EXHIBIT 10.49
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LOAN AND SECURITY AGREEMENT
Dated as of November 15, 1999
Among
GENERAL ELECTRIC CAPITAL CORPORATION
As Lender
and
NUTRITION FOR LIFE INTERNATIONAL, INC.
AC ACQUISITION COMPANY
(to be known as ASH CORP.)
BPI ACQUISITION COMPANY
(to be known as BACTOLAC PHARMACEUTICAL INC.)
NL ACQUISITION COMPANY
as Borrowers
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TABLE OF CONTENTS
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Recitals................................................................................ 2
Agreement............................................................................... 2
1. Amount and Terms of Credit......................................................... 2
1.1 Loans....................................................................... 2
1.2 Term and Prepayment......................................................... 3
1.3 Use of Proceeds............................................................. 3
1.4 Single Loan................................................................. 3
1.5 Interest.................................................................... 3
1.6 Cash Management System...................................................... 4
1.7 Fees........................................................................ 4
1.8 Receipt of Payments......................................................... 4
1.9 Application and Allocation of Payments...................................... 4
1.10 Accounting.................................................................. 5
1.11 Indemnity................................................................... 5
1.12 Borrowing Base; Reserves.................................................... 5
2. Conditions Precedent............................................................... 6
2.1 Conditions to the Initial Loans............................................. 6
2.2 Further Conditions to the Loans............................................. 7
3. Representations, warranties and affirmative covenants.............................. 7
3.1 Corporate Existence; Compliance with Law.................................... 8
3.2 Executive Offices; Corporate or Other Names; Conduct of Business............ 8
3.3 Corporate Power; Authorization; Enforceable Obligations..................... 8
3.4 Financial Statements and Projections; Books and Records..................... 8
3.5 Material Adverse Change..................................................... 9
3.6 Real Estate; Property....................................................... 9
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness... 9
3.8 Government Regulation. ..................................................... 9
3.9 Margin Regulations.......................................................... 10
3.10 Taxes; Charges.............................................................. 10
3.11 Payment of Obligations...................................................... 10
3.12 ERISA....................................................................... 10
3.13 Litigation.................................................................. 10
3.14 Intellectual Property....................................................... 11
3.15 Full Disclosure............................................................. 11
3.16 Hazardous Materials......................................................... 11
3.17 Insurance................................................................... 11
3.18 Deposit and Disbursement Accounts; Commodity and Security Accounts.......... 12
3.19 Accounts and Inventory...................................................... 12
3.20 Conduct of Business; Maintenance of Existence............................... 12
3.21 Further Assurances.......................................................... 12
3.22 Year 2000 Covenants......................................................... 13
3.23 Solvency.................................................................... 13
3.24 Common Enterprise; Benefit Received......................................... 13
3.25 Aggregate Borrowing Availability............................................ 13
3.26 Perpetual Inventory System.................................................. 13
4. Financial Matters; Reports.......................................................... 14
4.1 Reports and Notices......................................................... 14
4.2 Financial Covenants......................................................... 14
4.3 Other Reports and Information............................................... 14
5. Negative Covenants..................................................................... 15
6. Security Interest...................................................................... 17
6.1 Grant of Security Interest................................................... 17
6.2 Lender's Rights.............................................................. 18
6.3 Lender's Appointment as Attorney-in-Fact..................................... 19
6.4 Grant of License to Use Intellectual Property Collateral..................... 19
7. Events Of Default: Rights And Remedies................................................. 19
7.1 Events of Default............................................................ 19
7.2 Remedies..................................................................... 21
7.3 Waivers by Credit Parties.................................................... 22
7.4 Proceeds..................................................................... 22
8. Successors and Assigns................................................................. 23
9. Guarantor Waivers by Borrowers......................................................... 23
10. Miscellaneous......................................................................... 24
10.1 Complete Agreement; Modification of Agreement................................ 24
10.2 Expenses..................................................................... 24
10.3 No Waiver.................................................................... 24
10.4 Severability; Section Titles................................................. 25
10.5 Authorized Signature......................................................... 25
10.6 Notices...................................................................... 25
10.7 Counterparts................................................................. 25
10.8 Time of the Essence.......................................................... 25
10.9 GOVERNING LAW................................................................ 25
10.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL............................. 26
10.11 Press Releases............................................................... 26
10.12 Reinstatement................................................................ 26
11.1 Cross-Guaranty....................................................................... 27
11.1 Cross-Guaranty............................................................... 27
11.2 Waivers by Borrowers......................................................... 27
11.3 Benefit of Guaranty.......................................................... 27
11.4 Subordination of Subrogation, Etc............................................ 27
11.5 Election of Remedies......................................................... 28
11.6 Limitation................................................................... 28
11.7 Contribution with Respect to Guaranty Obligations............................ 28
11.8 Liability Cumulative......................................................... 29
11.9 Intercompany Subordination................................................... 29
ii
INDEX OF EXHIBITS AND SCHEDULES
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Schedule A - Definitions
Schedule B - Lender's and Borrowers' Addresses for Notices
Schedule C - Letters of Credit (Not Used)
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.10) - Taxes
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (3.18) - Commodity and Security Accounts
Disclosure Schedule (3.19) - Contracts (Offset Risk)
Disclosure Schedule (5(b)) - Indebtedness
Disclosure Schedule (5(e)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit C-1 - Inventory Rollforward and Reconciliation
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - Form of Term Note
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Landlord's Waiver and Consent
Exhibit M - Form of Opinion of Counsel to Borrower
Exhibit N - Form of Intercreditor Agreement (unsecured junior debt)
Exhibit O - Form of U.C.C. Schedule
Exhibit P - Form of Payment of Proceeds Letter
Exhibit Q - Form of Standard Payoff Letter
iii
GE Capital
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
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REVOLVING CREDIT LOAN
Maximum Amount: $12,000,000
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Term: 3 years
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Revolving Credit Rate: Index Rate plus .50%
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Letter of Credit Subfacility: n/a
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Borrowing Base: 85% of the value (as determined by Lender) of
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each Borrower's Eligible Accounts; provided,
that Lender shall reduce the foregoing
percentage by one percentage point for each
percentage point that the dilution of such
Borrower's Accounts (calculated by Lender as
the average dilution over the most recent
three months) exceeds 5%; plus the lesser of
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(i) 60% of the value of each Borrower's (or
49% in the case of BPI) Eligible Inventory or
(ii) 85% of the orderly liquidation value as
determined by Lender of each Borrower's
Eligible Inventory.
TERM LOAN
Original Principal Amount: $2,360,000
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Term: 3 years
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Amortization: Equal monthly principal installments of
------------ $11,479.17 until the date the Ash Corp.
Acquisition is closed, at which time the
monthly principle installment shall
thereafter increase to $49,166.70, payable on
the first day of each month, with payment of
all remaining principle then outstanding due
on the Commitment Termination Date.
Term Loan Rate: Index Rate plus .50%
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FEES
Closing Fee: $120,000
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Collateral Monitoring Fee: $10,000 per annum.
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Unused Line Fee: .25%
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Letter of Credit Fee: n/a
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Prepayment Fee: 3% in year one; 2% in year two; and 1% in
year three.
The Loans described generally here are established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
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LOAN AND SECURITY AGREEMENT, Page 1
This LOAN AND SECURITY AGREEMENT is dated as of November 15, 1999, and
agreed to by and among NUTRITION FOR LIFE INTERNATIONAL, INC., a Texas
corporation ("Leading Borrower"), NL ACQUISITION COMPANY, a Delaware corporation
( "NLAC"), AC ACQUISITION COMPANY, a Delaware corporation (to be known after
the Ash Corp. Acquisition as Ash Corp. and herein "ASH"), BPI ACQUISITION
COMPANY, a Delaware corporation (to be known after the Closing Date as Bactolac
Pharmaceutical Inc. and herein "BPI" and Leading Borrower, ASH, NLAC, and BPI
being collectively referred to as "Borrowers" and each a "Borrower"), any other
Credit Party executing this Agreement, and GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation ("Lender").
Recitals
A. Borrowers desire to obtain the Loans and other financial accommodations
from Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
B. Capitalized terms used herein shall have the meanings assigned to them
in Schedule A and, for purposes of this Agreement and the other Loan Documents,
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the rules of construction set forth in Schedule A shall govern. All Schedules,
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Attachments, Addenda and Exhibits (collectively, "Appendices") hereto, or
expressly identified to this Agreement, are incorporated herein by reference,
and taken together with this Agreement, constitute but a single agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. Amount and Terms of Credit
1.1 Loans.
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(a) Subject to the terms and conditions of this Agreement, from the
Closing Date and until the Commitment Termination Date (i) Lender agrees (A) to
make available advances (each, a "Revolving Credit Advance") and (B) to incur
Letter of Credit Obligations (if the Lender determines in its discretion to do
so, it having no commitment to incur Letter of Credit Obligations) in an
aggregate outstanding amount for any Borrower not to exceed the Borrowing
Availability of such Borrower, and (ii) any Borrower may at the request of
Leading Borrower as agent for such Borrower from time to time borrow, repay and
reborrow, and may request Lender to incur Letter of Credit Obligations, under
this Section 1.1; provided, however, that ASH shall not be entitled to request
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any advances under this Agreement until ASH has completed the Ash Corp.
Acquisition in a manner satisfactory to the Lender.
(b) Leading Borrower, as agent for each Borrower, shall request each
Revolving Credit Advance by written notice to Lender substantially in the form
of Exhibit A (each a "Notice of Revolving Credit Advance") given no later than
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12:00 P.M. (New York City time) on the Business Day of the proposed Revolving
Credit Advance. Lender shall be fully protected under this Agreement in relying
upon, and shall be entitled to rely upon, (i) any Notice of Revolving Credit
Advance believed by Lender to be genuine, and (ii) the assumption that the
Persons making electronic requests or executing and delivering a Notice of
Revolving Credit Advance were duly authorized, unless the responsible individual
acting thereon for Lender shall have actual knowledge to the contrary. As an
accommodation to Borrowers, Lender may permit telephonic or facsimile requests
for a Revolving Credit Advance and electronic or facsimile transmittal of
instructions, authorizations, agreements or reports to Lender by any Borrower.
Unless Borrowers specifically direct Lender in writing not to accept or act upon
telephonic, facsimile or electronic communications from any Borrower, Lender
shall have no liability to any Borrower for any loss or damage suffered by any
Borrower as a result of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically, by facsimile or electronically and purporting
to have been sent to Lender by any Borrower and Lender shall have no duty to
verify the origin of any such communication or the identity or authority of the
Person sending it. The Revolving Credit
LOAN AND SECURITY AGREEMENT, Page 2
Loan shall be evidenced by, and be repayable in accordance with the terms of,
the Revolving Credit Note and this Agreement
(c) In making any Loan hereunder Lender shall be entitled to rely upon
the most recent Borrowing Base Certificate delivered to Lender by such Borrower
and other information available to Lender. Lender shall be under no obligation
to make any further Revolving Credit Advance to any Borrower or incur any other
Obligation if any Borrower shall have failed to deliver a Borrowing Base
Certificate to Lender by the time specified in Section 4.1(b).
(d) Term Loan. Subject to the terms and conditions of this Agreement,
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Lender agrees to make the Term Loan to Borrowers in two advances, one on the
Closing Date in the original principal amount equal to Five Hundred Fifty-One
Thousand Dollars ($551,000) and the other to be made on the date of the closing
of the Ash Corp. Acquisition in the original principle amount of One Million
Eight Hundred and Nine Thousand Dollars ($1,809,000), provided that the Ash
Corp. Acquisition is closed in compliance with the terms of this Agreement. The
Term Loan shall be evidenced by, and be repayable in accordance with the terms
of, the Term Note and this Agreement.
(e) Letters of Credit. Notwithstanding anything to the contrary
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contained in this Agreement, including Schedule C, Lender shall have no
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obligations to incur Letter of Credit Obligations for the account of any
Borrower.
1.2 Term and Prepayment.
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(a) Upon the Commitment Termination Date the obligation of Lender to
make Revolving Credit Advances and extend other credit hereunder shall
immediately terminate and Borrowers shall pay to Lender in full, in cash: (i)
all outstanding Revolving Credit Advances and all accrued but unpaid interest
thereon; (ii) an amount sufficient to enable Lender to hold cash collateral as
specified in Schedule C; (iii) all principal and accrued but unpaid interest on
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the Term Loan; and (iv) all other non-contingent Obligations due to or incurred
by Lender.
(b) If the Revolving Credit Loan attributable to any Borrower shall at
any time exceed such Borrower's Borrowing Availability, then such Borrower shall
immediately repay the Revolving Credit Loan in the amount of such excess.
(c) Each Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to (i) terminate voluntarily Borrowers' right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations, (ii) prepay all or a portion
of the Term Loan, provided that any prepayment of less than all of the
outstanding balance of the Term Loan shall be applied to the remaining
installments of the Term Loan in the inverse order of their maturity, and (iii)
prepay all of the Obligations. The effective date of termination of the
Revolving Credit Loan and the Term Loan specified in such notice shall be the
Commitment Termination Date. If any Borrower exercises the right of termination
and prepayment, or if Lender's obligation to make Loans is terminated for any
reason prior to the Stated Expiry Date then in effect (including as a result of
the occurrence of a Default), Borrowers shall pay to Lender the applicable
Prepayment Fee.
1.3 Use of Proceeds. Borrowers shall use the proceeds of the Loans to
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finance the cash consideration paid in connection with the Acquisitions and for
working capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of any
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Borrower to Lender shall constitute one general obligation of such Borrower
secured by all of the Collateral.
1.5 Interest
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(a) Each Borrower shall pay interest to Lender on the aggregate
outstanding Revolving Credit Advances attributable to such Borrower at a
floating rate equal to the Index Rate plus fifty hundredths percent (.50%) per
annum (the "Revolving Credit Rate") and on the outstanding balance of the Term
Loan at a floating rate equal to the Index Rate plus fifty hundredths percent
(.50%) per annum (the "Term Loan Rate"). All computations
LOAN AND SECURITY AGREEMENT, Page 3
of interest, and all calculations of the Letter of Credit Fee, shall be made by
Lender on the basis of a three hundred and sixty (360) day year, in each case
for the actual number of days occurring in the period for which such interest or
fee is payable. Each determination by Lender of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error. In no event
will Lender charge interest at a rate that exceeds the highest rate of interest
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable.
(b) Interest shall be payable on the outstanding Revolving Credit
Advances and balance of the Term Loan (i) in arrears for the preceding calendar
month on the first day of each calendar month, (ii) on the Commitment
Termination Date, and (iii) if any interest accrues or remains payable after
the Commitment Termination Date, upon demand by Lender.
(c) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, the Revolving Credit Rate, the
Term Loan Rate and the Letter of Credit Fee shall automatically be increased by
two percentage points (2%) per annum (such increased rate, the "Default Rate"),
and all outstanding Obligations, including unpaid interest and Letter of Credit
Fees, shall continue to accrue interest from the date of such Event of Default
at the Default Rate applicable to such Obligations.
(d) If any interest or other payment (including Unused Line Fees,
Letter of Credit Fees and Collateral Monitoring Fees) to Lender under this
Agreement becomes due and payable on a day other than a Business Day, such
payment date shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such extension.
1.6 Cash Management System. On or prior to the Closing Date and until the
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Termination Date, each Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
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be made to or deposited in the blocked or lockbox accounts described in Schedule
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D in accordance with the terms thereof.
-
1.7 Fees. Each Borrower agrees to pay to Lender the Fees set forth in
----
Schedule E.
