Reduction Date occurs on or after the
first anniversary of the Closing Date but prior to and including the thirtieth
day prior to the third anniversary of the Closing Date.
(b) The Borrowers recognize that the amounts evidenced by checks, notes, drafts
or any other items of payment relating to and/or proceeds of Collateral may not
be collectible by Agent on the date received. In consideration of Agent's
agreement to conditionally credit Borrowers' Account as of the Business Day on
which Agent receives those items of payment, the Borrowers agree that, in
computing the charges under this Agreement, all items of payment shall be deemed
applied by Agent on account of the Obligations one (1) Business Day after
confirmation to Agent by the Blocked Account bank or Depository Account bank, as
provided for in Section 4.15(h), that such items of payment have been collected
in good funds and finally credited to Agent's account. Agent is not, however,
required to credit Borrowers' Account for the amount of any item of payment
which is unsatisfactory to Agent and Agent may charge Borrowers' Account for the
amount of any item of payment which is returned to Agent unpaid.
23
(c) All payments of principal, interest and other amounts payable hereunder, or
under any of the related agreements shall be made to Agent at the Payment Office
not later than 1:00 p.m. (New York time) on the due date therefore in lawful
money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers'
Account or by making Revolving Advances as provided in Section 2.2.
(d) Borrowers shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement, without any deduction whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.
(e) The Additional Availability Amount shall be reduced by consecutive equal
monthly installments of $31,000 each, on the first day of the month commencing
on February 1, 2004 and continuing on the 1st of every month thereafter, or in
such greater amounts as Borrowers may, from time to time, designate by notice to
the Agent.
2.8. Repayment of Excess Advances.
The aggregate balance of Advances outstanding, at any time in
excess of the maximum amount of Advances permitted hereunder (including but not
limited to applicable amounts exceeding the Letter of Credit Sublimit and/or the
Inventory Sublimit), shall be immediately due and payable without the necessity
of any demand, at the Payment Office, whether or not a Default or Event of
Default has occurred.
2.9. Statement of Account.
Agent shall maintain, in accordance with its customary
procedures, a loan account (the "Borrowers' Account") in the name of Borrowers
in which shall be recorded the date and amount of each Advance made by Lenders
and the date and amount of each payment in respect thereof; provided, however,
the failure by Agent to record the date and amount of any Advance shall not
adversely affect Agent or any Lender. Each month, Agent shall send to Borrowers
a statement showing the accounting for the Advances made, payments made or
credited in respect thereof, and other transactions between Lenders and
Borrowers, during such month. The monthly statements shall be deemed correct and
binding upon Borrowers in the absence of manifest error and shall constitute an
account stated between Lenders and Borrowers unless Agent receives a written
statement of Borrowers specific exceptions thereto within thirty (30) days after
such statement is received by Borrowers. The records of Agent with respect to
the loan account shall be conclusive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.10. Letters of Credit.
Subject to the terms and conditions hereof, Agent shall issue
or cause the issuance of Documentary Letters of Credit and Standby Letters of
Credit (collectively, "Letters of Credit") by the Issuer on behalf of the
24
Borrowers; provided, however, that Agent will not be required to issue or cause
to be issued any Letters of Credit to the extent that the face amount of such
Letters of Credit would then cause the sum of (i) the outstanding Revolving
Advances (including the amount of the Effective Additional Availability Amount)
plus (ii) Reserves plus (iii) outstanding Letters of Credit to exceed the lesser
of (x) the Maximum Loan Amount or (y) the Formula Amount. The maximum amount of
outstanding Letters of Credit shall not exceed $2,000,000, in the aggregate at
any time (the "Letters of Credit Sublimit"). All disbursements or payments
related to Letters of Credit shall be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall bear interest at the Contract Rate
for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall
not bear interest.
2.11. Issuance of Letters of Credit.
(a) Borrowers may request Agent to issue or cause the issuance of a Letter of
Credit by delivering to Agent at the Payment Office, Issuer's standard form of
letter of credit and security agreement and standard form of letter of credit
application (collectively, the "Letter of Credit Application") and any draft if
applicable, completed to the satisfaction of Agent; and such other certificates,
documents and other papers and information as Agent or Issuer may reasonably
request.
(b) Each Letter of Credit shall, among other things, (i) provide for the payment
of sight drafts or acceptances of issuance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) (a) with respect to Documentary Letters of
Credit, have an expiry date not later than one hundred and eighty (180) days
after such Documentary Letter of Credit's date of issuance or (b) with respect
to Standby Letters of Credit, have an expiry date not later than twelve (12)
months after such Standby Letter of Credit's date of issuance, and (with respect
to clauses (ii) (a) and (ii) (b) above) in no event having an expiry date later
than the Termination Date unless Loan Parties provide cash collateral equal to
not less than one hundred five percent (105%) of the face amount thereof to be
held by Agent pursuant to a cash collateral agreement in form and substance
satisfactory to Agent. Each Documentary Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof adhered to by the Issuer and, to the extent not inconsistent
therewith, the laws of the State of New York. All Standby Letters of Credit
shall be subject to the laws or rules designated in such Standby Letter of
Credit, or if no laws or rules are designated, the International Standby
Practices (ISP98 - International Chamber of Commerce Publication Number 590)
(the "ISP98 Rules") and, as to matters not governed by the ISP98 Rules, the laws
of the State of New York.
(c) Agent shall use its reasonable efforts to notify Lenders of the request by
Borrowers for a Letter of Credit hereunder.
2.12. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit, Borrowers shall
indemnify, save and hold Agent, each Lender and each Issuer harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent, any Lender or any Issuer and expenses and reasonable attorneys' fees
incurred by Agent, any Lender or any Issuer arising out of, or in connection
25
with, any Letter of Credit to be issued or created for the Borrowers. Borrowers
shall be bound by Agent's or Issuer's regulations and good faith interpretations
of any Letter of Credit issued or created for Borrowers' Account, although this
interpretation may be different from its own; and, neither Agent, nor any
Lender, nor any Issuer nor any of their correspondents shall be liable for any
error, negligence, or mistakes, whether of omission or commission, in following
the Borrowers' instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit except for Agent's, any Lender's, any Issuer's or any such
correspondents' willful misconduct.
(b) Borrowers shall authorize and direct any Issuer of a Letter of Credit to
deliver to Agent all related payment/acceptance advices, to deliver to Agent all
instruments, documents, and other writings and property received by the Issuer
pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the application therefore.
(c) In connection with all Letters of Credit issued or caused to be issued by
Agent under this Agreement, the Borrowers hereby appoint Agent, or its designee,
as its attorney, with full power and authority (i) to sign and/or endorse the
Borrowers' name upon any warehouse or other receipts, letter of credit
applications and acceptances; (ii) to sign the Borrowers' name on bills of
lading; (iii) to clear Inventory through Customs in the name of the Borrowers or
Agent or Agent's designee, and to sign and deliver to Customs officials powers
of attorney in the name of the Borrowers for such purpose; and (iv) to complete
in the Borrowers' name or Agent's, or in the name of Agent's designee, any
order, sale or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof. Neither Agent nor its attorneys
will be liable for any acts or omissions nor for any error of judgment or
mistakes of fact or law, except for Agent's or its attorney's willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount equal to the
product of such Lender's Commitment Percentage times the aggregate amount of all
unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in (i) each such unreimbursed
reimbursement obligation, (ii) Agent's credit support enhancement provided to
the Issuer of any Letter of Credit and (iii) each Revolving Advance made as a
consequence of the issuance of a Letter of Credit and all disbursements
thereunder, in each case in an amount equal to such Lender's applicable
Commitment Percentage times the outstanding amount of the Letters of Credit and
disbursements thereunder. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the amount permitted under Section 2.1(a), and such
disbursement is not reimbursed by Borrowers within two (2) Business Days, Agent
shall promptly notify each Lender and upon Agent's demand each Lender shall pay
to Agent such Lender's proportionate share of such unreimbursed disbursement
together with such Lender's proportionate share of Agent's unreimbursed costs
and expenses relating to such unreimbursed disbursement. Upon receipt by Agent
of a repayment from the Borrowers of any amount disbursed by Agent for which
Agent had already been reimbursed by Lenders, Agent shall deliver to each Lender
that Lender's pro rata share of such repayment. Each Lender's participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or cause to be issued Letters
of Credit hereunder; (B) no Letters of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than the Borrowers) have
been fully reimbursed for all payments made under or relating to Letters of
Credit.
26
2.13. Additional Payments.
Any sums expended by Agent or any Lender due to any Loan
Party's failure to perform or comply with its obligations under this Agreement
or any Other Document including, without limitation, any Loan Party's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1, may be charged to
Borrowers' Account as a Revolving Advance and added to the Obligations.
2.14. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced according to the
applicable Commitment Percentages of Lenders. (b) Each payment (including each
prepayment) by Borrowers on account of the principal of the Revolving Advances,
shall be applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Except as expressly provided herein, all
payments (including prepayments) to be made by Borrowers on account of
principal, interest and fees shall be made without set off or counterclaim and
shall be made to Agent on behalf of the Lenders to the Payment Office, in each
case on or prior to 1:00 p.m. (New York time), in Dollars and in immediately
available funds.
(c) (i) Notwithstanding anything to the contrary contained in Sections 2.14(a)
and 2.14(b), commencing with the first Business Day following the Closing Date,
each borrowing of Advances shall be advanced by Agent and each payment by the
Borrowers on account of Advances shall be applied first to those Revolving
Advances advanced by Agent. On or before 1:00 p.m. (New York time) on each
Settlement Date commencing with the first Settlement Date following the Closing
Date, Agent and Lenders shall make certain payments as follows: (I) if the
aggregate amount of new Revolving Advances made by Agent during the preceding
Week (if any) exceeds the aggregate amount of repayments applied to outstanding
Revolving Advances during such preceding Week, then each Lender shall provide
Agent with funds in an amount equal to its applicable Commitment Percentage of
the difference between (w) such Revolving Advances and (x) such repayments and
(II) if the aggregate amount of repayments applied to outstanding Revolving
Advances during such Week exceeds the aggregate amount of new Revolving Advances
made during such Week, then Agent shall provide each Lender with funds in an
amount equal to its applicable Commitment Percentage of the difference between
(y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest
at the applicable Contract Rate on outstanding
Advances which it has funded for the period of such funding.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with
respect to payments received and Revolving Advances made during the Week
immediately preceding such Settlement Date. Such certificate of Agent shall be
conclusive in the absence of manifest error.
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(d) If any Lender (a "Benefited Lender") shall at any time receive any payment
of all or part of its Advances, or interest thereon, or receive any Collateral
in respect thereof (whether voluntarily or involuntarily or by set-off) in a
greater proportion than any such payment to and Collateral received by any other
Lender, if any, in respect of such other Lender's Advances, or interest thereon,
and such greater proportionate payment or receipt of Collateral is not expressly
permitted hereunder, such Benefited Lender shall purchase for cash from the
other Lenders a participation in such portion of each such other Lender's
Advances, or shall provide such other Lender with the benefits of any such
Collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Lender so purchasing a portion of another Lender's Advances may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in writing, by
any Lender that such Lender will not make the amount which would constitute its
applicable Commitment Percentage of the Advances available to Agent, Agent may
(but shall not be obligated to) assume that such Lender shall make such amount
available to Agent on the next Settlement Date and, in reliance upon such
assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowers of its receipt of any such notice from a Lender. If
such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three (3) Business Days
after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers' rights (if any) against such Lender.
(f) The liability of each Lender to the Agent to reimburse the
Agent for and Revolving Advances, made by the Lender, subject to the terms
hereof shall be absolute and unconditional and each Lender hereby agrees to
reimburse the Agent for its Commitment Percentage of any such Revolving Advances
made by the Agent under all circumstances whatsoever, including but not limited
to the lack of validity or enforceability of the Agreement or any Ancillary
Agreements or the existence of any claim, set-off, defense or other right which
any Lender may have at any time against the Agent or the Borrowers whether in
connection with this Agreement, Ancillary Agreement or any unrelated
transaction.
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2.15. Mandatory Prepayments.
(a) When any Loan Party sells or otherwise disposes of any Collateral other than
Inventory in the ordinary course of business, Loan Parties shall repay the
Advances in an amount equal to the net proceeds of such sale (i.e., gross
proceeds less the reasonable costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied, (i) to the outstanding
Advances in such order as Agent may determine, subject to Borrowers' ability to
reborrow Revolving Advances in accordance with the terms hereof or (ii) to all
other Obligations at Agents sole discretion. Notwithstanding the foregoing,
unless and until an Event of Default has occurred and is continuing, Loan
Parties may sell or otherwise dispose of Collateral not to exceed $250,000 in
the aggregate in any fiscal year and retain such net proceeds solely to acquire
replacement Collateral without making a mandatory prepayment hereunder so long
as (a) the fair market value of the acquired Collateral is equal to or greater
than the fair market value of the Collateral which was sold, (b) the acquired
Collateral is purchased by the applicable Loan Party within ninety (90) days of
the sale of the Collateral, (c) the acquired Collateral shall be deemed to be
acceptable Collateral by Agent in its Reasonable Discretion, (d) the acquired
Collateral shall be subject to Agent's first priority security interest created
hereunder and (e) until such time as the proceeds are used to acquire such
replacement Collateral, at the Agent's option, either (i) such proceeds shall be
held by Agent as cash collateral for the Obligations pursuant to terms
acceptable to Agent in its sole discretion or (ii) such proceeds shall be
applied as a repayment of Revolving Advances and a reserve against loan
availability under Section 2.1(a) in the amount of such repayment shall be
established. Such cash collateral or loan availability reserve, as the case may
be, shall be released by Agent only in connection with the making of a Revolving
Advance to be used by the Borrowers solely for the purposes of funding the
acquisition of replacement Collateral pursuant to the terms of this Section
2.15; provided, however, that nothing contained herein shall waive or modify any
conditions to the making of Revolving Advances or any other provisions of this
Agreement. If a Loan Party fails to meet the conditions set forth above, the
Loan Parties hereby authorize Agent and Lenders to apply the proceeds held by
Agent as a prepayment of the Advances in the manner set forth above.
(b) Intentionally Left Blank
(c) Subject to the provisions of Section 4.11, the Agent shall apply the
proceeds of any insurance settlements from casualty losses which are received by
the Agent to the outstanding Advances in such order as Agent may determine,
subject to Borrowers' ability to reborrow Revolving Advances in accordance with
the terms hereof.
2.16. Use of Proceeds.
Borrowers shall apply the proceeds of Advances, to (i) repay
existing Indebtedness owed to Fleet Bank, (ii) pay fees and expenses relating to
the transactions contemplated by this Agreement and (iii) provide for their
respective working capital needs.
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2.17. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in the event any
Lender (x) has refused (which refusal constitutes a breach by such Lender of its
obligations under this Agreement) to make available its portion of any Advance
or (y) notifies either Agent or Borrowers that it does not intend to make
available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a "Lender
Default"), all rights and obligations hereunder of such Lender (a "Defaulting
Lender") as to which a Lender Default is in effect and continues with respect to
the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.17 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the "Non-Defaulting
Lenders") which are not Defaulting Lenders based on their respective Commitment
Percentages, and no Commitment Percentage of any Lender or any pro rata share of
any Advances required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in payment in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to Agent or
to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
either Advances outstanding or a Commitment Percentage.
(d) Other than as expressly set forth in this Section 2.17, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this Section
2.17 shall be deemed to release any Defaulting Lender from its obligations under
this Agreement and the Other Documents, shall alter such obligations, shall
operate as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which the Borrowers, Agent or any Lender may have against
any Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.
(e) In the event a Defaulting Lender retroactively cures to the satisfaction of
Agent the breach which caused a Lender to become a Defaulting Lender, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as
a Lender under this Agreement.
