1
Exhibit 10.1
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
by and among
RIVER OAKS FURNITURE, INC.,
R.O. WEST, INC.,
R.O. EAST, INC., and
XXXXXX MANUFACTURING COMPANY,
as Borrowers,
BNY FINANCIAL CORPORATION,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
July 26, 1996
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2
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II
The Term Loan
2.1. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2. Term Loan Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.4. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5. Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.6. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.7. Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.9. Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.10. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III
The Revolving Credit Facility and Overadvance Facility
3.1. Revolving Loans and Overadvance Facility Loans . . . . . . . . . . . . . . . . . . . . . . . . 32
3.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4. Non-Conforming Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.5. Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.6. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.7. Reduction and Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.8. Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.9. Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.10. Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.11. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.12. Extension of Stated Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.13. Overadvance Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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3.14. Appointment of River Oaks and Authorized Representatives as Agents for the Borrowers . . . . . 37
ARTICLE IV
Security
4.1. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.2. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3. Information Regarding Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
Yield Protection and Illegality
5.1. Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2. Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.3. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4. Alternate Loan and Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.6. Replacement of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI
Conditions to Making Loans
6.1. Conditions of Term Loan and Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.2. Conditions of Revolving Loans and Overadvance Facility Loans . . . . . . . . . . . . . . . . . 47
ARTICLE VII
Representations and Warranties
7.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.2. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.3. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.4. Subsidiaries and Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.5. Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.6. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.7. Title to Properties; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.9. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.11. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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7.12. Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.13. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.14. No Untrue Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.15. No Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.17. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.18. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.19. Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
Affirmative Covenants
8.1. Financial Reports, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2. Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.3. Existence, Qualification, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.4. Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.6. True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.7. Right of Inspection; Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.8. Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.9. Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.10. Covenants Extending to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.11. Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.12. Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.13. Notice of Discharge of Hazardous Material or Environmental Complaint . . . . . . . . . . . . . 61
8.14. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.17. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.18. Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.19. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE IX
Negative Covenants
9.1. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.2. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.3. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.4. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.5. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.6. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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9.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.8. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.9. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.10. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.11. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.12. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.13. Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.14. Limitations on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.15. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.16. Rate Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.17. Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.18. Compensation; Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.19. Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.20. Prepayments, Etc. of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE X
Events of Default and Acceleration
10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.2. Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.3. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.5. Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XI
The Agent
11.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.2. Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.3. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.4. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.6. No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.8. Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.10. Sharing of Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XII
Miscellaneous
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12.1. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.3. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.6. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.9. Indemnification; Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.12. Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.13. Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.14. Joint and Several Liability; Cross-Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 91
12.15. GOVERNING LAW; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative . . . . . . . . . . . . . . C-1
EXHIBIT D Form of Inventory Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Interest Rate Selection Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G Form of Landlord Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H-1 Form of Revolving Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-0
XXXXXXX X-0 Form of Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-4
EXHIBIT I Form of Opinion of Borrower's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT J Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1
EXHIBIT K Form of Facility Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
EXHIBIT L Form of Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L-1
EXHIBIT M Form of Intellectual Property Security Agreement . . . . . . . . . . . . . . . . . . . . . . . M-1
EXHIBIT N Form of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1
EXHIBIT O Form of Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . O-1
Schedule 4.3 Information Regarding Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Schedule 7.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Schedule 7.4 Subsidiaries and Investments in Other Persons . . . . . . . . . . . . . . . . . . . . . . . . S-3
Schedule 7.7(a) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Schedule 7.7(b) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Schedule 7.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Schedule 7.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Schedule 9.17 Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of July 26,
1996 (the "Agreement"), is made by and among RIVER OAKS FURNITURE, INC., a
Mississippi corporation having its principal place of business in Xxxxxx,
Mississippi ("River Oaks"), R.O. WEST, INC., a Mississippi corporation having
its principal place of business in Xxxxxx, Mississippi ("R.O. West"), R.O.
EAST, INC., a Mississippi corporation having its principal place of business in
Xxxxxx, Mississippi ("R.O. East"), XXXXXX MANUFACTURING COMPANY, a Tennessee
corporation having its principal place of business in Xxxxxx, Mississippi
("Xxxxxx") (River Oaks, R.O. West, R.O. East and Xxxxxx being referred to
collectively as the "Borrowers" and individually as a "Borrower"), BNY
FINANCIAL CORPORATION, a corporation organized under the laws of the State of
New York ("BNYFC"), in its capacity as a Lender, and each other financial
institution executing and delivering a signature page hereto and each other
financial institution which may hereafter execute and deliver an instrument of
assignment with respect to this Agreement pursuant to Section 12.1 (hereinafter
such financial institutions may be referred to individually as a "Lender" or
collectively as the "Lenders"), and BNY FINANCIAL CORPORATION, a corporation
organized under the laws of the State of New York, in its capacity as agent for
the Lenders (in such capacity, and together with any successor agent appointed
in accordance with the terms of Section 11.9, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrowers have requested that the Lenders make available
to the Borrowers a term loan facility in the principal amount of $9,000,000,
the proceeds of which are to be used to refinance existing indebtedness and to
provide working capital, and a revolving credit facility of up to $42,000,000,
the proceeds of which are to be used to refinance existing indebtedness and
provide working capital; and
WHEREAS, the Lenders are willing to make such term loan and revolving
credit facilities available to the Borrowers upon the terms and conditions set
forth herein;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree
as follows:
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ARTICLE I
Definitions and Terms
1.1. Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Accounts" of any Person means all accounts, accounts
receivable, contract rights, general intangibles, notes, bills,
acceptances, choses in action, chattel paper, instruments, documents,
and other forms of obligations at any time owing to such Person, the
proceeds thereof and all of such Person's rights with respect to any
goods represented thereby, whether or not delivered, goods returned by
customers and all rights as an unpaid vendor or lienor, including
rights of stoppage in transit and of recovering possession by
proceedings including replevin and reclamation, together with all
customer lists, books and records, ledger and account cards, computer
tapes, software, disks, printouts and records, whether now in
existence or hereafter created, relating to Accounts.
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an
option, warrant or convertible or similar type security to acquire
such a controlling interest at the time it becomes exercisable by the
holder thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversion of securities
into, such equity interest, or (ii) assets of another Person which
constitute all or substantially all of the assets of such Person or of
a line or lines of business conducted by such Person, provided
that the acquisition of the assets formerly used by Xxxxxxxx Furniture,
Inc. shall not be considered an Acquisition.
"Advance" means any of (i) the borrowing under the Term Loan
Facility or (ii) a borrowing under the Revolving Credit Facility or
Overadvance Facility consisting of a Base Rate Loan or a Eurodollar
Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with any Borrower; or (ii) which beneficially
owns or holds 5% or more of any class of the outstanding Voting Stock
of any Borrower; or (iii) 5% or more of any class of the outstanding
Voting Stock (or in the case of a Person which is not a corporation,
5% or more of the equity interest) of which is beneficially owned or
held by any Borrower. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through ownership
of Voting Stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, a fraction, the numerator of which shall be such
Lender's Revolving Credit
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Commitment and the denominator of which shall be the Total Revolving
Credit Commitment, which Applicable Commitment Percentage for each
Lender as of the Closing Date is as set forth in Exhibit A; provided
that the Applicable Commitment Percentage of each Lender shall be
increased or decreased to reflect any assignments to or by such Lender
effected in accordance with Section 12.1.
"Applicable Margin" means
(a) 1.50% per annum for any Eurodollar Rate Loan
that is a Revolving Credit Loan or Overadvance Facility Loan;
(b) 0.00% per annum for any Base Rate Loan that
is a Revolving Credit Loan or Overadvance Facility Loan;
(c) 2.50% per annum for a Eurodollar Rate that is
the Term Loan, provided that if no Default or Event of Default
has occurred or is continuing on the date that the principal
amount of Term Loan Outstandings is reduced to $7,000,000 or
less, then commencing on such date the Applicable Margin shall
be 2.00% per annum for a Eurodollar Rate Loan that is the Term
Loan; and
(d) 1.00% per annum for a Base Rate Loan that is
the Term Loan, provided that if no Default or Event of Default
has occurred or is continuing on the date that the principal
amount of Term Loan Outstandings is reduced to $7,000,000 or
less, then commencing on such date the Applicable Margin shall
be .50% per annum for a Base Rate Loan that is the Term Loan.
"Approved Outside Factor" means a financial institution or
factor satisfactory to the Agent and the Required Lenders who (a) is a
party to a factoring agreement or other arrangement containing such
terms as are approved in writing by the Agent and the Required Lenders
and relating to accounts not subject to the Factoring Agreement, and
(b) has entered into a parity agreement and an assignment of proceeds,
each in form and substance satisfactory to the Agent.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 12.1.
"Assignment of Factoring Proceeds" means the Assignment of
Factoring Proceeds dated July 26, 1996, by River Oaks, as agent for
the Borrowers, and accepted and agreed to by the Agent and BNYFC, as
the same may be amended, modified or supplemented from time to time.
"Assignment of Trademarks, Copyrights and Licenses" means,
collectively (or individually as the context may indicate), (i) each
Assignment of Trademarks, Copyrights
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and Licenses dated as of the date hereof by any Borrower or any
Subsidiary to the Agent, and (ii) any additional Assignment of
Trademarks, Copyrights and Licenses delivered to the Agent pursuant to
Section 8.19, each as hereafter amended, supplemented or replaced from
time to time.
"Authorized Representative" means any of the President or the
chief financial officer of River Oaks or, with respect to financial
matters, the chief financial officer of River Oaks, or any other
Person expressly designated by River Oaks as an Authorized
Representative of the Borrowers, as set forth from time to time in a
certificate in the form of Exhibit C.
"Bank" means The Bank of New York, a New York banking
corporation.
"Bank of Mississippi" means Bank of Mississippi, a Mississippi
banking corporation.
"Bank of Mississippi Intercreditor Agreement" means that
certain Consent and Waiver among the Bank of Mississippi, the Agent
and River Oaks, dated as of the Closing Date, as amended, supplemented
or replaced from time to time.
"Base Rate" means the per annum rate of interest equal to the
sum of (x) the greater of (i) the Prime Rate or (ii) the Federal Funds
Effective Rate plus one-half of one percent (.50%), plus (y) the
Applicable Margin. Any change in the Base Rate resulting from a
change in the Prime Rate or the Federal Funds Effective Rate shall
become effective as of 12:01 A.M. of the Business Day on which each
such change occurs.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrowers' Account" means a demand deposit account number
_____________________ with Bank of Mississippi or any successor
account with Bank of Mississippi or the Agent, which may be maintained
at one or more offices of Bank of Mississippi or the Agent, or an
agent of Bank of Mississippi or the Agent.
"Borrowing Base" means, as of any date of determination
thereof, an amount equal to:
(a) all Eligible Credit Approved Receivables
multiplied by 95%; plus
(b) the lesser of (i) all Eligible Non-Credit
Approved Receivables multiplied by 90%, or (ii) $5,000,000;
plus
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(c) the lesser of (i) all Eligible Inventory, as
set forth in the most recent Inventory Designation delivered
pursuant to Section 6.1(x) or Section 8.1(d), multiplied by
60%, or (ii) $12,000,000; minus
(d) such reserves as the Agent, in its sole
discretion, may deem necessary.
The definition of "Borrowing Base" shall be automatically amended, as
set forth in Section 3.7(a), simultaneously with the reduction of the
Total Revolving Credit Commitment pursuant to such Section.
"Borrowing Notice" means the telephonic notice delivered by an
Authorized Representative in connection with an Advance under the
Revolving Credit Facility or the Overadvance Facility, as confirmed by
written notice in the form of Exhibit E.
"Business Day" means any day which is not a Saturday, Sunday
or a day on which banks in the State of New York are authorized or
obligated by law, executive order or governmental decree to be closed.
"Capital Expenditures" means, with respect to River Oaks and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
River Oaks or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of River Oaks and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced
in writing and submitted to the Agent together with any compliance
certificate delivered pursuant to Section 8.1(a) or (b), and (ii) with
respect to any Capital Lease entered into by River Oaks or its
Subsidiaries during such period, the present value of the lease
payments due under such Capital Lease over the term of such Capital
Lease applying a discount rate equal to the interest rate provided in
such lease (or in the absence of a stated interest rate, that rate
used in the preparation of the financial statements described in
Section 8.1(a)), all the foregoing in accordance with GAAP applied on
a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than
Xxxxxxx X. Xxxxxx or Xxxx X. Nail either (A) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Exchange
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Act), directly or indirectly, of Voting Stock of River Oaks
(or securities convertible into or exchangeable for such
Voting Stock) representing 33-1/3% or more of the combined
voting power of all Voting Stock of River Oaks (on a fully
diluted basis) or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of
the River Oaks;
(ii) any Person other than River Oaks or R.O. East
(A) owns any Voting Stock (or securities convertible into or
exchangeable for any Voting Stock) of any Borrower other than
River Oaks or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of
any Borrower other than River Oaks;
(iii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of any
Borrower shall cease for any reason (other than the death,
disability or retirement of an officer of such Borrower that
is serving as a director at such time so long as another
officer of such Borrower replaces such Person as a director)
to constitute a majority of the board of directors of such
Borrower;
(iv) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition
of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of any
Borrower; or
(v) Xxxxxxx X. Xxxxxx or Xxxx X. Nail sells or
transfers any Voting Stock of River Oaks currently held by him
or otherwise reduces his percentage ownership of the Voting
Stock of River Oaks other than (A) dispositions by gift or
other transfer to relatives, provides that such relatives
agree in advance to be bound by the provisions of this clause
(v) as if they were Xxxxxxx X. Xxxxxx or Xxxx X. Nail (as the
case may be), and (B) other dispositions of up to one-fourth
(in the aggregate) of the Voting Stock held by them on the
date hereof; or
(vi) Xxxxxxx X. Xxxxxx ceases to be Chairman of the
Board or Chief Executive Officer of River Oaks; Xxxx X. Nail
ceases to be President of River Oaks; or Xxxx X. Xxxxxx ceases
to be Chief Operating Officer or Chief Financial Officer of
River Oaks; provided, however, that no Change of Control shall
occur if River Oaks obtains the approval of the Agent for the
replacement of such individuals.
"CIT" means CIT Group/Commercial Services, Inc., a New York
corporation.
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"CIT Indebtedness" means, that certain $51,000,000 credit
facility and factoring arrangement among CIT, as lender and factor,
and River Oaks, Gaines, and R.O. West, as borrowers and account
sellers, as evidenced by Notification Factoring Agreements and Loan
and Security Agreements, each dated July 25, 1995, between each of
River Oaks, Gaines, and R.O. West, and CIT, and related documentation
(including without limitation, revolving loan notes, a term loan note,
factoring agreements, and export factoring agreements.)
"Closing Date" means the date as of which this Agreement is
executed by the Borrowers, the Lenders and the Agent and on which the
conditions set forth in Section 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Collateral" means, collectively, all property of any
Borrower, any Subsidiary or any other Person in which the Agent or any
Lender is granted a Lien as security for all or any portion of the
Obligations under any Security Instrument.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the
preparation of the audited financial statements of River Oaks referred
to in Section 7.6(a).
"Consolidated Current Assets" means cash and all other assets
of River Oaks and its Subsidiaries which are expected to be realized
in cash, sold in the ordinary course of business, or consumed within
one year or which would be classified as a current asset, all
determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis, provided that Consolidated Current Assets shall
not include any prepaid items or deferred income taxes.
"Consolidated Current Liabilities" means all liabilities of
River Oaks and its Subsidiaries which by their terms are payable
within one year (including all Indebtedness payable on demand or
maturing not more than one year from the date of computation and the
current portion of Indebtedness having a maturity date in excess of
one year), all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis, provided that the Revolving Credit
Loans, Overadvance Facility Loans, current maturities of the Term Loan
or any other factoring advance shall be included in Consolidated
Current Liabilities.
"Consolidated Debt Service" means, with respect to River Oaks
and its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated
Interest Expense and, (ii) principal payments on long-term
Consolidated Indebtedness required to be paid during such Four-Quarter
Period, all
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determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
"Consolidated Debt Service Coverage Ratio" means, with respect
to River Oaks and its Subsidiaries for any Four-Quarter Period ending
on the date of computation thereof, the ratio of (i) Consolidated
EBITDA for such period, to (ii) Consolidated Debt Service for such
period.
"Consolidated EBITDA" means, with respect to River Oaks and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
(iv) amortization, and (v) depreciation and (vi) non-cash liabilities
otherwise deducted in calculating Consolidated Net Income resulting
from FASB No. 106 Adjustments or FASB No. 121 Adjustments, all
determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis; provided, however, that with respect to an
Acquisition that is accounted for as a "purchase", for any
Four-Quarter Periods that includes the date of such Acquisition,
Consolidated EBITDA shall include the results of operations of the
Person or assets so acquired, which amounts shall be determined on a
historical pro forma basis as if such Acquisition had been consummated
as a "pooling of interests".
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of River Oaks and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of River
Oaks and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
payable in connection with the incurrence of Indebtedness to the
extent included in gross interest expense and (iii) the portion of any
payments made in connection with Capital Leases allocable to interest
expense, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Lease Payments" means the gross amount of all
lease or rental payments, whether or not characterized as rent, of
River Oaks and its Subsidiaries, excluding payments in respect of
Capital Leases constituting Indebtedness, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of River Oaks and its
Subsidiaries (including payments received by River Oaks and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement
and not related to an extraordinary event), less all operating and
non-operating expenses of River Oaks and its Subsidiaries
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including taxes on income, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis; but excluding as
income: (i) net gains on the sale, conversion or other disposition of
capital assets, (ii) net gains on the acquisition, retirement, sale or
other disposition of capital stock and other securities of River Oaks
or its Subsidiaries, (iii) net gains on the collection of proceeds of
life insurance policies, (iv) any write-up of any asset, and (v) any
other net gain or credit of an extraordinary nature as determined in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of River Oaks and its Subsidiaries (determined on a
consolidated basis and excluding any upward adjustment after the
Closing Date due to revaluation of assets): (i) the amount of issued
and outstanding share capital, plus (ii) the amount of additional
paid-in capital and retained earnings (or, in the case of a deficit,
minus the amount of such deficit), plus (iii) the amount of any
foreign currency translation adjustment (if positive, or, if negative,
minus the amount of such translation adjustment), minus (iv) the
amount of any treasury stock, all as determined in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Tangible Net Worth" means, as of any date on
which the amount thereof is to be determined, Consolidated
Shareholders' Equity minus (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings) (i) all reserves (other than contingency reserves not
allocated to any particular purpose), including without limitation
reserves for depreciation, depletion, amortization, obsolescence,
deferred income taxes, insurance and inventory valuation and (ii) the
net book value of all assets which would be treated as intangible
assets, such as (without limitation) goodwill (whether representing
the excess of cost over book value of assets acquired or otherwise),
capitalized expenses, unamortized debt discount and expense,
consignment inventory rights, patents, trademarks, trade names,
copyrights, franchises and licenses, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Assets" means, as of any date on which the
amount thereof is to be determined, the net book value of all assets
of River Oaks and its Subsidiaries as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Total Capitalization" means, as of any date on
which the amount thereof is to be determined, the sum of Consolidated
Indebtedness plus Consolidated Shareholders' Equity.
"Consolidated Working Capital" means, as of any date on which
the amount thereof is to be determined, the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
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"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring
thereof, would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied
on a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, all Rate Hedging Obligations and any
obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including obligations of such Person however incurred:
(1) to purchase such Indebtedness or other
obligation or any property or assets constituting security
therefor;
(2) to advance or supply funds in any manner (i) for
the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets
of such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the
Indebtedness or such obligation of the primary obligor against
loss in respect thereof.