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1.8 Receipt of Payments. Each Borrower shall make each payment under this
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Agreement (not otherwise made pursuant to Section 1.9) without set-off,
counterclaim or deduction and free and clear of all Taxes not later than 11:00
A.M. (New York City time) on the day when due in lawful money of the United
States of America in immediately available funds to the Collection Account. If
any Borrower shall be required by law to deduct any Taxes from any payment to
Lender under any Loan Document, then the amount payable to Lender shall be
increased so that, after making all required deductions, Lender receives an
amount equal to that which it would have received had no such deductions been
made. For purposes of computing interest and Fees, all payments shall be deemed
received by Lender 1 Business Day following receipt of immediately available
funds in the Collection Account. For purposes of determining the Borrowing
Availability, payments shall be deemed received by Lender upon receipt of
immediately available funds in the Collection Account
1.9 Application and Allocation of Payments. Each Borrower irrevocably
--------------------------------------
agrees that Lender shall have the continuing and exclusive right to apply any
and all payments against the then due and payable Obligations in such order as
Lender may deem advisable. Lender is authorized to, and at its option may
(without prior notice or precondition and at any time or times), but shall not
be obligated to, make or cause to be made Revolving Credit Advances on behalf of
any Borrower for: (a) payment of all Fees, expenses, indemnities, charges,
costs, principal, interest, or other Obligations owing by such Borrower under
this Agreement or any of the other Loan Documents, (b) the payment, performance
or satisfaction of any of such Borrower's obligations with respect to
preservation of the Collateral or otherwise under this Agreement, or (c) any
premium in whole or in part required in respect of any of the policies of
insurance required by this Agreement, even if the making of any such Revolving
Credit Advance causes the outstanding balance of the Revolving Credit Loan
attributable to any Borrower to exceed such Borrower's Borrowing Availability,
and each Borrower agrees to repay immediately, in cash, any amount by which the
Revolving Credit Loan attributable to such Borrower exceeds its Borrowing
Availability.
1.10 Accounting. Lender is authorized to record on its books and records
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the date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the
LOAN AND SECURITY AGREEMENT, Page 4
accuracy of the information so recorded. Lender shall provide Borrowers on a
monthly basis a statement and accounting of such recordations but any failure on
the part of the Lender to keep any such recordation (or any errors therein) or
to send a statement thereof to any Borrower shall not in any manner affect the
obligation of any Borrower to repay (with applicable interest) the Loans made to
such Borrower under this Agreement. Except to the extent that any Borrower
shall, within 30 days after such statement and accounting is sent, notify Lender
in writing of any objection such Borrower may have thereto (stating with
particularity the basis for such objection), such statement and accounting shall
be deemed final, binding and conclusive upon such Borrower, absent manifest
error.
1.11 Indemnity. Each Borrower and each other Credit Party executing this
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Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities, Taxes and
legal costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Loan Documents (collectively,
"Indemnified Liabilities"), INCLUDING, WITHOUT LIMITATION, INDEMNIFIED
LIABILITIES ARISING FROM THE SOLE OR CONTRIBUTORY ORDINARY NEGLIGENCE OF THE
INDEMNIFIED PERSON BUT EXCLUDING any such Indemnified Liability is finally
determined by a court of competent jurisdiction to have resulted solely from
such Indemnified Person's gross negligence or willful misconduct. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY CREDIT PARTY, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER
OF ATTORNEY FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY
BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.12 Borrowing Base; Reserves. The Borrowing Base of each Borrower shall
------------------------
be determined by Lender (including the eligibility of Accounts and Inventory)
based on the most recent Borrowing Base Certificate delivered to Lender in
accordance with Section 4.1(b) and such other information available to Lender.
Without limiting any other rights and remedies of Lender hereunder or under the
other Loan Documents, the Revolving Credit Loan shall be subject to Lender's
continuing right to withhold from any Borrower's Borrowing Availability
reserves, and to increase and decrease such reserves from time to time, if and
to the extent that in Lender's good faith credit judgment such reserves are
necessary, including to protect Lender's interest in the Collateral or to
protect Lender against possible non-payment of Accounts for any reason by
Account Debtors or possible diminution of the value of any Collateral or
possible non-payment of any of the Obligations or for any Taxes or in respect of
any state of facts which could constitute a Default. Lender may, at its option,
implement reserves by designating as ineligible a sufficient amount of Accounts
or Inventory which would otherwise be Eligible Accounts or Eligible Inventory,
as the case may be, so as to reduce any Borrower's Borrowing Base by the amount
of the intended reserves.
2. Conditions Precedent
2.1 Conditions to the Initial Loans. Lender shall not be obligated to
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make any of the Loans or to perform any other action hereunder, until the
following conditions have been satisfied in a manner satisfactory to Lender in
its sole discretion, or waived in writing by Lender all on or before November
30, 1999:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
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LOAN AND SECURITY AGREEMENT, Page 5
(b) Lender shall have received evidence satisfactory to it that all
Liens, other than Permitted Encumbrances, upon any of the property of any
Borrower or any other Credit Party shall have been or will be terminated
immediately on the date the first Loan is made hereunder;
(c) Lender shall have received evidence satisfactory to it that each
Credit Party has obtained all consents and acknowledgments of all Persons and
Governmental Authorities whose consents or acknowledgments may be required prior
to the execution and delivery of this Agreement, the other Loan Documents or the
Closing Date Acquisition Documents (or pursuant to the terms here or thereof)
and the consummation of the transactions contemplated hereby and thereby and
that such consents or acknowledgments remain in full force and effect;
(d) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.17 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
(e) as of the Closing Date Net Borrowing Availability for all
Borrowers combined shall be not less than $1,500,000 after giving effect to the
initial Revolving Credit Advance and Letter of Credit Obligations (on a pro
forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales);
(f) Lender shall have received an opinion of counsel to the Borrowers
with respect to the Transaction Documents (excluding the Ash Corp. Acquisition
Documents) addressing the matters set forth on Exhibit M in form and substance
satisfactory to Lender;
(g) Lender shall have received evidence satisfactory to it that the
purchase price payable in connection with the Closing Date Acquisitions plus the
amount of assumed liabilities and aggregate fees and closing costs (including
those payable to Lender) shall not exceed $3,500,000;
(h) the Closing Date Acquisitions and the transfer of title to the
assets being acquired thereby free and clear of all Liens and encumbrances in
connection therewith except for Permitted Encumbrances and the documentation
relating thereto (including the Acquisition Documents) shall in form and
substance satisfactory to Lender;
(i) Lender shall have been provided evidence satisfactory to Lender
that the transactions contemplated by the Closing Date Acquisition Documents
will be consummated on the Closing Date in accordance with the Closing Date
Acquisition Documents;
(j) Lender shall have received in form and substance satisfactory to
it a pro forma consolidated and consolidating balance sheets of the Borrowers
which balance sheets shall give effect to the Closing Date Acquisitions and the
incurrence of the Obligations to be incurred on the Closing Date;
(k) Lender shall have received executed copies of each of the Closing
Date Acquisition Documents (including all exhibits, schedules, disclosure letter
and opinions referred to therein or delivered pursuant thereto), and any
landlords and any stockholders' agreement, voting trust agreement, stock
redemption agreement or any other agreement with shareholders of the Leading
Borrower in each case and in effect on the Closing Date in form and substance
satisfactory to Lender, certified by an authorized officer of the Leading
Borrower as true, correct and complete copies thereof;
(l) Lender shall have received a certificate from the chief financial
officer of the Leading Borrower certifying that (i) upon payment of the purchase
price, each Closing Date Acquisition shall have been consummated in accordance
with the Closing Date Acquisition Documents, (ii) the representations and
warranties of any Borrower in the Closing Date Acquisition Documents are true,
complete and correct in all material respects on and as of the Closing Date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date) and (iii) to the best knowledge of
the Borrowers, no Person or party to any Closing Date Acquisition Document is in
default in the performance or compliance with any of the material terms or
provisions of any Closing Date Acquisition Document; and
LOAN AND SECURITY AGREEMENT, Page 6
(m) Lender shall have received evidence satisfactory to it that on or
prior to the Closing Date Leading Borrower has issued its series A preferred
stock $.001 par value on terms satisfactory to Lender.
2.2 Further Conditions to the Loans. Lender shall not be obligated to
-------------------------------
fund any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect as of
such date, except to the extent that any such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;
or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
(d) after giving effect to such Loan the Revolving Credit Loan
attributable to any Borrower would exceed the Borrowing Availability of such
Borrower.
(e) any action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any Governmental
Authority to enjoin, restrain or prohibit, or to obtain damages in respect of,
or which is related to or arises out of, this Agreement, any other Loan Document
or any Acquisition Document or the consummation of any transaction contemplated
hereby or thereby and which, in Lender's sole judgment, would make it
inadvisable to consummate any transaction contemplated by this Agreement, any
other Loan Document or any Acquisition Document.
The request and acceptance by Leading Borrower, as agent for each Borrower, of
the proceeds of any Loan, and the request by Leading Borrower, as agent for each
Borrower, for the incurrence by Lender of any Letter of Credit Obligations, as
the case may be, shall be deemed to constitute, as of the date of such request
and the date of such acceptance, (i) a representation and warranty by each
Borrower that the conditions in Section 2.2 have been satisfied and (ii) a
restatement by each Borrower of each of the representations and warranties made
by such Borrower in any Loan Document and a reaffirmation by each Borrower of
the granting and continuance of Lender's Liens pursuant to the Loan Documents.
3. Representations, warranties and affirmative covenants
To induce Lender to enter into this Agreement and to make the Loans, each
Borrower and each other Credit Party executing this Agreement represent and
warrant to Lender (each of which representations and warranties shall survive
the execution and delivery of this Agreement), and promise to and agree with
Lender until the Termination Date and as of and after the Closing Date, after
giving effect to the Closing Date Acquisitions, and as of and after the date of
the closing of the Ash Corp. Acquisition, after giving effect to the Ash Corp.
Acquisition, as follows:
3.1 Corporate Existence; Compliance with Law. Each Corporate Credit
----------------------------------------
Party: (a) is, as of the Closing Date, and will continue to be (i) a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (b) has and will continue to have (i) the
requisite corporate power and authority and the legal right to execute, deliver
and perform its obligations under the Transaction Documents, and to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
LOAN AND SECURITY AGREEMENT, Page 7
powers, consents or approvals from or by all Persons or Governmental Authorities
having jurisdiction over such Corporate Credit Party which are necessary or
appropriate for the conduct of its business.
3.2 Executive Offices; Corporate or Other Names; Conduct of Business.
----------------------------------------------------------------
The jurisdiction in which each Corporate Credit Party is organized is correctly
set forth in the introduction to this Agreement. The location of each Corporate
Credit Party's chief executive office, corporate offices, warehouses, other
locations of Collateral and locations where records with respect to Collateral
are kept (including in each case the county of such locations) are as set forth
in Disclosure Schedule (3.2) and, except as set forth in such Disclosure
-------------------------
Schedule, such locations have not changed during the preceding twelve months.
As of the Closing Date, during the prior five years, except as set forth in
Disclosure Schedule (3.2) and except for the names of the Predecessor Companies,
-------------------------
no Corporate Credit Party has been known as or conducted business in any other
name (including trade names). No Corporate Credit Party shall change its (a)
name, (b) chief executive office, (c) corporate offices, (d) warehouses or other
Collateral locations, (e) location of its records concerning the Collateral, or
(f) jurisdiction of organization or acquire, lease or use any real estate after
the Closing Date without such Person, in each instance, giving thirty (30) days
prior written notice thereof to Lender and taking all actions deemed necessary
or appropriate by Lender to continuously protect and perfect Lender's Liens upon
the Collateral. No third party has possession or control of any Collateral
other than Inventory in transit and checks representing proceeds held by third
parties to facilitate collection.
3.3 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by each Credit Party of the Transaction
Documents to which it is a party, and the creation of all Liens provided for
herein and therein: (a) are and will continue to be within such Credit Party's
power and authority; (b) have been and will continue to be duly authorized by
all necessary or proper action; (c) are not and will not be in violation of any
Requirement of Law or Contractual Obligation of such Credit Party; (d) do not
and will not result in the creation or imposition of any Lien (other than
Permitted Encumbrances) upon any of the Collateral; and (e) do not and will not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(c) (all of which will have been
duly obtained, made or complied with on or before the Closing Date and shall be
in full force and effect on such date). As of the Closing Date, each
Transaction Document (excluding the Ash Corp. Acquisition Documents until the
closing of the Ash Corp. Acquisition) shall have been duly executed and
delivered on behalf of each Credit Party thereto, and each such Transaction
Document upon such execution and delivery shall be and will continue to be a
legal, valid and binding obligation of such Credit Party, enforceable against it
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally.
3.4 Financial Statements and Projections; Books and Records.
-------------------------------------------------------
(a) The Financial Statements delivered by each Borrower to Lender for
its and for each Predecessor Company's Fiscal Year and Fiscal Month most
recently ended prior to September 30, 1999, are true, correct and complete and
reflect fairly and accurately the financial condition of such Person as of the
date of each such Financial Statement in accordance with GAAP. The Projections
most recently delivered by each Borrower to Lender have been prepared in good
faith, with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such assumptions are disclosed in the Projections.
The pro forma balance sheets delivered under the terms of Section 2.1(j) were
prepared by Leading Borrower based on the unaudited balance sheets of the
Leading Borrower, NLAC and the Predecessor Companies dated June 30, 1999 and
were prepared in accordance with GAAP, with only such adjustments thereto as
would be required in accordance with GAAP.
(b) Each Borrower and each other Corporate Credit Party shall keep
adequate Books and Records with respect to the Collateral and its business
activities in which proper entries, reflecting all consolidated and
consolidating financial transactions, and payments and credits received on, and
all other dealings with, the Collateral, will be made in accordance with GAAP
and all Requirements of Law and on a basis consistent with the Financial
Statements.
3.5 Material Adverse Change. Between the date of each Borrower's and each
-----------------------
Predecessor Company's most recently audited Financial Statements delivered to
Lender and the Closing Date: (a) no Corporate Credit Party has incurred any
obligations, contingent or non-contingent liabilities, or liabilities for
Charges, long-term leases or unusual forward or long-term commitments which are
not reflected in the Projections delivered on the Closing Date
LOAN AND SECURITY AGREEMENT, Page 8
and which could, alone or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (b) there has been no material deviation from such
Projections; and (c) no events have occurred which alone or in the aggregate has
had or could reasonably be expected to have a Material Adverse Effect. No
Requirement of Law or Contractual Obligation of any Credit Party has or have had
or could reasonably be expected to have a Material Adverse Effect and no Credit
Party is in default, and to such Credit Party's knowledge no third party is in
default, under or with respect to any of its Contractual Obligations, which
alone or in the aggregate has had or could reasonably be expected to have a
Material Adverse Effect.
3.6 Real Estate; Property. The real estate listed in Disclosure
--------------------- ----------
Schedule (3.6) constitutes all of the real property owned, leased, or used by
--------------
each Corporate Credit Party in its business, and such Credit Party will not
execute any material agreement or contract in respect of such real estate after
the date of this Agreement without giving Lender prompt prior written notice
thereof. Each Corporate Credit Party holds and will continue to hold good and
marketable fee simple title to all of its owned real estate, and good and
marketable title to all of its other properties and assets, and valid and
insurable leasehold interests in all of its leases (both as lessor and lessee,
sublessee or assignee), and none of the properties and assets of any Corporate
Credit Party are or will be subject to any Liens, except Permitted Encumbrances.
With respect to each of the premises identified in Disclosure Schedule (3.2) on
-------------------------
or prior the Closing Date or the date required by Section 3.21, a bailee,
landlord or mortgagee agreement acceptable to Lender has been obtained.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
------------ ------------------------
Closing Date no Corporate Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and outstanding Stock of each Corporate Credit
Party (including all rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Corporate Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock) as of the Closing Date is
owned by each of the Stockholders (and in the amounts) set forth on Disclosure
----------
Schedule (3.7). As of the Closing Date, Disclosure Schedule (3.7) sets forth
------------- -------------------------
the authorized, issued, and outstanding capital stock, membership interests, or
other equity interests of each Borrower and each Subsidiary. All of the
outstanding capital stock of each Borrower and each Subsidiary has been validly
issued, is fully paid, and is nonassessable. Except as set forth in Disclosure
----------
Schedule (3.7), there are no outstanding subscriptions, options, warrants,
-------------
calls, or rights (including preemptive rights) to acquire, and no outstanding
securities or instruments convertible into, capital stock, membership interests
or other equity interests of any Borrower or any Subsidiary. All outstanding
Indebtedness of each Corporate Credit Party as of the Closing Date is described
in Disclosure Schedule (5(b)).