2.18 Intentionally Left Blank.
2.19 Borrowers Agent.
Notwithstanding anything to the contrary herein, for all
purposes relating to requests for borrowings, issuance of letters for credit,
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requests for or conversion to any interest rates and accounting to Borrowers by
the Agent, the Agent may rely and deal with only the Borrowers' Agent. Borrowers
hereby irrevocably appoint Jaco to be the Borrowers' Agent for all purposes
under this Agreement and to act in their behalf and stead as if they were
individually acting on their own behalf and the Agent may rely on any requests,
instructions or directions given by the Borrowers' Agent with the same effect as
such requests, instructions or directions were given by the Borrowers themselves
and Agent shall incur no liability of any kind in connection with relying on any
such requests, instructions or directions from Borrowers' Agent.
III. INTEREST AND FEES.
3.1. Interest.
Interest on Revolving Advances shall be payable to Agent for
the benefit of Lenders in arrears on the first day of each month with respect to
Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of
each Interest Period. Interest charges shall be computed and be payable on the
actual principal amount of Revolving Advances and any other Obligations for
moneys owed to Agent and/or the Lenders, outstanding during the month (the
"Monthly Advances") at a rate per annum equal to the applicable Contract Rate.
Whenever, subsequent to the date of this Agreement, the Base Rate is increased
or decreased, the applicable Contract Rate for Domestic Rate Loans shall be
similarly changed without notice or demand of any kind by an amount equal to the
amount of such change in the Base Rate during the time such change or changes
remain in effect. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, the Obligations shall bear interest at the
applicable Contract Rate plus two percent (2.0%) (the "Default Rate").
3.2. Letter of Credit Fees; Cash Collateral.
(a) Borrowers shall pay (x) to Agent, for the benefit of Lenders, fees for each
Letter of Credit for the period from and excluding the date of issuance of same
to and including the date of expiration or termination, equal to the average
daily face amount of each outstanding Letter of Credit multiplied by (i) three
(3%) percent per annum with respect to Standby Letters of Credit and (ii) three
(3%) percent per annum with respect to Documentary Letters of Credit, such fees
to be calculated on the basis of a 360-day year for the actual number of days
elapsed and to be payable monthly in arrears on the first day of each month and
on the last day of the Term and (y) to Agent for the benefit of the Issuer, any
and all fees and expenses as agreed upon by the Issuer and the Borrowers in
connection with any Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and shall reimburse Agent for any and all fees and expenses, if any, paid by
Agent to the Issuer (all of the foregoing fees, the "Letter of Credit Fees").
All such charges shall be deemed earned in full on the date when the same are
due and payable hereunder and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason. Any such charge in effect at
the time of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer's prevailing charges for
that type of transaction. Upon and after the occurrence of an Event of Default,
and during the continuation thereof, the Agent may, and at the direction of the
Required Lenders the Agent shall, increase the Letter of Credit Fees by two
percent (2.0%) per annum. All Letter of Credit Fees payable hereunder shall be
deemed earned in full on the date when the same are due and payable hereunder
and shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.
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(b) On demand, Borrowers will cause cash to be deposited and maintained in an
account with Agent, as cash collateral, in an amount equal to one hundred and
five percent (105%) of the outstanding Letters of Credit, and the Borrowers
hereby irrevocably authorizes Agent, in its discretion, on the Borrowers' behalf
and in the Borrowers' name, to open such an account and to make and maintain
deposits therein, or in an account opened by the Borrowers, in the amounts
required to be made by the Borrowers, out of the proceeds of Receivables or
other Collateral or out of any other funds of the Borrowers coming into any
Lender's possession at any time. Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which Agent and
the Borrowers mutually agree and the net return on such investments shall be
credited to such account and constitute additional cash collateral. The
Borrowers may not withdraw amounts credited to any such account except upon
payment and performance in full of all Obligations and termination of this
Agreement.
3.3. Loan Fees.
(a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to
Agent for the ratable benefit of Lenders a closing fee of one-half of one (.5%)
percent of the Maximum Loan Amount.
(b) Facility Fee. If, for any month during the Term, the average daily unpaid
balance of the Advances, for each day of such month, does not equal the Maximum
Loan Amount, then Borrowers shall pay to Agent for the ratable benefit of
Lenders a fee at a rate equal to one-half of one (.5%) percent per annum on the
amount by which the Maximum Loan Amount exceeds such average daily unpaid
balance of the Advances. Such fee shall be payable to Agent in arrears on the
first day of each month.
3.4. Collateral Monitoring/Auditing Fees.
(a) Collateral Monitoring Fee. Borrowers shall pay the Agent, for the sole
benefit of the Agent, a collateral monitoring fee equal to $1,667 per month,
payable in advance on the first of each month during the Term of this Agreement.
The collateral monitoring fee shall be deemed earned in full on the date when
same is due and payable hereunder and shall not be subject to rebate or
proration upon termination of this Agreement for any reason.
(b) Auditing Fees. Borrowers shall pay to Agent on the first day of each month
following any month in which Agent performs any collateral audit - namely any
field examination, collateral analysis or other business analysis, the need for
which is to be determined by Agent and which monitoring is undertaken by Agent
or for Agent's benefit an auditing fee in an amount equal to $850 per day for
each person employed to perform such auditing and monitoring, plus all costs and
disbursements incurred by Agent in the performance of such examination or
analysis. Any Lender may request quarterly that the Agent perform, or cause to
be performed, such collateral audit.
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(c) Inventory Appraisal. Borrowers shall pay all costs and expenses relating to
at least one annual inventory appraisal (after the occurrence of a Default of
this Agreement additional inventory appraisals may be made by the Agent at the
request of the Agent or the Lenders at Borrowers' expense) undertaken by an
appraiser designated by the Agent. Any Lender may request annually that the
Agent perform, or cause to be performed such inventory appraisal.
3.5. Computation of Interest and Fees.
Interest and fees hereunder shall be computed on the basis of
a year of 360 days and for the actual number of days elapsed. If any payment to
be made hereunder becomes due and payable on a day other than a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the applicable Contract Rate during such
extension.
3.6. Maximum Charges.
In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under law. In the event
interest and other charges as computed hereunder would otherwise exceed the
highest rate permitted under law, such excess amount shall be first applied to
any unpaid principal balance owed by Borrowers, and if the then remaining excess
amount is greater than the previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the provisions hereof shall
be deemed amended to provide for such permissible rate.
3.7. Increased Costs.
In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by any Lender (for purposes of this Section 3.7, the term
"Lender" shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Other Document or change the basis of
taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other
Documents (except for changes in the rate of tax on the overall net
income of Agent or any Lender by the jurisdiction in which it maintains
its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit
extended by, any office of Agent or any Lender, including (without
limitation) pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
33
(c) impose on Agent or any Lender or the London interbank Eurodollar market
any other condition with respect to this Agreement or any Other
Document;
and the result of any of the foregoing is to increase the cost to Agent
or any Lender of making, renewing or maintaining its Advances hereunder
by an amount that Agent or such Lender deems to be material or to
reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the Advances by an amount that Agent or
such Lender deems to be material, then, in any case Borrowers shall
promptly pay Agent or such Lender, upon its demand, such additional
amount as will compensate Agent or such Lender for such additional cost
or such reduction, as the case may be, provided that the foregoing
shall not apply to increased costs which are reflected in the Adjusted
LIBO Rate. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowers, and such certification
shall be conclusive absent manifest error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair.
In the event that Agent or any Lender shall have determined
that:
(a) reasonable means do not exist for ascertaining the Adjusted LIBO Rate
applicable pursuant to Section 2.2 for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant maturity
are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar
Rate Loan, or a proposed conversion of a Domestic Rate Loan into a
Eurodollar Rate Loan,
then Agent shall give Borrowers prompt written, telephonic or telegraphic notice
of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowers
shall notify Agent no later than 10:00 a.m. (New York time) two (2) Business
Days prior to the date of such proposed borrowing, that its request for such
borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been
converted to an affected type of Eurodollar Rate Loan shall be continued as or
converted into a Domestic Rate Loan, or, if Borrowers shall notify Agent, no
later than 10:00 a.m. (New York time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrowers shall notify Agent, no
later than 10:00 a.m. (New York time) two (2) Business Days prior to the last
Business Day of the then current Interest Period applicable to such affected
Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar
Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and the Borrowers shall have
no right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.
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3.9. Capital Adequacy.
(a) In the event that Agent or any Lender shall have determined that any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term "Lender" shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender's capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent's
and each Lender's policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material, then, from time to time, Borrowers shall
pay upon demand to Agent or such Lender such additional amount or amounts as
will compensate Agent or such Lender for such reduction. In determining such
amount or amounts, Agent or such Lender may use any reasonable averaging or
attribution methods. The protection of this Section 3.9 shall be available to
Agent and each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such amount or amounts
as shall be necessary to compensate Agent or such Lender with respect to Section
3.9(a) when delivered to Borrowers shall be conclusive absent manifest error.
IV. COLLATERAL: GENERAL TERMS.
4.1. Security Interest in the Collateral.
To secure the prompt payment and performance to Agent, each
Issuer and each Lender of the Obligations, each Loan Party hereby assigns,
pledges and grants to Agent for the ratable benefit of Agent, each Issuer and
each Lender a continuing security interest in and to all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located (such security interests shall continue, without interruption or break
in continuity, any security interest granted to Agent under the Existing
Agreement). Each Loan Party shall ▇▇▇▇ its books and records as may be necessary
or appropriate to evidence, protect and perfect Agent's security interest and
shall cause its financial statements to reflect such security interest.
4.2. Perfection of Security Interest.
(a) Each Loan Party shall take all action that may be necessary or desirable, or
that Agent may request, so as at all times to maintain the validity, perfection,
enforceability and priority of Agent's security interest in the Collateral or to
enable Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, including, but not limited to, (i) immediately discharging all Liens
other than Permitted Encumbrances, (ii) obtaining landlords' or mortgagees' lien
waivers, (iii) delivering to Agent, endorsed or accompanied by such instruments
of assignment as Agent may specify, and stamping or marking, in such manner as
Agent may specify, any and all chattel paper, instruments, letters of credits
and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) entering into warehousing, lockbox, bailee and other custodial
arrangements satisfactory to Agent, and (v) executing and delivering financing
statements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent's security interest
under the UCC or other applicable law.
35
(b) The Agent may at any time and from time to time file, without the signature
of any Loan Party in accordance with Section 9-509 of the UCC, financing
statements, continuation statements and amendments thereto that describe the
Collateral as "all assets" of the applicable Loan Party and which contain any
other information required by the UCC for the sufficiency or filing office
acceptance of any financing statements, continuation statements or amendments.
Each Loan Party agrees to furnish any such information to Agent promptly upon
request.
(c) Each Loan Party shall, at any time and from time to time, take such steps as
Agent may reasonably request (i) to obtain an acknowledgment, in form and
substance reasonably satisfactory to Agent, of any bailee having possession of
any of the Collateral, stating that the bailee holds such Collateral for Agent,
(ii) to obtain "control" of any letter-of-credit rights, deposit accounts or
electronic chattel paper (as such terms are defined in the UCC with
corresponding provisions thereof defining what constitutes "control" for such
items of Collateral), with any agreements establishing control to be in form and
substance reasonably satisfactory to Agent, and (iii) otherwise to insure the
continued perfection and priority of Agent's security interest in any of the
Collateral for the benefit of the Lenders and of its rights therein. If any Loan
Party shall at any time, acquire a "commercial tort claim" (as such term is
defined in the UCC) in excess of $50,000, such Loan Party shall promptly notify
Agent thereof in writing, therein providing a reasonable description and summary
thereof, and upon delivery thereof to Agent, such Loan Party shall be deemed to
thereby grant to Agent for the benefit of the Lenders (and each Loan Party
hereby grants to Agent, for the benefit of each Lender) a security interest and
lien in and to such commercial tort claim and all proceeds thereof, all upon the
terms of and governed by this Agreement.
(d) Each Loan Party hereby confirms and ratifies all UCC financing statements
filed by Agent with respect to such Loan Party on or prior to the date of the
Agreement or in connection with, or relating to, or otherwise applicable to, or
arising under the Existing Agreement without interruption or break in
continuity.
(e) All charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, shall be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations, or, at Agent's
option, shall be paid to Agent for the ratable benefit of Lenders immediately
upon demand.
4.3. Disposition of Collateral.
Each Loan Party will safeguard and protect all Collateral for
Agent's general account and make no disposition thereof whether by sale, lease
36
or otherwise except (a) the sale of Inventory in the ordinary course of business
and (b) the disposition or transfer of obsolete and worn-out Equipment in the
ordinary course of business during any fiscal year having an aggregate fair
market value of not more than $250,000 and only to the extent that (i) the
proceeds of any such disposition are used to acquire replacement Equipment which
is subject to Agent's first priority security interest or (ii) the proceeds of
such disposition are remitted to Agent as a prepayment on the Advances. In the
event that the applicable Loan Party elects to utilize clauses (i) and/or (ii)
above, then (x) the applicable Loan Party shall give the Agent written notice of
such election within three (3) days of the date of the applicable disposition;
(y) such acquisition of replacement Equipment or such prepayment of the Advances
shall be made no later than three (3) days after the date of such disposition;
and (z) until such time as the proceeds are used as described in clauses (i)
and/or (ii) above, at the Agent's option, either (a) such proceeds shall be held
by Agent as cash collateral for the Obligations pursuant to terms acceptable to
Agent in its sole discretion or (b) such proceeds shall be applied as a
repayment of Advances and a reserve against loan availability under Section 2.1
in the amount of such repayment shall be established. Such cash collateral or
loan availability reserve, as the case may be, shall be released by Agent only
in connection with the making of an Advance to be used by the Borrowers solely
for the purposes set forth in clauses (i) and (ii) above; provided, however,
that nothing contained herein shall waive or modify any conditions to the making
of Advances or any other provisions of this Agreement.
4.4. Preservation of Collateral.
In addition to the rights and remedies set forth in Section
11.1, Agent: (a) may at any time take such steps as Agent deems necessary to
protect Agent's interest in and to preserve the Collateral, including the hiring
of such security guards or the placing of other security protection measures as
Agent may deem appropriate; (b) may employ and maintain at any Loan Party's
premises a custodian who shall have full authority to do all acts necessary to
protect Agent's interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any Loan
Party's owned or leased lifts, hoists, trucks and other facilities or equipment
for handling or removing the Collateral; and (e) shall have, and is hereby
granted, a right of ingress and egress to the places where the Collateral is
located, and may proceed over and through any Loan Party's owned or leased
property. Each Loan Party shall cooperate fully with all of Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged
to Borrowers' Account as a Revolving Advance and added to the Obligations.
4.5. Ownership of Collateral.
With respect to the Collateral, at the time the Collateral
becomes subject to Agent's security interest: (a) each Loan Party shall be the
sole owner of and fully authorized and able to sell, transfer, pledge and/or
grant a first priority security interest in each and every item of its
respective Collateral to Agent; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by each Loan Party or delivered to Agent or
any Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of each Loan Party that appear on
such documents and agreements shall be genuine and each Loan Party shall have
full capacity to execute same; and (d) each Loan Party's Equipment and Inventory
shall be located as set forth on Schedule 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the ordinary course of business and Equipment to the
extent permitted in Section 4.3.
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4.6. Defense of Agent's and Lenders' Interests.
Until (a) payment and performance in full of all of the
Obligations and (b) termination of this Agreement, Agent's interests in the
Collateral shall continue in full force and effect. During such period no Loan
Party shall, without Agent's prior written consent, pledge, sell (except
Inventory in the ordinary course of business and Equipment to the extent
permitted in Section 4.3), assign, transfer, create or suffer to exist a Lien
upon or encumber or allow or suffer to be encumbered in any way except for
Permitted Encumbrances, any part of the Collateral. Each Loan Party shall defend
Agent's interests in the Collateral against any and all Persons whatsoever. At
any time following demand by Agent for payment of all Obligations, Agent shall
have the right to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including without limitation:
labels, stationery, documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral, Loan Parties shall,
upon demand, assemble it in the best manner possible and make it available to
Agent at a place reasonably convenient to Agent. In addition, with respect to
all Collateral, Agent and Lenders shall be entitled to all of the rights and
remedies set forth herein and further provided by the UCC or other applicable
law. Each Loan Party shall, and Agent may, at its option, instruct all
suppliers, carriers, forwarders, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Agent holds a security
interest to deliver same to Agent and/or subject to Agent's order and if they
shall come into any Loan Party's possession, they, and each of them, shall be
held by such Loan Party in trust as Agent's trustee, and such Loan Party will
immediately deliver them to Agent in their original form together with any
necessary endorsement.