"Copyright Memorandum" means, collectively (or individually as
the context may indicate), any Memorandum of Copyrights delivered to
the Agent pursuant to Section 8.19, as hereafter amended, supplemented
or replaced from time to time.
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of any Borrower (other
than River Oaks) or any Subsidiary to be transferred in connection
therewith, (ii) the amount of any cash and fair market value of other
property (excluding property described in clause (i) and the unpaid
principal amount of any debt instrument) given as consideration, (iii)
the amount (determined by using the face amount or the amount payable
at maturity, whichever is greater) of any Indebtedness incurred,
assumed or acquired by any Borrower or any Subsidiary in connection
with such Acquisition, (iv) all additional purchase price amounts in
the form of earnouts and other contingent obligations that should be
recorded on the financial statements of River Oaks and its
Subsidiaries in
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accordance with GAAP, (v) all amounts paid in respect of covenants not
to compete, consulting agreements that should be recorded on financial
statements of River Oaks and its Subsidiaries in accordance with GAAP,
and other affiliated contracts in connection with such Acquisition,
(vi) the aggregate fair market value of all other consideration given
by any Borrower or any Subsidiary in connection with such Acquisition
other than consideration payable solely in common stock of River Oaks
or options, warrants or other commitments to acquire River Oaks common
stock, and (vii) out of pocket transaction costs for the services and
expenses of attorneys, accountants and other consultants incurred in
effecting such transaction, and other similar transaction costs so
incurred. For purposes of determining the Cost of Acquisition for any
transaction, (A) the capital stock of any Borrower (other than River
Oaks) or any other Subsidiary shall be valued as determined by a
committee composed of the disinterested members of the Board of
Directors of such Subsidiary and, if requested by the Agent,
determined to be a reasonable valuation by the independent public
accountants referred to in Section 8.1(a), and (B) with respect to any
Acquisition accomplished pursuant to the exercise of options or
warrants or the conversion of securities, of the party being acquired
or any other Person (except the acquiror), the Cost of Acquisition
shall include both the cost of acquiring such option, warrant or
convertible security as well as the cost of exercise or conversion.
"Credit Approved Accounts" means Accounts with respect to
which the Credit Risk is borne by BNYFC or any Approved Outside
Factor.
"Credit Risk" means the risk of loss resulting solely and
exclusively from the financial inability of a customer to pay at
maturity an Account purchased by BNYFC or an Approved Outside Factor.
"Current Ratio" means the ratio of Consolidated Current Assets
to Consolidated Current Liabilities.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate
Loans, at a rate of interest per annum which shall be two percent (2%)
above the Base Rate and (iii) in any case, the maximum rate permitted
by applicable law, if lower.
"Deposit Guaranty" means Deposit Guaranty National Bank, a
national banking association.
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"Deposit Guaranty Intercreditor Agreement" means that certain
Consent and Waiver among Deposit Guaranty, the Agent and River Oaks,
dated as of the Closing Date, as from time to time amended,
supplemented or replaced.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United
States of America.
"Eligible Credit Approved Receivables" means Eligible
Receivables that are Credit Approved Accounts.
"Eligible Non-Credit Approved Receivables" means all Eligible
Receivables other than Eligible Credit Approved Receivables.
"Eligible Inventory" means the Inventory of any Borrower which
consists of the raw materials and finished goods inventory located in
the United States of America and in which the Agent shall have a first
priority, fully perfected security interest (subject to no other Liens
of any other Person), all of which Inventory is usable, in good
condition, and saleable (at prices not less than cost) and conforms to
the representations and warranties contained in the Security
Agreement, less (to the extent otherwise included in Eligible
Inventory) (a) any goods returned or rejected by customers unless such
goods are of a quality to be saleable as first quality merchandise of
the Borrower (and otherwise meet the requirements for Eligible
Inventory), (b) any raw materials or goods to be returned to suppliers
of any Borrower, (c) any raw materials or goods in transit to third
parties, (d) any reserves required by GAAP for obsolete inventory,
market value declines, and xxxx and hold (deferred shipment) sales,
and (e) any Inventory which the Agent otherwise determines, in its
sole discretion, is not eligible.
"Eligible Receivables" means the Accounts arising from the
sale of Inventory or services by a Borrower (a) which conform (in each
case) to the representations and warranties contained in the Security
Agreement and (b) which the Agent, in its sole discretion, deems to be
acceptable for borrowing purposes. Without limiting the generality of
the foregoing, the following Accounts are not Eligible Receivables:
(i) Non-Credit Approved Accounts which remain unpaid for
more than sixty (60) days after the due date specified in the original
invoice;
(ii) Non-Credit Approved Accounts which remain unpaid for
more than ninety (90) days after the invoice date;
(iii) Non-Credit Approved Accounts due from a customer if
more than 50% of the aggregate amount of all Accounts owed, at the
time, by such customer to any Borrower remain unpaid for more than
sixty (60) days after the due date specified in the original invoice;
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(iv) Accounts with respect to which the related Inventory
or services have not been accepted by the customer, or the customer
has exercised its right of return of goods;
(v) Accounts with respect to which any dispute, offset,
defense or counterclaim has been asserted by the customer;
(vi) Accounts with respect to which the customer is a
Borrower, an Affiliate of any Borrower, or a director, officer, agent
or employee of any Borrower, or any of its Affiliates;
(vii) Accounts with respect to which the customer is the
United States of America or any department, agency or instrumentality
thereof unless the Borrowers have, with respect to such Accounts,
complied with the Federal Assignment of Claims Act (31 U.S.C. Section
3727), as amended, and any other applicable laws or regulations
(including the Federal Acquisition Regulations);
(viii) Accounts due from a customer whose principal place of
business is located outside the United States of America, Puerto Rico
or Canada unless such Account is backed by a letter of credit issued
(A) by a bank that is organized under the laws of the United States of
America or a State thereof and is otherwise acceptable to the Agent
(an "Eligible Bank") or (B) from an entity whose principal place of
business is located in a territory of the United States and confirmed
by an Eligible Bank;
(ix) Accounts due from a customer whose credit standing is
not then satisfactory to the Agent in its sole discretion;
(x) Accounts evidenced by an instrument (as defined in
Article 9 of the New York Uniform Commercial Code) not in the
possession of the Agent;
(xi) Accounts with respect to which the Agent does not
have a valid, first priority and fully perfected security interest or
ownership interest (except that the Lien of the Agent with respect to
any Accounts may be subject to the Lien of BNYFC or any Approved
Outside Factor that has purchased such Accounts);
(xii) Accounts subject to any Lien except those in favor of
the Agent or in favor of BNYFC or any Approved Outside Factor that has
purchased such Accounts;
(xiii) Accounts with respect to which the customer is the
subject of any bankruptcy or other insolvency proceeding; or
(xiv) Accounts with respect to which the customer's
obligation to pay is conditional or subject to a repurchase
obligation, including xxxx and hold sales, guaranties sale, or return
transactions, sales on approval or consignment sales.
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"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized
under the laws of any state of the United States of America or
under the laws of any other nation, payable in the United
States of America, expressed to mature not later than 92 days
following the date of issuance thereof and rated in an
investment grade rating category by S&P and Xxxxx'x;
(c) interest bearing demand or time deposits
issued by any Lender or certificates of deposit maturing
within one year days from the date of issuance thereof and
issued by a bank or trust company organized under the laws of
the United States or of any state thereof having capital
surplus and undivided profits aggregating at least
$400,000,000 and being rated "A-3" or better by S&P or "A" or
better by Xxxxx'x;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) shares of mutual funds which invest in
obligations described in paragraphs (a) through (e) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(g) tax-exempt or taxable adjustable rate
preferred stock issued by a Person having a rating of its long
term unsecured debt of "A" or better by S&P or "A-3" or better
by Xxxxx'x; and
(h) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P- 1" by Xxxxx'x.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of River Oaks or any of its ERISA Affiliates or is assumed
by River Oaks or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of River Oaks or any current or former ERISA Affiliate.
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act, as amended, the Clean Air Act, as amended, the
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Clean Water Act, as amended, any other "Superfund" or "Superlien" law
or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning,
any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Borrower, means any
Person or trade or business which is a member of a group which is
under common control with such Borrower, who together with such
Borrower, is treated as a single employer within the meaning of
Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar Rate = Interbank Offered Rate + Applicable
Margin
"Event of Default" means any of the occurrences set forth as
such in Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Extension of Credit" shall mean (i) all loans or advances
made to the Borrowers under any Loan Document, (ii) all other
extensions of credit to or for the benefit of the Borrowers under any
Loan Document and (iii) to the extent not otherwise included in the
foregoing, all Guaranteed Obligations.
"Facility Guaranty" means each Guaranty Agreement between one
or more Guarantors and the Agent for the benefit of the Lenders,
delivered as of the Closing Date and otherwise pursuant to Section
8.19, as the same may be amended, modified or supplemented from time
to time.
"Facility Termination Date" means the date on which the
Revolving Credit Termination Date shall have occurred, and the
Borrowers shall have fully, finally and irrevocably paid and satisfied
all Obligations.
"Factoring Agreement" means the BNY Financial Corporation
Factoring Agreement dated July 26, 1996, among BNYFC and the
Borrowers, as the same may be amended, modified or supplemented from
time to time (including the letter agreements,
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each dated July 26, 1996, between BNYFC and River Oaks, as agent for
the Borrowers, supplementing the Factoring Agreement).
"Factoring Documents" means the Factoring Agreement and all
other instruments and documents heretofore or hereafter executed or
delivered to or in favor of BNYFC in connection with the Accounts
factored and transactions contemplated under the Factoring Agreement,
as the same may be amended, modified or supplemented from time to
time.
"FASB No. 106 Adjustments" means adjustments to income (or
loss) less actual cash payments resulting from "retirement benefits
other than pensions" (as defined in the Statement of Financial
Accounting Standards No. 106).
"FASB No. 121 Adjustments" means adjustments charged to income
(or loss) resulting from impairment of long-lived assets (as defined
in the Statement of Financial Accounting Standards No. 121).
"Federal Funds Effective Rate" means, for any day, the rate
per annum (rounded upward to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on such day, provided that (a) if such day is not a Business Day,
the Federal Funds Effective Rate for such day shall be such rate on
such transactions on the next preceding Business Day, and (b) if no
such rate is so published on such day or such next preceding Business
Day, the Federal Funds Effective Rate for such day shall be the
average rate quoted to the Bank on such day on such transactions from
three federal funds brokers of recognized standing as determined by
the Agent.
"Fiscal Year" means the twelve month fiscal period of River
Oaks and its Subsidiaries commencing on January 1 of each calendar
year and ending on December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of River Oaks and its Subsidiaries, taken together as
one accounting period.
"Xxxxxx" has the meaning specified in the preamble hereto.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
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Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranteed Obligations" has the meaning given to such term in
Section 12.14(b).
"Guaranty Adjusted Net Worth" of any Initial Guarantor (other
than River Oaks), for the purposes of Section 12.14(b) shall mean, as
of any date of determination thereof, the excess of (i) the amount of
the "present fair saleable value" of the assets of such Initial
Guarantor as of the date of such determination, over (ii) the amount
of all "liabilities" of such Initial Guarantor, "contingent or
otherwise" as of the date of such determination, as such quoted terms
are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors. In determining
the Guaranty Adjusted Net Worth of any Initial Guarantor for the
purposes of calculating the Maximum Guaranty Amount for such Initial
Guarantor in respect of any of the Guaranteed Obligations, the
liabilities of such Initial Guarantor to be used in such determination
pursuant to clause (ii) of the preceding sentence shall exclude the
liabilities of such Initial Guarantor hereunder in respect of the
Guaranteed Obligations and any other guarantees of the obligations of
the Borrowers incurred after the date hereof.
"Guaranty Determination Date" shall mean, with respect to any
Initial Guarantor, the earlier of (a) the date of commencement of a
case under Title 11 of the United States Code in which such Initial
Guarantor is a debtor and (b) the date enforcement hereunder is sought
with respect to such Guarantor.
"Guaranties" means all obligations of any Borrower or any
Subsidiary directly or indirectly guaranteeing, or in effect
guaranteeing, any Indebtedness or other obligation of any other
Person.
"Guarantors" means, at any date, all Subsidiaries of River
Oaks who have executed and delivered a Facility Guaranty and the other
documents required under Section 8.19.
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"Hazardous Material" means and includes any hazardous, toxic
or dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Contingent Obligations, that portion of obligations with respect to
Capital Leases and other items which in accordance with GAAP is
required to be classified as a liability on a balance sheet; but
excluding all accounts payable in the ordinary course of business so
long as payment therefor is due within one year; provided that in no
event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and investment credits, or other
deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, (a) all indebtedness in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title
retention agreements), other than trade payables incurred in the
ordinary course of business, and (b) without duplication, all
Obligations under this Agreement or any other Loan Document.
"Initial Guarantors" has the meaning given to such term in
Section 12.14(b).
"Intellectual Property" has the meaning given to such term in
Section 7.13.
"Intellectual Property Security Agreement" means, collectively
(or individually as the context may indicate), (i) the Intellectual
Property Security Agreement dated as of the date hereof by the
Borrowers to the Agent, and (ii) any additional Intellectual Property
Security Agreement delivered to the Agent pursuant to Section 8.19 ,
as hereafter amended, supplemented or replaced from time to time.
"Interbank Offered Rate" means, with respect to any day, the
rate of interest equal to the rate per annum listed in The Wall Street
Journal on such day as the London Interbank Offered Rate for a period
equal to one month.
"Intercreditor Agreements" means the Bank of Mississippi
Intercreditor Agreement and the Deposit Guaranty Intercreditor
Agreement.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
conversion of any Eurodollar Rate Loan
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into a Base Rate Loan or the conversion of any Base Rate Loan into a
Eurodollar Rate Loan, in the form of Exhibit F.
"Inventory" of a Person means all inventory of such Person
wherever located, including without limitation, all goods manufactured
or acquired for sale or lease, and any piece goods, raw materials,
work in process and finished merchandise, findings or component
materials, and all supplies, goods, incidentals, office supplies,
packaging materials and any and all items used or consummated in the
operation of the business of such Person or which may contribute to
the finished product or to the sale, promotion and shipment thereof,
in which such Person now or at any time hereafter may have an
interest, whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of such
Person or is held by such Person or by others for such Person's
account.
"Inventory Designation" means a certificate of an Authorized
Representative in the form attached hereto as Exhibit D.
"Landlord Waiver" means a landlord waiver in the form of
Exhibit G hereto delivered, as requested by the Agent, by each
landlord with respect to leased facilities of any Borrower or any
Subsidiary.
"Lending Office" means, as to each Lender, the Lending Office
of such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time
specify to the Authorized Representative and the Agent as the office
by which its Loans are to be made and maintained.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, any Borrower and any
Subsidiary shall be deemed to be the owner of any property which it
has acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" means any of the Revolving Loans, the
Overadvance Facility Loans or the Term Loan made under the Revolving
Credit Facility, the Overadvance Facility or the Term Loan Facility,
respectively.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the Factoring Documents and all
other instruments and documents heretofore or hereafter executed or
delivered to or in favor of any Lender or the Agent in
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connection with the Loans made and transactions contemplated under
this Agreement or the Factoring Agreement, as the same may be amended,
supplemented or replaced from the time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, business prospects, properties, operations or
condition, financial or otherwise, of River Oaks or any of its
Subsidiaries, (ii) the ability of River Oaks or any of its
Subsidiaries to pay or perform its respective obligations, liabilities
and indebtedness under the Loan Documents as such payment or
performance becomes due in accordance with the terms thereof, or (iii)
the rights, powers and remedies of the Agent or any Lender under any
Loan Document or the validity, legality or enforceability thereof
(including for purposes of clauses (ii) and (iii) the imposition of
burdensome conditions thereon).
"Maximum Guaranty Amount" for any Initial Guarantor shall
mean, as of the Guaranty Determination Date for such Initial
Guarantor, the sum of:
(i) an amount equal to the sum of each Extension
of Credit (or portion thereof) that is loaned or advanced to
such Initial Guarantor or the proceeds of which are used to
make a Valuable Transfer to such Initial Guarantor; plus
(ii) interest on such amount at the rate specified
in the Credit Agreement; plus
(iii) the greater of:
(A) ninety-five percent (95%) of the
Guaranty Adjusted Net Worth of such
Initial Guarantor at the date of
execution of this Agreement before
giving effect to any Extensions of
Credit made on such date; and
(B) ninety-five percent (95%) of the
Guaranty Adjusted Net Worth of such
Initial Guarantor at the Guaranty
Determination Date for such Initial
Guarantor without giving effect to
any Extension of Credit made after
the date of the execution of this
Guaranty.
There shall be deducted in determining the Maximum Guaranty Amount for
any Initial Guarantor amounts, if any, collected from such Initial
Guarantor in respect of the Guaranteed Obligations by or on behalf of
any holder of the Guaranteed Obligations pursuant to any Loan
Document.
"Mortgage" means, collectively, all Mortgages, Deeds of Trust
and Deeds to Secure Debt granting a Lien to the Agent (or a trustee
for the benefit of the Agent) for the
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benefit of the Lenders in Collateral constituting real property, as
such documents may be amended, modified or supplemented from time to
time.
"Xxxxx'x" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which River Oaks or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Xxxxx'x.
"Net Proceeds" when used with respect to any insurance
proceeds shall mean the gross proceeds from such proceeds, award or
other amount, less all taxes, fees and expenses (including attorneys'
fees) incurred in the realization thereof.
"Non-Credit Approved Accounts" means all Accounts other than
Credit Approved Accounts.
"Notes" means, collectively, the Term Notes and the Revolving
Notes.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrowers with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, and (ii) the payment
and performance of all other obligations, liabilities and Indebtedness
of the Borrowers to the Lenders or the Agent hereunder, under the
Factoring Agreement or any other Loan Document or with respect to the
Loans.
"Outstandings" means, collectively, at any date, the Term Loan
Outstandings, Revolving Credit Outstandings and Overadvance Facility
Outstandings on such date.
"Overadvance Facility" means the overadvance facility
established by the Lenders in favor of the Borrowers pursuant to
Section 3.1(b).
"Overadvance Facility Commitment" means, with respect to each
Lender, the obligation of such Lender to make Overadvance Facility
Loans to the Borrowers up to an aggregate principal amount at any one
time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Overadvance Facility Sublimit.
"Overadvance Facility Loan" means any borrowing pursuant to an
Advance under the Overadvance Facility in accordance with Section
3.1(b).
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"Overadvance Facility Outstandings" means, as of any date of
determination, the aggregate principal amount of all Overadvance
Facility Loans then outstanding.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of River Oaks or
any of its ERISA Affiliates or is assumed by River Oaks or any of its
ERISA Affiliates in connection with any Acquisition or (ii) has at any
time been maintained for the employees of River Oaks or any current or
former ERISA Affiliate.
"Permitted Liens" shall have the meaning given to such term in
Section 9.4.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Stock Pledge Agreement dated
as of the date hereof between the Borrowers and the Agent for the
benefit of the Agent and the Lenders, and (ii) any additional Stock
Pledge Agreement or Collateral Assignment of Partnership Interests
delivered to the Agent pursuant to Section 8.19, as hereafter amended,
supplemented or replaced from time to time.
"Pledged Stock" has the meaning given to such term in the
Pledge Agreement.
"Prime Rate" means the rate of interest per annum announced
publicly by the Bank as its prime rate from time to time. The Prime
Rate is a reference rate used by the Bank and not necessarily the best
or the lowest rate of interest offered by the Bank.