------------------------
3.8 Government Regulation. No Credit Party is subject to or regulated
---------------------
under the Investment Company Act of 1940, the Public Utility Holding Company Act
of 1935, the Federal Power Act or any other Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur Indebtedness,
pledge its assets, or to perform its obligations under the Transaction
Documents. The making of the Loans, the application of the proceeds and
repayment thereof, and the consummation of the transactions contemplated by the
Transaction Documents do not and will not violate any provision of any such
statute or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.9 Margin Regulations. No Corporate Credit 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
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Corporate Credit Party owns any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any Margin Stock
or for any other purpose which might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulation T, U or X of the Federal Reserve Board. No Corporate
Credit Party will take or permit to be taken any action which might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
3.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.10)
-------------- -------------------------
all tax returns, reports and statements required by any Governmental Authority
to be filed by Borrower or any other Credit Party have, as of the
LOAN AND SECURITY AGREEMENT, Page 9
Closing Date, been filed and will, until the Termination Date, be filed with the
appropriate Governmental Authority and no tax Lien has been filed against any
Credit Party or any Credit Party's property. Except as disclosed on Disclosure
----------
Schedule (3.10), proper and accurate amounts have been and will be withheld by
---------------
Borrower and each other Credit Party from their respective employees for all
periods in complete compliance with all Requirements of Law and such
withholdings have and will be timely paid to the appropriate Governmental
Authorities. Disclosure Schedule (3.10) sets forth as of the Closing Date those
--------------------------
taxable years for which any Credit Party's tax returns are currently being
audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Disclosure Schedule
-------------------
(3.10), no Credit Party has executed or filed with the IRS or any other
------
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements or
agreement extending the period of assessment of any Charges) or (b) to each
Credit Party's knowledge, as a transferee. As of the Closing Date, no Credit
Party has agreed or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise, which could
reasonably be expected to have a Material Adverse Effect. The matters disclosed
on Disclosure Schedule (3.10) are not expected to have a Material Adverse
--------------------------
Effect.
3.11 Payment of Obligations. Each Credit Party will pay, discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its Charges and other obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral is or could reasonably be expected to become subject to any Lien or
forfeiture or loss as a result of such contest.
3.12 ERISA. No ERISA Event has occurred or is reasonably expected to
-----
occur that, when taken together with all other existing ERISA Events, could
reasonably be expected to result in a liability of any Credit Party of more than
the Minimum Actionable Amount. The present value of all accumulated benefit
obligations of the Credit Parties under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent Financial Statements reflecting such amounts,
exceed the fair market value of the assets of such Plan by more than the Minimum
Actionable Amount, and the present value of all accumulated benefit obligations
of all underfunded Plans (based on the assumptions used for purposes of
Statement of Financial Account Standards No. 87) did not, as of the date of the
most recent Financial Statements reflecting such amounts, exceed the fair market
value of the assets of such underfunded Plans by more than the Minimum
Actionable Amount. No Credit Party or ERISA Affiliate has incurred or
reasonably expects to incur any Withdrawal Liability in excess of the Minimum
Actionable Amount.
3.13 Litigation. No Litigation is pending or, to the knowledge of any
----------
Credit Party, threatened by or against any Credit Party or against any Credit
Party's properties or revenues (a) with respect to any of the Transaction
Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect. Except as
set forth on Disclosure Schedule (3.13), as of the Closing Date there is no
-------------------------
Litigation pending or threatened against any Credit Party which seeks damages in
excess of $50,000 or injunctive relief or alleges criminal misconduct of any
Credit Party. Each Credit Party shall notify Lender promptly upon learning of
the existence, threat or commencement of any Litigation against any Credit
Party, any ERISA Affiliate or any Plan or any allegation of criminal misconduct
against any Credit Party. The matters disclosed on Disclosure Schedule (3.13)
--------------------------
are not expected to have a Material Adverse Effect.
3.14 Intellectual Property. As of the Closing Date, all material
---------------------
Intellectual Property owned or used by any Corporate Credit Party is listed,
together with application or registration numbers, where applicable, in
Disclosure Schedule (3.14). Each Corporate Credit Party owns, or is licensed to
-------------------------
use, all Intellectual Property necessary to conduct its business as currently
conducted except for such Intellectual Property the failure of which to own or
license could not reasonably be expected to have a Material Adverse Effect.
Each Corporate Credit Party will maintain the patenting and registration of all
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or other appropriate Governmental Authority and
each Corporate Credit Party will promptly patent or register, as the case may
be, all new Intellectual Property and notify Lender in writing five (5) Business
Days prior to filing any such new patent or registration.
LOAN AND SECURITY AGREEMENT, Page 10
3.15 Full Disclosure. No information contained in any Transaction
---------------
Document, the Financial Statements or any written statement furnished by or on
behalf of any Credit Party under any Transaction Document, or to induce Lender
to execute the Loan Documents, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.
3.16 Hazardous Materials. Except as set forth on Disclosure Schedule
------------------- -------------------
(3.16), as of the Closing Date, (a) each real property location owned, leased or
-----
occupied by each Corporate Credit Party (the "Real Property") is maintained free
of contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Credit Party's knowledge,
potential Environmental Liabilities, in excess of $50,000 in the aggregate, (c)
no notice has been received by any Corporate Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in any Corporate Credit Party
being identified as a "potentially responsible party" under CERCLA or analogous
state statutes; and (d) each Corporate Credit Party has provided to Lender
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Corporate Credit Party. Each Corporate Credit Party: (i)
shall comply in all material respects with all applicable Environmental Laws and
Environmental Permits; (ii) shall notify Lender in writing within seven days if
and when it becomes aware of any Release, on, at, in, under, above, to, from or
about any of its Real Property; and (iii) shall promptly forward to Lender a
copy of any order, notice, permit, application, or any communication or report
received by it or any other Credit Party in connection with any such Release.
The matters disclosed on Disclosure Schedule (3.16) are not expected to have a
--------------------------
Material Adverse Effect.
3.17 Insurance. As of the Closing Date, Disclosure Schedule (3.17)
--------- -------------------------
lists all insurance of any nature maintained for current occurrences by
Borrowers and each other Corporate Credit Party, as well as a summary of the
terms of such insurance. Each Corporate Credit Party shall deliver to Lender
certified copies and endorsements to all of its and those of its Subsidiaries
(a) "All Risk" and business interruption insurance policies naming Lender loss
payee, and (b) general liability and other liability policies naming Lender as
an additional insured. All policies of insurance on real and personal property
will contain an endorsement, in form and substance acceptable to Lender, showing
loss payable to Lender (Form 438 BFU or equivalent) and extra expense and
business interruption endorsements. Such endorsement, or an independent
instrument furnished to Lender, will provide that the insurance companies will
give Lender at least 30 days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
any Borrower or any other Person shall affect the right of Lender to recover
under such policy or policies of insurance in case of loss or damage. Each
Corporate Credit Party shall direct all present and future insurers under its
"All Risk" policies of insurance to pay all proceeds payable thereunder directly
to Lender. If any insurance proceeds are paid by check, draft or other
instrument payable to any Credit Party and Lender jointly, Lender may endorse
such Credit Party's name thereon and do such other things as Lender may deem
advisable to reduce the same to cash. Lender reserves the right at any time,
upon review of each Credit Party's risk profile, to require additional forms and
limits of insurance. Each Corporate Credit Party shall, on each anniversary of
the Closing Date and from time to time at Lender's request, deliver to Lender a
report by a reputable insurance broker, satisfactory to Lender, with respect to
such Person's insurance policies.
3.18 Deposit and Disbursement Accounts; Commodity and Security Accounts.
------------------------------------------------------------------
Attachment I to Schedule D lists all banks and other financial institutions at
----------
which any Borrower or any other Corporate Credit Party, maintains deposits
and/or other accounts, including the Disbursement Account, and such Attachment
correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number. No Corporate Credit Party will
establish any depository or other bank account of any kind with any financial
institution (other than the accounts set forth on Attachment 1 to Schedule D)
without Lender's prior written consent. Disclosure Schedule (3.18) correctly
--------------------------
identifies all commodity and securities accounts owned by any Corporate Credit
Party and the institutions holding such accounts. No Person has control over
any investment property of any Corporate Credit Party. No Corporate Credit
Party shall open any new commodity or security account without Lender's prior
written consent. Prior to the occurrence of a Default, a Corporate Credit Party
may make purchases and sales of investment property and financial assets in
accordance with the restrictions on investment set out in Section 5. After the
occurrence of a Default, no Corporate Credit Party shall be authorized to make
purchases and sales of the investment property or financial assets and each
Corporate Credit Party shall take such steps as Lender may reasonably request
LOAN AND SECURITY AGREEMENT, Page 11
to give Lender control over all investment property and financial assets. No
Corporate Credit Party will give any party other than Lender control over any
investment property or financial assets.
3.19 Accounts and Inventory. As of the date of each Borrowing Base
----------------------
Certificate delivered to Lender, each Account listed thereon as an Eligible
Account shall be an Eligible Account and all Inventory listed thereon as
Eligible Inventory shall be Eligible Inventory. No Borrower has made, nor will
any Borrower make, any agreement with any Account Debtor for any extension of
time for the payment of any Account, any compromise or settlement for less than
the full amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance for prompt
or early payment allowed by Borrower in the ordinary course of its business
consistent with historical practice and as previously disclosed to Lender in
writing. Disclosure Schedule (3.19) sets forth each contract of any Borrower
--------------------------
with any Account Debtor which gives such Account Debtor the right (under such
contract, under common law or otherwise) to offset any Accounts for such
Borrower's failure to perform under such contract and such Borrower has obtained
an offset waiver for each such contract in form and substance satisfactory to
Lender. With respect to the Accounts pledged as collateral pursuant to any Loan
Document (a) the amounts shown on all invoices, statements and reports which may
be delivered to the Lender with respect thereto are actually and absolutely
owing to the relevant Credit Party as indicated thereon and are not in any way
contingent; (b) no payments have been or shall be made thereon except payments
immediately delivered to the applicable Lock Box Accounts or the Lender as
required hereunder; and (c) to each Borrower's knowledge all Account Debtors
have the capacity to contract. Each Borrower shall notify Lender promptly of any
event or circumstance which to such Borrower's knowledge would cause Lender to
consider any then existing Account or Inventory as no longer constituting an
Eligible Account or Eligible Inventory, as the case may be.
3.20 Conduct of Business; Maintenance of Existence. Each Corporate
---------------------------------------------
Credit Party (a) shall conduct its business substantially as now conducted or as
otherwise permitted hereunder and preserve all of its rights, privileges and
franchises necessary and desirable in connection therewith, and (b) shall at all
times maintain, preserve and protect all of the Collateral and such Credit
Party's other property, used or useful in the conduct of its business and keep
the same in good repair, working order and condition (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices.
3.21 Further Assurances; Post Closing Agreements. At any time and from
-------------------------------------------
time to time, upon the written request of Lender and at the sole expense of
Borrowers, Borrowers and each other Credit Party shall promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as Lender may reasonably deem desirable (a) to obtain the full
benefits of this Agreement and the other Transaction Documents, (b) to protect,
preserve and maintain Lender's rights in the Collateral, or any of it, and under
this Agreement, subject to Section 6.1(b), or (c) to enable Lender to exercise
--------------
all or any of the rights and powers herein granted. Additionally, Borrowers and
each other Credit Party agree that they shall cause to be delivered within 30
days of Closing Date: (s) any documentation that Lender may require from
Leading Borrower demonstrating that Leading Borrower's umbrella insurance policy
has been extended to provide coverage of at least Ten Million Dollars
($10,000,000) to BPI and NLAC individually, to the extent that such parties' own
coverage fails to meet that amount, or that such coverage has otherwise been
obtained; (t) the Stock of QBI Acquisition Company, and UNC Acquisition Company
and any documents that the Lender may require to show that QBI Acquisition
Company and UNC Acquisition Company, both subsidiaries of NLAC, are duly
organized, validly existing, and in good standing under the laws of their
respective jurisdictions of incorporation.; (u) any documents that Lender may
require from Leading Borrower that shows that it is a corporation authorized to
do business and in good standing under the laws of the State of Alaska, (v)
certified copies of all insurance policies required to be delivered under
Section 3.17 of this Agreement which have not been delivered as of the Closing
------------
Date, (w) any landlord agreements required to be delivered under Section 3.6 of
-----------
this Agreement which have not been delivered as of the Closing Date, (x) except
as otherwise provided for in this Agreement, any documents that Lender may
require from Leading Borrower proving that each of its Subsidiaries organized
under the laws of a jurisdiction outside the United States of America is a
Person duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, (y) control agreements
relating to the Leading Borrower's Xxxxx Cash and the Borrowers' Disbursement
Accounts disclosed on and as required by Schedule D and (z) the Stock of all
----------
Subsidiaries organized under the Laws of a jurisdiction outside the United
States of America, subject to the exclusions in Section 6.1(b).
--------------
LOAN AND SECURITY AGREEMENT, Page 12
3.22 Year 2000 Covenants. Each Corporate Credit Party has eliminated all
-------------------
Year 2000 Problems, except where the failure to correct the same could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.
3.23 Solvency. Each Borrower and each other Credit Party both
--------
individually and on a consolidated basis: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its liabilities
(including contingent liabilities) and (ii) greater than the amount that will be
required to pay probable liabilities of then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to it; (b) has capital that is not unreasonably small
in relation to its business as presently conducted; and (c) does not intend to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
3.24 Common Enterprise; Benefit Received. Each Borrower is a member of an
-----------------------------------
affiliated group and the Borrowers are collectively engaged in a common
enterprise with one another. Each Borrower will receive reasonably equivalent
value in exchange for the obligations incurred under the Loan Documents to which
each is a party. Each Borrower will derive substantial benefit from the credit
extended pursuant hereto in an amount at least equal to its obligations under
the Loan Documents to which it is a party.
3.25 Aggregate Borrowing Availability. The Borrowers agree to cause the
--------------------------------
aggregate amount of the Net Borrowing Availability of all Borrowers to be in an
amount not less than $500,000 at all times.
3.26 Perpetual Inventory System. The Borrowers agree to install a
--------------------------
perpetual inventory system at BPI as soon as possible after the Closing Date and
in any event on or before December 31, 1999.
4. Financial matters; Reports
4.1 Reports and Notices. Each Borrower represents, agrees and promises
-------------------
that from and after the Closing Date until the Termination Date, each Borrower
shall deliver to Lender:
(a) within 15 days following the end of each Fiscal Month, an aged
trial balance by Account Debtor and an Inventory Perpetual or Physical (as
requested by Lender) and as soon as available but in no event later than 30 days
following the end of each Fiscal Month, a reconciliation of the aged trial
balance and the Inventory Perpetual or Physical (as the case may be) to such
Borrower's general ledger and from the general ledger to the Financial
Statements for such Fiscal Month accompanied by supporting detail and
documentation as Lender may request;
(b) as frequently as Lender may request and in any event no later than
the second Business Day of each week, a Borrowing Base Certificate in the form
of Exhibit C as of the last day of the previous week detailing ineligible
---------
Accounts and Inventory for adjustment to the Borrowing Base, certified as true
and correct by the Chief Financial Officer of such Borrower or such other
officer as is acceptable to Lender;
(c) within 15 days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together with an accounts payable
---------
aging) and an Accounts Receivable Roll Forward Analysis in the Form of
Exhibit E, each certified as true and correct by the Chief Financial Officer
---------
of such Borrower or such other officer as is acceptable to Lender;
(d) within 45 days following the end of each Fiscal Month, the
Financial Statements for such Fiscal Month, which shall provide comparisons to
budget and actual results for the corresponding period during the prior Fiscal
Year, both on a monthly and year-to-date basis, and accompanied by a
certification in the form of Exhibit J by the Chief Executive Officer or Chief
---------
Financial Officer of such Borrower that such Financial Statements are complete
and correct, that there was no Default (or specifying those Defaults of which he
or she was aware), and showing in reasonable detail the calculations used in
determining compliance with the financial covenants hereunder;
LOAN AND SECURITY AGREEMENT, Page 13
(e) within 105 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by an
independent certified accounting firm acceptable to Lender, which shall provide
comparisons to the prior Fiscal Year, and shall be accompanied by (i) a
statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants hereunder, (ii) a report from such
Borrower's accountants to the effect that in connection with their audit
examination nothing has come to their attention to cause them to believe that a
Default has occurred or specifying those Defaults of which they are aware, and
(iii) any management letter that may be issued;
(f) not less than 30 days prior to the close of each Fiscal Year, the
Projections, which will be prepared by such Borrower in good faith, with care
and diligence, and using assumptions which are reasonable under the
circumstances at the time such Projections are delivered to Lender and disclosed
therein when delivered; and
(g) all the reports and other information set forth on Exhibit B in
---------
the time frames set forth therein.