4.7. Books and Records.
Each Loan Party shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Loan Parties.
4.8. Financial Disclosure.
Each Loan Party hereby irrevocably authorizes and directs all
accountants and auditors employed by such Loan Party at any time during the Term
to exhibit and deliver to Agent and each Lender copies of any of the Loan
Party's financial statements, trial balances or other accounting records of any
sort in the accountant's or auditor's possession, and to disclose to Agent and
38
each Lender any information such accountants may have concerning such Loan
Party's financial status and business operations. Each Loan Party hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Loan Party,
whether made by such Loan Party or otherwise; however, Agent and each Lender
will attempt to obtain such information or materials directly from such Loan
Party prior to obtaining such information or materials from such accountants or
such authorities.
4.9. Compliance with Laws.
Each Loan Party shall comply with all acts, rules, regulations
and orders of any legislative, administrative or judicial body or official
applicable to its respective Collateral or any part thereof or to the operation
of such Loan Party's business the non-compliance with which could reasonably be
expected to have a Material Adverse Effect. Each Loan Party may, however,
contest or dispute any acts, rules, regulations, orders and directions of those
bodies or officials in any reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of Agent to protect Agent's Lien on or security interest in the
Collateral. The Collateral and assets of Loan Parties, at all times, shall be
maintained in accordance with the requirements of all insurance carriers which
provide insurance with respect to the Collateral and assets of Loan Parties so
that such insurance shall remain in full force and effect.
4.10. Inspection of Premises.
At all reasonable times Agent and each Lender shall have full
access to and the right to audit, check, inspect and make abstracts and copies
from each Loan Party's books, records, audits, correspondence and all other
papers relating to the Collateral and the operation of each Loan Party's
business. Agent, any Lender and their agents may enter upon any of Loan Party's
premises at any time during business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of such Loan Party's business
provided that Agent shall take reasonable efforts not to unduly interfere with
the business operations of the Borrowers in the absence of the occurrence of an
Event of Default.
4.11. Insurance.
Each Loan Party shall bear the full risk of any loss of any
nature whatsoever with respect to the Collateral. At each Loan Party's own cost
and expense in amounts and with carriers acceptable to Agent, each Loan Party
shall (a) keep all its insurable properties and properties in which each Loan
Party has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Loan Party's including, without limitation,
business interruption insurance; (b) maintain a bond in such amounts as is
customary in the case of companies engaged in businesses similar to such Loan
Party insuring against larceny, embezzlement or other criminal misappropriation
of insured's officers and employees who may either singly or jointly with others
at any time have access to the assets or funds of such Loan Party either
directly or through authority to draw upon such funds or to direct generally the
disposition of such assets; (c) maintain public and product liability insurance
39
against claims for personal injury, death or property damage suffered by others;
(d) maintain all such worker's compensation or similar insurance as may be
required under the laws of any state or jurisdiction in which Loan Party is
engaged in business; (e) maintain a credit insurance policy on Receivables
acceptable, in all respects and amounts, to the Agent, at its Reasonable
Discretion; (f) furnish Agent with (i) copies of all policies and evidence of
the maintenance of such policies by the renewal thereof at least thirty (30)
days before any expiration date, and (ii) appropriate loss payable endorsements
in form and substance satisfactory to Agent, naming Agent as a co-insured and
loss payee as its interests may appear with respect to all insurance coverage
referred to in clauses (a), (c) and (e) above, and providing (A) that all
proceeds thereunder shall be payable to Agent, (B) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (C) that such policy and loss payable clauses may not be
cancelled, amended or terminated unless at least thirty (30) days' prior written
notice is given to Agent. In the event of any loss thereunder, the carriers
named therein hereby are directed by Agent and the applicable Loan Party to make
payment for such loss to Agent and not to such Loan Party and Agent jointly. If
any insurance losses are paid by check, draft or other instrument payable to any
Loan Party and Agent jointly, Agent may endorse such Loan Party's name thereon
and do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a), (b) and (e) above. All loss recoveries
received by Agent upon any such insurance may be applied to the Obligations, in
such order as Agent in its sole discretion shall determine. Any surplus shall be
paid by Agent to Loan Parties or applied as may be otherwise required by law.
Any deficiency thereon shall be paid by Loan Parties to Agent, on demand.
Anything hereinabove to the contrary notwithstanding, and subject to the
fulfillment of the conditions set forth below, Agent shall remit to Loan Parties
insurance proceeds received by Agent during any calendar year under insurance
policies (other then pursuant to clause (e) above) procured and maintained by
Loan Parties which insure Loan Parties' insurable properties to the extent such
insurance proceeds do not exceed $250,000 in the aggregate during such calendar
year or $100,000 per occurrence. In the event the amount of insurance proceeds
received by Agent for any occurrence exceeds $100,000, then Agent shall not be
obligated to remit the insurance proceeds to Loan Parties unless Loan Parties
shall provide Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Loan Parties within thirty (30) days of such
Loan Party's receipt of such insurance proceeds to repair, replace or restore
the insured property which was the subject of the insurable loss. In the event
Loan Parties have previously received (or, after giving effect to any proposed
remittance by Agent to Loan Parties would receive) insurance proceeds which
equal or exceed $250,000 in the aggregate during any calendar year, then Agent
may, in its sole discretion, either remit the insurance proceeds to Loan Parties
upon Loan Parties providing Agent with evidence reasonably satisfactory to Agent
that the insurance proceeds will be used by Loan Parties within thirty (30) days
of such Loan Party's receipt of such insurance proceeds to repair, replace or
restore the insured property which was the subject of the insurable loss, or
apply the proceeds to the Obligations, as aforesaid. The agreement of Agent to
remit insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) no Event of
Default or Default shall then have occurred, (y) Loan Parties shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose and (z) until
such time as Loan Parties shall use such insurance proceeds for such repair,
replacement or restoration, at the Agent's option, either (a) such proceeds
shall be held by Agent as cash collateral for the Obligations pursuant to terms
40
acceptable to Agent in its sole discretion or (b) such proceeds shall be applied
as a repayment of Revolving Advances and a reserve against loan availability
under Section 2.1(a) in the amount of such repayment shall be established. Such
cash collateral or loan availability reserve, as the case may be, shall be
released by Agent only in connection with the making of a Revolving Advance to
be used by the Borrowers solely for the purposes of such repair, replacement or
restoration; provided, however, that nothing contained herein shall waive or
modify any conditions to the making of Revolving Advances or any other
provisions of this Agreement.
4.12. Failure to Pay Insurance.
If any Loan Party fails to obtain insurance as hereinabove
provided, or to keep the same in force, Agent, if Agent so elects, may obtain
such insurance and pay the premium therefor for Borrowers' Account, and charge
Borrowers' Account therefor and such expenses so paid shall be part of the
Obligations.
4.13. Payment of Taxes.
Each Loan Party will pay, when due, all taxes, assessments and
other Charges lawfully levied or assessed upon such Loan Party or any of the
Collateral including, without limitation, real and personal property taxes,
assessments and charges and all franchise, income, employment, social security
benefits, withholding, and sales taxes, except for such of the foregoing as are
being protested by Borrowers in good faith and for which Borrowers have provided
and maintained adequate reserves for payment thereof. If any tax by any
governmental authority is or may be imposed on or as a result of any transaction
between any Loan Party and Agent or any Lender which Agent or any Lender may be
required to withhold or pay or if any taxes, assessments, or other Charges
remain unpaid after the date fixed for their payment, or if any claim shall be
made which, in Agent's or any Lender's opinion, may possibly create a valid Lien
on the Collateral, Agent may (but shall not be obligated to) without notice to
Loan Parties pay the taxes, assessments or other Charges and each Loan Party
hereby indemnifies and holds Agent and each Lender harmless in respect thereof.
Agent will not pay any taxes, assessments or Charges to the extent that any Loan
Party has contested or disputed those taxes, assessments or Charges in good
faith, by expeditious protest, administrative or judicial appeal or similar
proceeding provided that any related tax lien is stayed and sufficient reserves
are established to the reasonable satisfaction of Agent to protect Agent's
security interest in or Lien on the Collateral. The amount of any payment by
Agent under this Section 4.13 shall be charged to Borrowers' Account as a
Revolving Advance and added to the Obligations and, until Loan Parties shall
furnish Agent with an indemnity therefor (or supply Agent with evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold without interest any balance standing to Loan Parties' credit and
Agent shall retain its security interest in any and all Collateral held by
Agent.
4.14. Payment of Leasehold Obligations.
Each Loan Party shall at all times pay, when and as due, its
rental obligations under all leases under which it is a tenant (except to the
extent of bona fide disputes or offsets, for which Borrowers establish or
maintain adequate reserves for payment therof), and shall otherwise comply, in
all material respects, with all other terms of such leases and keep them in full
force and effect and, at Agent's request will provide evidence of having done
so.
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4.15. Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of a Loan Party, or work, labor or services theretofore
rendered by a Loan Party as of the date each Receivable is created. Same shall
be due and owing in accordance with the applicable Loan Party's standard terms
of sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Loan Parties to Agent.
(b) Solvency of Customers. Each Customer, to the best of each Loan Party's
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Loan Party who are not solvent such
Loan Party has set up on its books and in its financial records bad debt
reserves adequate to cover such Receivables.
(c) Locations of Loan Party. Each Loan Party's chief executive office is located
at the addresses set forth on Schedule 4.15(c). Until written notice is given to
Agent by Borrowers of any other office at which any Loan Party keeps its records
pertaining to Receivables, all such records shall be kept at such executive
office.
(d) Collection of Receivables. Until any Loan Party's authority to do so is
terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), each Loan Party
will, at such Loan Party's sole cost and expense, but on Agent's behalf and for
Agent's account, collect as Agent's property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with any Loan
Party's funds or use the same except to pay Obligations. Each Loan Party shall,
upon request, deliver to Agent, or deposit in the Blocked Account, in original
form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time Agent shall have the
right to send notice of the assignment of, and Agent's security interest in, the
Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telecopy, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrowers' Account and added to the Obligations.
(f) Power of Agent to Act on Loan Parties' Behalf. Agent shall have the right to
receive, endorse, assign and/or deliver in the name of Agent or any Loan Party
any and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and each Loan Party hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each Loan
Party hereby constitutes Agent or Agent's designee as such Loan Party's attorney
42
with power (i) to endorse such Loan Party's name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (ii)
to sign such Loan Party's name on any invoice or ▇▇▇▇ of lading relating to any
of the Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign such Loan Party's name on all financing statements or any other documents
or instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of Loan Parties' rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign such Loan Party's name on
a proof of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign such Loan Party's name on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with the Receivables;
and (xii) to do all other acts and things necessary to carry out this Agreement.
All acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done
maliciously or with gross (not mere) negligence; this power being coupled with
an interest is irrevocable while any of the Obligations remain unpaid. Agent
shall have the right at any time to change the address for delivery of mail
addressed to any Loan Party to such address as Agent may designate and to
receive, open and dispose of all mail addressed to any Loan Party.
(g) No Liability. Neither Agent nor any Lender shall, under any circumstances or
in any event whatsoever, have any liability for any error or omission or delay
of any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for any damage
resulting therefrom. Agent may, without notice or consent from any Loan Party,
▇▇▇ upon or otherwise collect, extend the time of payment of, compromise or
settle for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept the return of the
goods represented by any of the Receivables, without notice to or consent by any
Loan Party, all without discharging or in any way affecting any Loan Party's
liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All proceeds of
Collateral shall, at the direction of Agent, be deposited by Loan Parties into a
lockbox account, dominion account or such other blocked account (collectively,
the "Blocked Accounts") as Agent may require pursuant to an arrangement with
such bank as may be selected by Loan Parties and be acceptable to Agent. Loan
Parties shall issue to any such bank, an irrevocable letter of instruction
directing said bank to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent. All funds deposited in a Blocked Account shall immediately
become the property of Agent and Loan Party shall obtain the agreement by such
bank to waive any offset rights against the funds so deposited. Neither Agent
nor any Lender assumes any responsibility for any Blocked Account arrangement,
including without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder. Alternatively, Agent
may establish depository accounts (collectively, the "Depository Accounts") in
the name of Agent at a bank or banks for the deposit of such funds and Loan
Parties shall deposit all proceeds of Collateral or cause same to be deposited,
in kind, in such Depository Accounts of Agent in lieu of depositing same to the
Blocked Accounts.
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(i) Adjustments. No Loan Party will, without Agent's consent, compromise or
adjust any Receivables (or extend the time for payment thereof) or accept any
returns of merchandise or grant any additional discounts, allowances or credits
thereon except for those compromises, adjustments, returns, discounts, credits
and allowances as have been heretofore customary in the business of such Loan
Party.
4.16. Inventory.
To the extent Inventory held for sale or lease has been
produced by any Loan Party, it has been and will be produced by such Loan Party
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment.
The Equipment shall be maintained in good operating condition
and repair (reasonable wear and tear excepted) and all necessary replacements of
and repairs thereto shall be made so that the value and operating efficiency of
the Equipment shall be maintained and preserved. No Loan Party shall use or
operate the Equipment in violation of any law, statute, ordinance, code, rule or
regulation. Each Loan Party shall have the right to sell Equipment to the extent
set forth in Section 4.3.
4.18. Exculpation of Liability.
Nothing herein contained shall be construed to constitute
Agent or any Lender as any Loan Party's agent for any purpose whatsoever, nor
shall Agent or any Lender be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof. Neither Agent nor
any Lender, whether by anything herein or in any assignment or otherwise, assume
any of Loan Party's obligations under any contract or agreement assigned to
Agent or such Lender, and neither Agent nor any Lender shall be responsible in
any way for the performance by Loan Party of any of the terms and conditions
thereof.
4.19. Environmental Matters.
(a) Loan Parties shall not take any action which causes the Real Property to not
remain in compliance with all Environmental Laws and they shall not place or
permit to be placed any Hazardous Substances on any Real Property except as not
prohibited by applicable law or appropriate governmental authorities.
(b) Loan Parties shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.
(c) Loan Parties shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
44
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Loan Parties shall use their best efforts to obtain certificates of disposal,
such as hazardous waste manifest receipts, from all treatment, transport,
storage or disposal facilities or operators employed by Loan Parties in
connection with the transport or disposal of any Hazardous Waste generated at
the Real Property.
(d) In the event any Loan Party obtains, gives or receives notice of any Release
or threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Loan
Party's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrowers
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Loan Party is aware giving rise
to the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Real Property
and is not intended to create nor shall it create any obligation upon Agent or
any Lender with respect thereto.
(e) Loan Parties shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Loan Party
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Loan Party and the Authority regarding such claims to
Agent until the claim is settled. Loan Parties shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Loan Party is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent's
security interest in the Real Property and the Collateral.
(f) Loan Parties shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Loan Party shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Loan Party shall fail to comply with
any of the requirements of any Environmental Laws, Agent on behalf of Lenders
may, but without the obligation to do so, for the sole purpose of protecting
Agent's interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Loan Parties, and until paid shall be added to and become
a part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Loan Party.
45
(g) Promptly upon the written request of Agent from time to time, Loan Parties
shall provide Agent, at Loan Parties' expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $250,000, Agent shall have the right to require Loan
Parties to post a bond, letter of credit or other security reasonably
satisfactory to Agent to secure payment of these costs and expenses.