"Principal Office" means the office of the Agent at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other office
and address as the Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of
River Oaks or any Subsidiary, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
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cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate "swap" agreements;
and (ii) any and all cancellations, buybacks, reversals, terminations
or assignments of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
including those relating to "highly leveraged transactions," whether
or not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Xxxxx'x or "A-1" by
S&P or "P-1" by Xxxxx'x.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least (i) if
there shall be fewer than three (3) Lenders, 100% of the aggregate
Credit Exposures of all Lenders on such date, and (ii) if there shall
be three (3) or more Lenders, 66-2/3% of the aggregate Credit
Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "Credit Exposure" of each Lender
shall be equal to the aggregate principal amount of the Loans owing to
such Lender plus the aggregate unutilized amounts of such Lender's
Revolving Credit Commitment plus the amount of such Lender's
Applicable Commitment Percentage of the Term Loan Outstandings.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of River Oaks or any of its Subsidiaries (other than
those payable or distributable solely to River Oaks) now or hereafter
outstanding, except a dividend payable solely in shares of a class of
stock to the holders of that class; (b) any redemption, conversion,
exchange, retirement or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of
River Oaks or any of its Subsidiaries (other than those payable or
distributable solely to River Oaks or payable solely in the form of
River Oaks common stock) now or hereafter outstanding; (c) any payment
made to retire, or to obtain the
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surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of River Oaks or any of its
Subsidiaries now or hereafter outstanding; and (d) any issuance and
sale of capital stock of any Subsidiary of River Oaks (or any option,
warrant or right to acquire such stock) other than to the River Oaks.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrowers up to an aggregate principal amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in
Article III hereof providing for Loans to the Borrowers by the Lenders
up to an aggregate principal amount of the Total Revolving Credit
Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans
then outstanding and all interest accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 10.1 upon the occurrence of an Event
of Default, or (iii) such date as the Borrowers may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings and all other Outstandings, in
accordance with the terms of Section 3.7.
"Revolving Loan" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with Section 3.1(a).
"Revolving Notes" means, collectively, the promissory notes of
the Borrowers evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 3.4 substantially in the form of
Exhibit H-1, with appropriate insertions as to amounts, dates and
names of Lenders.
"River Oaks" has the meaning given such term in the preamble
hereto.
"R.O. East" has the meaning given such term in the preamble
hereto.
"R.O. West" has the meaning given such term in the preamble
hereto.
"S&P" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Security Agreement dated as of the
date hereof by the Borrowers to the
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Agent, and (ii) any additional Security Agreement delivered to the
Agent pursuant to Section 8.19, as hereafter modified, amended or
supplemented from time to time.
"Security Instruments" means, collectively, the Pledge
Agreement, the Security Agreement, the Intellectual Property Security
Agreement, the Mortgage, the Copyright Memorandum, the Assignment of
Trademarks, Copyrights and Licenses, the Assignment of Factoring
Proceeds and all other agreements, instruments and other documents,
whether now existing or hereafter in effect, pursuant to which the
Borrowers or any Subsidiary or Affiliate shall grant or convey to the
Agent or the Lenders a Lien in property as security for all or any
portion of the Obligations, as any of them may be amended, modified or
supplemented from time to time.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which River Oaks or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means July 26, 1999, as such date
may be extended pursuant to Section 3.12.
"Subsidiary" means R.O. West, R.O. East, Xxxxxx or any other
corporation or other entity in which more than 50% of its outstanding
voting stock or more than 50% of all equity interests is owned
directly or indirectly by any Borrower and/or by one or more of a
Borrower's Subsidiaries.
"Term Loan" means the loan made pursuant to the Term Loan
Facility in accordance with Article II.
"Term Loan Commitment" means, with respect to each Lender, the
obligation of such Lender to make the Term Loan to the Borrowers in a
principal amount equal to such Lender's Applicable Commitment
Percentage of the Total Term Loan Commitment as set forth on Exhibit
A.
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"Term Loan Facility" means the facility described in Article
II providing for a Term Loan to the Borrowers by the Lenders in the
original principal amount of the Total Term Loan Commitment.
"Term Loan Maturity Date" means July 26, 2001, subject to any
acceleration of the Term Loan pursuant to this Agreement or any other
Loan Document.
"Term Loan Outstandings" means, as of any date of
determination, the aggregate principal amount of the Term Loan then
outstanding and all interest accrued thereon.
"Term Loan Termination Date" means the earlier of (a) the Term
Loan Maturity Date, or (b) the Revolving Credit Termination Date.
"Term Notes" means, collectively, the promissory notes of the
Borrowers evidencing the Term Loan executed and delivered to the
Lenders as provided in Section 2.7 substantially in the form of
Exhibit H-2, with appropriate insertions as to amounts, dates and
names of Lenders.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of River Oaks or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete
withdrawal of River Oaks or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA; or (viii) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan
under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any
event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Total Overadvance Facility Sublimit" means a principal amount
equal to $3,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to $42,000,000.
"Total Term Loan Commitment" means a principal amount equal to
$9,000,000.
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"Valuable Transfer" means, as to any Initial Guarantor, (i)
all loans, advances or capital contributions made to such Initial
Guarantor with proceeds of Guaranteed Obligations, (ii) all debt
securities or other obligations of such Initial Guarantor acquired
from any Borrower or retired by any Borrower with proceeds of
Guaranteed Obligations, (iii) the fair market value of all property
acquired with proceeds of Guaranteed Obligations and transferred,
absolutely and not as collateral, to such Initial Guarantor and (iv)
the value of any quantifiable economic benefits not included in
clauses (i) through (iii) above, but included in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, accruing to such Initial Guarantor as a result
of the incurrence of Guaranteed Obligations.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein
shall have the meanings assigned to such terms and shall be
interpreted in accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the New York
Uniform Commercial Code shall have the meaning given therein unless
otherwise defined herein, except to the extent that the Uniform
Commercial Code of another jurisdiction is controlling, in which case
such terms shall have the meaning given in the Uniform Commercial Code
of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references
herein to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules are references to articles,
sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of
such defined term, and all references to the masculine gender shall
include reference to the feminine or neuter gender, and vice versa, as
the context may require.
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(f) When used herein or in any other Loan Document, words
such as "hereunder", "hereto", "hereof" and "herein" and other words
of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without
limiting the generality of any description preceding such term, and
for purposes hereof the rule of ejusdem generis shall not be
applicable to limit a general statement, followed by or referable to
an enumeration of specific matters, to matters similar to those
specifically mentioned.
(h) When used herein or in any other Loan Document,
unless the context clearly indicates to the contrary, the word "or"
includes the concept "and/or."
(i) All dates and times of day specified herein shall
refer to such dates and times at New York, New York.
(j) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the
opportunity to request) revisions to, the Loan Documents, and any rule
of construction that ambiguities are to be resolved against the
drafting party shall be inapplicable in the construing and
interpretation of the Loan Documents and all exhibits, schedules and
appendices thereto.
(k) Any reference to an officer of any Borrower or any
other Person by reference to the title of such officer shall be deemed
to refer to each other officer of such Person, however titled,
exercising the same or substantially similar functions.
(l) All references to any agreement or document as
amended, modified or supplemented, or words of similar effect, shall
mean such document or agreement, as the case may be, as amended,
modified or supplemented from time to time only as and to the extent
permitted therein and in the Loan Documents.
(m) For the purpose of any financial term or covenant,
the Borrowers shall record each Account as an asset at its gross value
and shall record any Revolving Loan, Overadvance Facility Loan,
current maturity of the Term Loan or any other factoring advance as a
current liability.
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ARTICLE II
The Term Loan
2.1. Term Loan. (a) Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make an Advance of the Term Loan to
River Oaks (for itself and the other Borrowers) on the Closing Date on a pro
rata basis determined by its Applicable Commitment Percentage up to the Term
Loan Commitment of such Lender. The principal amount of the Term Loan
outstanding from time to time shall bear interest, at River Oaks' election, at
an interest rate per annum equal to the Base Rate or the Eurodollar Rate. No
amount of the Term Loan repaid or prepaid by any Borrower may be reborrowed
hereunder, and no subsequent Advances of Term Loan amounts shall be made by any
Lender after the initial such Advance.
(b) Interest and fees relating to the Term Loan shall be computed
on the basis of a year of 360 days and calculated for the actual number of days
elapsed.
2.2. Term Loan Advance. Not later than 1:00 P.M., on the Closing
Date, each Lender shall, pursuant to the terms and subject to the conditions of
this Agreement, make the amount of the Term Loan Advance to be made by it on
such day available by wire transfer to the Agent in the amount of its Term Loan
Commitment. Such wire transfer shall be directed to the Agent at the Principal
Office and shall be in the form of immediately available, freely transferable
Dollars. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrowers by delivery of
the proceeds thereof to the Borrowers' Account or otherwise as shall be
directed by the Authorized Representative and reasonably acceptable to the
Agent.
2.3. Payment of Principal. The principal amount of the Term Loan
shall be repaid in (a) fifty-nine (59) equal monthly payments of $107,142.86
each, on the first Business Day of each month, commencing on September 1, 1996,
and (b) a final payment equal to the outstanding principal balance of the Term
Loan on the Term Loan Maturity Date; provided, however, that the entire amount
of Term Loan Outstandings shall be due and payable in full on the Term Loan
Termination Date.
2.4. Payment of Interest. The Borrowers shall pay interest on the
outstanding and unpaid principal amount of Term Loan commencing on the Closing
Date, at the applicable Base Rate or Eurodollar Rate, as the case may be, as
designated by River Oaks in the applicable Borrowing Notice or Interest Rate
Selection Notice or as otherwise provided hereunder. Interest shall be
computed on the basis of a year of 360 days and calculated for actual days
elapsed. Interest on the Term Loan shall be paid (a) monthly in arrears on the
first Business Day of each month and (b) on the date of payment in full of the
Term Loan; provided, however, that if any amount due under this Agreement shall
not be paid when due (at maturity, by acceleration or otherwise), all amounts
outstanding hereunder shall bear interest thereafter at the Default Rate.
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2.5. Manner of Payment. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid to the Lenders with respect to the Term Loan, shall be made to the
Agent at the Principal Office for the account of each Lender in Dollars in
immediately available funds on or before 12:30 P.M. on the date such payment is
due. The Agent may, but shall not be obligated to, debit the amount of such
payment from any one or more ordinary deposit accounts or factoring accounts of
any Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of any
Borrower that is not made both in Dollars in immediately available funds and
prior to 12:30 P.M. on the date such payment is to be made to be a
non-conforming payment. Any such non-conforming payment shall not be deemed to
be received by the Agent until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming payment may
constitute or become a Default or Event of Default if receipt on the date of
determination by the preceding sentence would constitute or become a Default or
Event of Default. Interest shall continue to accrue on any principal as to
which a non- conforming payment is made until the later of (x) the date such
funds become available funds or (y) the next Business Day, and if such
non-conforming payment is overdue, the interest shall be calculated at the
Default Rate, from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Term
Notes becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day; provided, however,
that interest shall continue to accrue during the period of any such extension;
and provided further, however, that in no event shall any such due date be
extended beyond the Term Loan Termination Date.
2.6. Optional Prepayments. The Borrowers may prepay the Term Loan
in whole or in part from time to time on any Business Day, without penalty or
premium, upon not less than three (3) Business Days' prior written notice
(effective upon receipt) to the Agent, which notice shall be irrevocable. Any
prepayment, whether a Base Rate Loan or a Eurodollar Rate Loan, shall be made
at a prepayment price equal to (i) the amount of principal to be prepaid, plus
(ii) all accrued and unpaid interest on the amount so prepaid, to the date of
prepayment. All prepayments under this Section 2.6 shall be made in the
minimum principal amount of $500,000 or any integral multiple of $100,000 in
excess thereof (or in the entire remaining principal balance of the Term Loan),
and all such prepayments of principal shall be applied to installments of
principal in inverse order of their maturities.
2.7. Term Notes. The portion of the Term Loan made by each Lender
shall be evidenced by the Term Note payable to the order of such Lender in the
respective amount of its Term Loan Commitment, which Term Notes shall be dated
the Closing Date or a later date pursuant to an Assignment and Acceptance and
shall be duly completed, executed and delivered by the Borrowers.
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2.8. Use of Proceeds. The proceeds of the Term Loan hereunder
shall be used by the Borrowers exclusively to refinance the CIT Indebtedness
and for working capital purposes.
2.9. Conversions. The Term Loan shall, at the option of River Oaks
specified in an Interest Rate Selection Notice, be a Eurodollar Rate Loan or a
Base Rate Loan. Provided that no Default or Event of Default shall have
occurred and be continuing and subject to the limitations set forth below and
in Article V, River Oaks may, upon delivery (effective upon receipt) of a
properly completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. on any Business Day, convert a Eurodollar Rate Loan to a Base Rate
Loan or convert a Base Rate Loan to a Eurodollar Rate Loan. The Agent shall
give written notice to each Lender of such notice of conversion prior to 3:00
P.M. on the day such notice of conversion is received. All such conversions of
Loans shall be effected pro rata based on the Applicable Commitment Percentages
of the Lenders.
2.10. Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on the Term Loan and
the fees described in Section 2.12 shall be made to the Agent for the account
of the Lenders pro rata based on their Applicable Commitment Percentages, (b)
all payments to be made by the Borrowers for the account of each of the Lenders
on account of principal, interest and fees, shall be made without diminution,
set-off, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from the Borrowers.
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ARTICLE III
The Revolving Credit Facility and Overadvance Facility
3.1. Revolving Loans and Overadvance Facility Loans.
(a) Revolving Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to any one or more of
the Borrowers under the Revolving Credit Facility from time to time from the
Closing Date until the Revolving Credit Termination Date on a pro rata basis as
to the total borrowing requested by the Borrowers on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding the Revolving
Credit Commitment of such Lender, provided, however, that the Lenders will not
be required and shall have no obligation to make any such Advance (i) so long
as a Default or an Event of Default has occurred and is continuing or (ii) if
the Agent has accelerated the maturity of any of the Notes as a result of an
Event of Default; provided further, however, that immediately after giving
effect to each such Advance, (x) the principal amount of Revolving Credit
Outstandings shall not exceed the lesser of the Total Revolving Credit
Commitment or the Borrowing Base and (y) the principal amount of Revolving
Credit Outstandings plus the principal amount of Overadvance Facility
Outstandings shall not exceed the lesser of (1) the Total Revolving Credit
Commitment or (2) the Borrowing Base plus $3,000,000. Within such limits, the
Borrowers may borrow, repay and reborrow under the Revolving Credit Facility on
a Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date.
(b) Overadvance Facility Loans. Subject to the terms and
conditions this Agreement, and subject to the discretion of the Agent as to
whether any such Loans shall be made (as set forth below), each Lender
severally agrees to make Advances to any one or more of the Borrowers under the
Overadvance Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrowers on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Overadvance Facility
Commitment of such Lender, provided, however, that the Lenders will not be
required and shall have no obligation to make any such Advance (i) so long as a
Default or an Event of Default has occurred and is continuing, or (ii) if the
Agent has accelerated the maturity of any Obligations as a result of an Event
of Default, or (iii) if the Agent otherwise determines, in its sole discretion,
that any such Advance shall not be made; provided further, however, that
immediately after giving effect to each such Advance, (x) the principal amount
of Overadvance Facility Outstandings shall not exceed $3,000,000, (y) the
principal amount of Revolving Credit Outstandings shall be exactly equal to the
Borrowing Base, and (z) the principal amount of Overadvance Facility
Outstandings plus, the principal amount of Revolving Credit Outstanding shall
not exceed the Total Revolving Credit Commitment.
(c) Amounts. In the event that on any day, the principal amount
of Revolving Credit Outstandings (whether alone or in conjunction with the
principal amount of Overadvance Facility Outstandings, as applicable) exceeds
any of the limits set forth in clause (x) or (y) of Section
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3.1(a), the Borrowers shall immediately make such payments and
prepayments as shall be necessary to eliminate such excess.
(d) Advances. (i) An Authorized Representative of River Oaks (as
agent on behalf of the Borrowers) shall give the Agent irrevocable telephonic
notice (prior to 1:00 P.M. on the date of the proposed Loan) requesting a
Revolving Loan or Overadvance Facility Loan, and specifying the amount of the
borrowing, the type of interest rate (Base Rate or Eurodollar Rate), and the
date of borrowing. The Authorized Representative shall confirm such telephonic
notice by telefacsimile transmission (on the same day) of a written Borrowing
Notice, with appropriate insertions. (Except in the case of any Borrower's
request for an Overadvance Facility Loan which the Agent has not approved),
notice of receipt of each oral, telephonic Borrowing Notice, together with the
amount of each Lender's portion of an Advance requested thereunder, shall be
provided by the Agent to each Lender by telefacsimile transmission with
reasonable promptness, but (provided the Agent shall have received such
telephonic notice by 1:00 P.M.) not later than 1:30 P.M. on the same day as the
Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each
borrowing under this Section 3.1, each Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, make the amount of the Advance or
Advances to be made by it on such day available by wire transfer to the Agent
in the amount of its pro rata share, determined according to such Lender's
Applicable Commitment Percentage of the Revolving Loan(s) or Overadvance
Facility Loan(s) to be made on such day. Such wire transfer shall be directed
to the Agent at the Principal Office and shall be in the form of Dollars
constituting immediately available funds. The amount so received by the Agent
(or made available by the Agent through a deficiency advance under Section
3.10) shall, subject to the terms and conditions of this Agreement, be made
available to the Borrowers by delivery of the proceeds thereof to the
Borrowers' Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative and reasonably acceptable to
the Agent. River Oaks (as agent on behalf of the Borrowers) shall disburse the
proceeds of such Advance to the applicable Borrower or Borrowers.
(iii) The Borrowers shall have the option to convert the Revolving
Loans and Overadvance Facility Loans in accordance with Section 3.8. Eurodollar
Rate Loans and Base Rate Loans may be outstanding at the same time.
3.2. Payment of Interest. (a) The Borrowers shall pay interest to
the Agent for the account of each Lender on the outstanding and unpaid
principal amount of each Revolving Loan and Overadvance Facility Loan made by
such Lender for the period commencing on the date the proceeds of such Loan are
made available to the Borrower (in accordance with Section 3.1(d)(ii)) until
such Loan shall be due at the then applicable Base Rate for Base Rate Loans or
applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by the
Authorized Representative pursuant to Section 3.1; provided, however, that if
any amount shall not be paid when due (at maturity, by acceleration or
otherwise), all amounts outstanding hereunder shall bear interest thereafter at
the Default Rate.
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(b) Interest on each Revolving Loan and each Overadvance Facility
Loan shall be computed on the basis of a year of 360 days and calculated in
each case for the actual number of days elapsed. Interest on each Revolving
Loan and each Overadvance Facility Loan shall be paid (i) monthly in arrears on
the first Business Day of each month and (ii) upon payment in full of the
principal amount of such Loan.
3.3. Payment of Principal. The principal amount of each Revolving
Loan and each Overadvance Facility Loan shall be due and payable to the Agent
for the benefit of each Lender in full on the Revolving Credit Termination
Date, or earlier as specifically provided herein. The principal amount of any
Loan may be prepaid in whole or in part at any time. The Borrowers must repay
all Overadvance Facility Outstandings within 120 days after obtaining any
Overadvance Facility Loan. Upon repayment of all Overadvance Facility
Outstandings in accordance with the preceding sentence, the Borrowers shall not
request any additional Overadvance Facility Loans (and the Borrowers may not
have any Overadvance Facility Outstandings) for a period of at least 30 days.