4.2 Financial Covenants. Each Borrower shall not breach any of the
-------------------
financial covenants set forth in Schedule G.
----------
4.3 Other Reports and Information. Each Borrower shall advise Lender
-----------------------------
promptly, in reasonable detail, of: (a) any Lien, other than Permitted
Encumbrances, attaching to or asserted against any of the Collateral or any
occurrence causing a material loss or decline in value of any Collateral and the
estimated (or actual, if available) amount of such loss or decline; (b) any
material change in the composition of the Collateral; and (c) the occurrence of
any Default or other event which has had or could reasonably be expected to have
a Material Adverse Effect. Each Borrower shall, upon request of Lender, furnish
to Lender such other reports and information in connection with the affairs,
business, financial condition, operations, prospects or management of such
Borrower or any other Credit Party or the Collateral as Lender may request, all
in reasonable detail.
5. Negative Covenants
Each Borrower and each Credit Party executing this Agreement covenants and
agrees (for itself and each other Credit Party) that, without Lender's prior
written consent, from the Closing Date until the Termination Date, neither any
Borrower nor any other Corporate Credit Party shall, directly or indirectly, by
operation of law or otherwise:
(a) merge with (except for the mergers contemplated by the Closing
Date Acquisition Documents), consolidate with, acquire all or substantially all
of the assets or capital stock of, or otherwise combine with or make any
investment in or, except as provided in clause 5(c) below, loan or advance to,
any Person or form any Subsidiary; provided, however, that:
-------- -------
(i) any time before May 31, 2000, Leading Borrower may merge with
a newly created corporation created to facilitate a holding company
structure under which a new corporation ("Holding Co.") will own 100%
of Leading Borrower and the existing shareholders of Leading Borrower
will become shareholders of Holding Co. (the "Holding Co.
Restructure") if: (A) no Default exists at the time of, or will result
from, such transaction, (B) Holding Co. directly owns one-hundred
percent (100%) of the stock of Leading Borrower following the Holding
Co. Restructure, (C) Holding Co. becomes a Credit Party hereunder
(pursuant to such documentation as the Lender may require), pledging,
among other Collateral, all Stock in Leading Borrower to the Lender,
simultaneous with the closing of the Holding Co. Restructure, (D)
Holding Co. guarantees all Obligations pursuant to a guaranty to be in
form and substance acceptable to Lender, simultaneous with the closing
of the Holding Co. Restructure; and (E) Leading Borrower will be the
surviving Person;
LOAN AND SECURITY AGREEMENT, Page 14
(ii) Leading Borrower may create a Subsidiary organized under the
laws of Japan and may make an investment therein if: (A) no Default
exists at the time of, or will result from, such transaction, (B) the
aggregate amount of such investment in such Subsidiary shall not
exceed One Hundred Thousand Dollars ($100,000), and (C) Leading
Borrower delivers the Stock of such Subsidiary to the Lender as
collateral hereunder, simultaneous with the creation of such
Subsidiary (or 66% of such Stock if pledging 100% of such Stock would
impute a deemed dividend under Section 956 of the Internal Revenue
Code); and
(iii) A Borrower may make advances to another Borrower provided
that (A) the aggregate outstanding amount of such advances at any time
does not exceed Fifty Thousand Dollars ($50,000) in the aggregate for
all Borrowers, (B) no Default exists at the time such an advance is
made or would result therefrom (including, without limitation, any
Default arising as a result of the failure of the representations and
warranties in Section 3.23 relating to solvency not being true and
correct as of the date of and after giving effect to the advance), and
(C) any note executed to evidence such advances is delivered to the
Lender as Collateral hereunder on the date such note is executed;
(iv) Leading Borrower may acquire the assets of Nutrition for
Life International Philippines, Inc., a Philippines corporation, in
connection with the liquidation or dissolution of such Subsidiary; and
(v) ASH may acquire Ash Corp. through the merger of ASH with Ash
Corp., with ASH surviving and changing its name to Ash Corp., if: (A)
no Default exists at the time of, or will result from, such
transaction, (B) the Lender consents to the terms and provisions of
such transaction, and (C) all documentation that the Lender may
require related to such transaction has been delivered to Lender;
(b) cancel any debt owing to it or create, incur, assume or permit to
exist any Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing
as of the Closing Date set forth on Disclosure Schedule 5(b) and any refinancing
------------------------
of such Indebtedness as long as the principal amount of such Indebtedness is not
increased and the maturity date of such Indebtedness is not accelerated, (iii)
deferred taxes, (iv) by endorsement of instruments or items of payment for
deposit to the general account of such Credit Party, (v) for Guaranteed
Indebtedness incurred for the benefit of a Borrower if the primary obligation is
permitted by this Agreement; and (vi) additional Indebtedness (including
Purchase Money Indebtedness) incurred after the Closing Date in an aggregate
outstanding amount for all such Corporate Credit Parties combined not exceeding
$50,000;
(c) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) other than as permitted by Section 5(a) and other
than loans or advances to employees in the ordinary course of business in an
aggregate outstanding amount not exceeding $50,000;
(d) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date or amend its charter or by-laws or other organizational documents;
(e) create or permit any Lien on any of its properties or assets,
except for Permitted Encumbrances;
(f) sell, transfer, issue, convey, assign or otherwise dispose of any
of its assets or properties, including its Accounts or any shares of its Stock
or engage in any sale-leaseback, synthetic lease or similar transaction;
provided, however, that (i) the foregoing shall not prohibit the sale of
-------- -------
Inventory or obsolete or unnecessary Equipment in the ordinary course of its
business; (ii) if no Default under Section 2.1(k) exists at the time of or will
--------------
result from such
LOAN AND SECURITY AGREEMENT, Page 15
issuance of Stock, Leading Borrower, prior to the Holding Co. Restructure, and
Holding Co., after the Holding Co. Restructure, may issue Stock: (A) as required
under the outstanding warrants and options disclosed on Disclosures Schedule
--------------------
(3.18), (B) to the Sellers as required by the terms of the earnout agreements
------
executed in connection with the Acquisitions; provided, however, that no such
-------- -------
stock may be issued under the earnout agreements related to the Ash Corp.
Acquisition until the closing of such acquisition in compliance with the
limitations thereon set forth in this Agreement, (C) pursuant to future grants
of stock options under shareholder approved stock option plans and (D) in
connection with the conversion of Leading Borrower's Series A Preferred Stock to
common stock; (iii) if no Default exists at the time of or will result from such
transaction, Leading Borrower may liquidate its subsidiary, Nutrition for Life
International Philippines, Inc., a Philippines corporation; and (iv) the
Borrowers (other than the Leading Borrower) may issue Stock in connection with
the investments permitted by Section 5(a)(iii).
(g) change its jurisdiction of organizations, its name, chief
executive office, corporate offices, warehouses or other Collateral locations,
or location of its records concerning the Collateral, or acquire, lease or use
any real estate after the Closing Date without such Person, in each instance,
giving thirty (30) days prior written notice thereof to Lender and taking all
actions deemed necessary or appropriate by Lender to continuously protect and
perfect Lender's Liens upon the Collateral;
(h) establish any depository or other bank account of any kind with
any financial institution (other than the accounts set forth on Attachment 1 to
Schedule D) or establish any commodity or security account (other than such
amounts set forth on Disclosures Schedule (3.18)), in each case without Lender's
---------------------------
prior written consent; or
(i) make or permit any Restricted Payment; provided that Leading
-------------
Borrower may (A) declare and pay regularly scheduled dividends on account of its
Series A Preferred Stock; (B) make regularly scheduled payments of principal
and interest under the terms of the subordinated indebtedness owed to Xx. Xxxxxx
X. Xxxxx; and (C) may make payments to the Sellers as they become due under the
earnout agreements executed in connection with the Acquisitions; provided,
--------
however, that no such payment may be made pursuant to the earnout agreements
-------
related to the Ash Corp. Acquisition until the closing of such acquisition in
compliance with the limitations thereon set forth in this Agreement (any of the
foregoing clauses (A) through (C), herein a "Permitted Payment"); provided
---------------------- ----------------- --------
further, Permitted Payments may only be made if, with respect to each Permitted
-------
Payment, prior to and after giving pro forma effect thereto: (1) the Borrowers
shall be in compliance with the minimum Fixed Charge Coverage Ratio then
required under the terms of Section 4.2 and Schedule G but calculated (a) for
the Fiscal Quarter most recently ended as of the date of the Permitted Payment
and (b) by adding the Permitted Payment proposed to be made under the
permissions of this clause (i) to the amounts calculated under clause (b) of the
definition of Fixed Charge Coverage Ratio as if such payment had been made
during such period; (2) the average daily balances of the sum of Borrowers'
cash, cash equivalents and Net Borrowing Availability for the thirty (30) day
period prior to the date of the Permitted Payment and calculated as if the
Permitted Payment had occurred on the first (1st) day of such period, shall
equal or exceed $1,000,000; and (3) no Default exists.
6. Security Interest
6.1 Grant of Security Interest.
--------------------------
(a) As collateral security for the prompt and complete payment and
performance of the Obligations, each of the Borrowers and each other Credit
Party executing this Agreement hereby grants to the Lender a security interest
in and Lien upon all of its personal property, tangible or intangible, and
whether now owned or hereafter acquired, or in which it now has or at any time
in the future may acquire any right, title, or interest, including all of the
following property in which it now has or at any time in the future may acquire
any right, title or interest: all Accounts; all bank and deposit accounts and
all funds on deposit therein; all cash and cash equivalents; all Investment
Property and other financial assets; all Inventory and Equipment; all Goods; all
Chattel Paper, Documents and Instruments; all Books and Records; all General
Intangibles (including all Intellectual Property, Stock [including, without
limitation, the Stock described on Disclosure Schedule 6.1(a)], contract rights,
--------------------------
and choses in action); and to the extent not otherwise included, all Proceeds
and products of all and any of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing, but
excluding in all events Hazardous Waste and 34% of the Stock of each Subsidiary
which is organized under the laws of a jurisdiction outside the United States of
America if pledging 100% of such Stock would impute a deemed dividend under
Section 956 of the Internal Revenue
LOAN AND SECURITY AGREEMENT, Page 16
Code (all of the foregoing, together with any other collateral pledged to the
Lender pursuant to any other Loan Document, collectively, the "Collateral").
(b) Each Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Each Borrower and
each other Credit Party executing this Agreement represents, warrants and
promises to Lender that: (i) each Borrower and each other Credit Party granting
a Lien in Collateral is the sole owner of each item of the Collateral upon which
it purports to xxxxx x Xxxx pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon completion of the filings and other actions
listed on Disclosure Schedule 6.1 (which, in the case of all filings and other
-----------------------
documents referred to in said Schedule, have been delivered to the Lender in
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Lender as security for the prompt and complete
payment and performance of the Obligations, enforceable in accordance with the
terms hereof against any and all creditors of and purchasers from any Credit
Party (other than purchasers of Inventory in the ordinary course of business)
and such security interests are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances which have
priority by operation of law; and (iii) no effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Encumbrances.
Each Borrower and each other Credit Party executing this Agreement promise to
defend the right, title and interest of Lender in and to the Collateral against
the claims and demands of all Persons whomsoever, and each shall take such
actions, including (x) the prompt delivery of all original Instruments, Chattel
Paper and certificated Stock owned by such Borrower and each other Credit Party
granting a Lien on Collateral to Lender, (y) notification of Lender's interest
in Collateral at Lender's request; (provided, however, that Lender agrees that
-------- -------
(i) no delivery of the Stock of Nutrition for Life International Philippines,
Inc., a Philippines corporation, is required unless 60 days after the Closing
Date such Subsidiary had not been liquidated or dissolved at that time; (ii) no
delivery of the Stock of any other Subsidiary organized under the laws of a
jurisdiction outside the United States of America, of QBI Acquisition Company or
of UNC Acquisition Company is required until 30 days after the Closing Date;
(iii) unless a Default exists or the value of the Stock of Subsidiaries
organized under the laws of a jurisdiction outside the United States of America
increases and except as required by the foregoing clause (ii), Leading Borrower
shall not be required to cause the Lender's Lien on such foreign Subsidiary
Stock to be perfected in accordance with the local laws of the jurisdiction of
organization of such Subsidiaries but if a Default exists or such value
increases the Leading Borrower will take all action as the Lender may request to
ensure the proper perfection of such Liens under the local laws of such
jurisdiction, including without limitation, engaging local counsel in those
jurisdictions to advise on the proper methods of perfection), and (z) the
institution of litigation against third parties as shall be prudent in order to
protect and preserve each Credit Party's and Lender's respective and several
interests in the Collateral. Each Borrower (and any other Credit Party granting
a Lien in Collateral) shall xxxx its Books and Records pertaining to the
Collateral to evidence the Loan Documents and the Liens granted under the Loan
Documents. All Chattel Paper shall be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of General Electric Capital Corporation."
6.2 Lender's Rights.
---------------
(a) Lender may, (i) at any time in Lender's own name or in the name of
any Borrower, communicate with Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other Collateral to verify
to Lender's satisfaction, the existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper or other Collateral, and (ii) at any
time and without prior notice to any Borrower or any other Credit Party, notify
Account Debtors, parties to Contracts, and obligors in respect of Chattel Paper,
Instruments, or other Collateral that the Collateral has been assigned to Lender
and that payments shall be made directly to Lender. Upon the request of Lender,
each Borrower shall so notify such Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other Collateral. Each
Borrower hereby constitutes Lender or Lender's designee as such Borrower's
attorney with power to endorse such Borrower's name upon any notes, acceptance
drafts, money orders or other evidences of payment or Collateral.
(b) It is expressly agreed by each Borrower that, notwithstanding
anything herein to the contrary, each Borrower shall remain liable under each
Contract, Instrument and License to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and Lender shall have
no obligation or
LOAN AND SECURITY AGREEMENT, Page 17
liability whatsoever to any Person under any Contract, Instrument or License
(between any Borrower or any other Credit Party and any Person other than
Lender) by reason of or arising out of the execution, delivery or performance of
this Agreement, and Lender shall not be required or obligated in any manner (i)
to perform or fulfill any of the obligations of any Borrower, (ii) to make any
payment or inquiry, or (iii) to take any action of any kind to collect,
compromise or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times
under or pursuant to any Contract, Instrument or License.
(c) Each Borrower and each other Credit Party shall, with respect to
each owned, leased, or controlled property or facility, during normal business
hours and upon reasonable advance notice (unless a Default shall have occurred
and be continuing, in which event no notice shall be required and Lender shall
have access at any and all times): (i) provide access to such facility or
property to Lender and any of its officers, employees and agents, as frequently
as Lender determines to be appropriate; (ii) permit Lender and any of its
officers, employees and agents to inspect, audit and make extracts and copies
(or take originals if reasonably necessary) from all of such Borrower's and such
Credit Party's Books and Records; and (iii) permit Lender to inspect, review,
evaluate and make physical verifications and appraisals of the Inventory and
other Collateral in any manner and through any medium that Lender considers
advisable, and each Borrower and such Credit Party agree to render to Lender, at
such Borrower's and such Credit Party's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto.
(d) After the occurrence and during the continuance of a Default, each
Borrower at its own expense, shall cause the certified public accountant then
engaged by such Borrower to prepare and deliver to Lender at any time and from
time to time, promptly upon Lender's request, the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) test verifications of such Accounts as Lender may request.
