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TABLE OF CONTENTS
[Not a part of the Agreement]
ARTICLE I. DEFINITIONS...........................................................................................1
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Accounting Terms and Determinations......................................................17
SECTION 1.03. Use of Defined Terms.....................................................................17
SECTION 1.04. Terminology..............................................................................17
ARTICLE IIA. THE REVOLVING CREDIT LOAN..........................................................................18
SECTION 2A.01. Revolving Credit Commitment.............................................................18
SECTION 2A.02. Method of Borrowing.....................................................................18
SECTION 2A.03. Revolving Credit Note...................................................................18
SECTION 2A.04. Payment of Advances.....................................................................18
SECTION 2A.05. Interest Rates..........................................................................19
SECTION 2A.06. Facility Fee............................................................................19
SECTION 2A.07. Optional Termination or Reduction of Revolving Credit Commitment
..............................................................................................19
SECTION 2A.08. Termination of Revolving Credit Commitment..............................................20
SECTION 2A.09. Optional Prepayments....................................................................20
SECTION 2A.10. Mandatory Prepayments...................................................................20
ARTICLE IIB. THE TERM LOAN......................................................................................21
SECTION 2B.01. The Term Loan...........................................................................21
SECTION 2B.02. Term Loan Note..........................................................................21
SECTION 2B.03. Selection of Interest Periods...........................................................21
SECTION 2B.04. Interest Rates..........................................................................21
SECTION 2B.05. Payment of Principal and Interest.......................................................22
SECTION 2B.06. Prepayment..............................................................................22
ARTICLE IIC. GENERAL PROVISIONS CONCERNING PAYMENTS AND FEES....................................................23
SECTION 2C.01. General Provisions Concerning Payments..................................................23
SECTION 2C.02. Computation of Interest.................................................................24
ARTICLE III. CHANGE IN CIRCUMSTANCES; COMPENSATION..............................................................24
SECTION 3.01. Basis for Determining Interest Rate Inadequate or Unfair.................................24
SECTION 3.02. Illegality...............................................................................25
SECTION 3.03. Increased Cost and Reduced Return........................................................25
SECTION 3.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans...............................26
SECTION 3.05. Compensation.............................................................................27
ARTICLE IV. CONDITIONS PRECEDENT................................................................................27
SECTION 4.01. Conditions to First Borrowing............................................................27
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SECTION 4.02. Conditions to All Loans or Advances......................................................29
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......................................................................30
SECTION 5.01. Corporate Existence and Power............................................................30
SECTION 5.02. Corporate and Governmental Authorization; No Contravention...............................30
SECTION 5.03. Binding Effect...........................................................................30
SECTION 5.04. Financial Information....................................................................30
SECTION 5.05. Litigation...............................................................................31
SECTION 5.06. Compliance with ERISA....................................................................31
SECTION 5.07. Taxes....................................................................................31
SECTION 5.08. Subsidiaries.............................................................................31
SECTION 5.09. Not an Investment Company................................................................32
SECTION 5.10. Public Utility Holding Company Act.......................................................32
SECTION 5.11. Ownership of Property; Liens.............................................................32
SECTION 5.12. No Default...............................................................................32
SECTION 5.13. Full Disclosure..........................................................................32
SECTION 5.14. Environmental Matters...................................................................32
SECTION 5.15. Compliance with Laws.....................................................................33
SECTION 5.16. Capital Stock............................................................................33
SECTION 5.17. Margin Stock.............................................................................33
SECTION 5.18. Insolvency...............................................................................33
SECTION 5.19. Insurance................................................................................33
SECTION 5.20. Year 2000................................................................................33
ARTICLE VI. COVENANTS...........................................................................................34
SECTION 6.01. Information..............................................................................34
SECTION 6.02. Inspection of Property, Books and Records................................................35
SECTION 6.03. Consolidated Fixed Charges Coverage Ratio................................................36
SECTION 6.04. Ratio Funded Debt to Consolidated EBITDA.................................................36
SECTION 6.05. Ratio of Funded Debt to Consolidated Total Capitalization................................36
SECTION 6.06. Minimum Consolidated Tangible Net Worth..................................................36