(h) Loan Parties shall defend and indemnify Agent and Lenders and hold Agent,
Lenders and their respective employees, agents, directors and officers harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney's fees, suffered or incurred by Agent or
Lenders under or on account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real Property,
whether or not the same originates or emerges from the Real Property or any
contiguous real estate, including any loss of value of the Real Property as a
result of the foregoing except to the extent such loss, liability, damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Agent or any Lender. Loan Parties' obligations under this Section 4.19
shall arise upon the discovery of the presence of any Hazardous Substances at
the Real Property, whether or not any federal, state, or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Loan Parties' obligation and the indemnifications
hereunder shall survive the termination of this Agreement.
(i) For purposes of Sections 4.19 and 5.7, all references to Real Property shall
be deemed to include all of Loan Parties' right, title and interest in and to
its owned and leased premises.
4.20. Financing Statements.
Except with respect to the financing statements filed by Agent
and the financing statements described on Schedule 7.2, no financing statement
covering any of the Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
Each Loan Party represents and warrants as follows:
46
5.1. Authority.
Each Loan Party has full power, authority and legal right to
enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. This Agreement and the Other
Documents constitute the legal, valid and binding obligations of each Borrower,
enforceable in accordance with their terms. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Loan Party's limited liability company or corporate powers, have been duly
authorized, are not in contravention of law or the terms of such Loan Party's
certificate of formation, limited liability company agreement, by-laws,
certificate of incorporation or other applicable documents relating to such Loan
Party's formation or to the conduct of such Loan Party's business or of any
material agreement or undertaking to which such Loan Party is a party or by
which such Loan Party is bound, and (b) will not conflict with nor result in any
breach in any of the provisions of or constitute a default under or result in
the creation of any Lien except Permitted Encumbrances upon any asset of such
Loan Party under the provisions of any agreement, charter document, instrument,
by-law, or other instrument to which such Loan Party or its property is a party
or by which it may be bound except for such of the foregoing as would not be
likely to have a Material Adverse Effect.
5.2. Formation and Qualification.
(a) Each Loan Party is duly formed or incorporated and in good standing under
the laws of the state listed on Schedule 5.2(a) and is qualified to do business
and is in good standing in the states listed on Schedule 5.2(a) which constitute
all states in which qualification and good standing are necessary for such Loan
Party to conduct its business and own its property and where the failure to so
qualify could reasonably be expected to have a Material Adverse Effect. The
exact State organizational number of each Loan Party is set forth on Schedule
5.2(a). Each Loan Party has delivered to Agent true and complete copies of its
certificate of formation, limited liability company agreement, certificate of
incorporation and by-laws, as the case may be and will promptly notify Agent of
any amendment or changes thereto. The exact name of each Loan Party is set forth
in the first paragraph to this Agreement (or, if such Loan Party is not listed
in such first paragraph, such exact name is set forth on Schedule 5.2(a)).
(b) The only Subsidiaries of each Loan Party are listed on Schedule 5.2(b).
5.3. Survival of Representations and Warranties.
All representations and warranties of such Loan Party
contained in this Agreement and the Other Documents shall be true at the time of
such Loan Party's execution of this Agreement and the Other Documents, and shall
survive the execution, delivery and acceptance thereof by the parties thereto
and the closing of the transactions described therein or related thereto.
5.4. Tax Returns.
Each Loan Party's federal tax identification number is set
forth on Schedule 5.4. Each Loan Party has filed all federal, state and local
tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable. Federal income tax returns of each Loan Party have been examined and
reported upon by the appropriate taxing authority or closed by applicable
statute and satisfied for all fiscal years prior to and including the fiscal
year ending June 30, 1999. The provision for taxes on the books of each Loan
Party are adequate for all years not closed by applicable statutes, and for its
current fiscal year, and no Loan Party has any knowledge of any deficiency or
additional assessment in connection therewith not provided for on its books.
47
5.5. Financial Statements.
(a) Intentionally Left Blank.
(b) The twelve-month cash flow projections of the Loan Parties on a Consolidated
Basis and on a consolidating basis and their projected balance sheets as of the
Closing Date, copies of which are annexed hereto as Exhibit 5.5 were prepared by
the Chief Financial Officer of the Loan Parties, on behalf of the Loan Parties,
are based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Loan Parties' judgment based on
present circumstances of the most likely set of conditions and course of action
for the projected period. The cash flow projections are referred to as the "Pro
Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of the Loan Parties, their
Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary
relationship existed) as of September 30, 2003, and the related statements of
income, changes in stockholder's equity, and changes in cash flow for the period
ended on such date, all accompanied by reports thereon containing opinions
without qualification by independent certified public accountants, copies of
which have been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Loan Parties
and their Subsidiaries at such date and the results of their operations for such
period). Since September 30, 2003 there has been no change in the condition,
financial or otherwise, of Loan Parties or their Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Loan Parties and their
Subsidiaries, except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse.
5.6. Corporate Name.
The exact name of each Loan Party is set forth in the first
paragraph to this Agreement (or, if such Loan Party is not listed in such first
paragraph, such exact name is set forth on Schedule 5.6). No Loan Party has been
known by any other corporate, limited liability company or partnership name in
the past five years and no Loan Party sells Inventory under any other name
except as set forth on Schedule 5.6, nor has any Loan Party been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.
48
5.7. O.S.H.A. and Environmental Compliance.
(a) Each Loan Party has duly complied with, and its facilities, business,
assets, property, leaseholds and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health Act,
the Environmental Protection Act, RCRA and all other Environmental Laws; there
have been no outstanding citations, notices or orders of non-compliance issued
to any Loan Party or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations, in each case except as set
forth on Schedule 5.7.
(b) Each Loan Party has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable Environmental Laws,
except as set forth on Schedule 5.7.
(c) To the knowledge of each Loan Party (i) there are no visible signs of
releases, spills, discharges, leaks or disposal (each, a "Release") of Hazardous
Substances at, upon, under or within any Real Property or any premises leased by
any Loan Party; (ii) there are no underground storage tanks or polychlorinated
biphenyls on the Real Property or any premises leased by any Loan Party; (iii)
neither the Real Property nor any premises leased by any Loan Party has ever
been used as a treatment, storage or disposal facility of Hazardous Waste; and
(iv) no Hazardous Substances are present on the Real Property or any premises
leased by any Loan Party, excepting such quantities as are handled in accordance
with all applicable manufacturer's instructions and governmental regulations and
in proper storage containers and as are necessary for the operation of the
commercial business of any Loan Party or of its tenants, in each case except as
set forth on Schedule 5.7.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the transactions contemplated under this Agreement,
each Loan Party will be solvent, able to pay its debts as they mature, has
capital sufficient to carry on its business and all businesses in which it is
about to engage, and (i) as of the Closing Date, the fair present saleable value
of each Loan Party's assets, calculated on a going concern basis, is in excess
of the amount of its liabilities and (ii) subsequent to the Closing Date, the
fair saleable value of each Loan Party's assets (calculated on a going concern
basis) will be in excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Loan Party has (i) any pending
or, to its knowledge, threatened litigation, arbitration, actions or proceedings
which involve the possibility of having a Material Adverse Effect, and (ii) any
indebtedness for borrowed money other than the Obligations.
(c) No Loan Party is in violation of any applicable statute, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is any Loan Party in violation of any order of any court,
governmental authority or arbitration board or tribunal.
(d) No Loan Party nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(d). Except as
set forth in Schedule 5.8(d), (i) no Plan has incurred any "accumulated funding
49
deficiency," as defined in Section 302(a)(2) of ERISA and Section 412(a) of the
Code, whether or not waived, and each Loan Party and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan, (ii) each Plan which is intended
to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) no Loan Party nor any member
of the Controlled Group has incurred any liability to the PBGC other than for
the payment of premiums, and there are no premium payments which have become due
which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and no Loan
Party nor any member of the Controlled Group knows of any facts or circumstances
which would materially change the value of such assets and accrued benefits and
other liabilities, (vi) no Loan Party or any member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan, (vii) no Loan Party nor any member of a
Controlled Group has incurred any liability for any excise tax arising under
Section 4972 or 4980B of the Code, and no fact exists which could give rise to
any such liability, (viii) no Loan Party nor any member of the Controlled Group
nor any fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited
transaction" described in Section 406 of ERISA or Section 4975 of the Code nor
taken any action which would constitute or result in a Termination Event with
respect to any such Plan which is subject to ERISA, (ix) each Loan Party and
each member of the Controlled Group has made all contributions due and payable
with respect to each Plan, (x) there exists no event described in Section
4043(b) of ERISA, for which the thirty (30) day notice period contained in 29
CFR ss.2615.3 has not been waived, (xi) no Loan Party nor any member of the
Controlled Group has any fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than employees or former
employees of any Loan Party and any member of the Controlled Group, and (xii) no
Loan Party nor any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses.
All material patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, copyrights,
copyright applications, design rights, tradenames, assumed names, trade secrets
and licenses owned or utilized by any Loan Party are set forth on Schedule 5.9,
are valid and have been duly registered or filed with all appropriate
governmental authorities and constitute all of the intellectual property rights
which are necessary for the operation of its business; there is no objection to
or pending challenge to the validity of any such material patent, trademark,
copyright, design right, tradename, trade secret or license and no Loan Party is
aware of any grounds for any challenge, except for such of the foregoing as is
not likely to have a Material Adverse Effect, and except as set forth in
Schedule 5.9. Each patent, patent application, patent license, trademark,
trademark application, trademark license, service ▇▇▇▇, service ▇▇▇▇
application, service ▇▇▇▇ license, copyright, copyright application and
copyright license owned or held by any Loan Party and all trade secrets used by
any Loan Party consist of original material or property developed by such Loan
Party or was lawfully acquired by or is lawfully licensed to such Loan Party
from the proper and lawful owner thereof. Each of such items has been maintained
so as to preserve the value thereof from the date of creation or acquisition
thereof.
50
5.10. Licenses and Permits.
Except as set forth in Schedule 5.10, each Loan Party (a) is
in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, state or local
law or regulation for the operation of its business in each jurisdiction wherein
it is now conducting or proposes to conduct business and where the failure to
procure such licenses or permits could have a Material Adverse Effect.
5.11. Default of Indebtedness.
No Loan Party is in default in the payment of the principal of
or interest on any Indebtedness or under any instrument or agreement under or
subject to which any Indebtedness has been issued and no event has occurred
under the provisions of any such instrument or agreement which with or without
the lapse of time or the giving of notice, or both, constitutes or would
constitute an event of default thereunder.
5.12. No Default.
No Loan Party is in default of any of the terms and conditions
of the Existing Agreement and no Loan Party is in default in the payment or
performance of any of its material contractual obligations and no Default has
occurred.
5.13. No Burdensome Restrictions.
No Loan Party is party to any contract or agreement the
performance of which could have a Material Adverse Effect. No Loan Party has
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien which is not a Permitted Encumbrance.
5.14. No Labor Disputes.
No Loan Party is involved in any labor dispute; there are no
strikes or walkouts or union organization of any Loan Party's employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Schedule 5.14.
5.15. Margin Regulations.
No Loan Party is engaged, nor will it engage, principally or
as one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the meaning of
the quoted term under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. No part of the
proceeds of any Advance will be used for "purchasing" or "carrying" "margin
stock" as defined in Regulation U of such Board of Governors.
51
5.16. Investment Company Act.
No Loan Party is an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
nor is it controlled by such a company.
5.17. Disclosure.
No representation or warranty made by any Loan Party in this
Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Loan Parties or which reasonably should be known to Loan Parties which Loan
Parties have not disclosed to Agent in writing with respect to the transactions
contemplated by this Agreement which could reasonably be expected to have a
Material Adverse Effect.
5.18. Intentionally Left Blank.
5.19. Swaps.
No Loan Party is a party to, nor will it be a party to, any
swap agreement whereby such Loan Party has agreed or will agree to swap interest
rates or currencies.
5.20. Conflicting Agreements.
No provision of any mortgage, indenture, contract, agreement,
judgment, decree or order binding on any Loan Party or affecting the Collateral
conflicts with, or requires any Consent which has not already been obtained to,
or would in any way prevent the execution, delivery or performance of, the terms
of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations.
No Loan Party nor any Affiliate of any Loan Party is subject
to any statute, rule or regulation which regulates the incurrence of any
Indebtedness, including without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
5.22. Business and Property of Loan Parties.
Upon and after the Closing Date, Loan Parties do not propose
to engage in any business other than the distribution of electronic components
and providing contract manufacturing services and activities necessary to
conduct the foregoing. On the Closing Date, each Loan Party will own all the
property and possess all of the rights and Consents necessary for the conduct of
the business of such Loan Party.
5.23. Material Contracts.
Schedule 5.23 contains a true, correct and complete list of
all contracts which are material to the operation of any Loan Party's business.
Except as set forth on Schedule 5.23, each such contract is in full force and
effect and no material defaults enforceable against such Loan Party exist
thereunder. No Loan Party has received notice from any party to such contract
stating that it intends to terminate or amend such contract.
52
VI. AFFIRMATIVE COVENANTS.
Each Loan Party shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees.
Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(h). Agent may, without
making demand, charge Borrowers' Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets.
(i) Conduct continuously and operate actively its business
according to good business practices and maintain all of its properties useful
or necessary in its business in good working order and condition (reasonable
wear and tear excepted and except as may be disposed of in accordance with the
terms of this Agreement), including, without limitation, all licenses, patents,
copyrights, design rights, tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity of any intellectual
property right or other right included in the Collateral; (ii) keep in full
force and effect its existence and comply in all material respects with the laws
and regulations governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (iii) make
all such reports and pay all such franchise and other taxes and license fees and
do all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United
States or any political subdivision thereof.
6.3. Violations.
Promptly notify Agent in writing of any violation of any law,
statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to any Loan Party which could reasonably be expected to have
a Material Adverse Effect.
6.4. Government Receivables.
Take all steps necessary to protect Agent's interest in the
Collateral under the Federal Assignment of Claims Act or other applicable state
or local statutes or ordinances and deliver to Agent appropriately endorsed, any
instrument or chattel paper connected with any Receivable arising out of
contracts between any Loan Party and the United States, any state or any
department, agency or instrumentality of any of them.
53
6.5. Execution of Supplemental Instruments.
Execute and deliver to Agent from time to time, upon demand,
such supplemental agreements, statements, assignments and transfers, or
instructions or documents relating to the Collateral, and such other instruments
as Agent may request, in order that the full intent of this Agreement may be
carried into effect.
6.6. Payment of Indebtedness.
Subject at all times to any applicable subordination
arrangement in favor of Agent and/or Lenders, pay, discharge or otherwise
satisfy at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal payment practices) all
its obligations and liabilities of whatever nature, except when the failure to
do so could not reasonably be expected to have a Material Adverse Effect or when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and each Loan Party shall have provided for such
reserves as Agent may reasonably deem proper and necessary.
6.7. Standards of Financial Statements.
Cause all financial statements referred to in Sections 9.7,
9.8, 9.9, 9.10 and 9.12 as to which GAAP is applicable to be complete and
correct in all material respects (subject, in the case of interim financial
statements, to normal year-end audit adjustments) and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).
6.8. Intentionally Left Blank
6.9. Financial Covenants.
(a) EBITDA. Maintain EBITDA for the Loan Parties on a Consolidated Basis as of
the end of each fiscal quarter set forth below for the respective fiscal periods
set forth below ending on the last day of such fiscal quarter in an amount not
less than the amount set forth below:
Fiscal Period Minimum EBITDA
------------- --------------
Fiscal Quarter Ending 12/31/03 $ 400,000
Fiscal Quarter Ending 3/31/04 $1,000,000
Fiscal Quarter Ending 6/30/04 $1,300,000
Fiscal Quarter Ending 9/30/04 $1,300,000
(b) Fixed Charge Coverage Ratio. Maintain as of the end of each quarter, on a
four quarter rolling basis for the previous four quarters, a Fixed Charge
Coverage Ratio for the Loan Parties on a Consolidated Basis as of the end of
each fiscal quarter set forth below for the respective periods set forth below
of not less than the ratios set forth below:
54
Fiscal Period Fixed Charge Coverage Ratio
------------- ---------------------------
12/31/04 and at anytime thereafter 1.1 to 1.0
6.10. Minimum Net Worth.
Maintain at all times a minimum Net Worth of at least
$44,500,000 to be increased for each fiscal year by sixty-five (65%) percent of
fiscal year end net income.