Each Borrower, at its own expense, shall cause its certified independent public
accountants to deliver to Lender the results of any physical verifications of
all or any portion of the Inventory made or observed by such accountants when
and if such verification is conducted. Lender shall be permitted to observe and
consult with each Borrower's accountants in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-Fact. On the Closing Date, each
----------------------------------------
Borrower and each other Credit Party executing this Agreement shall execute and
deliver a Power of Attorney in the form attached as Exhibit I. THE POWER OF
---------
ATTORNEY GRANTED PURSUANT TO THE POWER OF ATTORNEY AND ALL POWERS GRANTED UNDER
ANY LOAN DOCUMENT ARE POWERS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL THE TERMINATION DATE. The powers conferred on Lender under the Power of
Attorney are solely to protect Lender's interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. Lender agrees and
promises that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing, (b)
Lender shall only exercise the powers granted under the Power of Attorney in
respect of Collateral, provided, except as otherwise required by applicable law,
Lender shall not have any duty as to any Collateral, and Lender shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers. NONE OF LENDER OR ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER OR ANY OTHER CREDIT
PARTY FOR ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE
POWER OF ATTORNEY OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES. Each Borrower and each other Credit Party executing this Agreement
also hereby authorizes Lender to file any financing or continuation statement
without the signature of such Borrower or such Credit Party to the extent
permitted by applicable law.
6.4 Grant of License to Use Intellectual Property Collateral. Each
--------------------------------------------------------
Borrower and each other Credit Party executing this Agreement hereby grants to
Lender an irrevocable, non-exclusive license (exercisable upon the occurrence
and during the continuance of an Event of Default without payment of royalty or
other compensation to any Borrower or such Credit Party) to use, transfer,
license or sublicense any Intellectual Property now owned, licensed to, or
hereafter acquired by such Borrower or such Credit Party, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer and
automatic machinery software and programs used for the compilation or printout
thereof, and represents, promises and agrees that any such license or sublicense
is not and will not be in conflict with the
LOAN AND SECURITY AGREEMENT, Page 18
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
7. Events Of Default: Rights And Remedies
7.1 Events of Default. The occurrence of any one or more of the
-----------------
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 10.3:
(a) any Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) (i) Borrower or any other Credit Party shall fail or neglect to
perform, keep or observe any of the covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in Section 1,
Sections 3.1, 3.2, 3.17, 3.18, 3.19, 3.20, 4.2, 4.3 or Section 5 of this
Agreement; or (ii) Borrower or any other Credit Party shall fail or neglect to
perform, keep or observe any of the other covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in this
Agreement (other than those set forth in the Sections referred to in clause (i)
immediately above) or any of the other Loan Documents, regardless of whether
such breach involves a covenant, promise, agreement, condition, requirement,
term or provision with respect to a Credit Party that has not signed this
Agreement, and such breach is not remediable or, if remediable, continues
unremedied for a period of five (5) Business Days after the earlier to occur of
(x) the date on which such breach is known or reasonably should have become
known to any officer of the Borrower or such Credit Party and (y) the date on
which Lender shall have notified the Borrower or such other Credit Party of such
breach; or
(c) an event of default shall occur under any Contractual Obligation
of any Borrower or any other Credit Party (other than this Agreement and the
other Loan Documents), and such event of default (i) involves the failure to
make any payment (whether or not such payment is blocked pursuant to the terms
of an intercreditor agreement or otherwise), whether of principal, interest or
otherwise, and whether due by scheduled maturity, required prepayment,
acceleration, demand or otherwise, in respect of any Indebtedness (other than
the Obligations) of such Person in an aggregate amount exceeding the Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness or
a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate
amount exceeding the Minimum Actionable Amount to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by any
Borrower or any other Credit Party shall be untrue or incorrect as of the date
when made or deemed made, regardless of whether such breach involves a
representation or warranty with respect to a Credit Party that has not signed
this Agreement; or
(e) there shall be commenced against any Borrower or any other Credit
Party any Litigation seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which remains
unstayed or undismissed for sixty (60) consecutive days; or any Borrower or any
other Credit Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or
(f) case or proceeding shall have been commenced involuntarily against
any Borrower or any other Credit Party in a court having competent jurisdiction
seeking a decree or order: (i) under the United States Bankruptcy Code or any
other applicable Federal, state or foreign bankruptcy or other similar law, and
seeking either (x) the appointment of a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Person or of
any substantial part of its properties, or (y) the reorganization or winding up
or liquidation of the affairs of any such Person, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding; or (ii) invalidating or denying any Person's right, power, or
competence to enter into or perform any of its obligations
LOAN AND SECURITY AGREEMENT, Page 19
under any Loan Document or invalidating or denying the validity or
enforceability of this Agreement or any other Loan Document or any action taken
hereunder or thereunder; or
(g) any Borrower or any other Credit Party shall (i) commence any
case, proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it or seeking appointment of a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for it or any substantial part of its properties, (ii) make a general assignment
for the benefit of creditors, (iii) consent to or take any action in furtherance
of, or, indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in paragraphs (e) or (f) of this Section 7.1 or clauses (i) and
(ii) of this paragraph (g), or (iv) shall admit in writing its inability to, or
shall be generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess
of the Minimum Actionable Amount in the aggregate shall be rendered against any
Borrower or any other Credit Party, unless the same shall be (i) fully covered
by insurance and the issuer(s) of the applicable policies shall have
acknowledged full coverage in writing within thirty (30) days of judgment, or
(ii) vacated, stayed, bonded, paid or discharged within a period of thirty (30)
days from the date of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect and Lender shall have
given Leading Borrower notice thereof; or
(j) any provision of any Loan Document shall for any reason cease to
be valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral (or any
Credit Party shall so assert any of the foregoing); or
(k) a Change of Control shall have occurred with respect to any
Corporate Credit Party; provided, however, that it shall not be deemed a Change
-------- -------
of Control if at any time before March 31, 2000, Leading Borrower merges with a
newly created corporation created to facilitate a holding company structure
under which a new corporation ("Holding Co.") owns 100% of Leading Borrower and
the existing shareholders of Leading Borrower become shareholders of Holding Co.
(the "Holding Co. Restructure") and if: (i) no Event of Default exists at the
time of, or will result from, such transaction; (ii) Holding Co. directly owns
one-hundred percent (100%) of the stock of Leading Borrower following the
Holding Co. Restructure; (iii) Holding Co. pledges all stock in Leading Borrower
to the Lender pursuant to a pledge agreement in form and substance acceptable to
the Lender, simultaneous with the closing of the Holding Co. Restructure; (iv)
Holding Co. guarantees all Obligations pursuant to a guaranty to be in form and
substance acceptable to Lender, simultaneous with the closing of the Holding Co.
Restructure; and (v) Leading Borrower will be the surviving Person.; or
(l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred and
are then continuing, could reasonably be expected to result in liability of any
Credit Party in an aggregate amount exceeding the Minimum Actionable Amount.
7.2 Remedies.
--------
(a) If any Default shall have occurred and be continuing, then Lender
may terminate or suspend its obligation to make further Revolving Credit
Advances and to incur additional Letter of Credit Obligations. In addition, if
any Event of Default shall have occurred and be continuing, Lender may, without
notice, take any one or more of the following actions: (i) declare all or any
portion of the Obligations to be forthwith due and payable, including contingent
liabilities with respect to Letter of Credit Obligations, whereupon such
Obligations shall become and be due and payable; (ii) require that all Letter of
Credit Obligations be fully cash collateralized pursuant to Schedule C; or (iii)
----------
exercise any rights and remedies provided to Lender under the Loan Documents or
at law or equity, including all remedies provided under the Code; provided, that
--------
upon the occurrence of any Event of Default specified in Sections 7.1 (e), (f)
or (g), the Obligations shall become immediately due and payable (and any
obligation of Lender to make further Loans, if not previously terminated, shall
immediately be terminated) without declaration, notice or demand by Lender.
LOAN AND SECURITY AGREEMENT, Page 20
(b) Without limiting the generality of the foregoing, each Borrower
and each other Credit Party executing this Agreement expressly agrees that upon
the occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for the benefit of Lender the whole or
any part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption each Borrower and each other Credit Party executing
this Agreement hereby releases. Such sales may be adjourned, or continued from
time to time with or without notice. Lender shall have the right to conduct
such sales on any Credit Party's premises or elsewhere and shall have the right
to use any Credit Party's premises without rent or other charge for such sales
or other action with respect to the Collateral for such time or times as Lender
deems necessary or advisable.
(c) Each Borrower and each other Credit Party executing this Agreement
further agrees, upon the occurrence and during the continuance of an Event of
Default and at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at
its premises or elsewhere. Until Lender is able to effect a sale, lease, or
other disposition of the Collateral, Lender shall have the right to complete,
assemble, use or operate the Collateral or any part thereof, to the extent that
Lender deems appropriate, for the purpose of preserving such Collateral or its
value or for any other purpose. Lender shall have no obligation to any Credit
Party to maintain or preserve the rights of such Credit Party as against third
parties with respect to any Collateral while such Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. To the maximum extent permitted by applicable law, each Borrower and
each other Credit Party executing this Agreement waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Each Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
Each Borrower and each other Credit Party shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Credit Parties. Except as otherwise provided for in this
-------------------------
Agreement and to the fullest extent permitted by applicable law, each Borrower
and each other Credit Party executing this Agreement waives: (a) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, Accounts, Contracts, Documents, Instruments,
Chattel Paper and guaranties at any time held by Lender on which such Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Lender
may do in this regard; (b) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or levy
upon, any Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws. Each Borrower and each
other Credit Party executing this Agreement acknowledges that it has been
advised by counsel of its choices and decisions with respect to this Agreement,
the other Loan Documents and the transactions evidenced hereby and thereby.
7.4 Proceeds. The Proceeds of any sale, disposition or other realization
--------
upon any Collateral shall be applied by Lender upon receipt to the Obligations
in such order as Lender may deem advisable in its sole discretion (including the
cash collateralization of any Letter of Credit Obligations), and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by
LOAN AND SECURITY AGREEMENT, Page 21
any provision of law, including Section 9-504(1)(c) of the Code (but only after
Lender has received what Lender considers reasonable proof of a subordinate
party's security interest), the surplus, if any, shall be paid to Borrowers or
their representatives or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
8. Successors and Assigns
Each Loan Document shall be binding on and shall inure to the benefit of
each Borrower and each other Credit Party executing such Loan Document, Lender,
and their respective successors and assigns, except as otherwise provided herein
or therein. Neither any Borrower nor any other Credit Party may assign,
transfer, hypothecate, delegate or otherwise convey its rights, benefits,
obligations or duties under any Loan Document without the prior express written
consent of Lender. Any such purported conveyance by such Borrower or such
Credit Party without the prior express written consent of Lender shall be void.
There shall be no third party beneficiaries of any of the terms and provisions
of any of the Loan Documents. Lender reserves the right at any time to create
and sell participations in the Loans and the Loan Documents and to sell,
transfer or assign any or all of its rights in the Loans and under the Loan
Documents.
9. Guarantor Waivers by Borrowers
IF AND TO THE EXTENT THAT ANY OBLIGATION OF ANY BORROWER TO LENDER SHALL BE
CONSIDERED AN OBLIGATION OF GUARANTY OR SURETYSHIP, THEN THE FOLLOWING
PROVISIONS OF THIS SECTION 9 SHALL APPLY WITH RESPECT TO EACH SUCH BORROWER
SOLELY TO THE EXTENT THAT SUCH BORROWER IS DEEMED TO ACT IN THE CAPACITY OF A
GUARANTOR AND SHALL NOT EFFECT A WAIVER OF RIGHTS IN SUCH PERSON'S CAPACITY AS A
BORROWER:
(A) SUCH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE LENDER FIRST
TO PURSUE ANY OTHER PERSON, THE COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY
THAT MAY BE HELD FOR THE OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR GUARANTY
TO THE OBLIGATIONS BEFORE SEEKING FROM SUCH BORROWER PAYMENT IN FULL OF ITS
LIABILITIES TO LENDER OR PROCEEDING AGAINST SUCH BORROWER FOR SAME.
(B) SUCH BORROWER ACKNOWLEDGES THAT IF LENDER MAY, UNDER APPLICABLE
LAW, PROCEED TO REALIZE ITS BENEFITS UNDER ANY OF THE LOAN DOCUMENTS GIVING
LENDER A LIEN UPON ANY COLLATERAL, WHETHER OWNED BY ANY BORROWER OR BY ANY OTHER
PERSON, EITHER BY JUDICIAL FORECLOSURE OR BY NON-JUDICIAL SALE OR ENFORCEMENT,
LENDER MAY, AT ITS SOLE OPTION, DETERMINE WHICH OF ITS REMEDIES OR RIGHTS IT MAY
PURSUE WITHOUT AFFECTING ANY OF ITS RIGHTS AND REMEDIES. IF, IN THE EXERCISE OF
ANY OF ITS RIGHTS AND REMEDIES, LENDER SHALL FORFEIT ANY OF ITS RIGHTS OR
REMEDIES, INCLUDING ITS RIGHT TO ENTER A DEFICIENCY JUDGMENT AGAINST ANY
BORROWER OR ANY OTHER PERSON, WHETHER BECAUSE OF ANY APPLICABLE LAWS PERTAINING
TO "ELECTION OF REMEDIES" OR THE LIKE, SUCH BORROWER HEREBY CONSENTS TO SUCH
ACTION BY LENDER AND WAIVES ANY CLAIM BASED UPON SUCH ACTION, EVEN IF SUCH
ACTION BY LENDER SHALL RESULT IN A FULL OR PARTIAL LOSS OF ANY RIGHTS OF
SUBROGATION WHICH SUCH BORROWER MIGHT OTHERWISE HAVE HAD BUT FOR SUCH ACTION BY
LENDER. ANY ELECTION OF REMEDIES WHICH RESULTS IN THE DENIAL OR IMPAIRMENT OF
THE RIGHT OF LENDER TO SEEK A DEFICIENCY JUDGMENT AGAINST ANY BORROWER SHALL NOT
IMPAIR ANY OTHER BORROWER'S OBLIGATION TO PAY THE FULL AMOUNT OF THE
OBLIGATIONS. IN THE EVENT LENDER SHALL BID AT ANY FORECLOSURE OR TRUSTEE'S SALE
OR AT ANY PRIVATE SALE PERMITTED BY LAW OR THE LOAN DOCUMENTS, LENDER MAY BID
ALL OR LESS THAN THE AMOUNT OF THE OBLIGATIONS AND THE AMOUNT OF SUCH BID NEED
NOT BE PAID BY LENDER BUT SHALL BE CREDITED AGAINST THE OBLIGATIONS. THE AMOUNT
OF THE SUCCESSFUL BID AT ANY SUCH SALE, WHETHER LENDER OR ANY OTHER PARTY IS THE
SUCCESSFUL BIDDER, SHALL BE CONCLUSIVELY DEEMED TO BE THE FAIR MARKET VALUE OF
THE COLLATERAL AND THE DIFFERENCE BETWEEN SUCH BID AMOUNT AND THE REMAINING
BALANCE OF THE OBLIGATIONS SHALL BE CONCLUSIVELY DEEMED TO BE THE AMOUNT OF THE
LOAN AND SECURITY AGREEMENT, Page 22
OBLIGATIONS GUARANTEED BY SUCH BORROWER, NOTWITHSTANDING THAT ANY PRESENT OR
FUTURE LAW OR COURT DECISION OR RULING MAY HAVE THE EFFECT OF REDUCING THE
AMOUNT OF ANY DEFICIENCY CLAIM TO WHICH LENDER MIGHT OTHERWISE BE ENTITLED BUT
FOR SUCH BIDDING AT ANY SUCH SALE.
(C) SUCH BORROWER AGREES THAT LENDER SHALL BE UNDER NO OBLIGATION TO
(I) MARSHAL ANY ASSETS IN FAVOR OF SUCH BORROWER, (II) PROCEED FIRST AGAINST ANY
OTHER BORROWER OR PERSON OR ANY PROPERTY OF ANY OTHER BORROWER OR PERSON OR
AGAINST ANY COLLATERAL, (III) ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS WITH
RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS, OR (IV) PURSUE ANY OTHER REMEDY IN
LENDER'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO PURSUE ITSELF AND THAT MAY
LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH SUCH BORROWER HEREBY
EXPRESSLY WAIVES.