SECTION 6.07. Accounts Receivable......................................................................36
SECTION 6.08. Capital Expenditures.....................................................................36
SECTION 6.09. Restricted Payments......................................................................36
SECTION 6.10. Loans or Advances........................................................................36
SECTION 6.11. Investments..............................................................................37
SECTION 6.12. Negative Pledge..........................................................................37
SECTION 6.13. Maintenance of Existence.................................................................37
SECTION 6.14. Dissolution..............................................................................37
SECTION 6.15. Consolidations, Mergers and Sales of Assets..............................................37
SECTION 6.16. Use of Proceeds..........................................................................38
SECTION 6.17. Compliance with Laws; Payment of Taxes...................................................38
SECTION 6.18. Insurance................................................................................38
SECTION 6.19. Change in Fiscal Year....................................................................39
SECTION 6.20. Maintenance of Property..................................................................39
SECTION 6.21. Environmental Notices....................................................................39
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SECTION 6.22. Environmental Matters....................................................................39
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SECTION 6.23. Environmental Release....................................................................39
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SECTION 6.24. Transactions with Affiliates.............................................................39
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SECTION 6.25. Collateral...............................................................................40
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SECTION 6.26. Interest Rate Protection.................................................................40
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SECTION 6.27. Creation, Formation or Acquisition of a Subsidiary.......................................40
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SECTION 6.28. Y2K......................................................................................41
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SECTION 6.29. New Mortgages............................................................................41
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SECTION 6.30. Inactive Subsidiaries....................................................................41
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ARTICLE VII. DEFAULTS...........................................................................................41
SECTION 7.01. Events of Default........................................................................41
SECTION 7.02. Remedies on Default......................................................................44
SECTION 7.03. Security Interest; Offset................................................................44
ARTICLE VIII. MISCELLANEOUS.....................................................................................44
SECTION 8.01. Notices..................................................................................44
SECTION 8.02. No Waivers...............................................................................45
SECTION 8.03. Expenses; Documentary Taxes; Indemnification.............................................45
SECTION 8.04. Amendments and Waivers...................................................................46
SECTION 8.05. Successors and Assigns...................................................................46
SECTION 8.06. Confidentiality..........................................................................48
SECTION 8.07. Interest Limitation......................................................................48
SECTION 8.08. Survival of Certain Obligations..........................................................48
SECTION 8.09. Governing Law............................................................................48
SECTION 8.10. Counterparts.............................................................................48
SECTION 8.11. Consent to Jurisdiction..................................................................48
SECTION 8.12. Joint and Several Liability..............................................................49
SECTION 8.13. Severability.............................................................................51
SECTION 8.14. Captions.................................................................................51
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Term Loan Note
EXHIBIT C Form of Opinion of Counsel for the Borrowers
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Closing Certificate
EXHIBIT F Form of Officer's Certificate
EXHIBIT G Form of Receivables Certification
EXHIBIT H Location of Collateral
EXHIBIT I Form of Compliance Certificate
EXHIBIT J Description of Illinois Property
EXHIBIT K Description of Pennsylvania Real Property
EXHIBIT L Form of Joinder Agreement
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Schedule 1.01 Definitions
Schedule 5.05 Litigation Disclosure
Schedule 5.07 Taxes Disclosure
Schedule 5.08 List of Subsidiaries
Schedule 5.11 Liens;List of Patents, Trade Names, Trademarks and Applications
Schedule 5.14 Environmental Matters
Schedule 6.10 Parameters/Criteria for Xxxxxxx Xxxxxxxx Loan
Schedule 6.30 Inactive Subsidiaries
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, made as of the 31st day of March,
1999, by and among THE SOURCE INFORMATION MANAGEMENT COMPANY, a Missouri
corporation (the "Parent Company"), SOURCE-MYCO, INC., a Delaware corporation
("Myco"), SOURCE- XXXXXX INDUSTRIES, INC., a Delaware corporation ("Xxxxxx"),
SOURCE-U.S. MARKETING SERVICES, INC.,a Delaware corporation ("Marketing"),
SOURCE-CHESTNUT DISPLAY SYSTEMS, INC., a Delaware corporation ("Chestnut"), THE
SOURCE-CANADA CORP., an Ontario, Canada corporation ("Canada Corp."), T.C.E.
CORPORATION, a Delaware corporation ("T.C.E. Corp."), BRAND MANUFACTURING CORP.,
a New York corporation ("Brand"), and VAIL COMPANIES, INC., a Delaware
corporation ("Vail" -- hereinafter, the Parent Company, Myco, Xxxxxx, Marketing,
Chestnut, Canada Corp., T.C.E. Corp., Brand, and Vail are sometimes individually
referred to as a "Borrower" and collectively as the "Borrowers"); and WACHOVIA
BANK, NATIONAL ASSOCIATION (together with endorsees, successors and assigns, the
"Bank").