3.4. Non-Conforming Payments. (a) Each payment of principal
(including any prepayment) and payment of interest and fees, and any other
amount required to be paid to the Lenders with respect to the Revolving Loans
or Overadvance Facility Loans, shall be made to the Agent at the Principal
Office, for the account of each Lender, in Dollars and in immediately available
funds before 12:30 P.M. on the date such payment is due. The Agent may, but
shall not be obligated to, debit the amount of any such payment which is not
made by such time to any ordinary deposit account or factoring account of any
Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrowers hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later of
(i) the time such funds become available funds and (ii) the next Business Day.
Any non-conforming payment may constitute or become a Default or Event of
Default if receipt on the date determined by the preceding sentence would
constitute a Default or Event of Default. Interest shall continue to accrue on
any principal as to which a non-conforming payment is made until the later of
(x) the date such funds become available funds or (y) the next Business Day at
the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Revolving
Notes becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day; provided that
interest shall continue to accrue during the period of any such extension and
provided further, that in no event shall any such due date be extended beyond
the Revolving Credit Termination Date.
3.5. Revolving Notes. Revolving Loans and Overadvance Facility
Loans made by each Lender shall be evidenced by the Revolving Note payable to
the order of such Lender in the respective amount of its Applicable Commitment
Percentage of the Revolving Credit Commitment, which Revolving Note shall be
dated the Closing Date or a later date pursuant to
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an Assignment and Acceptance and shall be duly completed, executed and
delivered by the Borrowers.
3.6. Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on the Revolving Loans
or the Overadvance Facility Loans, and the fees described in Section 3.9 shall
be made to the Agent for the account of the Lenders pro rata based on their
Applicable Commitment Percentages, (b) all payments to be made by the Borrowers
for the account of each of the Lenders on account of principal, interest and
fees, shall be made without diminution, setoff, recoupment or counterclaim, and
(c) the Agent will promptly distribute to the Lenders in immediately available
funds payments received in fully collected, immediately available funds from
the Borrowers.
3.7. Reduction and Early Termination.
(a) Reduction of Total Revolving Credit Commitment. The
Borrowers shall, upon not less than three (3) Business Days' notice to
the Agent from an Authorized Agent, have the right at any time to
reduce the Total Revolving Credit Commitment to exactly $30,000,000,
provided that the definition of "Borrowing Base" shall be
simultaneously and automatically amended (effective on and after the
date of such reduction) so that as amended it shall read as follows:
"'Borrowing Base' means, as of the date of
determination thereof, an amount equal to:
(a) all Eligible Credit Approved
Receivables multiplied by 95%; plus
(b) the lesser of (i) all Eligible
Non-Credit Approved Receivables multiplied by 90%, or
(ii) $5,000,000; minus
(c) such reserves as the Agent, in its
sole discretion, may deem necessary";
provided further that both immediately before and immediately after
such reduction of the Total Revolving Credit Commitment and such
amendment of the "Borrowing Base": (A) the Borrowers shall be in
compliance with Sections 3.1(a)(ii)(x) and (y) and (B) no Default or
Event of Default shall have occurred and be continuing.
(b) Early Termination by Borrowers. The Borrowers may,
upon at least 90 days' written notice from an Authorized
Representative of River Oaks to the Agent, terminate all (but not less
than all) of the Revolving Credit Facility, the Term Loan Facility and
the Overadvance Facility prior to the then applicable Revolving Credit
Termination Date (as such date may have been previously extended
pursuant to Section
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3.12, the "Scheduled Termination Date"), by paying to the Agent on the
effective date of such early termination (the "Early Termination
Date") an amount equal to the sum of: (a) all Revolving Credit
Outstandings, Term Loan Outstandings and Overadvance Facility
Outstandings, plus (b) all other Obligations then due and owing under
the Loan Documents (subject, however, to the ability of BNYFC (in its
discretion) to extend the maturity of the Factoring Agreement pursuant
to Section thereof), plus (c) an amount equal to the Minimum
Factoring Commission from the Early Termination Date through the
Scheduled Termination Date.
3.8. Conversions. Provided that no Default or Event of Default
shall have occurred and be continuing and subject to the limitations set forth
below and in Article VI, the Borrowers may, upon delivery (effective upon
receipt) of a properly completed Interest Rate Selection Notice from an
Authorized Representative of River Oaks to the Agent on or before 10:30 A.M. on
any Business Day, convert all or a part of Eurodollar Rate Loans to Base Rate
Loans, or convert all or a part of Base Rate Loans to Eurodollar Rate Loans.
The Agent shall give written notice to each Lender of such notice of conversion
prior to 3:00 P.M. on the day such notice of conversion is received. All such
conversions of Loans shall be effected pro rata based on the Applicable
Commitment Percentages of the Lenders.
3.9. Facility Fees.
(a) Unused Facility Fee. For the period beginning on the
Closing Date and ending on the Revolving Credit Termination Date, the
Borrowers agree to pay to the Agent, for the pro rata benefit of the
Lenders based on their Applicable Commitment Percentages, an unused
fee equal to a rate of one-half of one percent (.50%) per annum
applied to the average daily amount by which the Total Revolving
Credit Commitment exceeds the sum of (i) the principal amount of
Revolving Credit Outstandings plus (ii) the principal amount of
Overadvance Facility Outstandings. Such fees shall be due in arrears
on the first Business Day of each month, commencing on September 1,
1996, to and on the Revolving Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make
available any portion of its Revolving Credit Commitment or its
Overadvance Facility Commitment when requested by the Agent, such
portion shall be deemed outstanding for purposes of calculating the
fee and such Lender shall not be entitled to receive payment of its
pro rata share of such fee until such Lender shall make available such
portion. Such fee shall be calculated on the basis of a year of 360
days for the actual number of days elapsed.
(b) Closing Fee. In addition to the foregoing, on or
before the Closing Date, the Borrowers shall pay to BNYFC a closing
fee in the amount set forth in the letter agreement of even date
herewith between the Borrowers and BNYFC.
3.10. Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan nor shall the Revolving Credit Commitment or Overadvance Facility
Commitment of any Lender hereunder be increased
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as a result of such default of any other Lender. Without limiting the
generality of the foregoing, in the event any Lender shall fail to advance
funds to any of the Borrowers under the Revolving Credit Facility or the
Overadvance Facility as herein provided, the Agent may in its discretion, but
shall not be obligated to, advance under the Revolving Note in its favor as a
Lender all or any portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of principal of and
interest on such deficiency advance in the same manner and at the same interest
rate or rates to which such other Lender would have been entitled had it made
such advance under its Revolving Note; provided that, upon payment to the Agent
from such other Lender of the entire outstanding amount of each such deficiency
advance, together with accrued and unpaid interest thereon, from the most
recent date or dates interest was paid to the Agent by the Borrowers on each
Loan comprising the deficiency advance at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve Bank, then such
payment shall be credited against the applicable Revolving Note of the Agent in
full payment of such deficiency advance and the Borrowers shall be deemed to
have borrowed the amount of such deficiency advance from such other Lender as
of the most recent date or dates, as the case may be, upon which any payments
of interest were made by the Borrowers thereon.
3.11. Use of Proceeds. The proceeds of the Loans made pursuant to
the Revolving Credit Facility and the Overadvance Facility hereunder shall be
used by the Borrowers to repay existing indebtedness and general working
capital needs.
3.12. Extension of Stated Termination Date. The Stated Termination
Date then in effect shall be automatically extended for additional periods of
one-year each, unless the Borrowers (through an Authorized Representative), the
Agent or the Required Lenders give written notice to the other parties hereto,
not less than 90 days prior to Stated Termination Date then in effect,
announcing that such date shall not be extended.
3.13. Overadvance Premium. If (a) the sum of the principal amount
of Revolving Credit Outstandings exceeds the lesser of the Total Revolving
Credit Commitment or the Borrowing Base for more than four (4) days (whether or
not such days are consecutive) during any calendar month, or (b) there are any
Overadvance Facility Outstandings for more than four (4) days (whether or not
consecutive) during any calendar month, then in each case the Borrowers shall
pay to the Agent (for the pro rata benefit of the Lenders) on the first
Business Day following such month, an Overadvance Premium (the "Overadvance
Premium") equal to one-half of one percent (.50%) per annum multiplied by the
average daily principal amount of Revolving Credit Outstandings and Overadvance
Facility Outstandings for each day during such month. The Overadvance Premium
shall be in addition to any other interest accrued on the Revolving Credit
Outstandings and Overadvance Facility Outstandings, and in addition to any
other principal, interest, fees or other Obligations due and payable pursuant
to this Agreement, the Factoring Agreement or any other Loan Document.
3.14. Appointment of River Oaks and Authorized Representatives as
Agents for the Borrowers. Each Borrower hereby irrevocably appoints each of
River Oaks and each Authorized Representative as its agent for the purpose of
all transactions contemplated by this Agreement, the
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Factoring Agreement or any other Loan Document. Each Borrower grants to River
Oaks and each Authorized Representative (whether acting jointly or separately)
an irrevocable power of attorney to act on behalf of each Borrower and to take
any and all actions contemplated by any Loan Document on behalf of each
Borrower, including without limitation the delivery of any Borrowing Notice,
Interest Rate Selection Notice or other notice, request or directive, the
receipt or disbursement of any Loans, the execution of any documents, and the
grant or conveyance of any security interest or title.
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ARTICLE IV
Security
4.1. Security. As security for the full and timely payment and
performance of all Obligations, the Borrowers and the Subsidiaries shall on or
before the Closing Date do or cause to be done all things necessary in the
opinion of the Agent and its counsel to grant to the Agent for the benefit of
the Lenders a duly perfected security interest in all Collateral subject to no
prior Lien or other encumbrance or restriction on transfer (other than (a)
restrictions on transfer imposed by applicable securities laws, (b) Liens in
favor of BNYFC or an Approved Outside Factor, which Liens encumber only the
Accounts purchased by BNYFC or such Approved Outside Factor, as applicable), or
(c) Permitted Liens), all as more fully set forth in the Security Instruments.
4.2. Further Assurances. At the request of the Agent, each
Borrower will or will cause the Subsidiaries, as the case may be to execute, by
its duly authorized officers, alone or with the Agent, any certificate,
instrument, statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other action (and pay all
connected costs) which the Agent reasonably deems necessary from time to time
to create, continue or preserve the liens and security interests in Collateral
(and the perfection and priority thereof) of the Agent contemplated hereby and
by the other Loan Documents.
4.3. Information Regarding Collateral. Each Borrower represents,
warrants and covenants that (i) the chief executive office of such Borrower and
each other Person providing Collateral pursuant to a Security Instrument (each,
a "Grantor") at the Closing Date is located at the address or addresses
specified on Schedule 4.3, and (ii) Schedule 4.3 contains a true and complete
list of (a) the name (including any name previously held by any Grantor) and
address of each Grantor and of each other Person that has effected any merger
or consolidation with a Grantor or contributed or transferred to a Grantor any
property constituting Collateral at any time since January 1, 1986 (excluding
Persons making sales in the ordinary course of their businesses to a Grantor of
property constituting inventory in the hands of such seller), (b) each location
of the chief executive office of each Grantor at any time since January 1,
1986, (c) each location in which goods constituting Collateral are or have been
located since January 1, 1986 (together with the name of each owner of the
property located at such address if not the applicable Grantor, and a summary
description of the relationship between the applicable Grantor and such
Person), and (d) each trade name used by any Grantor since January 1, 1986 and
the purposes for which it was used. No Borrower shall change, or permit any
other Grantor to change, the location of its chief executive office or any
location specified in clause (c) of the immediately preceding sentence, or use
or permit any other Grantor to use, any additional trade name, except upon
giving not less than thirty (30) days' prior written notice to the Agent and
taking or causing to be taken all such action at such Borrower's or such other
Grantor's expense as may be reasonably requested by the Agent to perfect or
maintain the perfection of the Lien of the Agent in Collateral.
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ARTICLE V
Yield Protection and Illegality
5.1. Additional Costs. (a) The Borrowers shall promptly pay to
the Agent for the account of a Lender from time to time, without duplication,
such amounts as such Lender may reasonably determine to be necessary to
compensate it for any costs incurred by such Lender which it determines are
attributable to its making or maintaining any Loan or its obligation to make
any Loans hereunder, or any reduction in any amount receivable by such Lender
under this Agreement or the Notes in respect of any of such Loans, including
reductions in the rate of return on a Lender's capital (such increases in costs
and reductions in amounts receivable and returns being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes
the basis of taxation of any amounts payable to such Lender under this
Agreement or the Notes in respect of any of such Loans (other than taxes
imposed on or measured by the income, revenues or assets); or (ii) imposes or
modifies any reserve, special deposit, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (other than any such reserve, deposit or
requirement reflected in the Prime Rate, Federal Funds Effective Rate or the
Interbank Offered Rate, in each case computed in accordance with the respective
definitions of such terms set forth in Section 1.1); or (iii) has or would have
the effect of reducing the rate of return on capital of any such Lender to a
level below that which the Lender could have achieved but for such Regulatory
Change (taking into consideration such Lender's policies with respect to
capital adequacy); or (iv) imposes any other condition adversely affecting the
Agent or the Lenders under this Agreement or the Notes (or any of such
extensions of credit or liabilities). Each Lender will notify the Authorized
Representative and the Agent of any event occurring after the Closing Date
which would entitle it to compensation pursuant to this Section 5.1(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.1, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of the Lender which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of any Lender
which includes Eurodollar Rate Loans or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may hold, then,
if the Lender so elects by notice to the other Lenders, the obligation
hereunder of such Lender to make, and to convert Base Rate Loans into,
Eurodollar Rate Loans that are the subject of such restrictions shall be
suspended until the date such Regulatory Change ceases to be in effect and the
Borrowers shall immediately convert such Eurodollar Rate Loans into Base Rate
Loans; provided, however, that the suspension of such obligation and the
conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply only
to any Lender who is affected by such restrictions and who has provided such
notice to the other Lenders, and the obligation of the other Lenders to make,
and to convert Base Rate Loans into, Eurodollar Rate Loans shall not be
affected by such restrictions. In the event that the obligation of some, but
not all, of the Lenders
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to make, or to convert Base Rate Loans into, Eurodollar Rate Loans is
suspended, then any request by the Borrowers during the pendency of such
suspension for a Eurodollar Rate Loan shall be deemed a request for such
Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for
a Base Rate Loan from the Lender(s) who are subject to such suspension, in each
case in the respective amounts based on the Lenders' respective Applicable
Commitment Percentages.
(c) Determinations by any Lender for purposes of this Section 5.1
of the effect of any Regulatory Change on its costs of making or maintaining,
or being committed to make Loans hereunder, or the effect of any Regulatory
Change on amounts receivable by any Lender in respect of Loans, and of the
additional amounts required to compensate the Lender in respect of any
Additional Costs, shall be made taking into account such Lender's policies, or
the policies of the parent corporation of such Lender, as to the allocation of
capital, costs and other items and shall be conclusive absent manifest error.
The Lender requesting such compensation shall furnish to the Authorized
Representative and the Agent within one hundred eighty (180) days of the
incurrence of any Additional Costs for which compensation is sought an
explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of any such Additional Costs.
5.2. Suspension of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Eurodollar Rate Loan, the Agent determines (which determination made on a
reasonable basis shall be conclusive absent manifest error) that:
(a) the quotation of the interest rate referred to in the
definition of "Eurodollar Rate" in the Section 1.1 is not being
provided for the relevant period for purposes of determining the rate
of interest for such Eurodollar Rate Loan as provided in this
Agreement; or
(b) the relevant rate of interest referred to in the
definition of "Interbank Offered Rate" in Section 1.1 upon the basis
of which the Eurodollar Rate is to be determined does not adequately
reflect the cost to the Lenders of making or maintaining such
Eurodollar Rate Loan;
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Rate Loans, or to convert Base Rate Loans into
Eurodollar Rate Loans, and the Borrowers shall immediately convert outstanding
Eurodollar Rate Loans into Base Rate Loans. The Agent shall give the
Authorized Representative notice describing in reasonable detail any event or
condition described in this Section 5.2 promptly following the determination by
the Agent that the availability of Eurodollar Rate Loans is, or is to be,
suspended as a result thereof.
5.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrowers thereof (with a copy to
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the Agent) and such Lender's obligation to make or continue Eurodollar Rate
Loans, or to convert Base Rate Loans into Eurodollar Rate Loans, shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Rate Loans, and such Lender's outstanding Eurodollar Rate Loans shall be
immediately converted into Base Rate Loans. The conversion of any Eurodollar
Rate Loans into Base Rate Loans shall apply only to any Lender who is affected
by such restrictions and who has provided the notice described above, and the
obligation of the other Lenders to make, and to convert Base Rate Loans into,
Eurodollar Rate Loans shall not be affected by such restrictions. In the event
that the obligation of some, but not all, of the Lenders to make, or to convert
Base Rate Loans into, Eurodollar Rate Loans is so suspended, then any request
by the Borrowers during the pendency of such suspension for a Eurodollar Rate
Loan shall be deemed a request for such Eurodollar Rate Loan from the Lender(s)
not subject to such suspension and for a Base Rate Loan from the Lender(s) who
are subject to such suspension, in each case in the respective amounts based on
the Lenders' respective Applicable Commitment Percentages.
5.4. Alternate Loan and Lender. In the event any Lender suspends
the making of any Eurodollar Rate Loan pursuant to this Article V (herein a
"Restricted Lender"), the Restricted Lender's Commitment Percentage of any
Eurodollar Rate Loan shall bear interest at the Base Rate until the Restricted
Lender once again makes available the applicable Eurodollar Rate Loan.
Interest shall be payable to the Restricted Lender at the time and manner as
paid to those Lenders making available Eurodollar Rate Loans.
5.5. Taxes. (a) All payments by the Borrowers of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise, stamp
or other taxes, fees, duties, levies, imposts, charges, deductions,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding (i) franchise taxes, (ii) any taxes (other than
withholding taxes) that would not be imposed but for a connection between a
Lender or the Agent and the jurisdiction imposing such taxes (other than a
connection arising solely by virtue of the activities of such Lender or the
Agent pursuant to or in respect of this Agreement or any other Loan Document),
(iii) any taxes imposed on or measured by any Lender's assets, net income,
receipts or branch profits, and (iv) any taxes arising after the Closing Date
solely as a result of or attributable to a Lender changing its designated
lending office after the date such Lender becomes a party hereto (such
non-excluded items being collectively called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrowers hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrowers will
(x) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(y) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
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(z) pay to the Agent for the account of each Lender such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
(b) Prior to the date that any Lender or participant
organized under the laws of a jurisdiction outside the United States becomes a
party hereto, such Person shall deliver to the Borrowers and the Agent such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, properly completed, currently effective
and duly executed by such Lender or participant establishing that payments to
it hereunder and under the Notes are (i) not subject to United States Federal
backup withholding tax and (ii) not subject to United States Federal
withholding tax under the Code because such payment is either effectively
connected with the conduct by such Lender or participant of a trade or business
in the United States or totally exempt from United States Federal withholding
tax by reason of the application of the provisions of a treaty to which the
United States is a party or such Lender is otherwise exempt.
(c) If the Borrowers fail to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Agent, for the
account of the respective Lender, the required receipts or other required
documentary evidence, the Borrowers shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure. For purposes of this Section 5.6, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by or on behalf of the Borrowers.