(D) EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH SUCH BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY MADE THE WAIVED
DESCRIBED ABOVE FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
10. Miscellaneous
10.1 Complete Agreement; Modification of Agreement. This Agreement and
---------------------------------------------
the other Loan Documents constitute the complete agreement between the parties
with respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, and each other Credit Party a
party to such Loan Document. Each Borrower and each other Credit Party executing
this Agreement or any other Loan Document shall have all duties and obligations
under this Agreement and such other Loan Document from the date of its execution
and delivery, regardless of whether the initial Loan has been funded at that
time.
10.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs
--------
and expenses (including the fees and expenses of all special counsel, advisors,
consultants (including environmental and management consultants) and auditors
retained in connection therewith), incurred in connection with: (a) the
preparation, negotiation, execution, delivery, performance and enforcement of
the Loan Documents and the preservation of any rights thereunder; (b)
collection, including deficiency collections; (c) the forwarding to Borrower or
any other Person on behalf of Borrower by Lender of the proceeds of any Loan
(including a wire transfer fee of $20 per wire transfer); (d) any amendment,
extension, modification or waiver of, or consent with respect to any Loan
Document or advice in connection with the administration of the Loans or the
rights thereunder; (e) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by or between any combination of Lender, Borrower or
any other Person or Persons), and an appeal or review thereof, in any way
relating to the Collateral, any Transaction Document, or any action taken or any
other agreements to be executed or delivered in connection therewith, whether as
a party, witness or otherwise; and (f) any effort (i) to monitor the Loans, (ii)
to evaluate, observe or assess any Borrower or any other Credit Party or the
affairs of such Person, and (iii) to verify, protect, evaluate, assess,
appraise, collect, sell, liquidate or otherwise dispose of the Collateral.
10.3 No Waiver. Neither Lender's failure, at any time or times, to
---------
require strict performance by any Borrower or any other Credit Party of any
provision of any Loan Document, nor Lender's failure to exercise, nor any delay
in exercising, any right, power or privilege hereunder, (a) shall waive, affect
or diminish any right of Lender thereafter to demand strict compliance and
performance therewith, or (b) shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or future exercise thereof or the exercise of any other right, power or
privilege. Any suspension or waiver of a Default under or other provision of the
Loan Documents shall not suspend, waive or affect any other Default or other
provision under any Loan Document, whether the same is prior or subsequent
thereto and whether of the same or of a different type, and shall not be
construed as a bar to any right or remedy which Lender would otherwise have had
on any future occasion. None of the undertakings, indemnities, agreements,
warranties, covenants and representations of any Borrower or
LOAN AND SECURITY AGREEMENT, Page 23
any other Credit Party to Lender contained in any Loan Document and no Default
by any Borrower or any other Credit Party under any Loan Document shall be
deemed to have been suspended or waived by Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer or other
authorized employee of Lender and directed to such Borrower specifying such
suspension or waiver (and then such waiver shall be effective only to the extent
therein expressly set forth), and Lender shall not, by any act (other than
execution of a formal written waiver), delay, omission or otherwise, be deemed
to have waived any of its rights or remedies hereunder.
10.4 Severability; Section Titles. Wherever possible, each provision of
----------------------------
the Loan Documents shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of any Loan Document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of such
Loan Document. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under the Loan Documents shall in any way affect or
impair the Obligations, duties, covenants, representations and warranties,
indemnities, and liabilities of any Borrower or any other Credit Party or the
rights of Lender relating to any unpaid Obligation (due or not due, liquidated,
contingent or unliquidated), or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is not
required until after the Commitment Termination Date, all of which shall not
terminate or expire, but rather shall survive such termination or cancellation
and shall continue in full force and effect until the Termination Date;
provided, that all indemnity obligations of the Credit Parties under the Loan
Documents shall survive the Termination Date. The Section titles contained in
any Loan Document are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
10.5 Authorized Signature. Until Lender shall be notified in writing by
--------------------
any Borrower or any other Credit Party to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed by Lender or any
of Lender's officers, agents, or employees to be that of an officer of such
Borrower or such other Credit Party listed in the Secretarial Certificate in the
form of Exhibit H shall bind such Borrower and such other Credit Party and be
---------
deemed to be the act of such Borrower or such other Credit Party affixed
pursuant to and in accordance with resolutions duly adopted by such Borrower's
or such other Credit Party's Board of Directors, and Lender shall be entitled to
assume the authority of each signature and authority of the person whose
signature it is or appears to be unless the person acting in reliance of such
signature shall have actual knowledge of the fact that such signature is false
or the person whose signature or purported signature is presented is without
authority.
10.6 Notices. Except as otherwise provided herein, whenever any notice,
-------
demand, request or other communication shall or may be given to or served upon
any party by any other party, or whenever any party desires to give or serve
upon any other party any communication with respect to this Agreement, each such
notice, demand, request or other communication shall be in writing and shall be
deemed to have been validly served, given or delivered (a) upon the earlier of
actual receipt and three (3) days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 10.6), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when hand-delivered, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number indicated in Schedule B or to such other address (or facsimile number) as
----------
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request or other communication to any Person (other than any Borrower or Lender)
designated in Schedule B to receive copies shall in no way adversely affect the
----------
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
10.7 Counterparts. Any Loan Document may be executed in any number of
------------
separate counterparts by one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
10.8 Time of the Essence. Time is of the essence for performance of the
-------------------
Obligations under the Loan Documents.
LOAN AND SECURITY AGREEMENT, Page 24
10.9 GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING
-------------
UNDER THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
10.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
------------------------------------------------
(A) EACH BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS
AGREEMENT HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN SUCH BORROWER AND SUCH CREDIT PARTY AND LENDER PERTAINING TO
THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS; PROVIDED, THAT LENDER, EACH BORROWER AND EACH OTHER CREDIT PARTY
-------
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS
--- ------- --------
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH BORROWER AND
EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH BORROWER AND EACH OTHER CREDIT PARTY HEREBY WAIVE ANY OBJECTION WHICH
IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
-----
NON CONVENIENS. EACH BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS
--- ----------
AGREEMENT HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE LEADING BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE B OF THIS
----------
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
THE LEADING BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
(B) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LENDER, ANY
BORROWER AND ANY OTHER CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
10.11 Press Releases. Each Credit Party executing this Agreement agrees
--------------
that neither it nor its Affiliates will in the future issue any press release or
other public disclosure using the name of General Electric Capital Corporation
or its affiliates or referring to this Agreement or the other Loan Documents
without at least two (2) Business Days' prior notice to Lender and without the
prior written consent of Lender unless (and only to the extent that) such Credit
Party or Affiliate is required to do so under law and then, in any event, such
Credit Party or Affiliate will consult with Lender before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Lender of a tombstone or similar advertising material relating to
the financing transactions contemplated by this Agreement.
10.12 Reinstatement. This Agreement shall continue to be effective, or be
-------------
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by the Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or any other Credit Party, or otherwise, all as though such
payments had not been made.
LOAN AND SECURITY AGREEMENT, Page 25
11. Cross-Guaranty
11.1 Cross-Guaranty. Each Borrower hereby absolutely and unconditionally
--------------
guarantees to Lender and its successors and assigns the full and prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of
all Obligations owed or hereafter owing to Lender by each other Borrower,
including that portion of the Revolving Credit Loan attributable to each other
Borrower. Each Borrower agrees that its guaranty obligation hereunder is a
continuing guaranty of payment and performance and not of collection, and that
its obligations under this Section 11 shall be absolute and unconditional,
irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement (including
this Section 11) or any other Loan Document or the waiver or consent by Lender
with respect to any of the provisions hereof or thereof;
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the absence
of any action, by Lender in respect thereof (including the release of any such
security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each Borrower that its obligations under this Section 11
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded, and shall be in the
same position, as principal debtor with respect to the Obligations guaranteed
hereunder.
11.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
--------------------
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Lender to xxxxxxxx assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit Party,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower. It is agreed among each Borrower and Lender that the foregoing
waivers are of the essence of the transactions contemplated by this Agreement
and the other Loan Documents and that, but for the provisions of this Section 11
and such waivers, Lender would decline to enter into this Agreement.
11.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this
-------------------
Section 11 are for the benefit of Lender and its successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
other Borrower and Lender, the obligations of such other Borrower under the Loan
Documents.
11.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
---------------------------------
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 11.7, each Borrower hereby expressly and irrevocably
subordinates to the payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this waiver is intended to
benefit Lender and shall not limit or otherwise affect such Borrower's liability
hereunder or the enforceability of this Section 11, and that Lender and its
successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 11.4.
11.5 Election of Remedies. If Lender may, under applicable law, proceed
--------------------
to realize its benefits under any of the Loan Documents giving Lender a Lien
upon any Collateral, whether owned by any Borrower or by any other Person,
either by judicial foreclosure or by non-judicial sale or enforcement, Lender
may, at its sole option, determine which of its remedies or rights it may pursue
without affecting any of its rights and remedies under this Section 11. If, in
the exercise of any of its rights and remedies, Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
any Borrower or any other Person, whether because of any applicable laws
pertaining to "election of remedies" or the like, each Borrower hereby consents
to such action by
LOAN AND SECURITY AGREEMENT, Page 26
Lender and waives any claim based upon such action, even if such action by
Lender shall result in a full or partial loss of any rights of subrogation which
such Borrower might otherwise have had but for such action by Lender. Any
election of remedies which results in the denial or impairment of the right of
Lender to seek a deficiency judgment against any Borrower shall not impair any
other Borrower's obligation to pay the full amount of the Obligations. In the
event Lender shall bid at any foreclosure or trustee's sale or at any private
sale permitted by law or the Loan Documents, Lender may bid all or less than the
amount of the Obligations and the amount of such bid need not be paid by Lender
but may be credited against the Obligations. The amount of the successful bid at
any such sale, whether Lender or any other party is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 11, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Lender might otherwise be entitled but for such bidding at any
such sale.
11.6 Limitation. Notwithstanding any provision herein contained to the
----------
contrary, each Borrower's liability under this Section 11 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount which could be claimed by Lender from such Borrower
under this Section 11 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the United States Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 11.7.
11.7 Contribution with Respect to Guaranty Obligations.
-------------------------------------------------
(a) To the extent that any Borrower shall make a payment under
this Section 11 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") which, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount which such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 11 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the United States
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 11.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 11.7 is intended to or
shall impair the obligations of each Borrower to pay any amounts as and when the
same shall become due and payable in accordance with the terms of this
Agreement, including Section 11.1. Nothing contained in this Section 1.7 shall
limit the liability of any Borrower to pay the Loans made directly or indirectly
to that Borrower and accrued interest, Fees and expenses with respect thereto
for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets of Borrower to which such
contribution and indemnification is owing.
LOAN AND SECURITY AGREEMENT, Page 27
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 11.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of Lender's
obligation to extend any credit under this Agreement.
11.8 Liability Cumulative. The liability of Borrowers under this Section
--------------------
11 is in addition to and shall be cumulative with all liabilities of each
Borrower to Lender under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of the
other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.
11.9 Intercompany Subordination. In furtherance, and not in limitation, of
--------------------------
Sections 6.1 and 11.4, each Borrower agrees, for itself and each future holder
of the Subordinated Obligations (as defined below), that the Subordinated
Obligations are expressly "subordinate and junior in right of payment" (as that
phrase is defined below) to all Obligations.
(a) "Subordinated Obligations": the collective reference to all
------------------------
obligations and liabilities of any Borrower to any other Borrower (including,
without limitation, interest accruing at the then applicable rate, if any,
provided after the maturity and interest accruing at the then applicable rate
provided after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, in each case whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel).
(b) "Subordinate and junior in right of payment" means that (1) no
------------------------------------------
part of the Subordinated Obligation shall have any claim to the assets of any
Borrower on a parity with or prior to the claim of the Obligations; and (2)
unless and until the Obligations have been paid in full and the obligation of
the Lender to extend credit to the Borrowers under the Loan Documents shall have
been irrevocably terminated, without the express prior written consent of the
Lender (A) no Borrower will take, demand or receive from any other Borrower, and
no Borrower will make, give or permit, directly or indirectly, by set-off,
redemption, purchase or in any other manner, any payment of (of whatever kind or
nature, whether in cash, property, securities or otherwise) or security for the
whole or any part of the Subordinated Obligation, including, without limitation,
any letter of credit or similar credit support facility to support payment of
the Subordinated Obligation; provided, however, that at any time when no Default
-------- -------
has occurred and is continuing or would result therefrom, a Borrower may make,
and the other Borrower may receive, regularly scheduled payments on account of
the Subordinated Obligations in accordance with the terms thereof determined on
a pre-default non-accelerated basis, and (B) no Borrower will accelerate for any
reason the scheduled maturities of any amount owing under the Subordinated
Obligations.
(c) The expressions "prior payment in full," "payment in full,"
"paid in full" and any other similar terms or phrases when used herein with
respect to the Obligations shall mean the payment in full, in immediately
available funds, of all of the Obligations.
(d) The Borrowers agree that upon the occurrence of any Insolvency
Event (as defined in the Intercreditor Agreement attached hereto as Exhibit N):
(1) all Obligations shall be paid in full before any payment
or distribution of whatever kind or nature is made with respect to the
Subordinated Obligation; and
(2) any payment or distribution of assets of any Borrower,
whether in cash, property or securities, to which any other Borrower would be
entitled except for the provisions hereof, shall be paid or delivered by any
Borrower, or any receiver, trustee in bankruptcy, liquidating trustee,
disbursing agent or other Person making such payment or distribution, directly
to the Lender, to the extent necessary to pay in full all Obligations, before
any payment or distribution of any kind or nature shall be made to any Borrower.
(e) Upon the occurrence of any Insolvency Event:
LOAN AND SECURITY AGREEMENT, Page 28
(1) each Borrower irrevocably authorizes and empowers the
Lender (A) to demand, xxx for, collect and receive every payment or distribution
on account of the Subordinated Obligation payable or deliverable in connection
with such event or proceeding and give acquittance therefor, and (B) to file
claims and proofs of claim in any statutory or non-statutory proceeding and take
such other actions, in its own name as Lender, or in the name of the Borrower or
otherwise, as the Lender may deem necessary or advisable for the enforcement of
the provisions of this Section 11.9; provided, however, that the foregoing
-------- -------
authorization and empowerment imposes no obligation on the Lender to take any
such action;
(2) each Borrower shall take such action, duly and promptly,
as the Lender may request from time to time (A) to collect the Subordinated
Obligation for the account of the Lender and (B) to file appropriate proofs of
claim in respect of the Subordinated Obligation; and
(3) each Borrower shall execute and deliver such powers of
attorney, assignments or proofs of claim or other instruments as the Lender may
request to enable the Lender to enforce any and all claims in respect of the
Subordinated Obligation and to collect and receive any and all payments and
distributions which may be payable or deliverable at any time upon or in respect
of the Subordinated Obligation.
(f) If any payment or distribution, whether consisting of money,
property or securities, shall be collected or received by any Borrower in
respect of the Subordinated Obligation, except payments permitted to be made at
the time of payment as provided in paragraph (b) above, such Borrower forthwith
shall deliver the same to the Lender, in the form received, duly indorsed to the
Lender, if required, to be applied to the payment or prepayment of the
Obligations until the Obligations are paid in full. Until so delivered, such
payment or distribution shall be held in trust by such Borrower as the property
of the Lender, segregated from other funds and property held by such Borrower.
(g) In the event that any Borrower has or at any time acquires any
lien upon or security interest in the assets securing the Obligations, or any
part thereof, such Borrower hereby waives any right that such Borrower may have
whether such right arises under Sections 9-504 or 9-505 of the Uniform
Commercial Code or other applicable law, to receive notice of the Lender's
intended disposition of such assets (or a portion thereof) or of the Lender's
proposed retention of such assets in satisfaction of the Obligations (or a
portion thereof). Each Borrower further agrees that in the event any Borrower
consents or fails to object to a proposed retention of such assets (or a portion
thereof) by the Lender in satisfaction of the Obligations (or a portion
thereof), such Borrower hereby consents to such proposed retention regardless of
whether such Subordinated Creditor is provided with notice of such proposed
retention.