6.11. Dissolution of Immaterial Subsidiaries.
Borrowers shall dissolve all Immaterial Subsidiaries (other
than Jaco De Mexico, Inc., if applicable) within ninety (90) days of the Closing
Date (except for Jaco Electronics Canada Inc. in which case such dissolution
shall take place not later than 180 days after the Closing Date). Failure to
complete such dissolutions within the allotted time periods provided for in this
Section 6.11 shall be deemed to a Default under this Agreement and the Borrowers
shall pay to the Agent for the pro rata share of the Lenders a default fee of
$50,000 per month while such Default continues.
VII. NEGATIVE COVENANTS.
No Loan Party shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization with or into
any other Person or acquire all or a substantial portion of the assets or stock
of any Person or permit any other Person to consolidate with or merge with it
other than a merger or consolidation of a Subsidiary of the Borrowers into the
Borrowers, and/or of Loan Parties other than the Borrowers into each other.
(b) Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except in the ordinary course of its business and except as provided in
Section 4.3.
7.2. Creation of Liens.
Create or suffer to exist any Lien or transfer upon or against
any of its property or assets now owned or hereafter acquired, except Permitted
Encumbrances.
7.3. Guarantees.
Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, (b) guarantees made in the ordinary
course of business up to an aggregate amount of $250,000 for all Loan Parties
and (c) the endorsement of checks in the ordinary course of business.
55
7.4. Investments.
Purchase or acquire obligations or stock of, or any other
interest in, any Person, except Cash Equivalents.
7.5. Loans.
Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate except with
respect to (i) the extension of commercial trade credit in connection with the
sale of Inventory in the ordinary course of its business and (ii) loans to
employees on an arm's-length basis in the ordinary course of business consistent
with past practices for travel expenses, relocation costs and similar purposes
up to a maximum of $50,000 to any employee and up to a maximum of $150,000 in
the aggregate at any one time outstanding.
7.6. Capital Expenditures.
Contract for, purchase or make any net Capital Expenditures as
of the end of each fiscal year in an amount not exceeding $750,000 for such
fiscal year.
7.7. Dividends and Distributions.
Declare, pay or make any dividend or distribution on any
shares of the common stock, preferred stock or other equity interests of any
Loan Party (other than dividends or distributions payable in its stock or other
equity interests or split-ups or reclassifications of its stock or other equity
interests) or apply any of its funds, property or assets to the purchase,
redemption or other retirement of any common or preferred stock, or of any
options to purchase or acquire any such shares of common or preferred stock or
other equity interests of any Loan Party.
7.8. Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt) except in respect of (i) Indebtedness to the Lenders
pursuant to this Agreement; (ii) Indebtedness incurred for capital expenditures
permitted under Section 7.6; (iii) Indebtedness existing on the Effective Date
as set forth on Schedule 7.8.
7.9. Nature of Business.
Substantially change the nature of the business in which it is
presently engaged, nor except as specifically permitted hereby purchase or
invest, directly or indirectly, in any assets
56
or property other than in the ordinary course of business for assets or property
which are useful in, necessary for and are to be used in its business as
presently conducted.
7.10. Transactions with Affiliates.
Directly or indirectly, purchase, acquire or lease any
property from, or sell, transfer or lease any property to, or otherwise deal
with, any Affiliate, except transactions disclosed in the ordinary course of
business, on an arm's-length basis on terms no less favorable than terms which
would have been obtainable from a Person other than an Affiliate.
7.11. Leases.
Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6) if after
giving effect thereto, aggregate annual rental payments for all leased property
would exceed $3,000,000 in any one fiscal year for all Loan Parties.
7.12. Subsidiaries.
(a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this
Agreement as a Loan Party and becomes jointly and severally liable for the
obligations of Loan Parties hereunder, under the Notes, and under any other
agreement between any Loan Party and Lenders and (ii) Agent shall have received
all documents, including legal opinions, it may reasonably require to establish
compliance with each of the foregoing conditions.
(b) Enter into any partnership, joint venture or similar arrangement.
7.13. Fiscal Year and Accounting Changes.
Change its fiscal year from the period ending June 30th of
each calendar year or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by law.
7.14. Pledge of Credit.
Now or hereafter pledge Agent's or any Lender's credit on any
purchases or for any purpose whatsoever or use any portion of any Advance in or
for any business other than the applicable Loan Party's business as conducted on
the date of this Agreement.
7.15. Amendment of Organizational Documents.
Amend, modify or waive any term or provision of its Articles
of Formation, LLC Agreement, Certificate of Incorporation and By-Laws or any
shareholders agreement unless required by law.
7.16. Compliance with ERISA.
(i) (x) Maintain, or permit any member of the Controlled Group
to maintain, or (y) become obligated to contribute, or permit any member of the
57
Controlled Group to become obligated to contribute, to any Plan, other than
those Plans disclosed on Schedule 5.8(d), (ii) engage, or permit any member of
the Controlled Group to engage, in any non-exempt "prohibited transaction", as
that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii)
incur, or permit any member of the Controlled Group to incur, any "accumulated
funding deficiency", as that term is defined in Section 302 of ERISA or Section
412 of the Code, (iv) terminate, or permit any member of the Controlled Group to
terminate, any Plan where such event could result in any liability of any Loan
Party or any member of the Controlled Group or the imposition of a lien on the
property of any Loan Party or any member of the Controlled Group pursuant to
Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group
to assume, any obligation to contribute to any Multiemployer Plan not disclosed
on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to
incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly
to notify Agent of the occurrence of any Termination Event, (viii) fail to
comply, or permit a member of the Controlled Group to fail to comply, with the
requirements of ERISA or the Code or other applicable laws in respect of any
Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or the Code or postpone or
delay or allow any member of the Controlled Group to postpone or delay any
funding requirement with respect of any Plan.
7.17. Prepayment of Indebtedness.
At any time, directly or indirectly, prepay any Indebtedness
(other than to Lenders), or repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Loan Party.
7.18. Intentionally Left Blank.
7.19. State of Organization.
Change the State in which it is incorporated or otherwise
organized, unless it has given the Agent not less than thirty (30) days prior
written notice thereof.
7.20. Intentionally Left Blank.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances.
The agreement of Lenders to make the initial Advances
requested to be made on the Closing Date is subject to the satisfaction, or
waiver by Lenders, immediately prior to or concurrently with the making of such
Advances, of the following conditions precedent:
(a) Note(s). Agent shall have received the Notes duly executed and
delivered by an authorized officer of the Borrowers;
(b) Filings, Registrations, Recordings and Searches. Each document (including,
without limitation, any UCC financing statement) required by this
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Agreement, any related agreement or under law or reasonably requested by
the Agent to be filed, registered or recorded in order to create, in favor
of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction
in which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee,
tax or expense relating thereto. The Agent shall also have received UCC,
tax and judgment lien searches with respect to each Loan Party in such
jurisdictions as the Agent shall require, and the results of such searches
shall be satisfactory to the Agent;
(c) Corporate Proceedings of Loan Parties. Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors (or equivalent authority) of each Loan
Party authorizing (i) the execution, delivery and performance of this
Agreement and the Other Documents, the Notes, and any related
agreements, (collectively the "Documents") and (ii) the granting and/or
continuation, without interruption or break in continuity, by each Loan
Party of the security interests in and liens upon the Collateral in
each case certified by the Secretary or an Assistant Secretary of each
Loan Party as of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Loan Parties. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Loan
Party, dated the Closing Date, as to the incumbency and signature of
the officers of each Loan Party executing this Agreement, any
certificate or other documents to be delivered by it pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary;
(e) Certificates. Agent shall have received a copy of the Articles or
Certificate of Incorporation of each Loan Party, and all amendments
thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of
the By-Laws of each Loan Party and all agreements of each Loan Party's
shareholders certified as accurate and complete by the Secretary of
each Loan Party;
(f) Good Standing Certificates. Agent shall have received good standing
certificates for each Loan Party dated not more than thirty (30) days
prior to the Closing Date, issued by the Secretary of State or other
appropriate official of each Loan Party's jurisdiction of incorporation
and each jurisdiction where the conduct of each Loan Party's business
activities or the ownership of its properties necessitates
qualification;
(g) Legal Opinion. Agent shall have received the executed legal opinion of
Morrison, Cohen, Singer and ▇▇▇▇▇▇▇▇▇, LLP, in form and substance,
satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement and the Other Documents as
Agent may reasonably require and each Loan Party hereby authorizes and
directs such counsel to deliver such opinions to Agent and Lenders;
59
(h) No Litigation. (i) No litigation, investigation or proceeding before or
by any arbitrator or Governmental Body shall be continuing or
threatened against any Loan Party or against the officers or directors
of any Loan Party (A) in connection with this Agreement and/or the
Other Documents or any of the transactions contemplated thereby and
which, in the reasonable opinion of Agent, is deemed material or (B)
which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to any Loan Party or the
conduct of its business or inconsistent with the due consummation of
the transactions, under this Agreement, shall have been issued by any
Governmental Body;
(i) Financial Condition Certificates. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(i).
(j) Collateral Examination. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be
satisfactory in form and substance to Lenders, of the Receivables,
Inventory, General Intangibles, Investment Property, Leasehold
Interests and Equipment of each Loan Party and all books and records in
connection therewith;
(k) Fees. Agent shall have received all fees payable to Agent and Lenders
on or prior to the Closing Date pursuant to Article III;
(l) Intentionally Left Blank;
(m) Intentionally Left Blank;
(n) Intentionally Left Blank;
(o) Guaranties, Pledge Agreement(s), Other Documents. Agent shall have
received executed Guaranties, if any, and the Pledge Agreement(s) and
all Other Documents (including but not limited to all of the Subsidiary
Stock certificates with appropriately blankly endorsed stock powers and
regulation "G" certificates), each in form and substance satisfactory
to Lenders (except that Borrowers may deliver landlord, warehousemans
and contractor waivers within thirty (30) days after the Closing Date);
(p) Insurance. Agent shall have received in form and substance satisfactory
to Agent, (i) certified copies of Loan Parties' casualty and credit
insurance policies, together with loss payable endorsements on Agent's
standard form of loss payee endorsement naming Agent as loss payee, and
certified copies of Loan Parties' liability insurance policies,
together with endorsements naming Agent as a co-insured;
(q) Intentionally Left Blank
(r) Intentionally Left Blank.
(s) Payment Instructions. Agent shall have received written instructions
from Loan Parties directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
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(t) Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;
(u) Consents. Agent shall have received any and all Consents necessary to
permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such
Consents and waivers of such third parties as might assert claims with
respect to the Collateral, as Agent and its counsel shall deem
necessary;
(v) No Adverse Material Change. (i) since September 30, 2003, there shall
not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Lenders shall have been
proven to be inaccurate or misleading in any material respect;
(w) Intentionally Left Blank;
(x) Intentionally Left Blank;
(y) Intentionally Left Blank;
(z) Intentionally Left Blank;
(aa) Intentionally Left Blank;
(bb) Closing Certificate. Agent shall have received a closing certificate
signed by the Chief Financial Officer of each Loan Party, on behalf of
such Loan Party, dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and the
Other Documents are true and correct on and as of such date, (ii) Loan
Parties are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and
(iii) on such date no Default or Event of Default has occurred or is
continuing;
(cc) Borrowing Base. Agent shall have received a duly executed Borrowing
Base Certificate which shall indicate that the aggregate amount of
Eligible Receivables and Eligible Inventory is sufficient in value and
amount to support Advances in the amount requested by Borrowers on the
Closing Date;
(dd) Undrawn Availability. After giving effect to the outstanding Advances
hereunder, and fees, expenses due hereunder and other payables sixty
days or more past due, which are not being disputed in good faith,
Borrowers shall have Undrawn Availability of at least $5,000,000; and
(ee) Control Agreements. Agent shall have received control agreements with
respect to all Collateral in which a security interest may be perfected
by means of control under the UCC.
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(ff) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
under this Agreement shall be satisfactory in form and substance to
Agent, Lenders and their counsel.
(gg) Fleet Payout. Simultaneously, with the making of the initial Advances,
the Advances of Fleet Bank, to the Borrower under the Existing
Agreement, outstanding as of such date, shall be paid off.
8.2. Conditions to Each Advance.
The agreement of Lenders to make any Advance requested to be
made on any date (including, without limitation, the initial Advance), is
subject to the satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to this Agreement and
any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document
or financial or other statement furnished at any time under or in
connection with this Agreement or any related agreement shall be true
and correct in all material respects on and as of such date as if made
on and as of such date;
(b) No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that
Lenders, in their sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and
that any Advances so made shall not be deemed a waiver of any such
Event of Default or Default;
(c) Maximum Revolving Advances. In the case of any Revolving Advances
requested to be made, after giving effect thereto, the aggregate
Revolving Advances shall not exceed the maximum amount of Revolving
Advances permitted under Section 2.1; and
(d) Maximum Letters of Credit. In the case of any Letters of Credit
requested to be made, after giving effect thereto, the aggregate face
amount and reimbursement obligations outstanding in respect of Letters
of Credit shall not exceed the Letter of Credit Sublimit.
Each request for an Advance by the Borrowers hereunder shall constitute a
representation and warranty by the Borrowers as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
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8.3. Intentionally Left Blank.
IX. INFORMATION AS TO BORROWERS.
Each Loan Party shall, until satisfaction in full of the Obligations
and the termination of this Agreement:
9.1. Disclosure of Material Matters.
Immediately upon learning thereof, report to Agent all matters
materially affecting the value, enforceability or collectibility of any
portion of the Collateral including, without limitation, any Loan
Party's reclamation or repossession of, or the return to any Loan Party
of, a material amount of goods or claims or disputes asserted by any
Customer or other obligor.
9.2. Schedules.
(a) Deliver to Agent, on the date before each Settlement Date of each Week and
on the day of each Advance (or more frequently if required by Agent), a
Borrowing Base Certificate (which shall be calculated as of the last day of the
immediately preceding Week and which shall not be binding upon Agent or
restrictive of Agent's rights under this Agreement).
(b) Deliver to Agent on or before the twentieth (20th) day of each month as and
for the prior month (a) accounts receivable agings, (b) accounts payable agings,
and (c) Inventory reports. In addition, each Loan Party shall deliver to Agent
at such intervals as Agent may require: (i) confirmatory assignment schedules,
(ii) copies of Customer's invoices, (iii) evidence of shipment or delivery, and
(iv) such further schedules, documents and/or information regarding the
Collateral as Agent may require including, without limitation, trial balances
and test verifications. Agent shall have the right to confirm and verify all
Receivables and Inventory by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to protect its
interests hereunder.
(c) The items to be provided under Sections 9.2(a) and 9.2(b) are to be in form
satisfactory to Agent and executed by each Loan Party and delivered to Agent
from time to time solely for Agent's convenience in maintaining records of the
Collateral, and any Loan Party's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
9.3. Environmental Reports.
Furnish Agent, concurrently with the delivery of the financial
statements referred to in Sections 9.7 and 9.8, with a certificate signed by the
President of each Loan Party stating, to the best of his knowledge, that each
Loan Party is in compliance in all material respects with all federal, state and
local laws relating to environmental protection and control and occupational
safety and health. To the extent any Loan Party is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action Loan Party will implement in order to
achieve full compliance.
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9.4. Litigation.
Promptly notify Agent in writing of any litigation, suit or
administrative proceeding affecting any Loan Party, whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which in any
such case could reasonably be expected to have a Material Adverse Effect.
9.5. Material Occurrences.
Promptly notify Agent in writing upon the occurrence of (a)
any Event of Default or Default; (b) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of any Loan Party as of
the date of such statements; (c) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject any Loan Party
to a tax imposed by Section 4971 of the Code; (d) each and every default by any
Loan Party which might result in the acceleration of the maturity of any
indebtedness in excess of $100,000 for borrowed money, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such indebtedness; and (e) any other development
in the business or affairs of any Loan Party which could reasonably be expected
to have a Material Adverse Effect; in each case describing the nature thereof
and the action Loan Parties propose to take with respect thereto.