5.6. Replacement of Lender. If (i) any Lender has demanded
compensation under this Article V in an aggregate amount exceeding $5,000
during any calendar year and BNYFC is not entitled to similar compensation,
(ii) it becomes unlawful, impossible or impractical for any Lender to make or
continue to maintain Eurodollar Loans and such circumstance is not applicable
to BNYFC, or (iii) any Lender is or becomes insolvent or a receiver,
conservator or similar authority is appointed for any Lender, then the Agent or
River Oaks shall have the right, but not the obligation, upon notice to such
Lender and River Oaks or the Agent, as applicable, to designate an assignee for
any such Lender, which assignee shall be mutually satisfactory to the Agent and
River Oaks, to purchase such Lender's Loans and commitments and assume such
Lender's obligations. Within ten Business Days after any such notice to such
Lender and River Oaks or the Agent, as applicable, such Lender shall be
obligated to sell its Loans and commitments, and such assignee shall be
obligated to purchase such Loans and assume such Lender's obligations, as set
forth in Section 12.1,. The purchase price therefor shall be an amount equal
to the sum of (A) the outstanding principal amount of the Loans payable to such
Lender, plus, (B) all accrued and unpaid interest on such Loans, plus (C) all
accrued and unpaid fees and other amounts and Obligations due to such Lender
pursuant to this Agreement or any other Loan Document.
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ARTICLE VI
Conditions to Making Loans
6.1. Conditions of Term Loan and Initial Advance. The obligation
of the Lenders to make the Term Loan, the initial Advance under the Revolving
Credit Facility, and the initial Advance under the Overadvance Facility is
subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in
form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this Agreement,
the Notes, the initial Facility Guaranties, the Security
Instruments, the Factoring Agreement and the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions
with respect to the Loan Documents and the transactions
contemplated thereby of special counsel to the Borrowers dated
the Closing Date, addressed to the Agent and the Lenders and
satisfactory to Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P., special
counsel to the Agent, substantially in the form of Exhibit I;
(iii) executed originals of each of the
Intercreditor Agreements;
(iv) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Borrower certified by its secretary
or assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(v) specimen signatures of officers of each
Borrower executing the Loan Documents on behalf of such
Person, certified by the secretary or assistant secretary of
such Person;
(vi) the charter documents of each Borrower
certified as of a recent date by the Secretary of State of its
state of organization;
(vii) the bylaws of each Borrower certified as of
the Closing Date as true and correct by its secretary or
assistant secretary;
(viii) certificates issued as of a recent date by
the Secretaries of State of the respective jurisdictions of
formation of each Borrower as to the due existence and good
standing of each such Person;
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(ix) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of each
Borrower as of a recent date by the Secretary of State or
comparable official of each jurisdiction in which the failure
to be qualified to do business or authorized so to conduct
business could have a Material Adverse Effect;
(x) an initial Inventory Designation;
(xi) notice of appointment of the initial
Authorized Representative(s);
(xii) an initial Funds Transfer Telephone
Instruction Authorization;
(xiii) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in Sections 9.1(a) through
9.1(g), 9.3 and 9.19 as of the Closing Date, substantially in
the form of Exhibit J;
(xiv) evidence of all insurance required by the
Loan Documents with proper endorsements;
(xv) an initial Borrowing Notice, if any, and, if
elected by the Borrowers, Interest Rate Selection Notice;
(xvi) a Landlord Waiver with respect to each leased
facility of each Borrower and each Subsidiary required by the
Agent and the Lenders;
(xvii) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by applicable law to perfect the Liens of the Agent
under the Security Instruments as to items of Collateral in
which a security interest may be perfected by the filing of
financing statements, and such other documents and/or evidence
of other actions as may be necessary under applicable law to
perfect the Liens of the Agent under the Security Instruments
in and to such other Collateral as the Agent may require,
including without limitation:
(i) the delivery by the Borrowers of all stock
certificates evidencing Pledged Stock, accompanied in each
case by duly executed stock powers in blank affixed thereto;
and
(ii) the delivery by the Borrowers of one or
more executed Assignments of Trademarks, Copyrights and
Licenses;
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(xviii) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by law to perfect the Liens of BNYFC as to Accounts
purchased by BNYFC pursuant to the Factoring Agreement;
(xix) commitments for policies insuring title to
the Mortgaged Property with such endorsements as may be
requested by the Agent;
(xx) copies of title exceptions with respect to
the Mortgaged Property, acceptable in form and substance to
the Agent;
(xxi) Phase I environmental reports with respect to
the Mortgaged Property, acceptable in form, scope, detail,
analysis, and results to the Agent;
(xxii) current as-built surveys of the Mortgage
Property and surveyor's affidavits;
(xxiii) flood certificates and evidence of flood
insurance for any Mortgaged Property in a federally designated
flood zone;
(xxiv) appraisals of the Mortgaged Property and all
machinery and equipment constituting Collateral;
(xxv) Borrower's affidavit for the Mortgaged
Property;
(xxvi) evidence that all fees payable by the
Borrowers on the Closing Date to the Agent and each Lender
have been paid in full;
(xxvii) Uniform Commercial Code search results
showing only those Liens as are acceptable to the Agent; and
(xxviii) results of search of the records of the
United States Patent and Trademark Office and United States
Copyright Office acceptable to the Agent;
(xxix) a payoff letter and a letter of indemnity
with respect to the cancellation of the CIT Indebtedness and
CIT's factoring arrangements;
(xxx) executed financing statements releasing any
Liens of CIT;
(xxxi) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the
Lenders:
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(i) there shall not have occurred or become known
to the Lender any material damage or destruction of any
Collateral, or any material depreciation or reduction in value
thereof, or any event, condition, situation or status since
the date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning the Borrowers or the Subsidiaries delivered to the
Agent prior to the Closing Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be likely to
result in a Material Adverse Effect, except as described in
Schedule 7.10 hereto; and
(iii) each Borrower and each Subsidiary shall have
received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices as shall be
required to consummate the transactions contemplated hereby
without the occurrence of any default under, conflict with or
violation of (A) any applicable law, rule, regulation, order
or decree of any Governmental Authority or arbitral authority
or (B) any agreement, document or instrument to which any
Borrower or any Subsidiary is a party or by which any of them
or their properties is bound.
6.2. Conditions of Revolving Loans and Overadvance Facility Loans.
The obligations of the Lenders to make any Revolving Loans or Overadvance
Facility Loans hereunder on or subsequent to the Closing Date are subject to
the satisfaction of the following conditions:
(a) the Agent shall have received a Borrowing Notice if
required by Article III;
(b) the representations and warranties of the Borrowers
set forth in Article VII and in each of the other Loan Documents shall
be true and correct in all material respects on and as of the date of
such Advance, with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent
that such representations and warranties expressly relate to an
earlier date and except that the financial statements referred to in
Section 7.6(a)(i) shall be deemed to be those financial statements
most recently delivered to the Agent and the Lenders pursuant to
Section 8.1 from the date financial statements are delivered to the
Agent and the Lenders in accordance with such Section;
(c) at the time of (and after giving effect to) each
Advance, no Default or Event of Default specified in Article X shall
have occurred and be continuing;
(d) immediately after giving effect to each Advance under
the Revolving Credit Facility the conditions set forth in Section
3.1(a)(x) and (y) shall have been satisfied; and
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(e) immediately after giving effect to each Advance under
the Overadvance Facility the conditions set forth in Section
3.1(b)(x), (y) and (z) shall have been satisfied.
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ARTICLE VII
Representations and Warranties
Each Borrower represents and warrants with respect to itself and each
Subsidiary (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
7.1. Organization and Authority.
(a) Each Borrower and each Subsidiary is a corporation
duly organized and validly existing under the laws of the jurisdiction
of its formation;
(b) Each Borrower and each Subsidiary (x) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in
the Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(c) Each Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Subsidiary has the power and authority to
execute, deliver and perform the Facility Guaranty and each of the
other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan
Documents to which any Borrower or any Subsidiary is a party will be
the legal, valid and binding obligation or agreement, as the case may
be, of such Borrower or such Subsidiary, as applicable, enforceable
against such Borrower or such Subsidiary in accordance with its terms,
subject to the effect of any applicable bankruptcy, fraudulent
conveyance, moratorium, insolvency, reorganization or other similar
law affecting the enforceability of creditors' rights generally and to
the effect of general principles of equity (whether considered in a
proceeding at law or in equity);
7.2. Loan Documents. The execution, delivery and performance by
each Borrower and each Subsidiary of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of each Borrower
and each Subsidiary required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) applicable law,
rule or regulation, (ii) any judgment, writ, order, determination,
decree or arbitral award of any Governmental
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Authority or arbitral authority binding on any Borrower or any
Subsidiary or its properties, or (iii) the charter documents or bylaws
of any Borrower or any Subsidiary;
(c) does not and will not be in conflict with, result in
a breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which any Borrower or any Subsidiary is a party, or by
which the properties or assets of any Borrower or any Subsidiary are
bound; and
(d) does not and will not result in the creation or
imposition of any Lien upon any of the properties or assets of
Borrower or any Subsidiary except any Liens in favor of the Agent and
the Lenders created by the Security Instruments;
7.3. Solvency. Each Borrower and each Subsidiary is Solvent after
giving effect to the transactions contemplated by the Loan Documents;
7.4. Subsidiaries and Stockholders. No Borrower has any
Subsidiaries other than those Persons listed as Subsidiaries in Schedule 7.4
and additional Subsidiaries created or acquired after the Closing Date in
compliance with Section 8.19; Schedule 7.4 states as of the date hereof the
organizational form of each entity, the authorized and issued capitalization of
each Subsidiary listed thereon, the number of shares or other equity interests
of each class of capital stock or interest issued and outstanding of each such
Subsidiary and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or other equity interest owned by
any Borrower or by any such Subsidiary; the outstanding shares or other equity
interests of each such Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable; and Borrower and each such Subsidiary
owns beneficially and of record all the shares and other interests it is listed
as owning in Schedule 7.4, free and clear of any Lien other than Liens in favor
of the Agent or any Lender;
7.5. Ownership Interests. No Borrower owns any interest in any
Person other than the Persons listed in Schedule 7.4, equity investments in
Persons not constituting Subsidiaries permitted under Section 9.7 and
additional Subsidiaries created or acquired after the Closing Date in
compliance with Section 8.19;
7.6. Financial Condition.
(a) The Borrowers have heretofore furnished to each
Lender an audited consolidated and related consolidating balance
sheet of River Oaks and its Subsidiaries as at December 31, 1995 and
the notes thereto and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for the
Fiscal Year then ended as examined and certified by BDO Xxxxxxx, and
unaudited consolidated and consolidating interim financial statements
of River Oaks and its Subsidiaries consisting of a consolidated and
consolidating balance sheets and related consolidated and
consolidating statements of
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income, stockholders' equity and cash flows, in each case without
notes, for and as of the end of the fiscal quarter ending March 31,
1996. Except as set forth therein, such financial statements
(including the notes thereto) present fairly the financial condition
of River Oaks and its Subsidiaries as of the end of such Fiscal Year
and fiscal quarter and results of their operations and the changes in
its stockholders' equity for the Fiscal Year and interim period then
ended, all in conformity with GAAP applied on a Consistent Basis,
subject however, in the case of unaudited interim statements to year
end audit adjustments and the absence of notes; and
(b) since March 31, 1996, there has been no material
adverse change in the condition, financial or otherwise, of River Oaks
or any of its Subsidiaries or in the businesses, properties,
performance, prospects or operations of River Oaks or its
Subsidiaries, nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or
act of God;
7.7. Title to Properties; Leases. Each Borrower and each of its
Subsidiaries has good and marketable title to all its real and personal
properties, subject to no transfer restrictions or Liens of any kind, except
for the transfer restrictions and Liens described in Schedule 7.7(a) and Liens
permitted by Section 9.4. No Borrower nor any Subsidiary is party to any real
property leases or subleases other than as disclosed on Schedule 7.7(b) hereto;
7.8. Taxes. Each Borrower and each of its Subsidiaries has filed
or caused to be filed all federal, state and local tax returns which are
required to be filed by it and, except for taxes and assessments being
contested in good faith by appropriate proceedings diligently conducted and
against which reserves reflected in the financial statements described in
Section 7.6(a) and satisfactory to the Borrowers' independent certified public
accountants have been established, have paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the extent that
such taxes have become due;
7.9. Other Agreements. Neither any Borrower nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions,
which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect; or
(b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which any Borrower or any
Subsidiary is a party, which default has, or if not remedied within
any applicable grace period could reasonably be likely to have, a
Material Adverse Effect;
7.10. Litigation. Except as set forth in Schedule 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of any Borrower, threatened by or
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against any Borrower or any Subsidiary or affecting any Borrower or any
Subsidiary or any properties or rights of any Borrower or any Subsidiary, which
could reasonably be likely to have a Material Adverse Effect;
7.11. Margin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrowers only for the purposes expressly authorized
herein. None of such proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute any of
the Loans under this Agreement a "purpose credit" within the meaning of said
Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither any
Borrower nor any agent acting in its behalf has taken or will take any action
which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended, or any state securities laws, in each case as in effect on the date
hereof;
7.12. Investment Company. Neither any Borrower nor any Subsidiary
is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. Section 80a-1, et
seq.). The application of the proceeds of the Loans and repayment thereof by
the Borrowers and the performance by the Borrowers and the Subsidiaries of the
transactions contemplated by the Loan Documents will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof;
7.13. Intellectual Property. The Borrowers and the Subsidiaries
own, or have a license or otherwise have the right to use, in all jurisdictions
in which they carry on business, all patents (including all applications,
renewals, reissues, extensions, divisions, continuations and extensions
thereof), trademarks (including both registered and unregistered trademarks and
applications therefor), service marks, trade names, copyrights (including all
registrations, renewals, modifications and extensions thereof), and know-how
and trade secrets of material importance to the conduct of their business as
currently conducted (collectively, the "Intellectual Property"), without, to
the knowledge of any Borrower, violating or conflicting with any patent,
license, franchise, trademark, trade secret, trade name, copyright, or other
proprietary rights of any other Person. Schedule 7.13 hereto lists all
patents, all registered and material unregistered trademarks, service marks and
trade names and all registered copyrights, and all applications for any of the
foregoing that are owned by the Borrowers or any of the Subsidiaries. Except
as set forth on Schedule 7.13 hereto, none of the Intellectual Property is
subject to any Lien other than Permitted Liens;
7.14. No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of any Borrower or any Subsidiary in accordance with or pursuant to any Loan
Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or
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preparation of the Loan Documents contains any misrepresentation or untrue
statement of material fact or omits to state a material fact necessary, in
light of the circumstance under which it was made, in order to make any such
warranty, representation or statement contained therein not misleading;
7.15. No Consents, Etc. Neither the respective businesses or
properties of any Borrower or any Subsidiary, nor any relationship between any
Borrower or any Subsidiary and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with,
any Governmental Authority or any other Person on the part of any Borrower or
any Subsidiary as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan Documents, which, if
not obtained or effected, would be reasonably likely to have a Material Adverse
Effect, or if so, such consent, approval, authorization, filing, registration
or qualification has been duly obtained or effected, as the case may be;
7.16. Employee Benefit Plans.
(a) Each Borrower and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in compliance with all
Foreign Benefit Laws with respect to all Employee Benefit Plans except
for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. No material
liability has been incurred by any Borrower or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan or any Multiemployer Plan;
(b) Neither any Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section
4975 of the Code or Section 406 of ERISA affecting any of the
Employee Benefit Plans or the trusts created thereunder which could
subject any such Employee Benefit Plan or trust to a material tax or
penalty on prohibited transactions imposed under Internal Revenue Code
Section 4975 or ERISA, (ii) incurred any accumulated funding
deficiency with respect to any Employee Benefit Plan, whether or not
waived, or any other liability to the PBGC which remains outstanding
other than the payment of premiums and there are no premium payments
which are due and unpaid, (iii) failed to make a required contribution
or payment to a Multiemployer Plan, or (iv) failed to make a required
installment or other required payment under Section 412 of the Code,
Section 302 of ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither any Borrower nor any
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ERISA Affiliate has incurred any unpaid withdrawal liability with
respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits
under each Employee Benefit Plan which is subject to Title IV of
ERISA, did not, as of the most recent valuation date for each such
plan, exceed the then current value of the assets of such Employee
Benefit Plan allocable to such benefits;
(e) To the best of each Borrower's knowledge, each
Employee Benefit Plan subject to Title IV of ERISA, maintained by any
Borrower or any ERISA Affiliate, has been administered in accordance
with its terms in all material respects and is in compliance in all
material respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules;
(f) The consummation of the Loans provided for herein
will not involve any prohibited transaction under ERISA which is not
subject to a statutory or administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of each Borrower after
due inquiry, is threatened concerning or involving any Employee
Benefit Plan;
7.17. No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
7.18. Hazardous Materials. Each Borrower and each Subsidiary is in
compliance with all applicable Environmental Laws (except for noncompliance
which could not reasonably be expected to have a Material Adverse Effect).
Neither any Borrower nor any Subsidiary has been notified of any action, suit,
proceeding or investigation which, and neither any Borrower nor any Subsidiary
is aware of any facts which, (i) calls into question, or could reasonably be
expected to call into question, compliance by any Borrower or any Subsidiary
with any Environmental Laws (except for noncompliance which could not
reasonably be expected to have a Material Adverse Effect), (ii) which seeks, or
could reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Material,
the generation, use or storage of which is material to the business, business
prospects, properties, operations or condition, financial or otherwise, of any
Borrower or any Subsidiary, or (iii) seeks to cause, or could reasonably be
expected to form the basis of a meritorious proceeding to cause, any property
of any Borrower or any Subsidiary to be subject to any restrictions on
ownership, use, occupancy or transferability under any Environmental Law; and
7.19. Employment Matters. (a) None of the employees of any
Borrower or any Subsidiary is subject to any collective bargaining agreement
and there are no strikes, work stoppages, election or decertification petitions
or proceedings, unfair labor charges, equal
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opportunity proceedings, or other material labor/employee related controversies
or proceedings pending or, to the best knowledge of each Borrower, threatened
against any Borrower or any Subsidiary or between any Borrower or any
Subsidiary and any of its employees, other than employee grievances arising in
the ordinary course of business which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, each Borrower and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending or threatened any litigation, administrative proceeding nor, to
the knowledge of any Borrower, any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect.