LOAN AND SECURITY AGREEMENT, Page 29
(h) So long as any of the Obligations shall remain outstanding or the
obligation of Lender to extend credit to the Borrowers remains in effect, no
Borrower shall, without the prior written consent of the Lender:
(1) permit to exist any security interest, lien, charge or
other encumbrance on any property or assets of any Borrower to secure or provide
for payment or performance of the Subordinated Obligation or exercise any right
of set off or counterclaim which the Subordinated Creditor may have with respect
to any amounts payable or to be paid by the Subordinated Creditor to any Credit
Party;
(2) commence, or join with any creditors other than the
Lender in commencing any case or proceeding referred to in the definition of
Insolvency Event (as such term is defined in the intercreditor agreement
attached hereto as Exhibit N);
(3) assert, collect, or enforce all or any part of the
Subordinated Obligation or any claims in respect thereof, except as specifically
provided for herein; or
(4) take any action to foreclose upon, take possession of,
liquidate or proceed against any property or assets, or otherwise institute any
action or proceeding, to serve or provide for payment of the Subordinated
Obligation or otherwise exercise any rights or remedies under or with respect to
the Subordinated Obligation or hinder or delay the Lender in the exercise of any
rights and remedies under or in respect of the Obligations.
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed
as of the date first written above.
NUTRITION FOR LIFE INTERNATIONAL, INC.
By: ----------------------------------------------
Xxxxx Xxxxxxxx
President
NL ACQUISITION COMPANY
AC ACQUISITION COMPANY
(to be known as Ash Corp.)
BPI ACQUISITION COMPANY
(to be known as Bactolac Pharmaceutical Inc.)
By: ----------------------------------------------
Xxxx X. Xxxxx, Xx., Secretary of each company
GENERAL ELECTRIC CAPITAL CORPORATION
By: ----------------------------------------------
Xxxxx Xxxxxx
Duly Authorized Signatory
LOAN AND SECURITY AGREEMENT, Page 30
INDEX OF EXHIBITS AND SCHEDULES
-------------------------------
Schedule A - Definitions
Schedule B - Lender's and Borrowers' Addresses for Notices
Schedule C - Letters of Credit (Not Used)
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.10) - Taxes
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (3.18) - Commodity and Security Accounts
Disclosure Schedule (3.19) - Contracts (Offset Risk)
Disclosure Schedule (5(b)) - Indebtedness
Disclosure Schedule (5(e)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit C-1 - Inventory Rollforward and Reconciliation
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - Form of Term Note
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Landlord's Waiver and Consent
Exhibit M - Form of Opinion of Counsel to Borrower
Exhibit N - Form of Intercreditor Agreement (unsecured junior debt)
Exhibit O - Form of U.C.C. Schedule
Exhibit P - Form of Payment of Proceeds Letter
Exhibit Q - Form of Standard Payoff Letter
i
Schedule A - Definitions
Capitalized terms used in this Agreement and the other Loan Documents shall
have (unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Person, including or in addition: (i) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered or from any other transaction (including any such obligations which may
be characterized as an account or contract right under the Code); (ii) all of
such Person's rights in, to and under all purchase orders or receipts for goods
or services; (iii) all of such Person's rights to any goods represented by any
of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods); (iv) all moneys due or to become due to such Person under
all purchase orders and contracts for the sale of goods or the performance of
services or both by such Person or in connection with any other transaction
(whether or not yet earned by performance on the part of such Person), including
the right to receive the proceeds of said purchase orders and contracts; and (v)
all collateral security and guarantees of any kind given by any other Person
with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit
D.
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the
form of Exhibit E.
"Acquisitions" shall mean the following transactions:
(a) the merger of NL Acquisition Company with Advanced Nutraceuticals,
Inc., with NL Acquisition Company as the surviving corporation;
(b) the merger of AC Acquisition Company with Ash Corp., with AC
Acquisition Company as the surviving corporation and thereafter
changing its name to Ash Corp.; and
(c) the merger of BPI Acquisition Company with Bactolac Pharmaceutical
Inc., with BPI Acquisition Company surviving and changing its name to
Bactolac Pharmaceutical Inc.
"Acquisition Documents" shall mean each of the following agreements and any
and all other documentation entered into pursuant to the terms of or otherwise
in connection with the following agreements or the Acquisitions (other than the
Loan Documents), as all the same may be amended or otherwise modified from time
to time:
(d) Agreement and Plan of Merger dated October 20, 1999 among Leading
Borrower, Advanced Nutraceuticals, Inc., and NL Acquisition Company,
Xxxxxxx Xxxxx, and Xxxxx X. Xxxxx;
(a) Agreement and Plan of Merger dated as of October 25, 1999 between
Leading Borrower, Advanced Nutraceuticals, Inc., Ash Corp., a
Mississippi corporation, Xxxxx X. Xxxxxx and Xxxx Xxxxxx; an d
(b) Agreement and Plan of Merger dated November 5, 1999 among Leading
Borrower, Advanced Nutraceuticals, Inc., BPI Acquisition Company,
Bactolac Pharmaceutical Inc., a New York corporation and Xxxxxx X.
Xxxxx.
"Affiliate" shall mean, with respect to any Person: (i) each other Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power for the election of directors of such Person; (ii)
each other Person that controls, is controlled by or is under common control
with such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
Schedule A - Definitions - Page 1 of 15
"Agreement" shall mean this Agreement including all Appendices attached or
otherwise identified thereto, restatements and modifications and supplements
thereto, and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to this Agreement as the same may be in effect at the time such
reference becomes operative; provided, that except as specifically set forth in
this Agreement, any reference to the Disclosure Schedules to this Agreement
shall be deemed a reference to the Disclosure Schedules as in effect on the
Closing Date or in a written amendment thereto executed by Borrower and Lender.
"ANI" shall mean Advanced Nutraceuticals, Inc., a Delaware Corporation.
"Appendices" shall have the meaning assigned to it in the Recitals of this
Agreement.
"ASH" shall have the meaning assigned in the preamble of this Agreement.
"Ash Corp." shall mean Ash Corp., a Mississippi corporation, when referring
to that certain company to be acquired by ASH.
"Ash Corp. Acquisition" shall mean the merger of AC Acquisition Company
with Ash Corp., with AC Acquisition Company as the surviving corporation and
thereafter changing its name to Ash Corp.
"Ash Corp. Acquisition Documents" shall mean each of the Agreement and Plan
of Merger dated as of October 25, 1999 between Leading Borrower, Advanced
Nutraceuticals, Inc., Ash Corp., a Mississippi corporation, Xxxxx X. Xxxxxx and
Xxxx Xxxxxx and any and all other documentation entered into pursuant to the
terms of or otherwise in connection with such agreement or the Ash Corp.
Acquisition (other than the Loan Documents), as all the same may be amended or
otherwise modified from time to time:
"Books and Records" shall mean all books, records, board minutes,
contracts, licenses, insurance policies, environmental audits, business plans,
files, computer files, computer discs and other data and software storage and
media devices, accounting books and records, financial statements (actual and
pro forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Borrower" and "Borrowers" shall have the meanings assigned to them in the
preamble of this Agreement.
"Borrowing Availability" shall mean, at any time with respect to any
Borrower, the lesser of (i) such Borrower's Maximum Amount or (ii) such
Borrower's Borrowing Base, in each case less reserves established by Lender from
time to time.
"Borrowing Base" shall mean at any time with respect to any Borrower, an
amount equal to the sum at such time of:
(a) eighty five percent (85%) of the value (as determined by Lender) of
such Borrower's Eligible Accounts; provided that Lender shall reduce
the foregoing percentage by one percentage point for each percentage
point that the dilution of such Borrower's Accounts (calculated by
Lender as the average dilution over the most recent 3 months) exceeds
5%; plus
(b) the lesser of (i) sixty percent (60%) (or, if such Borrower is BPI,
forty-nine percent (49%)) of the value of such Borrower's Eligible
Inventory, or (ii) eighty-five percent (85%) of the orderly
liquidation value of such Borrower's Eligible Inventory, in each case
as determined by Lender, valued on a first-in, first-out basis (at
the lower of cost or market).
"Borrowing Base Certificate" shall mean a certificate in the form of
Exhibit C.
"BPI" shall have the meaning assigned in the preamble of this Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
Schedule A - Definitions - Page 2 of 15
"Capital Expenditures" shall mean all payments or accruals (including
Capital Lease Obligations) for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
any Borrower, any such lease under which such Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease,
the amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in Schedule
C.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date, that any change in the composition of such Person's stockholders
as of the Closing Date shall occur which would result in any stockholder or
group acquiring 49.9% or more of any class of Stock of such Person, or that any
Person (or group of Persons acting in concert) shall otherwise acquire, directly
or indirectly (including through Affiliates), the power to elect a majority of
the Board of Directors of such Person or otherwise direct the management or
affairs of such Person by obtaining proxies, entering into voting agreements or
trusts, acquiring securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to PBGC at the time
due and payable), levies, customs or other duties, assessments, charges, liens,
and all additional charges, interest, penalties, expenses, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations, (iii)
the employees, payroll, income or gross receipts of any Credit Party, (iv) the
ownership or use of any assets by any Credit Party, or (v) any other aspect of
any Credit Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions
precedent set forth in Section 2 have been satisfied or specifically waived in
writing by Lender, and the initial Loan has been made.
"Closing Date Acquisitions" shall mean the following transactions:
(a) the merger of NL Acquisition Company with Advanced Nutraceuticals,
Inc., with NL Acquisition Company as the surviving corporation; and
(b) the merger of BPI Acquisition Company with Bactolac Pharmaceutical
Inc., with BPI Acquisition Company surviving and changing its name to
Bactolac Pharmaceutical Inc.
"Closing Date Acquisition Documents" shall mean each of the following
agreements and any and all other documentation entered into pursuant to the
terms of or otherwise in connection with the following agreements or the
Acquisitions (other than the Loan Documents), as all the same may be amended or
otherwise modified from time to time:
(a) Agreement and Plan of Merger dated October 20, 1999 among Leading
Borrower, Advanced Nutraceuticals, Inc., NL Acquisition Company,
Xxxxxxx Xxxxx, and Xxxxx X. Xxxxx; and
(b) Agreement and Plan of Merger dated November 5, 1999 among Leading
Borrower, Advanced Nutraceuticals, Inc., BPI Acquisition Company,
Bactolac Pharmaceutical Inc., a New York corporation and Xxxxxx X.
Xxxxx.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
Schedule A - Definitions - Page 3 of 15
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
"Collateral Monitoring Fee" shall have the meaning assigned to it in
Schedule E.
"Collection Account" shall mean that certain account of Lender, account
number 00-000-000 in the name of GECC-CAF Depository at Bankers Trust Company, 0
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, XXX number 000-000-000.
"Commitment Termination Date" shall mean the earliest of (i) the Stated
Expiry Date, (ii) the date Lender's obligation to advance funds is terminated
pursuant to Section 7.2, and (iii) the date of indefeasible prepayment in full
by Borrowers of the Obligations in accordance with the provisions of Section
1.2(c).
"Contracts" shall mean all the contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which any Person may now or hereafter have any right, title or interest,
including, without limitation, any agreement relating to the terms of payment or
the terms of performance of any Account, the Acquisition Documents and that
certain Purchase and Supply Agreement between Ash Corp. and Bayer Corporation.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Person: (i) all copyrights in any original work of authorship
fixed in any tangible medium of expression, now known or later developed, all
registrations and applications for registration of any such copyrights in the
United States or any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and applications in
the United States Copyright Office; and (ii) all Proceeds of the foregoing,
including license royalties and proceeds of infringement suits, the right to xxx
for past, present and future infringements, all rights corresponding thereto
throughout the world and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation,
partnership or limited liability company.
"Credit Party" shall mean each Borrower, and each other Person (other than
Lender) that is or may become a party to this Agreement or any other Loan
Document.
"Default" shall mean any Event of Default or any event which, with the
passage of time or notice or both, would, unless cured or waived, become an
Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(c).
"Documents" shall mean all "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located, including
all bills of lading, dock warrants, dock receipts, warehouse receipts, and other
documents of title, whether negotiable or non-negotiable.
Schedule A - Definitions - Page 4 of 15
"Eligible Accounts" shall mean as at the date of determination with respect
to any Borrower, all Accounts of such Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of such Borrower's
business;
(b) upon which (i) such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) such Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process;
(c) against which any defense, counterclaim or setoff, whether well-
founded or otherwise, is asserted or which is a "contra" Account;
(d) that is not a true and correct statement of a bona fide indebtedness
incurred in the amount of the Account for merchandise sold or
services performed and accepted by the Account Debtor obligated upon
such Account;
(e) with respect to which an invoice, acceptable to Lender in form and
substance, has not been sent;
(f) that is not owned by such Borrower or is subject to any right, claim,
or interest of another Person, other than the Lien in favor of
Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or any Stockholder owning in excess
of 2% or more of any Borrower or any other Credit Party, or an entity
which has common officers or directors with any Borrower or any other
Credit Party;
(h) that is the obligation of an Account Debtor that is the Federal (or
local) government or a political subdivision thereof, unless Lender
has agreed to the contrary in writing and such Borrower has complied
with the Federal Assignment of Claims Act of 1940 (or the state
equivalent thereof, if any) with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country unless such Account is supported by a letter of credit in
which Lender has a first priority perfected security interest or
credit insurance acceptable to Lender (and naming Lender as loss
payee);
(j) that is the obligation of an Account Debtor to whom any Borrower is
or may become liable for goods sold or services rendered by the
Account Debtor to any Borrower, to the extent of any Borrower's
liability to such Account Debtor;
(k) that arises with respect to goods which are delivered on a cash-on-
delivery basis or placed on consignment, guaranteed sale or other
terms by reason of which the payment by the Account Debtor may be
conditional;
(l) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts, to the
extent of such excess;
(m) that is not paid within 60 days from its due date or 90 days from its
invoice date or that are Accounts of an Account Debtor if 50% or more
of the Accounts owing from such Account Debtor remain unpaid within
such time periods;
(n) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable to
pay its debts as they become due or as to which a petition has been
filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;
(o) that arises from any xxxx-and-hold or other sale of goods which
remain in any Borrower's possession or under any Borrower's control;
(p) as to which Lender's interest therein is not a first priority
perfected security interest;
(q) to the extent that such Account exceeds any credit limit established
by Lender in Lender's sole discretion;
(r) as to which any of such Borrower's representations or warranties
pertaining to Accounts are untrue;
(s) that represents interest payments, late or finance charges, or
service charges owing to such Borrower; or
(t) that is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and
adjust eligibility standards and related reserves from time to time
in its good faith credit judgment.
"Eligible Inventory" shall mean as at the date of determination as to any
Borrower, all Inventory of such Borrower, except any Inventory that:
Schedule A - Definitions - Page 5 of 15
(a) is not subject to a first priority perfected security interest of
Lender or is not owned by such Borrower free and clear of all Liens
and rights of others (except the Liens in favor of Lender);
(b) is not located on premises owned or operated by such Borrower and
referenced in Disclosure Schedule (3.2),
(c) is not located on premises where the aggregate amount of all Inventory
(valued at cost) of such Borrower located thereon is greater than
$100,000;
(d) is located on premises with respect to which Lender has not received a
landlord or mortgagee letter acceptable in form and substance to
Lender;
(e) is in transit;
(f) is covered by a negotiable document of title, unless such document and
evidence of acceptable insurance covering such Inventory has been
delivered to Lender,
(g) in Lender's good faith credit judgment, is obsolete, unsalable (as a
result of third party contractual restrictions or otherwise),
shopworn, damaged, unfit for further processing, is of substandard
quality or is not of good and merchantable quality, free from any
defects;
(h) consists of (i) discontinued items, (ii) slow-moving or excess items
held in inventory, or (iii) used items held for resale;
(i) does not consist of raw materials or finished goods;
(j) does not meet all standards imposed by any Governmental Authority,
including with respect to its production, acquisition or importation
(as the case may be);
(k) is placed by such Borrower on consignment or held by such Borrower on
consignment from another Person;
(l) is held for rental or lease by or on behalf of such Borrower;
(m) is produced in violation of the Fair Labor Standards Act and subject
to the "hot goods" provisions contained in 29 U.S.C. S 215 or any
successor statute or section;
(n) in any way fails to meet or violates any warranty, representation or
covenant contained in this Agreement, any other Loan Document or any
agreement providing for the manufacture or sale thereof;
(o) is subject to any licensing, patent, royalty, trademark, trade name or
copyright agreement with any third parties;
(p) requires the consent of any Person for the completion of manufacture,
sale or other disposition of such Inventory by Lender following an
Event of Default and such completion, manufacture or sale constitutes
a breach or default under any contract or agreement to which such
Borrower is a party or to which such Inventory is or may become
subject;
(q) is literature or other promotional items; or
(r) is not otherwise acceptable in the good faith discretion of Lender,
provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in its
good faith credit judgment.