9.6. Government Receivables.
Notify Agent immediately if any of its Receivables arise out
of contracts between any Loan Party and the United States, any state, or any
department, agency or instrumentality of any of them.
9.7. Annual Financial Statements.
Furnish Agent within ninety (90) days after the end of each
fiscal year of Loan Parties, financial statements of Loan Parties on a
consolidating and consolidated basis including, but not limited to, statements
of income and stockholders' equity and cash flow from the beginning of the
current fiscal year to the end of such fiscal year and the balance sheet as at
the end of such fiscal year, all prepared in accordance with GAAP applied on a
basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm
selected by Loan Parties and satisfactory to Agent (the "Accountants"). The
report of the Accountants shall be accompanied by a statement of the Accountants
certifying that (i) they have caused the Loan Agreement to be reviewed, (ii) in
making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing,
and such report shall contain or have appended thereto calculations which set
forth Loan Parties' compliance with the requirements or restrictions imposed by
Sections 6.9, 7.6, 7.8 and 7.11. In addition, the reports shall be accompanied
by a certificate of each Loan Party's Chief Financial
64
Officer which shall state that, based on an examination sufficient to permit him
to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Loan
Parties with respect to such event, and such certificate shall have appended
thereto calculations which set forth Loan Parties' compliance with the
requirements or restrictions imposed by Sections 6.9, 7.6, 7.8 and 7.11.
9.8. Quarterly Financial Statements.
Furnish Agent within forty-five (45) days after the end of
each fiscal quarter, an unaudited balance sheet of Loan Parties on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Loan Parties reflecting results of
operations from the beginning of the fiscal year to the end of such quarter and
for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring
year end adjustments that individually and in the aggregate are not material to
the business of Loan Parties. Each such balance sheet, statement of income and
stockholders' equity and statement of cash flow shall set forth a comparison of
the figures for (w) the current fiscal period and (x) the current year-to-date
with the figures for (y) the same fiscal period and year-to-date period of the
immediately preceding fiscal year and (z) the projections for such fiscal period
and year-to-date period delivered pursuant to Section 5.5(a) or Section 9.12, as
applicable. The financial statements shall be accompanied by a certificate
signed by the Chief Financial Officer of each Loan Party, which shall state
that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Loan Parties with respect
to such default and, such certificate shall have appended thereto calculations
which set forth Loan Parties' compliance with the requirements or restrictions
imposed by Sections 6.9, 7.6, 7.8 and 7.11.
9.9. Monthly Financial Statements.
Furnish Agent within thirty (30) days after the end of each
month (other than the last month of each fiscal quarter and the last month of
each fiscal year), an unaudited balance sheet of Loan Parties on a consolidated
and consolidating basis and unaudited statements of income and stockholders'
equity and cash flow (with respect to cash flow only not prepared on the basis
of GAAP) of Loan Parties on a consolidated and consolidating basis reflecting
results of operations from the beginning of the fiscal year to the end of such
month and for such month, prepared on a basis consistent with prior practices
and complete and correct in all material respects, subject to normal and
recurring year end adjustments that individually and in the aggregate are not
material to the business of Loan Parties. Each such balance sheet, statement of
income and stockholders' equity and statement of cash flow shall set forth a
comparison of the figures for (w) the current fiscal period and (x) the current
year-to-date with the figures for (y) the same fiscal period and year-to-date
period of the immediately preceding fiscal year and (z) the projections for such
fiscal period and year-to-date period delivered pursuant to Section 5.5(a) or
Section 9.12, as applicable. The financial statements shall be accompanied by a
certificate of each Loan Party's Chief Financial Officer, which shall state
that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing
65
and the steps being taken by Loan Parties with respect to such event and, such
certificate shall have appended thereto calculations which set forth Loan
Parties' compliance with the requirements or restrictions imposed by Sections
6.9, 7.6, 7.8 and 7.11.
9.10. Other Reports.
Furnish Agent as soon as available, but in any event within
ten (10) days after the issuance thereof, with copies of such financial
statements, reports and returns as each Loan Party shall send to its
stockholders.
9.11. Additional Information.
Furnish Agent with such additional information as Agent shall
reasonably request in order to enable Agent to determine whether the terms,
covenants, provisions and conditions of this Agreement and the Note(s) have been
complied with by Loan Parties including, without limitation and without the
necessity of any request by Agent, (a) copies of all environmental audits and
reviews, (b) at least thirty (30) days prior thereto, notice of any Loan Party's
opening of any new office or place of business or any Loan Party's closing of
any existing office or place of business, and (c) promptly upon any Loan Party's
learning thereof, notice of any labor dispute to which any Loan Party may become
a party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which any Loan Party is
a party or by which any Loan Party is bound.
9.12. Projected Operating Budget.
Furnish Agent, no later than thirty (30) days after the
beginning of each Loan Party's fiscal years commencing with fiscal year 2005, a
month by month projected operating budget and cash flow of Loan Parties on a
consolidated and consolidating basis for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a certificate signed
by the President or Chief Financial Officer of each Loan Party to the effect
that such projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial statements and that
such officer has no reason to question the reasonableness of any material
assumptions on which such projections were prepared.
9.13. Variances From Operating Budget.
Furnish Agent, concurrently with the delivery of the financial
statements referred to in Section 9.7 and each monthly report, a written report
summarizing all material variances from budgets submitted by Loan Parties
pursuant to Section 9.12 and a discussion and analysis by management with
respect to such variances.
9.14. Notice of Suits, Adverse Events.
Furnish Agent with prompt notice of (i) any lapse or other
termination of any Consent issued to any Loan Party by any Governmental Body or
any other Person that is material to the operation of any Loan Party's business,
(ii) any refusal by any Governmental Body or any other Person to renew or extend
any such Consent; and (iii) copies of any periodic or special reports filed by
any Loan Party with any Governmental Body or Person, if such reports indicate
any material change in the business, operations, affairs or condition of any
Loan Party, or if copies thereof are requested by Agent or any Lender, and (iv)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to any Loan Party.
66
9.15. ERISA Notices and Requests.
Furnish Agent with immediate written notice in the event that
(i) any Loan Party or any member of the Controlled Group knows or has reason to
know that a Termination Event has occurred, together with a written statement
describing such Termination Event and the action, if any, which such Loan Party
or member of the Controlled Group has taken, is taking, or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Loan
Party or any member of the Controlled Group knows or has reason to know that a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred together with a written statement describing such transaction
and the action which such Loan Party or any member of the Controlled Group has
taken, is taking or proposes to take with respect thereto, (iii) a funding
waiver request has been filed with respect to any Plan together with all
communications received by any Loan Party or any member of the Controlled Group
with respect to such request, (iv) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions
to any Plan to which any Loan Party or any member of the Controlled Group was
not previously contributing shall occur, (v) any Loan Party or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (vi) any Loan Party or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Loan
Party or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice;
(viii) any Loan Party or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; (ix) any Loan Party
or any member of the Controlled Group knows that (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.16. Additional Documents.
Execute and deliver to Agent, upon request, such documents and
agreements as Agent may, from time to time, reasonably request to carry out the
purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. Failure by any Loan Party to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or by notice of intention to
prepay, or by required prepayment or failure to pay any other
liabilities or make any other payment, fee or charge provided for
herein when due or in any Other Document;
67
10.2. (i) Failure by Loan Parties to perform, keep or observe any provision
of Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.10, 4.11, 4.15(h), 6.9, 6.10,
Article VII or (ii) any representation or warranty made or deemed made
by any Loan Party in this Agreement or any related agreement or in any
certificate, document or financial or other statement furnished at any
time in connection herewith or therewith shall prove to have been
misleading in any material respect on the date when made or deemed to
have been made;
10.3. Failure by any Loan Party to (i) furnish financial information when due
or when requested which is unremedied for a period of ten (10) days, or
(ii) permit the inspection of its books or records;
10.4. Issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Loan Party's property
which is not stayed or lifted within thirty (30) days;
10.5. Failure or neglect of any Loan Party to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in
any Other Document, now or hereafter entered into between any Loan
Party, Agent and/or any Lender (to the extent such breach is not
otherwise embodied in any other provision of this Article X for which a
different grace or cure period is specified or which constitute an
immediate Event of Default under this Agreement or the Other
Documents), which is not cured within five (5) Business Days after the
occurrence of such Event of Default;
10.6. Any judgment or judgments are rendered or judgment liens filed against
one or more Loan Parties for an aggregate amount in excess of $150,000
(provided Borrowers have established adequate reserves to pay such
judgment liens under $150,000) which within thirty (30) days of such
rendering or filing is not either satisfied, stayed or discharged of
record;
10.7. Any Loan Party shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of creditors, (iii) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (iv)
be adjudicated a bankrupt or insolvent, (v) file a petition seeking to
take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within forty (45) days,
any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting
any of the foregoing;
10.8. Any Loan Party shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its
present business;
10.9.Any Subsidiary of any Loan Party shall (i) apply for, consent to or suffer
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (ii) admit in writing its inability, or
be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated
a bankrupt or insolvent, (vi) file a petition seeking to take advantage of
any other law providing for the relief of debtors, (vii) acquiesce to, or
fail to have dismissed, within fifteen (15) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
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10.10. Any change in any Loan Party's condition or affairs (financial or
otherwise) which in Agent's Reasonable Discretion has a Material
Adverse Effect;
10.11. Any Lien created hereunder or provided for hereby or under any Other
Document for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. Intentionally Left Blank;
10.13. A default of the obligations of any Loan Party under any other
agreement to which it is a party shall occur which materially and
adversely affects its condition, affairs or prospects (financial or
otherwise) which default is not cured within any applicable grace
period;
10.14. Termination or breach of any Guaranty or similar agreement executed and
delivered to Agent in connection with the Obligations of any Loan
Party, or if any Guarantor attempts to terminate, challenges the
validity of, or its liability under, any such Guaranty or similar
agreement;
10.15. Any Change of Control shall occur;
10.16. Any material provision of this Agreement shall, for any reason, cease
to be valid and binding on any Loan Party, or any Loan Party shall so
claim in writing to Agent;
10.17. (i) Any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any material license, permit, patent trademark or
tradename of any Loan Party, or (B) commence proceedings to suspend,
revoke, terminate or adversely modify any such material license, permit,
trademark, tradename or patent and such proceedings shall not be dismissed
or discharged within sixty (60) days, or (c) schedule or conduct a hearing
on the renewal of any material license, permit, trademark, tradename or
patent necessary for the continuation of any Loan Party's business and the
staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement
which is necessary or material to the operation of any Loan Party's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such
revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse
Effect;
10.18. Any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Loan Party or the title and rights of any
Loan Party or any Original Owner which is the owner of any material
portion of the Collateral shall have become the subject matter of
litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by
this Agreement or the Other Documents;
10.19. Intentionally Left Blank;
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10.20. An event or condition specified in Section 7.16 or Section 9.15 shall
occur or exist with respect to any Plan and, as a result of such event
or condition, together with all other such events or conditions, any
Loan Party or any member of the Controlled Group shall incur, or in the
opinion of Agent be reasonably likely to incur, a liability to a Plan
or the PBGC (or both) which, in the reasonable judgment of Agent, would
have a Material Adverse Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies.
Upon the occurrence of (i) an Event of Default pursuant to
Section 10.7, all Obligations shall be immediately due and payable and this
Agreement and the obligation of Lenders to make Advances shall be deemed
terminated; and, (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured), at the option of
Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
any Loan Party in any involuntary case under any state or federal bankruptcy
laws, the obligation of Lenders to make Advances hereunder shall be terminated
other than as may be required by an appropriate order of the bankruptcy court
having jurisdiction over any Loan Party. Upon the occurrence of any Event of
Default, Agent shall have the right to exercise any and all other rights and
remedies provided for herein, under the UCC and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process. Agent may enter any Loan Party's premises or
other premises without legal process and without incurring liability to any Loan
Party therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Loan Parties to
make the Collateral available to Agent at a convenient place. With or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Loan Parties reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Loan Parties at least five (5) days
prior to such sale or sales is reasonable notification. At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or any
other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by each Loan Party. Agent may specifically disclaim any warranties of title or
the like at any sale of Collateral. In connection with the exercise of the
foregoing remedies, Agent is granted permission to use all of each Loan Party's
trademarks, trade styles, trade names, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with (a)
Inventory for the purpose of disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods.
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11.2. Application of Proceeds.
The proceeds realized from the sale of any Collateral shall be
applied as follows: first, to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Agent and each of the Lenders, for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second, to interest due upon any of the Obligations; third, to fees
payable in connection with this Agreement; fourth, to furnish to Agent cash
collateral in an amount not less than 105% of the aggregate undrawn amount of
all Letters of Credit, such cash collateral arrangements to be in form and
substance satisfactory to Agent; and, fifth, to the principal of the
Obligations. If any deficiency shall arise, Loan Parties shall remain liable to
Agent and Lenders therefor. If it is determined by an authority of competent
jurisdiction that a disposition by Agent did not occur in a commercially
reasonably manner, Agent may obtain a deficiency judgment for the difference
between the amount of the Obligation and the amount that a commercially
reasonable sale would have yielded. Agent will not be considered to have offered
to retain the Collateral in satisfaction of the Obligations unless Agent has
entered into a written agreement with Loan Party to that effect.
11.3. Agent's Discretion.
Agent shall have the right in its sole discretion to determine
which rights, Liens, security interests or remedies Agent may at any time
pursue, relinquish, subordinate, or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Agent's or Lenders' rights hereunder.
11.4. Setoff.
In addition to any other rights which Agent, any Lender or any
Issuer may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent, such Lender and such Issuer shall have a right to apply any
Loan Party's property held by Agent, such Lender or such Issuer to reduce the
Obligations.
11.5. Rights and Remedies not Exclusive.
The enumeration of the foregoing rights and remedies is not
intended to be exhaustive and the exercise of any right or remedy shall not
preclude the exercise of any other right or remedies provided for herein or
otherwise provided by law, all of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
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12.1. Waiver of Notice.
Each Loan Party hereby waives notice of non-payment, demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.
12.2. Delay.
No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. Jury Waiver.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term.
This Agreement, which shall inure to the benefit of and shall
be binding upon the respective successors and permitted assigns of each Loan
Party, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until the earliest of (x) December 31,
2006 (the "Original Term"), (y) the acceleration of all Obligations pursuant to
the terms of this Agreement or (z) the date on which this Agreement shall be
terminated in accordance with the provisions hereof or by operation of law (the
"Termination Date"). Loan Parties may terminate this Agreement at any time upon
thirty (30) days' prior written notice upon payment in full of the Obligations.
In the event the Obligations are prepaid in full prior to the last day of the
Term (the date of such prepayment hereinafter referred to as the "Early
Termination Date"), Loan Parties shall pay to Agent for the benefit of Lenders
an early termination fee (the "Early Termination Fee(s)") in an amount equal to
(x) two (2.0%) percent of the Maximum Loan Amount if the Early Termination Date
occurs on or after the Closing Date but prior to and including the date
immediately preceding the first anniversary of the Closing Date, (y) one (1.0%)
percent of the Maximum Loan Amount if the Early Termination Date occurs on or
after the first anniversary of the Closing Date but prior to and including the
date immediately preceding the second anniversary of the Closing Date and (z)
one (1.0%) percent of the Maximum Loan Amount if the Early Termination Date
occurs on or after the second anniversary of the Closing Date but prior to the
thirtieth day prior to the third anniversary of the Closing Date.
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13.2. Termination.
The termination of the Agreement shall not affect any Loan
Party's, Agent's or any Lender's rights, or any of the Obligations having their
inception prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into,
rights or interests created or Obligations have been fully disposed of,
concluded or liquidated. The security interests, Liens and rights granted to
Agent and Lenders hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrowers' Account may from time to time be
temporarily in a zero or credit position, until all Commitments of the Lenders
under this Agreement have been terminated and until all of the Obligations of
each Loan Party have been paid or performed in full after the termination of
this Agreement or each Loan Party has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, each Loan Party waives any rights which it may have under Section
9-513 of the UCC to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such termination
statements to each Loan Party, or to file them with any filing office, unless
and until this Agreement shall have been terminated in accordance with its terms
and all Obligations (other than contingent indemnification Obligations which
shall be due any payable when due according to the terms of this Agreement) paid
in full in immediately available funds. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until all Obligations are paid or performed in full.