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ARTICLE VIII
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, each Borrower will, and where applicable will
cause each Subsidiary to:
8.1. Financial Reports, Etc. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year of River Oaks, deliver
or cause to be delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of River Oaks and its Subsidiaries as at the end
of such Fiscal Year, and the notes thereto, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows, and
the respective notes thereto, for such Fiscal Year, setting forth (other than
for consolidating statements) comparative financial statements for the
preceding Fiscal Year, all prepared in accordance with GAAP applied on a
Consistent Basis and containing, with respect to the consolidated financial
statements, opinions of BDO Xxxxxxx, or other such independent certified public
accountants selected by River Oaks and approved by the Agent, which are
unqualified as to the scope of the audit performed and as to the "going
concern" status of River Oaks or any Subsidiary and without any exception not
acceptable to the Lenders, and (ii) a certificate of an Authorized
Representative demonstrating compliance with Sections 9.1(a) through 9.1(g),
9.3 and 9.19, which certificate shall be in the form of Exhibit I;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) unaudited consolidated and
consolidating balance sheets of River Oaks and its Subsidiaries as at the end
of such fiscal quarter, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year
through the end of such reporting period, and accompanied by a certificate of
the Chief Financial Officer of River Oaks to the effect that such financial
statements present fairly the financial position of River Oaks and its
Subsidiaries as of the end of such fiscal period and the results of their
operations and the changes in their financial position for such fiscal period,
in conformity with the standards set forth in Section 7.6(a) with respect to
interim financial statements, and (ii) a certificate of an Authorized
Representative containing computations for such quarter comparable to that
required pursuant to Section 8.1(a)(ii);
(c) as soon as practicable and in any event 30 days after the end
of each calendar month (except the last month of any fiscal quarter or any
Fiscal Year), deliver unaudited consolidated and consolidating balance sheets
of River Oaks and its Subsidiaries and the related unaudited consolidated and
consolidating statements of income and stockholders' equity for such calendar
month and for the period from the beginning of the then current Fiscal Year to
the end of such calendar month including statements of income showing the
profit and loss from each business division of River Oaks and each Subsidiary
and a comparative statement showing the corresponding figures for the preceding
Fiscal Year and a comparison of actual performance to
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budgeted performance for such month, all of which shall be accompanied by a
certificate of the Chief Financial Officer of River Oaks to the effect that
such financial statements present fairly the financial position of River Oaks
and its Subsidiaries as of the end of such month and the results of their
operations and the changes in their financial position for such month, in
conformity with the standards set forth in Section 7.6(a) with respect to
interim financial statements;
(d) as often as practicable and in any event 15 days after the end
of each calendar month, deliver to the Agent and each Lender an Inventory
Designation;
(e) together with each delivery of the financial statements
required by Section 8.1(a)(i), deliver to the Agent and each Lender a letter
from River Oaks' accountants specified in Section 8.1(a)(i) stating that in
performing the audit necessary to render an opinion on the financial statements
delivered under Section 8.1(a)(i), they obtained no knowledge of any Default or
Event of Default by the Borrowers in the fulfillment of the terms and
provisions of this Agreement insofar as they relate to financial matters (which
at the date of such statement remains uncured); or if the accountants have
obtained knowledge of such Default or Event of Default, a statement specifying
the nature and period of existence thereof;
(f) (simultaneously with the delivery thereof to Bank of
Mississippi, Deposit Guaranty or any other lender or agent) deliver to the
Agent and each Lender a copy of any certificate or document delivered to Bank
of Mississippi, Deposit Guaranty, or such other lender or agent, demonstrating
the compliance or non-compliance of any Borrower with any financial covenant
contained in any loan agreement or credit arrangement;
(g) promptly upon their becoming available to any Borrower, such
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular
or special reports or effective registration statements which any Borrower or
any Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by any Borrower or any Subsidiary to its shareholders, bondholders
or the financial community in general, and (iii) any management letter or other
report submitted to any Borrower or any Subsidiary by independent accountants
in connection with any annual, interim or special audit of any Borrower or any
Subsidiary; and
(h) not later than the last Business Day of each Fiscal Year,
deliver to the Agent and each Lender a capital and operating expense budget and
consolidated financial projections for the Borrowers and the Subsidiaries for
the next Fiscal Year, prepared in accordance with GAAP applied on a Consistent
Basis. Upon the request of the Agent, such projections shall be compiled by an
independent certified public accountant acceptable to the Agent;
(i) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding any Borrower's
and any Subsidiary's operations, business affairs and financial condition as
the Agent or such Lender may reasonably request;
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The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any
written request therefor or in the ordinary course of examination of loan
files, or to any other Person who shall acquire or consider the assignment of,
or acquisition of any participation interest in, any Obligation permitted by
this Agreement;
8.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
Intellectual Property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices;
8.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material
rights and franchises, and maintain its license or qualification to do business
as a foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not
have a Material Adverse Effect;
8.4. Regulations and Taxes. Comply in all material respects with
or contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien (other than
Permitted Liens) against any of its properties except liabilities being
contested in good faith by appropriate proceedings diligently conducted and
against which adequate reserves acceptable to the Borrowers' independent
certified public accountants have been established unless and until any Lien
resulting therefrom attaches to any of its property and becomes enforceable
against its creditors;
8.5. Insurance. (a) Keep its property, including all Collateral,
continuously insured against such risks as are customarily insured against by
businesses of like size and type engaged in the same or similar operations, and
in any event satisfactory to the Agent and the Lenders, including, without
limiting the generality of any other covenant herein contained:
(i) casualty insurance on its property, including
the Inventory and the Equipment, in an amount not less than
the full insurable value thereof, against loss or damage by
theft, fire and lightning and other hazards ordinarily
included under uniform broad form standard extended coverage
policies, limited only as may be provided in the standard
broad form of extended coverage endorsement at the time in use
in the states in which the Collateral or other property is
located;
(ii) comprehensive general liability insurance
against claims for bodily injury, death or property damage
occurring with or about such Collateral (such
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coverage to include provisions waiving subrogation against the
Agent and the Lenders) in amounts as shall be reasonably
satisfactory to Agent;
(iii) liability insurance with respect to the
operation of its facilities under the workers' compensation
laws of the states in which such Collateral is located; and
(iv) business interruption insurance.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 8.5(a) hereof:
(i) may be provided by blanket policies now or
hereafter maintained by each Borrower or its parent companies;
(ii) shall be issued by such insurer (or insurers)
as shall be financially responsible, of recognized standing
and reasonably acceptable to the Agent;
(iii) shall be in such form and have such
provisions (including without limitation the loss payable
clause, the waiver of subrogation clause, the deductible
amount, if any, and the standard mortgagee endorsement
clause), as are generally considered standard provisions for
the type of insurance involved and are reasonably acceptable
in all respects to the Agent;
(iv) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer
without at least 30 days' prior written notice to the Agent,
except for non- payment of premium, in which case such
policies shall provide ten (10) days' prior written notice;
(v) without limiting the generality of the
foregoing, all insurance policies where applicable under
Section 8.5(a)(i) carried on the Collateral shall name the
Agent, for the benefit of the Lenders, as loss payee and a
party insured thereunder in respect of any claim for payment
in excess of $250,000.
(c) Prior to expiration of any such policy, such Borrower
shall furnish the Agent with evidence satisfactory to the Agent that
the policy or certificate has been renewed or replaced or is no longer
required by this Agreement.
(d) Each Borrower hereby irrevocably makes, constitutes
and appoints the Agent (and all officers, employees or agents
designated by the Agent), for the benefit of the Lenders, effective
upon the occurrence and during the continuance of an Event of Default
and acceleration of the Obligations, as such Borrower's true and
lawful attorney (and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies of insurance,
endorsing the name of such Borrower on any check, draft,
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instrument or other item or payment for the proceeds of such policies
of insurance and for making all determinations and decisions with
respect to such policies of insurance.
(e) In the event such Borrower shall fail to maintain, or
fail to cause to be maintained, the full insurance coverage required
hereunder or shall fail to keep any of its Collateral in good repair
and good operating condition, the Agent may (but shall be under no
obligation to), without waiving or releasing any Obligation or Event
of Default by such Borrower hereunder, contract for the required
policies of insurance and pay the premiums on the same or make any
required repairs, renewals and replacements; and all sums so disbursed
by Agent, including reasonable attorneys' fees, court costs, expenses
and other charges related thereto, shall be payable on demand by such
Borrower to the Agent and shall be additional Secured Obligations
secured by the Collateral.
(f) Each Borrower agrees that to the extent that it shall
not carry insurance required by Section 8.5(a) hereof, it shall in the
event of any loss or casualty pay promptly to the Agent, for the
benefit of the Lenders, for application in accordance with the
provisions of Section 8.5(h) hereof, such amount as would have been
received as Net Proceeds by the Agent, for the benefit of the Lenders,
under the provisions of Section 8.5(h) hereof had such insurance been
carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to
the provisions of Sections 8.5(a)(ii) and 8.5(a)(iii) hereof shall be
applied by such Borrower toward extinguishment of the claim or
satisfaction of the liability with respect to which such insurance
proceeds may be paid.
(h) The Net Proceeds of the insurance carried with
respect to the Collateral pursuant to the provisions of Section
8.5(a)(i) hereof shall be paid to such Borrower and held by such
Borrower in a separate account and applied as follows: (i) as long as
no Event of Default shall have occurred and be continuing, after any
loss under any such insurance and payment of the proceeds of such
insurance, each Borrower shall have a period of 30 days after payment
of the insurance proceeds with respect to such loss to elect to either
(x) repair or replace the Collateral so damaged, (y) deliver such Net
Proceeds to the Agent, for the benefit of the Lenders, as additional
Collateral or (z) apply such Net Proceeds to the acquisition of
tangible assets used or useful in the conduct of the business of such
Borrower, subject to the provisions of this Agreement. If such
Borrower elects to repair or replace the Collateral so damaged, such
Borrower agrees the Collateral shall be repaired to a condition
substantially similar to its condition prior to damage or replaced
with Collateral in a condition substantially similar to the condition
of the Collateral so replaced prior to damage; and (ii) at all times
during which an Event of Default shall have occurred and be
continuing, after any loss under such insurance and payment of the
proceeds of such insurance, such Borrower shall immediately deliver
such Net Proceeds to such Agent, for the benefit of the Lenders, as
additional Collateral.
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(i) In case of any material damage to or destruction of
all or any part of the Collateral pledged hereunder by a Borrower,
such Borrower shall give prompt notice thereof to the Agent. Each
such notice shall describe generally the nature and extent of such
damage, destruction, taking, loss, proceeding or negotiations. Each
Borrower is hereby authorized and empowered to adjust or compromise
any loss under any such insurance.
8.6. True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements;
8.7. Right of Inspection; Custodian. Permit any Person designated
by any Lender or the Agent to visit, inspect and audit any of the properties,
corporate books, financial reports, Collateral, and any records relating to the
Collateral, of any Borrower or any Subsidiary (and to make extracts or copies
from such records) and to discuss the affairs, finances and accounts of any
Borrower or any Subsidiary with its principal officers and independent
certified public accountants, all during normal business hours, at reasonable
intervals and with reasonable prior notice and to verify with any Person other
than Account Debtors the amount, quality, quantity, value and condition of, or
any other matter relating to, the Collateral and, if an Event of Default has
occurred and is continuing, to discuss any Borrower's affairs and finances with
such Borrower's Account Debtors and to verify the amount, quality, value and
condition of, or any other matter relating to, the Collateral and such Account
Debtors. The Borrowers shall pay all expenses and customary charges of the
Agent and each Lender associated with such visit, inspection or audit,
including all charges of outside auditors selected by the Agent or such Lender
and all per diem charge of the Agent's or such Lender's audit personnel at the
Agent's or such Lender's then standard rates, provided that, so long as no
Event of Default has occurred and is continuing, the amount of such expenses
and charges shall not exceed $60,000 in the aggregate in any Fiscal Year. Upon
or after the occurrence and during the continuation of an Event of Default and
acceleration of the Obligations, the Agent may at any time and from time to
time employ and maintain on any Borrower's premises a custodian selected by the
Agent who shall have full authority to do all acts necessary to protect the
Agent's and the Lenders' interest. All expenses incurred by the Agent by
reason of the employment of such custodian shall be paid by the Borrowers and
become part of the Obligations secured by the Collateral.
8.8. Observe all Laws. Conform to and duly observe all laws, rules
and regulations and all other valid requirements of any Governmental Authority
with respect to the conduct of its business except to the extent that non-
compliance could not reasonably be expected to have a Material Adverse Effect;
8.9. Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental
Authorities as are required for the conduct of its business as currently
conducted and as contemplated by the Loan Documents;
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8.10. Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of any Borrower in Sections 8.2 through 8.9, inclusive,
9.16 and 9.18;
8.11. Officer's Knowledge of Default. Upon any officer of any
Borrower obtaining knowledge of any Default or Event of Default hereunder or
under any other obligation of any Borrower, any Subsidiary to the Agent or any
Lender, or any event, development or occurrence which could reasonably be
expected to have a Material Adverse Effect, cause such officer or an Authorized
Representative to promptly notify the Agent of the nature thereof, the period
of existence thereof, and what action such Borrower or such Subsidiary proposes
to take with respect thereto;
8.12. Suits or Other Proceedings. Upon any officer of any Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against any Borrower, any Subsidiary, or any attachment, levy, execution or
other process being instituted against any assets of any Borrower or any
Subsidiary, making a claim or claims in an aggregate amount greater than
$500,000 not otherwise covered by insurance, promptly deliver to the Agent
written notice thereof stating the nature and status of such litigation,
dispute, proceeding, levy, execution or other process;
8.13. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by any Borrower or any Subsidiary from any Governmental Authority or
any actual or potential litigant, relating to any (a) violation or alleged
violation by any Borrower or any Subsidiary of any applicable Environmental
Law; (b) release or threatened release by any Borrower or any Subsidiary, or at
any facility or property owned or leased or operated by any Borrower or any
Subsidiary, of any Hazardous Material, except where occurring legally; or (c)
liability or alleged liability of any Borrower or any Subsidiary for the costs
of cleaning up, removing, remediating or responding to a release of Hazardous
Materials;
8.14. Environmental Compliance. If any Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or
citation from any Governmental Authority or any actual or potential litigant,
alleging that any Borrower or and Subsidiary has violated any Environmental Law
or is liable for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials, the Borrowers shall, within the time
period permitted by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or remedy,
or cause the applicable Subsidiary to remove or remedy, such violation or
release or satisfy such liability unless and only during the period that the
applicability of the Environmental Law, the fact of such violation or liability
or what is required to remove or remedy such violation is being contested by
the applicable Borrower or Subsidiary by appropriate proceedings diligently
conducted and all reserves with respect thereto as may be required under
Generally Accepted Accounting Principles, if any, have been made, and no Lien
in connection therewith shall have attached to any property of the applicable
Borrower or Subsidiary which shall have become enforceable against creditors of
such Person;
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8.15. Indemnification. Without limiting the generality of Section
12.9, the Borrowers hereby agree to indemnify and hold the Agent, the Lenders,
and their respective officers, directors, employees and agents, harmless from
and against any and all claims, losses, penalties, liabilities, damages and
expenses (including assessment and cleanup costs and reasonable attorneys' fees
and disbursements) arising directly or indirectly from, out of or by reason of
(a) the violation of any Environmental Law by any Borrower or any Subsidiary or
with respect to any property owned, operated or leased by any Borrower or any
Subsidiary or (b) the handling, storage, treatment, emission or disposal of any
Hazardous Materials by or on behalf of any Borrower or any Subsidiary or on or
with respect to property owned or leased or operated by any Borrower or any
Subsidiary. The provisions of this Section 8.15 shall survive the Facility
Termination Date and expiration or termination of this Agreement;
8.16. Further Assurances. At the Borrowers' cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;
8.17. Employee Benefit Plans.
(a) With reasonable promptness, and in any event within
thirty (30) days thereof, give notice to the Agent of (a) the
establishment of any new Pension Plan (which notice shall include a
copy of such plan), (b) the commencement of contributions to any
Employee Benefit Plan to which any Borrower or any of its ERISA
Affiliates was not previously contributing, (c) any material increase
in the benefits of any existing Employee Benefit Plan, (d) each
funding waiver request filed with respect to any Employee Benefit Plan
and all communications received or sent by any Borrower or any ERISA
Affiliate with respect to such request and (e) the failure of any
Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the
due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code,
in connection with any Pension Plan or any trust created thereunder,
deliver to the Agent a notice specifying the nature thereof, what
action any Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within
fifteen (15) days for purposes of clauses (a), (b) and (c), deliver to
the Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
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Employee Benefit Plan under Section 401(a) of the Code, (b) all
notices received by any Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (c) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by any
Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan and (d) all notices received by any
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant
to Section 4202 of ERISA. Each Borrower will notify the Agent in
writing within five (5) Business Days of any Borrower or any ERISA
Affiliate obtaining knowledge or reason to know that any Borrower or
any ERISA Affiliate has filed or intends to file a notice of intent to
terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA;
8.18. Continued Operations. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted;
8.19. New Subsidiaries. Simultaneously with the acquisition or
creation of any Subsidiary, cause to be delivered to the Agent for the benefit
of the Lenders each of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit K;
(b) a Security Agreement of such Subsidiary substantially
in the form of Exhibit L, together with such Uniform Commercial Code
financing statements on Form UCC-1 or otherwise duly executed by such
Subsidiary as "Debtor" and naming the Agent for the benefit of the
Lenders as "Secured Party", in form, substance and number sufficient
in the reasonable opinion of the Agent and its special counsel to be
filed in all Uniform Commercial Code filing offices in all
jurisdictions in which filing is necessary or advisable to perfect in
favor of the Agent for the benefit of the Lenders the Lien on
Collateral conferred under such Security Instrument to the extent such
Lien may be perfected by Uniform Commercial Code filing;
(c) an Intellectual Property Security Agreement of such
Subsidiary substantially in the form of Exhibit M, together with a
Copyright Memorandum and Collateral Assignment of Trademarks;
(d) a Mortgage of such Subsidiary, if it owns or becomes
owner at any time of any real property, substantially in the form of
Exhibit N;
(e) if such Subsidiary is a corporation or is a
partnership, limited liability company or other entity that has issued
certificates evidencing ownership of partnership or other such
interests, (A) the Pledged Stock or, if applicable, certificates of
ownership of such partnership or other interests, together with duly
executed stock powers or powers of assignment in blank affixed
thereto, and (B) if such Collateral shall be owned by a
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Subsidiary who has not then executed and delivered to the Agent a
Security Instrument from the owner of such Collateral granting a Lien
to the Agent in such Collateral, a Security Agreement or a Pledge
Agreement (as appropriate) in the form of Exhibit O, with appropriate
revisions as to the identity of the Subsidiary and securing the
obligations of such Subsidiary under its Facility Guaranty;
(f) if such Subsidiary is a partnership, limited
liability company or other entity not described in clause (d)
immediately above, (A) the certificate of the Registrar of such
partnership, limited liability company or other entity with respect to
the registration of the Lien on partnership or other such interests,
which certificate shall be in the form of Exhibit , and (B) if such
Collateral shall be owned by a Subsidiary who has not then executed
and delivered to the Agent a Security Instrument from the owner of
such Collateral granting a Lien to the Agent in such Collateral, a
Security Agreement or Pledge Agreement (as appropriate) in the form of
Exhibit O, with appropriate revisions as to the identity of the
pledgor and securing the obligations of such pledgor under its
Facility Guaranty;
(g) an opinion of counsel to the Subsidiary dated as of
the date of delivery of the Facility Guaranty and other Loan Documents
provided for in this Section 8.19 and addressed to the Agent and the
Lenders, containing opinions and including assumptions and
qualifications substantially the same as those contained in the
opinions of counsel delivered pursuant to Section 6.1(a));
(h) current copies of the charter documents, including
partnership agreements and certificate of limited partnership (or
other organizational documents), if applicable, and bylaws of such
Subsidiary, minutes of duly called and conducted meetings (or duly
effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such charter
documents, bylaws or by applicable law, of the shareholders) of such
Subsidiary authorizing the actions and the execution and delivery of
documents described in this Section 8.19.