"Environmental Laws" shall mean all Federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation).
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of whatever
nature, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person and
which relate to any health or safety condition regulated under any Environmental
Law, environmental permits or in connection with any Release, threatened
Release, or the presence of a Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including or in
addition any and all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal property (other than
Inventory) of every kind and description which may be now or hereafter used in
such Person's operations or which are owned by such Person
Schedule A - Definitions - Page 6 of 15
or in which such Person may have an interest, and all parts, accessories and
accessions thereto and substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any Credit Party, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the IRC, or, solely for the
purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a
single employer under Section 414 of the IRC.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any ERISA Affiliate of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or to appoint a trustee to administer any Plan; (f) the incurrence by any Credit
Party or any ERISA Affiliate of any liability with respect to any withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
any Credit Party or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of each Borrower and its
Subsidiaries, internally prepared for each Fiscal Month, and consolidating and
audited consolidated statements for each Fiscal Year, prepared in accordance
with GAAP.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers.
"Fiscal Year" shall mean the 12 month period of Borrowers ending September
30 of each year. Subsequent changes of the fiscal year of Borrowers shall not
change the term "Fiscal Year" unless Lender shall consent in writing to such
change.
"Fixed Charge Coverage Ratio" shall have the meaning specified on Schedule
G.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, consistently applied.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including or
in addition all right, title and interest which such Person may now or hereafter
have in or under any Contract, Intellectual Property, interests in partnerships,
joint ventures and other business associations, permits, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials, Books and Records, Goodwill (including the Goodwill associated with
any Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums),
Schedule A - Definitions - Page 7 of 15
uncertificated securities, choses in action, deposit accounts, rights to receive
tax refunds and other payments and rights of indemnification.
"Goods" shall mean all "goods," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae, quality
control standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, or in
addition, the United States Food and Drug Administration and the Federal Trade
Commission.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guarantor" shall mean each Person which executes a guaranty or a support,
put or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and in
form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as the
same may be in effect at the time such reference becomes operative.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the
Resource Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et. seq.).
"Holding Co." shall have the meaning ascribed to such term in Section
5(a).
"Holding Co. Restructure" shall have the meaning ascribed to such term in
Section 5(a).
"Indebtedness" of any Person shall mean: (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but not including obligations to trade creditors incurred in the
ordinary course of business and not more than 45 days past due); (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments; (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all Capital Lease Obligations; (v) all Guaranteed Indebtedness; (vi) all
Schedule A - Definitions - Page 8 of 15
Indebtedness referred to in clauses (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
(vii) the Obligations; and (viii) all liabilities under Title IV of ERISA.
"Indemnified Liabilities" and "Indemnified Person" shall have the meaning
assigned to such terms in Section 1.11.
"Index Rate" shall mean the latest "Prime Rate", which normally is
published in the "Money Rates" section of The Wall Street Journal (or if such
rate ceases to be so published, as quoted from such other generally available
and recognizable source as Lender may select). The Index Rate shall be
determined (i) on the first Business Day immediately prior to the Closing Date
and (ii) thereafter, on the last Business Day of each calendar month for
calculation of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located, including
all certificated securities and all notes and other evidences of indebtedness,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Inventory" shall mean all "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Person, wherever located,
including or in addition all inventory, merchandise, goods and other personal
property which are held by or on behalf of such Person for sale or lease or are
furnished or are to be furnished under a contract of service or which constitute
raw materials, work in process or materials used or consumed or to be used or
consumed in such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter acquired by an Person, wherever located.
"IRC" and "IRS" shall mean respectively, the Internal Revenue Code of 1986
and the Internal Revenue Service, and any successor thereto.
"Leading Borrower" shall have the meaning as defined in the preamble of
this Agreement.
"Lender" shall mean General Electric Capital Corporation and, if at any
time Lender shall decide to assign or syndicate all or any of the Obligations,
such term shall include such assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of any Borrower for which
Lender has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations
(including all duty, freight, taxes, costs, insurance and any other charges and
expenses) incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee, by
Lender or another, of Letters of Credit, all as further set forth in Schedule C.
"License" shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Person.
Schedule A - Definitions - Page 9 of 15
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Notes, the Financial
Statements, each Guaranty, the Power of Attorney, the Lock Box Account
Agreements, and the other documents and instruments listed in Schedule F, and
all security agreements, mortgages and all other documents, instruments,
certificates, and notices at any time delivered by any Person (other than
Lender) in connection with any of the foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations, and the Term Loan.
"Lock Box Account" and "Lock Box Account Agreement" shall have the meanings
assigned to such terms in Schedule D.
"Material Adverse Effect" shall mean: a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of any
Borrower or any other Credit Party or the industry within which such Borrower or
any other Credit Party operates, (b) any Borrower's or any other Credit Party's
ability to pay or perform the Obligations under the Loan Documents to which such
Credit Party is a party in accordance with the terms thereof, (c) the Collateral
or Lender's Liens on the Collateral or the priority of any such Lien, or (d)
Lender's rights and remedies under this Agreement and the other Loan Documents.
"Maximum Amount" shall mean with respect to any Borrower, the sum of
$12,000,000 minus all Revolving Credit Loans outstanding in favor of all the
other Borrowers.
"Minimum Actionable Amount" shall mean $50,000.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in
Section 4001(a) (3) of ERISA, to which Borrower, any other Credit Party or any
ERISA Affiliate is making, is obligated to make, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"Net Borrowing Availability" shall mean at any time with respect to any
Borrower, such Borrower's Borrowing Availability less the Revolving Credit Loan
attributable to such Borrower.
"Net Income (Loss)" shall have the meaning specified on Schedule G.
"NLAC" shall have the meaning assigned in the preamble of this Agreement.
"Notes" shall mean the Revolving Credit Notes and the Term Note.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it
in Section 1.1(b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing by
any Borrower and any other Credit Party to Lender, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, whether arising under any of the Loan Documents or under any other
agreement between such Borrower, such Credit Party and Lender, and all covenants
and duties regarding such amounts. This term includes all principal, interest
(including interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
Schedule A - Definitions - Page 10 of 15
like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), Fees, Charges, expenses, attorneys'
fees and any other sum chargeable to any Borrower under any of the Loan
Documents, and all principal and interest due in respect of the Loans and all
obligations and liabilities of any Guarantor under any Guaranty.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens
for taxes or assessments or other governmental Charges or levies, either not yet
due and payable or to the extent that nonpayment thereof is permitted by the
terms of Section 3.11; (ii) pledges or deposits securing obligations under
worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing bids,
tenders, contracts (other than contracts for the payment of money) or leases to
which any Credit Party is a party as lessee made in the ordinary course of
business; (iv) deposits securing public or statutory obligations of any Credit
Party; (v) inchoate and unperfected workers', landlord's, mechanics', or similar
liens arising in the ordinary course of business so long as such Liens attach
only to Equipment, fixtures or real estate; (vi) carriers', warehouseman's',
suppliers' or other similar possessory liens arising in the ordinary course of
business and securing indebtedness not yet due and payable in an outstanding
aggregate amount not in excess of $25,000 at any time so long as such Liens
attach only to Inventory; (vii) deposits of money securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (viii) zoning restrictions, easements, licenses, or other restrictions
on the use of real property or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such real estate; (ix) Purchase Money Liens securing
Purchase Money Indebtedness (or rent) to the extent permitted under Section
5(b)(vi); (x) Liens in existence on the Closing Date as disclosed on Disclosure
----------
Schedule 5(e) provided that no such Lien is spread to cover additional property
-------------
after the Closing Date and the amount of Indebtedness secured thereby is not
increased; (xi) Liens in favor of Lender securing the Obligations; (xii) upon
the closing of the Ash Corp. Acquisition in compliance with the limitations
thereon contained in this Agreement, liens in favor of Xxxxxxx Bank encumbering
the real property known as 0000 00xx Xxxxxx, Xxxxxxxx, Xxxxxxxx Xxxxxx,
Xxxxxxxxxxx (the "Mississippi Property"); as long as such Liens do not encumber
any Collateral and Xxxxxxx Bank shall have executed and delivered to Lender a
Mortgagee Subordination Agreement in form and substance acceptable to Lender;
and (xiii) after the closing of the Ash Corp. Acquisition, Liens granted in
connection with the refinancing of the Indebtedness owed to Xxxxxxx Bank
encumbering the Mississippi Property as long as such Liens do not encumber any
Collateral, the holders of such Liens shall have executed and delivered to
Lender a Mortgagee Subordination Agreement in form and substance acceptable to
the Lender and the amount of Indebtedness secured by such Liens is not in excess
of an amount equal to 80% of the appraised value of the Mississippi Property.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether Federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's successors
and assigns.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the IRC or Section 302 of ERISA, and in respect of which any Credit Party
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
Schedule A - Definitions - Page 11 of 15
"Predecessor Company" shall mean each Person acquired pursuant to the
Acquisitions.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include: (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Borrower or any other Credit
Party from time to time with respect to any Collateral; (ii) any and all
payments (in any form whatsoever) made or due and payable to any Borrower or any
other Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority); (iii) any claim of any Borrower or any other Credit
Party against third parties (a) for past, present or future infringement of any
Intellectual Property or (b) for past, present or future infringement or
dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark License; (iv) any recoveries by any Borrower or any other
Credit Party against third parties with respect to any litigation or dispute
concerning any Collateral; and (v) any and all other amounts from time to time
paid or payable under or in connection with any Collateral, upon disposition or
otherwise.
"Projections" shall mean as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for each Borrower and its
Subsidiaries (including forecasted Capital Expenditures and Net Borrowing
Availability) (i) by month for the next Fiscal Year, and (ii) by year for the
following three Fiscal Years, in each case prepared in a manner consistent with
GAAP and accompanied by senior management's discussion and analysis of such
plan.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for
the payment of all or any part of the purchase price of any fixed asset, (ii)
any Indebtedness incurred for the sole purpose of financing or refinancing all
or any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which
secures the Purchase Money Indebtedness related thereto but only if such Lien
shall at all times be confined solely to the asset the purchase price of which
was financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
"Real Property" shall have the meaning assigned to it in Section 3.16.
"Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such Person, including the movement of Hazardous Materials
through or in the air, soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or
Articles of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case binding upon such Person or any of its property or to which such
Person or any of its property is subject, including, without limitation, all
laws, rules and regulations of, or enforced or administered by, the Food and
Drug Administration and the Federal Trade Commission, including, without
limitation, the Good Manufacturing Practices required by the Food, Drug and
Cosmetic Act.
"Restricted Payment" shall mean: (i) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets on or in respect of any
Borrower's or any other Credit Party's Stock; (ii) any payment or distribution
made in respect of any subordinated Indebtedness of any Borrower or any other
Credit Party; (iii) any payment on account of the purchase, redemption,
defeasance or other retirement of any Borrower's or any other Credit Party's
Stock or Indebtedness or any other payment or distribution made in respect of
any thereof, either directly or indirectly; other than (a) that arising under
this Agreement or (b) interest and principal, when due without acceleration or
modification of the amortization as in effect on the Closing Date, under
Indebtedness (not including subordinated Indebtedness, payments of which shall
Schedule A - Definitions - Page 12 of 15
be permitted only in accordance with the terms hereof) described in Disclosure
----------
Schedule (5(b)) or otherwise permitted under Section 5(b)(vi); or (iv) any
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payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person which is not expressly and specifically permitted in
this Agreement; provided, that no payment to Lender shall constitute a
Restricted Payment.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a).
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total Letter
of Credit Obligations incurred by Lender and outstanding at such time, plus
(iii) the amount of accrued but unpaid interest thereon and Letter of Credit
Fees with respect thereto.
"Revolving Credit Note" shall mean each promissory note dated the Closing
Date, executed by a Borrower substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section
1.5(a).
"Sellers" means each shareholder of the Predecessor Companies.
"Stated Expiry Date" shall mean November 15, 2002.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"Stockholder" shall mean each holder of Stock of any Borrower or any other
Credit Party.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or manager or may exercise the powers of a general partner or manager.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Lender.
"Term Loan" shall mean the loan in the amount specified in and evidenced by
the Term Note, and made to Borrowers under the terms of the Agreement, and any
renewals, extensions, revisions, modifications or replacements therefor or
thereof.
"Term Loan Rate" shall have the meaning assigned to it in Section 1.5(a).
"Term Note" shall mean the promissory note of Borrowers dated the Closing
Date, substantially in the form of Exhibit G.
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"Termination Date" shall mean the date on which all Obligations under this
Agreement are indefeasibly paid in full, in cash (other than amounts in respect
of Letter of Credit Obligations if any, then outstanding, provided that
Borrowers shall have funded such amounts in cash in full into the Cash
Collateral Account), and Borrowers
Schedule A - Definitions - Page 13 of 15
shall have no further right to borrow any moneys or obtain other credit
extensions or financial accommodations under this Agreement.
"Third Party Interactives" shall mean all Persons with whom any Corporate
Credit Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"Trademark License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Person: (i) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State or Territory thereof,
or any other country or any political subdivision thereof, and (ii) all
reissues, extensions or renewals thereof.
"Transaction Documents" shall mean the Loan Documents and the Acquisition
Documents.
"Transaction Summary" shall mean the Transaction Summary set forth in the
Recitals to this Agreement.
"Unused Line Fee" shall have the meaning assigned to it in Schedule E.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any Person,
any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; including mainframe computers, file server/client systems,
computer workstations, routers, hubs, other network-related hardware, and other
computer-related software, firmware or hardware and information processing and
delivery systems of any kind and telecommunications systems and other
communications processors, security systems, alarms, elevators and HVAC systems.
"Year 2000 Problems" shall mean, with respect to each Corporate Credit
Party, limitations on the capacity or readiness of any such Corporate Credit
Party's Year 2000 Date-Sensitive Systems/Components to accurately accept,
create, manipulate, sort, sequence, calculate, compare or output calendar date
information with respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year computations),
including, without limitation, exchanges of information among Year 2000 Date-
Sensitive Systems/Components of the Corporate Credit Parties and exchanges of
information among the Corporate Credit Parties and Year 2000 Date-Sensitive
Systems/Components of Third Party Interactives and functionality of peripheral
interfaces, firmware and embedded microchips.
Any accounting term used in this Agreement or the other Loan Documents
shall have, unless otherwise specifically provided therein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP consistently applied; provided, that
all financial covenants and calculations in the Loan Documents shall be made in
accordance with GAAP as in effect on the Closing Date unless Borrower and Lender
shall otherwise specifically agree in writing. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. All other undefined terms
contained in this Agreement or the other Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code. The
words "herein," "hereof" and "hereunder" or other words of similar import refer
to this Agreement as a whole, including the exhibits and schedules thereto, as
the same may from time to time be amended, modified or supplemented, and not to
any particular section, subsection or clause contained in this Agreement.
Schedule A - Definitions - Page 14 of 15
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter; (b) the term "or" is not
exclusive; (c) the term "including" (or any form thereof) shall not be limiting
or exclusive; (d) all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations; (e)
all references in this Agreement or in the Schedules to this Agreement to
sections, schedules, disclosure schedules, exhibits, and attachments shall refer
to the corresponding sections, schedules, disclosure schedules, exhibits, and
attachments of or to this Agreement; and (f) all references to any instruments
or agreements, including references to any of the Loan Documents, shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.
Schedule A - Definitions - Page 15 of 15