XIV. AGENT AND CO-AGENT.
14.1. Appointment.
Each Lender hereby designates GMACCF to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Sections
3.4), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
without limitation, collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
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14.2. Nature of Duties.
Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Other Documents. None of Agent,
any Lender, or any Issuer nor any of their respective officers, directors,
employees, attorneys or agents shall be (i) liable for any action taken or
omitted by them as such hereunder or in connection herewith, unless caused by
their gross (not mere) negligence or willful misconduct, or (ii) responsible in
any manner for any recitals, statements, representations or warranties made by
any Loan Party or any officer thereof contained in this Agreement, or in any of
the Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any of the Other Documents or for any failure of Loan Party to perform its
obligations hereunder. Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any of the Other
Documents, or to inspect the properties, books or records of any Loan Party. The
duties of Agent as respects the Advances shall be mechanical and administrative
in nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.
14.3. Lack of Reliance on Agent and Resignation.
(a) Independently and without reliance upon Agent, any Issuer or any other
Lender, each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Loan Party in
connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of each Loan Party. Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before making of the Advances or at any time or times
thereafter except as shall be provided by any Loan Party pursuant to the terms
hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or value
of, or the perfection or priority of any lien or any security interests or the
security interests created or purported to be created under or in connection
with this Agreement or any Other Documents or the Ancillary Agreements or any
other instrument or document furnished pursuant thereto or the Existing
Agreement or of the financial condition of any Loan Party, or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Note(s), the Other
Documents or the financial condition of any Loan Party, or the existence of any
Event of Default or any Default, whether hereunder or under the Existing
Agreement or the Ancillary Agreements.
(b) Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrowers and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Loan Parties. If no such
successor Agent is appointed at the end of such sixty (60) day period, Agent may
designate one of the Lenders as a successor Agent.
(c) Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term "Agent" shall mean such successor agent effective upon its
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appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
14.4. Certain Rights of Agent.
If Agent shall request instructions from Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any Other Document, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, Lenders
shall not have any right of action whatsoever against Agent as a result of its
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders.
14.5. Reliance.
Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or entity, and, with respect to all
legal matters pertaining to this Agreement and the Other Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.
14.6. Notice of Default.
Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Other
Documents, unless Agent has received notice from a Lender or a Loan Party
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of
Default (including, without limitation, the institution of the Default Rate
pursuant to Section 3.1 hereof) as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default (including, without limitation, the institution of the Default Rate
pursuant to Section 3.1 hereof) as it shall deem advisable in the best interests
of Lenders.
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14.7. Indemnification.
To the extent Agent is not reimbursed and indemnified by Loan
Parties, each Lender will reimburse and indemnify Agent and each Issuer, upon
demand, in proportion to its respective portion of the Advances (or, if no
Advances are outstanding, according to its Commitment Percentage), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
and such Issuer in performing its duties hereunder, or in any way relating to or
arising out of this Agreement or any Other Document; provided that, Lenders
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the indemnified party's gross (not mere) negligence or willful
misconduct. Without limiting the forgoing, each Lender shall reimburse the
Agent, upon demand, for its pro rata share of any reasonable and documented
costs or out of pocket expenses (including legal fees) incurred by the Agent in
connection with the preparation, execution, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of or
legal advice in respect of rights or responsibility under this Agreement, any
Other Documents, any Ancillary Agreements, the Existing Agreement, any document
contemplated by or referred to herein, to the extent that the Agent is entitled
to reimbursement by, but is not reimbursed for such expenses by or on behalf of
any Loan Party. The Agreement in this Section 14.7 shall survive the payment of
all Obligations, Termination Date and the resignation or replacement of the
Agent.
14.8. Agent in its Individual Capacity.
With respect to the obligation of Agent to lend under this
Agreement, the Advances made by it shall have the same rights and powers
hereunder as any other Lender and as if it were not performing the duties as
Agent specified herein; and the term "Lender" or any similar term shall, unless
the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender. Agent may engage in business with any Loan Party as if it
were not performing the duties specified herein, and may accept fees and other
consideration from any Loan Party for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
14.9. Delivery of Documents.
To the extent Agent receives documents and information from
any Loan Party pursuant to Sections 9.7, 9.8 and 9.9, Agent will promptly
furnish such documents and information to Lenders.
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14.10. Loan Parties' Undertaking to Agent.
Without prejudice to their respective obligations to Lenders
under the other provisions of this Agreement, each Loan Party hereby undertakes
with Agent to pay to Agent from time to time on demand all amounts from time to
time due and payable by it for the account of Agent or Lenders or any of them
pursuant to this Agreement to the extent not already paid.
14.11 Co-Agent.
PNC Bank, National Association shall not have any additional
duties under or in respect of this Agreement or any Other Document by virtue of
having the title of Co-Agent. PNC Bank, National Association, as Co-Agent,
assumes no responsibility or obligation for the servicing, enforcement or
collection of any Obligations, nor any duties as Agent for Lenders. Its sole
obligation shall be those obligations in its capacity as a Lender. The title
"Co-Agent" implies no fiduciary responsibility on the part of the Co-Agent to
the Agent, the Issuer or the Lenders.
XV. GUARANTEE.
15.1. Guaranty.
Each Guarantor hereby unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, the due and punctual performance of all Obligations.
Each payment made by any Guarantor pursuant to this Guarantee shall be made in
lawful money of the United States in immediately available funds.
15.2. Waivers.
Each Guarantor hereby absolutely, unconditionally and
irrevocably waives (i) promptness, diligence, notice of acceptance, notice of
presentment of payment and any other notice hereunder, (ii) demand of payment,
protest, notice of dishonor or nonpayment, notice of the present and future
amount of the Obligations and any other notice with respect to the Obligations,
(iii) any requirement that the Agent or any Lender protect, secure, perfect or
insure any security interest or Lien or any property subject thereto or exhaust
any right or take any action against any other Loan Party, or any Person or any
Collateral, (iv) any other action, event or precondition to the enforcement
hereof or the performance by each such Guarantor of the Obligations, and (v) any
defense arising by any lack of capacity or authority or any other defense of any
Loan Party or any notice, demand or defense by reason of cessation from any
cause of Obligations other than payment and performance in full of the
Obligations by the Loan Parties and any defense that any other guarantee or
security was or was to be obtained by Agent.
15.3. No Defense.
No invalidity, irregularity, voidableness, voidness or
unenforceability of this Agreement or any Other Document or any other agreement
or instrument relating thereto, or of all or any part of the Obligations or of
any collateral security therefor shall affect, impair or be a defense hereunder.
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15.4. Guaranty of Payment.
The Guaranty hereunder is one of payment and performance, not
collection, and the obligations of each Guarantor hereunder are independent of
the Obligations of the other Loan Parties, and a separate action or actions may
be brought and prosecuted against any Guarantor to enforce the terms and
conditions of this Article XV, irrespective of whether any action is brought
against any other Loan Party or other Persons or whether any other Loan Party or
other Persons are joined in any such action or actions. Each Guarantor waives
any right to require that any resort be had by Agent or any Lender to any
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of any Agent or any Lender in favor of any Loan
Party or any other Person. No election to proceed in one form of action or
proceedings, or against any Person, or on any Obligations, shall constitute a
waiver of Agent's right to proceed in any other form of action or proceeding or
against any other Person unless Agent has expressed any such right in writing.
Without limiting the generality of the foregoing, no action or proceeding by
Agent against any Loan Party under any document evidencing or securing
indebtedness of any Loan Party to Agent shall diminish the liability of any
Guarantor hereunder, except to the extent Agent receives actual payment on
account of Obligations by such action or proceeding, notwithstanding the effect
of any such election, action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party.
15.5. Liabilities Absolute.
The liability of each Guarantor hereunder shall be absolute,
unlimited and unconditional and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any claim, defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of any other Obligation or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
shall not be discharged or impaired, released, limited or otherwise affected by:
(i) any change in the manner, place or terms of payment or performance,
and/or any change or extension of the time of payment or performance
of, release, renewal or alteration of, or any new agreements relating
to any Obligation, any security therefor, or any liability incurred
directly or indirectly in respect thereof, or any rescission of, or
amendment, waiver or other modification of, or any consent to departure
from, this Agreement or any Other Document, including any increase in
the Obligations resulting from the extension of additional credit to
the Borrowers or otherwise;
(ii) any sale, exchange, release, surrender, loss, abandonment, realization
upon any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, all or any of the Obligations, and/or
any offset there against, or failure to perfect, or continue the
perfection of, any Lien in any such property, or delay in the
perfection of any such Lien, or any amendment or waiver of or consent
to departure from any other guaranty for all or any of the Obligations;
(iii) the failure of the Agent or any Lender to assert any claim or demand or
to enforce any right or remedy against the Borrowers or any other Loan
Party or any other Person under the provisions of this Agreement or any
Other Document or any other document or instrument executed an
delivered in connection herewith or therewith;
(iv) any settlement or compromise of any Obligation, any security therefor
or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and any subordination of
the payment of all or any part thereof to the payment of any obligation
(whether due or not) of any Loan Party to creditors of any Loan Party
other than any other Loan Party;
(v) any manner of application of Collateral, or proceeds thereof, to all or
any of the Obligations, or any manner of sale or other disposition of
any Collateral for all or any of the Obligations or any other assets of
any Loan Party; and
(vi) any other agreements or circumstance of any nature whatsoever that may
or might in any manner or to any extent vary the risk of any Guarantor,
or that might otherwise at law or in equity constitute a defense
available to, or a discharge of, the Guaranty hereunder and/or the
obligations of any Guarantor, or a defense to, or discharge of, any
Loan Party or any other Person or party hereto or the Obligations or
otherwise with respect to the Advances, Letters of Credit or other
financial accommodations to the Borrowers pursuant to this Agreement
and/or the Other Documents.
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15.6. Waiver of Notice.
The Agent shall have the right to do any of the above without
notice to or the consent of any Guarantor and each Guarantor expressly waives
any right to notice of, consent to, knowledge of and participation in any
agreements relating to any of the above or any other present or future event
relating to Obligations whether under this Agreement or otherwise or any right
to challenge or question any of the above and waives any defenses of such
Guarantor which might arise as a result of such actions.
15.7. Agent's Discretion.
Agent may at any time and from time to time (whether prior to
or after the revocation or termination of this Agreement) without the consent
of, or notice to, any Guarantor, and without incurring responsibility to any
Guarantor or impairing or releasing the Obligations, apply any sums by
whomsoever paid or howsoever realized to any Obligations regardless of what
Obligations remain unpaid.
15.8. Reinstatement.
(a) The Guaranty provisions herein contained shall continue to be effective or
be reinstated, as the case may be, if claim is ever made upon the Agent or any
Lender for repayment or recovery of any amount or amounts received by such
Person in payment or on account of any of the Obligations and such Person repays
all or part of said amount for any reason whatsoever, including, without
limitation, by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over such Person or the respective
property of each, or any settlement or compromise of any claim effected by such
Person with any such claimant (including any Loan Party); and in such event each
Guarantor hereby agrees that any such judgment, decree, order, settlement or
compromise or other circumstances shall be binding upon such Guarantor,
notwithstanding any revocation hereof or the cancellation of any note or other
instrument evidencing any Obligation, and each Guarantor shall be and remain
liable to the Agent and/or Lenders for the amount so repaid or recovered to the
same extent as if such amount had never originally been received by such
Person(s).
(b) Agent shall not be required to marshal any assets in favor of any Guarantor,
or against or in payment of Obligations.
(c) No Guarantor shall be entitled to claim against any present or future
security held by Agent from any Person for Obligations in priority to or equally
with any claim of Agent, or assert any claim for any liability of any Loan Party
to any Guarantor in priority to or equally with claims of Agent for Obligations,
and no Guarantor shall be entitled to compete with Agent with respect to, or to
advance any equal or prior claim to any security held by Agent for Obligations.
(d) If any Loan Party makes any payment to Agent, which payment is wholly or
partly subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to any Person under any federal or provincial
statute or at common law or under equitable principles, then to the extent of
such payment, the Obligation intended to be paid shall be revived and continued
in full force and effect as if the payment had not been made, and the resulting
revived Obligation shall continue to be guaranteed, uninterrupted, by each
Guarantor hereunder.
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(e) All present and future monies payable by any Loan Party to any Guarantor,
whether arising out of a right of subrogation or otherwise, are assigned to
Agent for its benefit and for the ratable benefit of Lenders as security for
such Guarantor's liability to Agent and Lenders hereunder and are postponed and
subordinated to Agent's prior right to payment in full of Obligations. Except to
the extent prohibited otherwise by this Agreement, all monies received by any
Guarantor from any Loan Party shall be held by such Guarantor as agent and
trustee for Agent. This assignment, postponement and subordination shall only
terminate when the Obligations are paid in full in cash and this Agreement is
irrevocably terminated.
(f) Each Loan Party acknowledges this assignment, postponement and subordination
and, except as otherwise set forth herein, agrees to make no payments to any
Guarantor without the prior written consent of Agent. Each Loan Party agrees to
give full effect to the provisions hereof.
15.9. Action Upon Event of Default.
Upon the occurrence and during the continuance of any Event of
Default, the Agent may and upon written request of the Required Lenders shall,
without notice to or demand upon any Loan Party or any other Person, declare any
obligations of such Guarantor hereunder immediately due and payable, and shall
be entitled to enforce the obligations of each Guarantor. Upon such declaration
by the Agent, the Agent and Lenders are hereby authorized at any time and from
time to time to set off and apply any and all deposits (general or special, time
or demand, provisions or final) at any time held and other indebtedness at any
time owing by the Agent or Lenders to or for the credit or the account of any
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing hereunder, whether or not the Agent or Lenders shall have
made any demand hereunder against any other Loan Party and although such
obligations may be contingent and unmatured. The rights of the Agent and Lenders
hereunder are in addition to other rights and remedies (including other rights
of set-off) which the Agent and Lenders may have. Upon such declaration by the
Agent, with respect to any claims (other than those claims referred to in the
immediately preceding paragraph) of any Guarantor against any Loan Party (the
"Claims"), the Agent shall have the full right on the part of the Agent in its
own name or in the name of such Guarantor to collect and enforce such Claims by
legal action, proof of debt in bankruptcy or other liquidation proceedings, vote
in any proceeding for the arrangement of debts at any time proposed, or
otherwise, the Agent and each of its officers being hereby irrevocably
constituted attorneys-in-fact for each Guarantor for the purpose of such
enforcement and for the purpose of endorsing in the name of each Guarantor any
instrument for the payment of money. Each Guarantor will receive as trustee for
the Agent and will pay to the Agent forthwith upon receipt thereof any amounts
which such Guarantor may receive from any Loan Party on account of the Claims.
Each Guarantor agrees that at no time hereafter will any of the Claims be
represented by any notes, other negotiable instruments or writings, except and
in such event they shall either be made payable to the Agent, or if payable to
any Guarantor, shall forthwith be endorsed by such Guarantor to the Agent. Each
Guarantor agrees that no payment on account of the Claims or any security
interest therein shall be created, received, accepted or retained during the
continuance of any Event of Default nor shall any financing statement be filed
with respect thereto by any Guarantor.
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15.10. Statute of Limitations.
Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by any Loan Party or others
(including any Lenders) with respect to any of the Obligations shall, if the
statute of limitations in favor of any Guarantor against the Agent or Lenders
shall have commenced to run, toll the running of such statute of limitations
and, if the period of such statute of limitations shall have expired, prevent
the operation of such statute of limitations.
15.11. Interest.
All amounts due, owing and unpaid from time to time by any
Guarantor hereunder shall bear interest at the interest rate per annum then
chargeable with respect to Domestic Rate Loans constituting Revolving Advances.