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ARTICLE IX
Negative Covenants
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, no Borrower will, nor will
it permit any Subsidiary to:
9.1. Financial Covenants.
(a) Consolidated Tangible Net Worth. Permit on any date set forth
below Consolidated Tangible Net Worth to be less than the amount set forth
opposite each such date:
Consolidated Tangible
Date Net Worth Must Exceed
---- ---------------------
June 30, 1996 $26,850,000
September 30, 1996 $27,000,000
December 31, 1996 $27,750,000
March 31, 1997 $27,750,000
June 30, 1997 $28,000,000
September 30, 1997 $28,500,000
December 31, 1997 $29,000,000
March 31, 1998 $29,000,000
June 30, 1998 $29,500,000
September 30, 1998 $30,000,000
December 31, 1998 and
the last day of each fiscal
quarter thereafter $30,500,000
(b) Interest Coverage Ratio. Permit on any date set forth below
the ratio of Consolidated EBITDA to Consolidated Interest Expense for the
Four-Quarter Period then ended to be less than that set forth opposite each
such date:
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Date Interest Coverage Ratio Must Exceed
---- -----------------------------------
December 31, 1996 1.85 to 1.00
December 31, 1997 2.50 to 1.00
December 31, 1998, and the 3.00 to 1.00
last day of each Fiscal Year
thereafter
(c) Consolidated Debt Service Coverage Ratio. Permit on any date
set forth below the Consolidated Debt Service Coverage Ratio for the
Four-Quarter Period then ended to be less than that set forth opposite each
such date:
Date Debt Service Coverage Ratio Must Exceed
---- ---------------------------------------
December 31, 1996 1.28 to 1.00
December 31, 1997 1.58 to 1.00
December 31, 1998, and the last day of each 1.65 to 1.00
Fiscal Year thereafter
(d) Consolidated Indebtedness-to-Tangible Net Worth Ratio. Permit
on any date set forth below the ratio of Consolidated Indebtedness to
Consolidated Tangible Net Worth to be greater than that set forth opposite each
such date:
Indebtedness-to-Tangible
Net Worth Ratio
Date Must Not Exceed
---- -----------------------
December 31, 1996 2.00 to 1.00
December 31, 1997 1.85 to 1.00
December 31, 1998 and the last day of each 1.70 to 1.00
Fiscal Year thereafter
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(e) Consolidated Working Capital. Permit on any date set forth
below Consolidated Working Capital to be less than that set forth opposite each
such date:
Date Working Capital Must Exceed
---- ---------------------------
June 30, 1996 $ 8,000,000
September 30, 1996 $11,000,000
December 31, 1996 $12,000,000
March 31, 1997 $12,000,000
June 30, 1997 $12,000,000
September 30, 1997 $12,500,000
December 31, 1997 $13,000,000
March 31, 1998 $13,000,000
June 30, 1998 $13,000,000
September 30, 1998 $13,500,000
December 31, 1998, and the last day of each $14,000,000
fiscal quarter thereafter
(f) Current Ratio. Permit on any date set forth below the Current
Ratio to be less than that set forth opposite each such date:
Date Current Ratio Must Exceed
---- -------------------------
June 30, 1996 1.10 to 1.00
September 30, 1996 1.20 to 1.00
December 31, 1996 1.20 to 1.00
March 31, 1997 1.25 to 1.00
June 30, 1997 1.25 to 1.00
September 30, 1997 1.25 to 1.00
December 31, 1997 1.25 to 1.00
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March 31, 1998 1.30 to 1.00
Date Current Ratio Must Exceed
---- -------------------------
June 30, 1998 1.30 to 1.00
September 30, 1998 1.30 to 1.00
December 31, 1998 and the last
day of each fiscal quarter
thereafter 1.35 to 1.00
(g) Profitability. Permit Consolidated Net Income to be less than
$0 for any three consecutive fiscal quarters (whether or not such fiscal
quarters are in the same Fiscal Year).
9.2. Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by the Borrowers and the Subsidiaries, (ii)
no Default or Event of Default shall have occurred and be continuing either
immediately prior to or immediately after giving effect to such Acquisition and
the Borrowers shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year
of River Oaks and most recent interim fiscal quarter, if applicable, giving
effect to such Acquisition and (B) a certificate in the form of Exhibit J
prepared on a historical pro forma basis giving effect to such Acquisition,
which certificate shall demonstrate that no Default or Event of Default would
exist immediately after giving effect thereto, (iii) the Person acquired shall
be a wholly-owned Subsidiary, or be merged into River Oaks or a wholly-owned
Subsidiary, immediately upon consummation of the Acquisition (or if assets are
being acquired, the acquiror shall be River Oaks or a wholly-owned Subsidiary),
and (iv) after giving effect to such Acquisition, the aggregate Costs of
Acquisition incurred in any Fiscal Year (on a noncumulative basis, with the
effect that amounts not incurred in any Fiscal Year may not be carried forward
to a subsequent period) shall not exceed $250,000;
9.3. Capital Expenditures. Make or become committed to make
Capital Expenditures (excluding Costs of Acquisitions and excluding the
acquisition of assets formerly used by Xxxxxxxx Furniture, Inc.) which exceed
in any period described below (on a noncumulative basis, with the effect that
amounts not expended in any such period may not be carried forward to a
subsequent period), the amount set forth opposite each such period:
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Fiscal Year Ending: Capital Expenditures Not to Exceed:
------------------ ----------------------------------
From Closing Date through December 31, 1996 $ 800,000
Fiscal Year ending December 31, 1997 $1,200,000
Each Fiscal Year thereafter $1,200,000
9.4. Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by any Borrower or any Subsidiary, other
than the following (collectively, "Permitted Liens"):
(a) Liens created under the Security Instruments in favor
of the Agent and the Lenders, and otherwise existing as of the date
hereof and as set forth in Schedule 7.7(a);
(b) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which
are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable against other creditors;
(d) Liens incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(e) easements (including reciprocal easement agreements
and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which
do not interfere materially with the ordinary conduct of the business
of any Borrower or any Subsidiary and which do not materially detract
from the value of the property to which they attach or materially
impair the use thereof to any Borrower or any Subsidiary;
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(f) purchase money Liens to secure Indebtedness permitted
under Section 9.5(e) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% of the purchase price
of such assets as of the date of purchase thereof and no property
other than the assets so purchased secures such Indebtedness;
(g) Liens arising in connection with Capital Leases
permitted under Section 9.5(e); provided that no such Lien shall
extend to any Collateral or to any other property other than the
assets subject to such Capital Leases; and
(h) Liens with respect to Accounts subject to factoring
arrangements with BNYFC or an Approved Outside Factor;
9.5. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of any Borrower, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set
forth in Schedule 7.6; provided, none of the instruments and
agreements evidencing or governing such Indebtedness shall be amended,
modified or supplemented after the Closing Date to increase the
principal amount thereof, change any terms of subordination, repayment
or rights of conversion, put, exchange or other rights from such terms
and rights as in effect on the Closing Date;
(b) Indebtedness owing to BNYFC, the Agent or any Lender
in connection with this Agreement, any Note or any other Loan
Document;
(c) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(d) purchase money Indebtedness described in Section
9.4(f) not to exceed an aggregate outstanding amount at any time of
$25,000;
(e) unsecured intercompany Indebtedness for loans and
advances made by any Borrower or any Subsidiary to any Borrower or to
any Subsidiary which is a Guarantor, provided that such intercompany
Indebtedness is evidenced by a promissory note or similar written
instrument acceptable to the Agent which provides that such
Indebtedness is subordinated to obligations, liabilities and
undertakings of the holder or owner thereof under the Loan Documents
on terms acceptable to the Agent;
(f) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred
under clauses (a), (d) and (f) of this Section 9.5, provided that the
terms of any such extension, renewal, refunding or refinancing
Indebtedness (and of any agreement or instrument entered into in
connection therewith) are no less favorable to the Agent and the
Lenders than the terms of the Indebtedness as in effect prior to such
action, and provided further that (i) the aggregate
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principal amount of or interest rate or rates and fees payable on such
extended, renewed, refunded or refinanced Indebtedness shall not be
increased by such action, (ii) the group of direct or contingent
obligors on such Indebtedness shall not be expanded as a result of any
such action, and (iii) immediately before and immediately after giving
effect to any such extension, renewal, refunding or refinancing, no
Default or Event of Default shall have occurred and be continuing; and
(g) Indebtedness owing to an Approved Outside Factor
arising under the factoring agreement or arrangement with such
Approved Outside Factor; and
(h) other Indebtedness not permitted under clauses (a)
through (g) above in an aggregate amount not in excess of $100,000 at
any time;
9.6. Transfer of Assets. Sell, lease, transfer or otherwise
dispose of any assets of any Borrower or any Subsidiary other than (a)
dispositions of inventory in the ordinary course of business, (b) dispositions
of equipment which, in the aggregate during any Fiscal Year, have a fair market
value or book value, whichever is less, of $50,000 or less and is not replaced
by equipment having at least equivalent value, and (c) dispositions of property
that is substantially worn, damaged, obsolete or, in the judgment of the
Borrowers, no longer useful in its business or that of any Subsidiary, (d)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by Section 9.8, provided that any Lien of the Agent and
Lenders in such assets remains perfected, (e) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrowers and the Subsidiaries, (f) dispositions by any Borrower or any
Subsidiary to any Borrower or to any Subsidiary which is a Guarantor, provided
that any Lien of the Agent and Lenders in such assets remains perfected, and
(g) accidental loss or theft of assets which, in the aggregate during any
Fiscal Year, have a fair market value or book value, whichever is less, of
$50,000 or less;
9.7. Investments. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that a Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in Schedule 7.4;
(d) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
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(e) investments in Subsidiaries which are Guarantors; and
(f) loans between the Borrowers and the Guarantors
described in Section 9.5(f);
9.8. Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose
of all or a substantial part of its assets; provided, however, (i) any
Subsidiary of a Borrower may merge or transfer all or substantially all of its
assets into or consolidate with such Borrower or any wholly-owned Subsidiary
who is a Guarantor, and (ii) any other Person (except a Borrower) may merge
into or consolidate with any Borrower or any wholly- owned Subsidiary who is a
Guarantor, and any Subsidiary may merge into or consolidate with any other
Person, in each case in order to consummate an Acquisition permitted by Section
9.2, provided further, that any resulting or surviving entity shall execute and
deliver such agreements and other documents, including a Facility Guaranty, and
take such other action as the Agent may require to evidence or confirm its
express assumption of the obligations and liabilities of its predecessor
entities under the Loan Documents;
9.9. Restricted Payments. Make any Restricted Payment or apply or
set apart any of their assets therefor or agree to do any of the foregoing;
9.10. Transactions with Affiliates. Other than transactions
permitted under Sections 9.7 and 9.8, enter into any transaction after the
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of any Borrower, except (a) that such Persons may render services
to any Borrower or its Subsidiaries for compensation at the same rates
generally paid by Persons engaged in the same or similar businesses for the
same or similar services, (b) that any Borrower or any Subsidiary may render
services to such Persons for compensation at the same rates generally charged
by such Borrower or such Subsidiary and (c) in either case in the ordinary
course of business and pursuant to the reasonable requirements of any
Borrower's (or any Subsidiary's) business consistent with past practice of such
Borrower and its Subsidiaries and upon fair and reasonable terms no less
favorable to such Borrower (or any Subsidiary) than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate;
9.11. Compliance with ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which
would result in a liability on the part of any Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities
under all Pension Plans to exceed the current value of the assets of
such Pension Plans allocable to such benefit liabilities; or
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(c) permit any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code) with respect to
any Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which any Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate
to engage, in any non-exempt prohibited transaction under Section 406
of ERISA or Sections 4975 of the Code for which a civil penalty
pursuant to Section 502(I) of ERISA or a tax pursuant to Section 4975
of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to any Borrower or any ERISA Affiliate or increase the
obligation of any Borrower or any ERISA Affiliate to a Multiemployer
Plan which liability or increase, individually or together with all
similar liabilities and increases, is in excess of $50,000; or
(g) fail, or permit any Borrower or any ERISA Affiliate
to fail, to establish, maintain and operate each Employee Benefit Plan
in compliance in all material respects with the provisions of ERISA,
the Code, all applicable Foreign Benefit Laws and all other applicable
laws and the regulations and interpretations thereof;
9.12. Fiscal Year. Change its Fiscal Year;
9.13. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such
winding up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 9.8;
9.14. Limitations on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by any Borrower or any
Subsidiary of real or personal property, whether now owned or hereafter
acquired in a related transaction or series of related transactions, which has
been or is to be sold or transferred by any Borrower or any Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of any
Borrower or any Subsidiary;
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9.15. Change in Control. Cause, suffer or permit to exist or occur
any Change of Control;
9.16. Rate Hedging Obligations. Incur any Rate Hedging Obligations
or enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except as otherwise agreed by the Borrowers and the
Agent, and not for speculative purposes;
9.17. Negative Pledge Clauses. Except in connection with the
financings described on Schedule 9.17 hereto as in effect on the date hereof,
enter into or cause, suffer or permit to exist any agreement with any Person
other than the Agent and the Lenders pursuant to this Agreement or any other
Loan Documents which prohibits or limits the ability of any Borrower or any
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, provided
that any Borrower or any Subsidiary may enter into such an agreement in
connection with property acquired with the proceeds of purchase money
Indebtedness permitted hereunder, when such prohibition or limitation is by its
terms effective only against the property acquired with the proceeds of such
Indebtedness;
9.18. Compensation; Reimbursement of Expenses.
(a) Pay any salary, fees, and other direct and indirect
remuneration and compensation to any of its directors and executive
officers in an amount in excess of those amounts paid to directors and
executive officers of comparable companies engaged in the same general
type of business and in similar financial condition;
(b) Reimburse any stockholder, officer, director,
employee or agent of any Borrower or any Subsidiary for any expenses
incurred by such Person other than reasonable expenses incurred for or
on behalf of any Borrower or any Subsidiary in the ordinary course of
business;
9.19. Lease Payments. Incur or cause, suffer or permit to be
incurred in any Fiscal Year (on a noncumulative basis, with the effect that
amounts not incurred in any Fiscal Year may not be carried forward to a
subsequent period) aggregate Consolidated Lease Payments in excess of
$___________.
9.20. Prepayments, Etc. of Indebtedness.
(a) Prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any
Indebtedness; or
(b) Amend, modify or change in any manner any term or
condition of any Indebtedness described in Section 9.5(a), (d) or (f)
or any lease so that the terms and
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conditions thereof are less favorable to the Agent and the Lenders
than the terms of such Indebtedness or leases as of the Closing Date;
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ARTICLE X
Events of Default and Acceleration
10.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual
payment of the principal of any Loan or other Obligation, when and as
the same shall be due and payable whether pursuant to any provision of
Article II or Article III, at maturity, by acceleration or otherwise;
or
(b) if default shall be made in the due and punctual
payment of any amount of interest on any Loan or other Obligation or
of any fees or other amounts payable to any of the Lenders or the
Agent on the date on which the same shall be due and payable; or
(c) if default shall be made in the performance or
observance of any covenant set forth in Section 8.7, 8.11, 8.12, 8.19
or Article IX;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Agent or an
officer of any Borrower becomes aware of such default, or if a default
shall be made in the performance or observance of, or shall occur
under, any covenant, agreement or provision contained in any of the
other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Agent or
any of the Lenders or delivered to the Agent or any of the Lenders in
connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and
effect (other than by reason of any action by the Agent or any
Lender), or if without the written consent of the Lenders, this
Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not
waived, in the payment of any principal, interest, premium or other
amount with respect to any Indebtedness or Rate Hedging Obligation
(other than the Loans and other Obligations) of any Borrower or any
Subsidiary in an amount not less than $5,000 in the aggregate
outstanding, or (ii) a default,
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which is not waived, in the performance, observance or fulfillment of
any term or covenant contained in any agreement or instrument under or
pursuant to which any such Indebtedness or Rate Hedging Obligation may
have been issued, created, assumed, guaranteed or secured by any
Borrower or any Subsidiary, or (iii) any other event of default as
specified in any agreement or instrument under or pursuant to which
any such Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by any Borrower or any
Subsidiary, and such default or event of default shall continue for
more than the period of grace, if any, therein specified, or such
default or event of default shall permit the holder of any such
Indebtedness (or any agent or trustee acting on behalf of one or more
holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of
fact contained in any Loan Document or in any writing, certificate,
report or statement at any time furnished to the Agent or any Lender
by or on behalf of any Borrower or any Subsidiary pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if any Borrower or any Subsidiary shall be unable to
pay its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the
whole or any substantial part of its property; file a petition or
answer seeking liquidation, reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law
or statute; or
(h) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against any Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or
control of any Borrower or any Subsidiary or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against any Borrower
or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
sixty (60) days; or if any Borrower or any Subsidiary takes any action
to indicate its consent to or approval of any such proceeding or
petition; or
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(i) if (i) one or more judgments or orders where the
amount not covered by insurance (or the amount as to which the insurer
denies liability) is in excess of $25,000 is rendered against any
Borrower or any Subsidiary, or (ii) there is any attachment,
injunction or execution against any Borrower's or any Subsidiary's
properties for any amount in excess of $100,000 in the aggregate; and
such judgment, attachment, injunction or execution remains unpaid,
unstayed, undischarged, unbonded or undismissed for a period of thirty
(30) days; or
(j) if any Borrower or any Subsidiary shall, other than
in the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of such Borrower or such Subsidiary for a period of more
than 60 days; or
(k) if any Borrower or any Subsidiary shall breach any of
the material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if any Borrower or any Subsidiary
shall disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
(l) if there shall occur and not be waived a default
under the Factoring Agreement, any of the other Loan Documents or any
other factoring agreement of one or more Borrowers with BNYFC or an
Approved Outside Factor;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may
be taken: (i) the Agent, with the consent of the Required
Lenders, may, and at the direction of the Required Lenders
shall, declare any obligation of the Lenders and the Issuing
Bank to make further Revolving Loans or Overadvance Facility
Loans terminated, whereupon the obligation of each Lender to
make further Revolving Loans or Overadvance Facility Loans
hereunder shall terminate immediately, and (ii) the Agent
shall at the direction of the Required Lenders, at their
option, declare by notice to the Borrowers any or all of the
Obligations to be immediately due and payable, and the same,
including all interest accrued thereon and all other
obligations of the Borrowers to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall occur
an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Revolving Loans or
Overadvance Facility Loans hereunder shall automatically
terminate and any and all of the Obligations shall be
immediately due
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and payable without the necessity of any action by the Agent
or the Required Lenders or notice to the Agent or the Lenders;
(B) The Agent and each of the Lenders shall have
all of the rights and remedies available under the Loan
Documents or under any applicable law.
10.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or
in any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
10.3. Cumulative Rights. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right
or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at
law or in equity or by statute, or otherwise.
10.4. No Waiver. No course of dealing between any Borrower and the
Agent or any Lender or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
10.5. Allocation of Proceeds. If an Event of Default has occurred
and not been waived, and the maturity of the Notes has been accelerated
pursuant to Article XI hereof, all payments received by the Agent hereunder, in
respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrowers hereunder, shall be applied by the Agent in the
following order:
(a) amounts due to the Lenders pursuant to Sections 3.9
and 12.5;
(b) amounts due to the Agent pursuant to Section 11.11;
(c) amounts due to BNYFC pursuant to the Factoring
Agreement;
(d) payments of interest on Loans to be applied for the
ratable benefit of the Lenders;
(e) payments of principal of Loans to be applied for the
ratable benefit of the Lenders;
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(f) amounts due to the Lenders pursuant to Sections 8.15
and 12.9;
(g) payments of all other amounts due under any of the
Loan Documents, if any, to be applied for the ratable benefit of the
Lenders; and
(h) any surplus remaining after application as provided
for herein, to the Borrowers or otherwise as may be required by
applicable law.
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ARTICLE XI
The Agent
11.1. Appointment. Each Lender hereby irrevocably designates and
appoints BNYFC as the Agent for the Lenders under this Agreement, and each of
the Lenders hereby irrevocably authorizes BNYFC as the Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and
the other Loan Documents and to exercise such powers as are expressly delegated
to the Agent by the terms of this Agreement and such other Loan Documents,
together with such other powers as are reasonably incidental thereto. The
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any of the Lenders, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
11.2. Attorneys-in-fact. The Agent may execute any of its duties
under the Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence, gross negligence or
willful misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
11.3. Limitation on Liability. Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact shall be liable to
the Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with the Loan Documents except for its or their own
gross negligence or willful misconduct. Neither the Agent nor any of its
affiliates shall be responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Borrower, any
Subsidiary or any officer or representative thereof contained in any Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in or received by the Agent or any Lender under or in
connection with any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Loan Document, or for any
failure of any Borrower or any Subsidiary to perform its obligations under any
Loan Document, or for any recitals, statements, representations or warranties
made, or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any Collateral. The Agent shall not be under any obligation to
any of the Lenders to ascertain or to inquire as to the observance or
performance of any of the terms, covenants or conditions of any Loan Document
on the part of any Borrower or any Subsidiary or to inspect the properties,
books or records of any Borrower or the Subsidiaries.
11.4. Reliance. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telefacsimile or telex
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrowers), independent accountants and
other experts selected by the
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Agent. The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes unless an Assignment shall have been filed with and accepted
by the Agent. The Agent shall be fully justified in failing or refusing to
take any action under the Loan Documents unless it shall first receive advice
or concurrence of the Lenders or the Required Lenders as provided in this
Agreement or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under the Loan
Documents in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all present and future holders of the Notes.
11.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Authorized
Representative or the Borrowers referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Event of Default as it shall deem advisable in the best interests of the
Lenders.
11.6. No Representations. Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any Borrower, any Subsidiary or any guarantor, shall
be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the financial condition, creditworthiness, affairs,
status and nature of each Borrower and each Subsidiary and made its own
decision to enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under the Loan Documents and to make such
investigation as it deems necessary to inform itself as to the status and
affairs, financial or otherwise, of the Borrowers and the Subsidiaries. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrowers or the
Subsidiaries which may come into the possession of the Agent or any of its
affiliates.
11.7. Indemnification. Each of the Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by any Borrower or
any Subsidiary and without limiting any obligations of any Borrower or any
Subsidiary to do so), ratably according to the respective
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principal amount of the Notes held by them (or, if no Notes are outstanding,
ratably in accordance with their respective Applicable Commitment Percentages
as then in effect) from and against any and all liabilities, obligations,
losses (excluding any losses suffered by the Agent as a result of the
Borrowers' failure to pay any fee owing to the Agent), damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of any Loan Document or
any other document contemplated by or referred to therein or the transactions
contemplated thereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the Facility Termination Date and
the termination of this Agreement.
11.8. Lender. The Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrowers and the Subsidiaries as though it were not the Agent hereunder. With
respect to its Loans made or renewed by it and any Note issued to it, the Agent
shall have the same rights and powers under this Agreement as any Lender and
may exercise the same as though it were not the Agent, and the terms "Lender"
and "Lenders" shall, unless the context otherwise indicates, include the Agent
in its individual capacity.
11.9. Resignation. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long as
there shall not have occurred and be continuing a Default or Event of Default,
of the Borrowers, which consent shall not be unreasonably withheld, a successor
Agent for the Lenders, which successor Agent shall be a commercial bank
organized under the laws of the United States or any state thereof, having a
combined surplus and capital of not less than $500,000,000, whereupon such
successor Agent shall succeed to the rights, powers and duties of the former
Agent and the obligations of the former Agent shall be terminated and canceled,
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement; provided, however, that the former
Agent's resignation shall not become effective until such successor Agent has
been appointed and has succeeded of record to all right, title and interest in
any Collateral held by the Agent; provided, further, that if the Required
Lenders and, if applicable, the Borrowers cannot agree as to a successor Agent
within ninety (90) days after such resignation, the Agent shall appoint a
successor Agent which satisfies the criteria set forth above in this Section
11.9 for a successor Agent and the parties hereto agree to execute whatever
documents are necessary to effect such action under this Agreement or any other
document executed pursuant to this Agreement; provided, however that in such
event all provisions of the Loan Documents, shall remain in full force and
effect. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XI shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
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11.10. Sharing of Payments, etc. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, set-off, counterclaim
or otherwise, obtain payment with respect to its Obligations (other than
pursuant to Article V) which results in its receiving more than its pro rata
share of the aggregate payments with respect to all of the Obligations (other
than any payment expressly provided hereunder to be distributed on other than a
pro rata basis and payments pursuant to Article V), then (a) such Lender shall
be deemed to have simultaneously purchased from the other Lenders a share in
their Obligations so that the amount of the Obligations held by each of the
Lenders shall be pro rata and (b) such other adjustments shall be made from
time to time as shall be equitable to insure that the Lenders share such
payments ratably; provided, however, that for purposes of this Section 11.10
the term "pro rata" shall be determined with respect to both the Revolving
Credit Commitment and Term Loan Commitment of each Lender and to the Total
Revolving Credit Commitments and Total Term Loan Commitment after subtraction
in each case of amounts, if any, by which any such Lender has not funded its
share of the outstanding Loans and Obligations. If all or any portion of any
such excess payment is thereafter recovered from the Lender which received the
same, the purchase provided in this Section 11.10 shall be rescinded to the
extent of such recovery, without interest. Each Borrower expressly consents to
the foregoing arrangements and agrees that each Lender so purchasing a portion
of the other Lenders' Obligations may exercise all rights of payment
(including, without limitation, all rights of set-off, banker's lien or
counterclaim) with respect to such portion as fully as if such Lender were the
direct holder of such portion.
11.11. Fees. The Borrowers agree to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrowers and Agent in writing.
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ARTICLE XII
Miscellaneous
12.1. Assignments and Participations. (a) At any time after the
Closing Date each Lender may, with the prior consent of the Agent and (so long
as no Default or Event of Default shall have occurred and be continuing) the
Borrowers, which consents shall not be unreasonably withheld, assign (at its
own expense) to one or more banks or financial institutions all or a portion of
its rights and obligations under the Loan Documents (including, without
limitation, all or a portion of any Note payable to its order); provided, that
(i) each such assignment shall be of a constant and not a varying percentage of
all of the assigning Lender's rights and obligations under the Term Loan
Facility, Revolving Credit Facility and Overadvance Facility, (ii) for each
assignment involving the issuance and transfer of a Note, the assigning Lender
shall execute an Assignment and Acceptance and the Borrowers hereby agree to
execute a replacement Note to give effect to the assignment, (iii) the amount
of Revolving Credit Commitment, Term Loan Commitment and Overadvance Facility
Commitment which shall be assigned is a minimum of $5,000,000, and, if greater,
an amount which is an integral multiple of $1,000,000, (iv) such assignee shall
have an office located in the United States, and (v) no consent of any Borrower
or the Agent shall be required in connection with any assignment by a Lender to
another Lender or to an affiliate of any Lender. Upon such execution,
delivery, approval and acceptance, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder or under any
such Note have been assigned or negotiated to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder and a
holder of such Note and (y) the assignor thereunder shall, to the extent that
rights and obligations hereunder or under such Note have been assigned or
negotiated by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement. Any Lender
who makes an assignment shall pay to the Agent a one-time administrative fee in
an amount to be determined by the Agent, which fee shall not be reimbursed by
the Borrowers.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) the assignment
made under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the Subsidiaries or the performance or observance
by any Borrower or any of the Subsidiaries of any of its obligations under any
Loan Document or any other instrument or Document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements delivered pursuant to Section
7.6(a) or Section 8.1, as the case may be, and such other Loan Documents and
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in
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taking or not taking action under any Loan Document; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender and a holder of
such Notes.
(c) The Agent shall maintain at its address referred to herein a
copy of each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender, the Agent shall give prompt notice thereof to the
Borrowers.
(e) Nothing herein shall prohibit any Lender from pledging or
assigning, without notice to or consent of the Borrowers and without the
payment of the administrative fee referred to in Section 12.1(a), any Note to
any Federal Reserve Bank in accordance with applicable law.
(f) Each Lender may sell participations at its expense to one or
more banks or other entities as to all or a portion of its rights and
obligations under this Agreement; provided, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any Note issued to it
for the purpose of this Agreement, (iv) such participations shall be in a
minimum amount of $1,000,000 and, if greater, an amount which is an integral
multiple of $1,000,000 and shall include an allocable portion of such Lender's
Participation, (v) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and with regard to any and
all payments to be made under this Agreement; provided, that the participation
agreement between a Lender and its participants may provide that such Lender
will obtain the approval of such participant prior to such Lender's agreeing to
any amendment or waiver of any provisions of any Loan Document which would (A)
extend the maturity of any Note, (B) reduce the interest rates hereunder or (C)
increase the Revolving Credit Commitment, Term Loan Commitment or Overadvance
Facility Commitment of the Lender granting the participation, and (vi) the sale
of any such participations which require the Borrowers to file a registration
statement with the United States Securities and Exchange Commission or under
the securities regulations or laws of any state shall not be permitted.
(g) No Borrower may assign, nor shall it cause, suffer or permit
any Subsidiary to assign any rights, powers, duties or obligations under this
Agreement or the other Loan Documents without the prior written consent of all
the Lenders.
12.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such
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party in written notice to the other parties hereto or otherwise received), in
the case of notice by telegram, telefacsimile or telex, respectively (where the
receipt of such message is verified by return), or (iii) on the fifth Business
Day after the day on which mailed, if sent prepaid by certified or registered
mail, return receipt requested, in each case delivered, transmitted or mailed,
as the case may be, to the address, telex number or telefacsimile number, as
appropriate, set forth below or such other address or number as such party
shall specify by notice hereunder:
(a) if to any Borrower or any Guarantor:
to such Borrower or Guarantor
in care of River Oaks Furniture, Inc.
0000 XxXxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attn: Mr. Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
with a copy to:
Waller, Lansden, Xxxxxx & Xxxxx, PLLC
Nashville City Center
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
(b) if to the Agent:
BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
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with a copy to:
BNY Financial Corporation
2810 Interstate Tower
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
12.3. Setoff. The Borrowers agree that the Agent and each Lender
shall have a lien for all the Obligations of any Borrower upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned
to the Agent or such Lender or otherwise in the possession or control of the
Agent or such Lender (other than for safekeeping) for any purpose for the
account or benefit of any Borrower and including any balance of any deposit
account or of any credit of any Borrower with the Agent or such Lender, whether
now existing or hereafter established, hereby authorizing the Agent and each
Lender at any time or times with or without prior notice to apply such balances
or any part thereof to such of the Obligations of any Borrower to the Lenders
then past due and in such amounts as they may elect, and whether or not the
collateral or the responsibility of other Persons primarily, secondarily or
otherwise liable may be deemed adequate. For the purposes of this paragraph,
all remittances and property shall be deemed to be in the possession of the
Agent or such Lender as soon as the same may be put in transit to it by mail or
carrier or by other bailee.
12.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and the Notes and
shall continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any commitment hereunder or any Borrower has
continuing obligations hereunder unless otherwise provided herein. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of any Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors
and permitted assigns of the Lenders or any of them.
12.5. Expenses. The Borrowers agree (a) to pay or reimburse the
Agent for all its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents (including
due diligence expenses and travel expenses relating to closing), and the
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consummation of the transactions contemplated thereby, including the reasonable
fees and disbursements of counsel to the Agent, (b) to pay or reimburse the
Agent and the Lenders for all their costs and expenses incurred in connection
with the enforcement or preservation of any rights under the Loan Documents,
including the reasonable fees and disbursements of their counsel and any
payments in indemnification or otherwise payable by the Lenders to the Agent
pursuant to the Loan Documents, and (c) to pay, indemnify and hold the Agent
and the Lenders harmless from any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any failure to pay or delay
in paying, documentary, stamp, excise and other similar taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of any of the Loan Documents, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Loan Document.
12.6. Amendments. No amendment, modification or waiver of any
provision of any Loan Document and no consent by the Lenders to any departure
therefrom by any Borrower or any Subsidiary shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the Agent,
shall have been approved by the Required Lenders through their written consent,
and the same shall then be effective only for the period and on the conditions
and for the specific instances and purposes specified in such writing;
provided, however, that, no such amendment, modification or waiver
(i) which changes, extends or waives any
provision of Section 2.14, Section 3.6, Section 11.9 or this
Section 12.6, the amount of or the due date of any scheduled
installment of or the rate of interest payable on any
Obligation, which changes the definition of "Required
Lenders", which permits an assignment by any Borrower or any
Subsidiary of its Obligations under any Loan Document, which
reduces the required consent of Lenders provided hereunder,
which increases, decreases (other than pursuant to the express
terms hereof) or extends (other than pursuant to the express
terms hereof) the Revolving Credit Commitment, or Term Loan
Commitment of any Lender, or which waives any condition to the
making of any Loan, shall be effective unless in writing and
signed by each of the Lenders;
(ii) which releases Collateral or the guaranty
obligation under any Facility Guaranty (other than pursuant to
the express terms hereof or thereof) shall be effective unless
with the written consent of each of the Lenders; or
(iii) which affects the rights, privileges,
immunities or indemnities of the Agent shall be effective
unless in writing and signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on any Borrower in any case shall
entitle any Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein. No delay
or omission on any Lender's or the Agent's part in exercising any right, remedy
or option shall
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operate as a waiver of such or any other right, remedy or option or of any
Default or Event of Default.
12.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
12.8. Termination. The termination of this Agreement shall not
affect any rights of the Borrowers, the Lenders or the Agent or any obligation
of the Borrowers, the Lenders or the Agent, arising prior to the effective date
of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into or rights created or obligations
incurred prior to such termination have been fully disposed of, concluded or
liquidated and the Obligations arising prior to or after such termination have
been irrevocably paid in full. The rights granted to the Agent for the benefit
of the Lenders under the Loan Documents shall continue in full force and
effect, notwithstanding the termination of this Agreement, until all of the
Obligations have been paid in full after the termination hereof (other than
Obligations in the nature of continuing indemnities or expense reimbursement
obligations not yet due and payable, which shall continue) or the Borrowers
have furnished the Lenders and the Agent with an indemnification satisfactory
to the Agent and each Lender with respect thereto. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until payment in full of the Obligations unless otherwise
provided herein. Notwithstanding the foregoing, if after receipt of any
payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrowers shall be liable to, and shall indemnify and
hold the Agent or such Lender harmless for, the amount of such payment
surrendered until the Agent or such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be
and remain effective notwithstanding any contrary action which may have been
taken by the Agent or the Lenders in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Agent or the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
12.9. Indemnification; Limitation of Liability. In consideration of
the execution and delivery of this Agreement by the Agent and each Lender and
the extension of credit under the Loans, the Borrowers hereby indemnify,
exonerate and hold the Agent and each Lender and each of their respective
affiliates, officers, directors, employees, agents and advisors (collectively,
the "Indemnified Parties") free and harmless from and against any and all
claims, actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities") that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in
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connection with or by reason of, or in connection with the execution, delivery,
enforcement, performance or administration of this Agreement and the other Loan
Documents, or any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan, whether or not such
action is brought against the Agent or any Lender, the shareholders or
creditors of the Agent or any Lender or an Indemnified Party or an Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated herein are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrowers hereby
agree to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
Borrowers agree that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it or any of its
Subsidiaries or any security holders or creditors thereof arising out of,
related to or in connection with the transactions contemplated herein, except
to the extent that such liability is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct; provided, however, in no event
shall any Indemnified Party be liable for consequential, indirect or special,
as opposed to direct, damages. The agreements in this Section 12.9 shall
survive the Facility Termination Date and the termination of this Agreement.
12.10. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
of the parties hereto, then such provision shall remain in effect with respect
to all parties, if any, as to whom such provision is neither illegal nor
invalid, and in any event all other provisions hereof shall remain effective
and binding on the parties hereto.
12.11. Entire Agreement. This Agreement, together with the other
Loan Documents, constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between or
among the parties, both oral and written, with respect thereto.
12.12. Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of
this Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
12.13. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are
repaid in full the total interest due
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hereunder (taking into account the increase provided for above) is less than
the total amount of interest which would have been due hereunder if the stated
rates of interest set forth in this Agreement had at all times been in effect,
then to the extent permitted by law, the Borrowers shall pay to the Agent an
amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention
of the Lenders and the Borrowers to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or receives any
consideration which constitutes interest in excess of the Highest Lawful Rate,
then any such excess shall be cancelled automatically and, if previously paid,
shall at such Lender's option be applied to the outstanding amount of the Loans
made hereunder or be refunded to the Borrowers. As used in this paragraph, the
term "Highest Lawful Rate" means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to such Lender which are presently in effect or, to
the extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
12.14. Joint and Several Liability; Cross-Guaranties.
(a) Joint and Several Liability. All Obligations of the
Borrowers (or any of them) hereunder or under any other Loan Document
shall be joint and several.
(b) Cross-Guaranties. In addition to, and without
limiting the generality of, the foregoing provisions of this Agreement
(including Section 12.14(a)), each of River Oaks, R.O. West, R.O. East
and Xxxxxx (collectively, the "Initial Guarantors) hereby jointly and
severally, unconditionally, absolutely, continually and irrevocably
guarantees to the Agent, BNYFC and the Lenders the payment and
performance in full of the Borrowers' Liabilities (as defined below).
For all purposes of this Guaranty, "Borrowers' Liabilities" means: (a)
each Borrower's prompt payment in full, when due (whether by
acceleration or otherwise) (including amounts which, but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code (or any successor statute), would become due), of all Obligations
and all other amounts pursuant to the terms of this Agreement, the
Notes, the Factoring Agreement and all other Loan Documents executed
in connection with the Credit Agreement or the Factoring Agreement
heretofore, now or at any time or times hereafter owing, arising, due
or payable from any Borrower to BNYFC or the Lenders, including
without limitation principal, interest, premium or fee (including, but
not limited to, loan fees and attorneys' fees and expenses); and (b)
each Borrower's prompt, full and faithful performance, observance and
discharge of each and every agreement, undertaking, covenant and
provision to be performed, observed or discharged by each Borrower
under this Agreement, the Factoring Agreement and all other Loan
Documents. The Initial Guarantors' obligations to the Agent, BNYFC
and the Lenders under this Section 12.14(b) are hereinafter
collectively referred to as the "Guaranteed Obligations"; provided,
however, that the liability of each Initial Guarantor (other than
River Oaks) individually, with respect to the Guaranteed Obligations
shall not exceed at any time the Maximum Guaranty Amount.
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12.15. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER
THAN THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY
SHALL BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.
(b) THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY AGREE
AND CONSENT THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE XXXXXX
XX XXX XXXX, XXXXX XX XXX XXXX, XXXXXX XXXXXX OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.
(c) EACH BORROWER AGREES THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH
BORROWER PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF
SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE ANY BORROWER OR ANY BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED
BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
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PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY
BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWERS, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
RIVER OAKS FURNITURE, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
R.O. WEST, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
R.O. EAST, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
XXXXXX MANUFACTURING COMPANY
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CREDIT AGREEMENT
SIGNATURE PAGE 1 of 2
103
BNY FINANCIAL CORPORATION, as Agent for
the Lenders
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
BNY FINANCIAL CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Lending Office:
BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
Wire Transfer Instructions:
The Bank of New York
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
ABA# 000000000
Attention: BNY Financial
Account No.: 8090653114
Credit to River Oaks
Furniture, Inc. 028000
CREDIT AGREEMENT
SIGNATURE PAGE 2 of 2