15.12. Guarantor's Investigation.
Each Guarantor acknowledges receipt of a copy of each of this
Agreement and the Other Documents. Each Guarantor has made an independent
investigation of the Loan Parties and of the financial condition of the Loan
Parties. Neither Agent nor any Lender has made and neither Agent nor any Lender
does make any representations or warranties as to the income, expense,
operation, finances or any other matter or thing affecting any Loan Party nor
has Agent or any Lender made any representations or warranties as to the amount
or nature of the Obligations of any Loan Party to which this Article XV applies
as specifically herein set forth, nor has Agent or any Lender or any officer,
agent or employee of Agent or any Lender or any representative thereof, made any
other oral representations, agreements or commitments of any kind or nature, and
each Guarantor hereby expressly acknowledges that no such representations or
warranties have been made and such Guarantor expressly disclaims reliance on any
such representations or warranties.
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15.13. Termination.
The provisions of this Article XV shall remain in effect until
the indefeasible payment in full in cash of all Obligations and irrevocable
termination of this Agreement.
XVI. MISCELLANEOUS.
16.1. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Loan Party with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Loan Party accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Loan Party hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowers at their addresses set forth in Section
16.6 and service so made shall be deemed completed five (5) days after the same
shall have been so deposited in the mails of the United States of America, or,
at the Agent's and/or any Lender's option, by service upon Borrowers which each
Loan Party irrevocably appoints as such Loan Party's Agent for the purpose of
accepting service within the State of New York. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall limit the right
of Agent or any Lender to bring proceedings against any Loan Party in the courts
of any other jurisdiction. Each Loan Party waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. Any
judicial proceeding by any Loan Party against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the City of New York, State of New
York.
16.2. Entire Understanding; Amendments.
(a) This Agreement and the documents executed concurrently herewith contain
the entire understanding between each Loan Party, Agent and each Lender
and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made
shall have no force and effect unless in writing, signed by each Loan
Party's, Agent's and each Lender's respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other
than by an agreement in writing, signed by the party to be charged.
Each Loan Party acknowledges that it has been advised by counsel in
connection with the execution of this Agreement and Other Documents and
is not relying upon oral representations or statements inconsistent
with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the Required
Lenders, and Loan Parties may, subject to the provisions of this
Section 16.2(b), from time to time enter into written supplemental
agreements to this Agreement or the Other Documents executed by Loan
Parties, for the purpose of adding or deleting any provisions or
otherwise changing, varying or waiving in any manner the rights of
Lenders, Agent or Loan Parties thereunder or the conditions, provisions
or terms thereof or waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however,
that no such supplemental agreement shall, without the consent of all
Lenders:
(i) increase the Commitment Percentage of any Lender;
(ii) increase the Maximum Loan Amount, the Maximum Revolving Advance Amount,
or the Maximum Term Loan Amount;
(iii) extend the maturity of any Note or the due date for any amount payable
hereunder, or decrease the rate of interest or reduce any scheduled
principal payment or fee payable by Borrowers to Lenders pursuant to
this Agreement;
(iv) alter the definition of the term Required Lenders or alter, amend or
modify this Section 16.2(b);
(v) release any Collateral during any calendar year (other than in
accordance with the provisions of this Agreement) having an aggregate
value in excess of $50,000;
(vi) change the rights and duties of Agent, provided however, any such
change shall also require the specific consent of the Agent;
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(vii) permit any Revolving Advance to be made if after giving effect thereto
the total of Revolving Advances outstanding hereunder would exceed the
Formula Amount for more than sixty (60) consecutive Business Days or
exceed the Formula Amount by ten (10%) percent; or
(viii) increase the Advance Rates above the Advance Rates in effect on the
Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Loan Parties, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Loan Parties, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
(c) In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such report, such Lender shall be deemed not
to have consented to the matter that was the subject of the request.
(d) In the event Agent involuntarily permits the outstanding Revolving Advances
to exceed the Formula Amount, Agent shall decrease such excess in as expeditious
a manner as is practicable under the circumstances and not inconsistent with the
reason for such excess. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.
Involuntary overadvances shall be overadvances that may result, from time to
time, due to the fact that the Formula Amount was unintentionally exceeded for
any reason, including but not limited to, Collateral previously deemed to be
either "Eligible Receivables" or "Eligible Inventory", as applicable, becomes
ineligible, collections of Receivables applied to reduce outstanding Advances
are thereafter returned for insufficient funds or overadvances are made to
protect or preserve the Collateral.
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16.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of Loan
Parties, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that no Loan Party may assign or
transfer any of its rights or obligations under this Agreement.
(b) Each Loan Party acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Participant"),
provided however, that each Lender, selling a participation shall (i) remain
solely responsible to the other parties hereto for the performance and
Obligations of such Lender (including but not limited to the Commitments of such
Lender hereunder), (ii) such Lender shall remain the holder of any Note for
Purposes of this Agreement, (iii) the Loan Parties, the Agent (the Issuer) and
other Lenders shall continue to deal solely and directly with such Lender
granting the participation as described herein and the Agent and the Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lenders rights and obligations (including such Lender's Commitment
hereunder) under this Agreement and no Participant under any such Participation
Agreement shall have the right to approve any amendment or waiver provision of
this Agreement or any of the Other Documents or the Ancillary Agreements except
to the extent that such amendment, waiver or consent requires the consent of all
the Lenders under this Agreement. Any such Participation Agreement shall also
prohibit the further assignment or subparticipation of any participated amount
to any other party. Each Loan Party hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Participant as security for the Participant's
interest in the Advances.
(c) Any Lender may with the consent of Agent which shall not be unreasonably
withheld or delayed sell, assign or transfer all or any part of its rights under
this Agreement and the Other Documents to one or more additional banks or
financial institutions and one or more additional banks or financial
institutions may commit to make Advances hereunder (each a "Purchasing Lender"),
in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and
Agent and delivered to Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Loan Parties hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Loan Parties shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment Transfer
Supplement delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Advances owing to each Lender from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Loan Parties, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Loan Parties or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Loan Parties authorize each Lender to disclose to any Participant or
Purchasing Lender and any prospective Participant or Purchasing Lender any and
all financial information in such Lender's possession concerning Loan Parties
which has been delivered to such Lender by or on behalf of Loan Parties pursuant
to this Agreement or in connection with such Lender's credit evaluation of Loan
Parties.
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(f) Each Lender or Participant organized under the laws of a jurisdiction
outside the United States, and from time to time thereafter if either requested
by Borrowers or the Agent or upon the obsolescence or expiration of any
previously delivered form, shall provide the Agent and the Borrowers with (i)
two (2) original executed copies of a correct and completed Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that payments to such
Lender or Participant are not subject to United States federal withholding tax
under the Code because such payment is either effectively connected with the
conduct by such Lender or Participant of a trade or business in the United
States or totally exempt from United States federal withholding tax by reason of
the application of an income tax treaty to which the United States is a party or
such Lender is otherwise exempt, (ii) or to the extent permitted by law, as an
alternative to form 1001 or 4224, each such Lender or Participant may provide
the Borrowers and the Agent with two original executed copies of Internal
Revenue Service Form W-8, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is exempt from United States
federal withholding tax pursuant to Section 871(h) or 881(c) of the Code,
together with an annual certificate stating that such Lender or Participant is
not a "person" described in Section 871(h)(3) or 881(c)(3) of the Code and (iii)
a duly completed and executed Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor or other form establishing an exemption from
United States federal backup withholding tax. Each such Lender further agrees to
complete and deliver to Borrowers, upon its request, such other forms or other
documentation as may be appropriate to minimize any withholding tax on payments
pursuant to this Agreement under the laws of any other jurisdiction unless such
completion and delivery may in any event be disadvantageous for such Lender. For
purposes of this subsection (b), the term "United States" shall have the meaning
specified in Section 7701 of the Code.
(g) At the request of Agent from time to time both before and after the Closing
Date, the Loan Parties will assist Agent in the syndication of the credit
facility provided pursuant to this Agreement and the Other Documents. Such
assistance shall include, but not be limited to (i) prompt assistance in the
preparation of an information memorandum and the verification of the
completeness and accuracy of the information and the reasonableness of the
projections contained therein, (ii) preparation of offering materials and
financial projections by Loan Parties and their advisors, (iii) providing Agent
with all information reasonably deemed necessary by Agent to successfully
complete the syndication, (iv) confirmation as to the accuracy and completeness
of such offering materials and information and confirmation that management's
projections are based on assumptions believed by the Loan Parties to be
reasonable at the time made, and (v) participation of the Loan Parties' senior
management in meetings and conference calls with potential lenders at such times
and places as Agent may reasonably request. The information provided pursuant to
this paragraph shall be subject to the provisions of the confidentiality
provisions of Section 16.16 hereof.
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16.4. Application of Payments.
Agent shall have the continuing and exclusive right to apply
or reverse and re-apply any payment and any and all proceeds of Collateral to
any portion of the Obligations. To the extent that any Loan Party makes a
payment or Agent or any Lender receives any payment or proceeds of the
Collateral for any Loan Party's benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
16.5. Indemnity.
Each Loan Party shall indemnify Agent, each Issuer, each
Lender and each of their respective officers, directors, Affiliates, employees
and agents (including legal counsel) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Agent, such Issuer or any Lender in any litigation,
proceeding or investigation instituted or conducted by any governmental agency
or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent, any Issuer or any Lender
is a party thereto, except to the extent that any of the foregoing arises out of
the gross negligence or willful misconduct of the party being indemnified.
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16.6. Notice.
Any notice or request hereunder may be given to any Loan Party
or to Agent or any Lender at their respective addresses set forth below or at
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section 16.6. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, or (d) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:
(A) If to Agent or to
GMACCF as Lender: GMAC COMMERCIAL FINANCE, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ____________________
(B) If to Co-Agent or a Lender other than GMACCF, as specified on the
signature pages hereof.
(C) If to Borrowers
or any Loan Party: JACO ELECTRONICS, INC.
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Office
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: MORRISION ▇▇▇▇▇ SINGER & ▇▇▇▇▇▇▇▇▇,
LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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16.7. Survival.
The obligations of Loan Parties under Sections 2.2(g), 3.7,
3.9, 4.19(h), 14.7 and 16.5 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
16.8. Waiver of Subrogation.
Each Loan Party expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Loan Party may now or hereafter have against the other Loan
Parties or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Loan Parties' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.
16.9. Severability.
If any part of this Agreement is contrary to, prohibited by,
or deemed invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
16.10. Expenses.
(a) The Loan Parties agree to pay all reasonable
costs and expenses including, but not limited to, legal fees of the
Agent in connection with the preparation, execution, delivery,
administration, modification, amendment of or any consent or waiver
under this Agreement, the Other Documents, the Ancillary Agreements,
all due diligence, collateral review, consultant, search filings and
recording fees and expenses and all additional fees of legal counsel
with respect to advising the Agent as to its rights, responsibilities
or the perfection, protection or preservation of rights or interests
under this Agreement, the Other Documents and the Ancillary Agreements
with respect to negotiations with any Loan Party or any other creditors
of any other Loan Party; and
(b) Loan Parties also agree to pay all reasonable
attorneys' fees and disbursements incurred by Agent, Agent on behalf of
Lenders and Lenders (i) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (ii) in
connection with the entering into, modification, amendment,
administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and
instruments, or (iii) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on
any of the Collateral, whether through judicial proceedings or
otherwise, or (iv) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's
transactions with any Loan Party, or (v) in connection with any advice
given to Agent or any Lender with respect to its rights and obligations
under this Agreement and all related agreements; and
(c) Loan Parties also agree to pay (in addition to
all fees payable pursuant to Section 3.4 hereof) all reasonable fees
and disbursements incurred by Agent or Agent on behalf of Lenders in
connection with any appraisals of Inventory or other Collateral, field
examinations, collateral analysis or monitoring or other business
analysis conducted by outside consultants in connection with this
Agreement and all related agreements;
all expenses, as described in this Section 16.10, may be charged to Borrowers'
Account and shall be part of the Obligations
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16.11 Injunctive Relief.
Each Loan Party recognizes that, in the event any Loan Party
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy at law may prove to be inadequate relief to
Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.
16.12. Consequential Damages.
None of Agent, any Issuer, any Lender, nor any agent or
attorney for any of them, shall be liable to any Loan Party for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
16.13. Captions.
The captions at various places in this Agreement are intended
for convenience only and do not constitute and shall not be interpreted as part
of this Agreement.
16.14 Counterparts; Telecopied Signatures.
This Agreement may be executed in any number of and by
different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.
16.15 Construction.
------------
The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.
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16.16 Confidentiality; Sharing Information.
(a) Agent, each Lender and each Participant shall
hold all non-public information obtained by Agent,
such Lender or such Participant pursuant to the requirements of this Agreement
in accordance with Agent's, such Lender's and such Participant's customary
procedures for handling confidential information of this nature; provided,
however, Agent, each Lender and each Participant may disclose such confidential
information (i) to its examiners, affiliates, outside auditors, counsel and
other professional advisors, (ii) to Agent, any Lender or to any prospective
Participants and Purchasing Lenders, and (iii) as required or requested by any
Governmental Body or representative thereof or pursuant to legal process;
provided, further that (x) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Participant shall use reasonable
efforts prior to disclosure thereof, to notify the Borrowers of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Participant by such
Governmental Body) or (B) pursuant to legal process and (y) in no event shall
Agent, any Lender or any Participant be obligated to return any materials
furnished by any Loan Party other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
(b) Each Loan Party acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such Loan
Party or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Loan Party hereby authorizes each Lender to share any
information delivered to such Lender by such Loan Party and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such Subsidiary or Affiliate of such Lender,
it being understood that any such Subsidiary or Affiliate of any Lender
receiving such information shall be bound by the provision of this Section 0 as
if it were a Lender hereunder. Such authorization shall survive the repayment of
the Obligations and the termination of this Agreement.
16.17 Publicity.
---------
Each Loan Party hereby authorizes Agent to make appropriate
announcements of the financial arrangement entered into among Loan Parties,
Agent and Lenders, including, without limitation, announcements which are
commonly known as tombstones, in such publications and to such selected parties
as Agent shall in its sole and absolute discretion deem appropriate. In
addition, each Loan Party authorizes Agent to include Loan Party's name and logo
in select transaction profiles and client testimonials prepared by Agent for use
in publications, company brochures and other marketing materials of Agent.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]
[SIGNATURE PAGES FOLLOW.]
90
Each of the parties has signed this Agreement as of the day and year
first above written.
ATTEST: JACO ELECTRONICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Name:▇▇▇▇ ▇▇▇▇▇▇
------------------- Title:President
▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Secretary
[SEAL]
▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
ATTEST: NEXUS CUSTOM ELECTRONICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Name:▇▇▇▇ ▇▇▇▇▇▇
------------------- Title:President
▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Secretary
[SEAL]
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
ATTEST: INTERFACE ELECTRONICS CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Name:▇▇▇▇ ▇▇▇▇▇▇
------------------- Title:President
▇▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Secretary
[SEAL]
▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
ATTEST: JACO DE MEXICO, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ -------------------
------------------- Name:▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ Title:President
Assistant Secretary
[SEAL]
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇.,▇▇▇ ▇▇▇▇ ▇▇▇.,
▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
91
GMAC COMMERCIAL FINANCE LLC,
as a Lender and as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: 1st VP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Commitment: $25,000,000.
PNC BANK, NATIONAL ASSOCIATION,
as a Co-Agent and Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Commitment: $25,000,000.
92
STATE OF ___________ )
) ss.
COUNTY OF ___________ )
On this _____ day of ______________, _____, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
STATE OF ___________ )
) ss.
COUNTY OF ___________ )
On this _____ day of ______________, _____, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
STATE OF ___________ )
) ss.
COUNTY OF ___________ )
On this _____ day of ______________, _____, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of _______________________, the
corporation described in and which executed the foregoing instrument and that he
signed his name thereto by order of the board of directors of said corporation.
------------------------------
NOTARY PUBLIC
93