BACKGROUND
The Borrowers have requested the Bank to make (i) a revolving
credit loan to the Borrowers in the aggregate maximum principal amount at any
time outstanding of $15,000,000, and (ii) a term loan to the Borrowers in the
principal amount of $15,000,000, and the Bank is willing to do so on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
promises herein contained, and each intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Accounts," "Chattel Paper," "Contracts," "Contract Rights,"
"Documents," "Equipment," "General Intangibles," "Goods," "Instruments,"
"Fixtures," and "Inventory" shall have the same respective meanings as are given
to those terms in the Uniform Commercial Code of North Carolina.
"Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
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"Adjusted Monthly LIBOR Index Rate" means a rate per annum
(rounded upward, if necessary, to the next higher 1/10,000th of 1%) determined
by the Bank pursuant to the following formula:
Adjusted Monthly LIBOR = Monthly Libor Index Rate + Applicable Margin for
Index Rate ------------------------------------ Euro-Dollar Loans
1.0 - Euro-Dollar Reserve Percentage
"Advance" means any advance by the Bank under the Revolving
Credit Commitment made under the terms and provisions of this Agreement and the
FMA Agreement.
"Affiliate" of any Person means (i) any other Person which
directly, or indirectly through one or more intermediaries, controls such
Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or
(iii) any other Person of which such Person owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, as amended, restated,
supplemented, modified and extended from time to time.
"Applicable Margin" means, for any Base Rate Loan for any day
and for any Euro-Dollar Loan and any Letter of Credit Fee, (i) a positive number
equal to 0.25% for Base Rate Loans and a positive number equal to 2.50% for
Euro-Dollar Loans from the Closing Date through April 30, 1999, and thereafter,
(ii) a positive number equal to the percentages set forth below during the
Borrowers' fiscal periods that the ratio of Funded Debt to EBITDA, based upon
the financial information submitted to the Bank pursuant to Section 6.01, is as
follows:
Ratio of Funded Applicable Margin Applicable Margin Applicable Margin
Debt to EBITDA for Base Rate Loans for Euro-Dollar Loans Letter of Credit Fee
-------------- ------------------- --------------------- --------------------
>3.00 to 1.00 1.00% 3.50% 2.50%
>2.25 to 1.00 0.50% 3.00% 2.00%
>1.50 to 1.00 0.25% 2.50% 1.50%
<1.50 to 1.00 0.00% 2.00% 1.00%
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"Approved Appraised Value" means an appraised value approved
by the Bank and set by the Bank prior to or not less than 30 days after the
Closing Date based upon an appraisal satisfactory to the Bank prepared by an
appraiser satisfactory to the Bank (which appraisal must be submitted to and
approved by the Bank prior to or not less than 30 days after the Closing Date).
Once the Approved Appraised Value is determined and set by the Bank, it shall
not change during the term of the Loans.
"Assignee" has the meaning set forth in Section 8.05(c).
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"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 8.05(c) in the form attached hereto as
Exhibit D.
"Authority" has the meaning set forth in Section 3.02.
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate for such day. For purposes
of determining the Base Rate for any day, changes in the Prime Rate shall be
effective on the date of each such change.
"Base Rate Loan" means the Term Loan or the Revolving Credit
Loan at the times and during the periods such Loan bears interest calculated by
reference to the Base Rate.
"Borrowers" means those Borrowers identified on the first page
of this Agreement and any Borrowers added by the Joinder Agreement attached
hereto as Exhibit L and pursuant to the provisions of Section 6.27 of this
Agreement.
"Borrowing" means a borrowing under the Revolving Credit
Commitment consisting of an Advance by the Bank. A Borrowing is a "Euro-Dollar
Borrowing" if the Advance is made as a Euro-Dollar Loan and a "Base Rate
Borrowing" if the Advance is made as a Base Rate Loan.
"Borrowing Base" means, based on the most recent Quarterly
Receivables Certification, which as of the date of a determination of the
Borrowing Base has been received by the Bank, the aggregate of: (a) 85% of the
aggregate net amount of Tier I Eligible Receivables; (b) 70% of the aggregate
net amount of Tier II Eligible Receivables; (c) 80% of the Approved Appraised
Value of the Illinois Real Property; and (d) 70% of $3,000,000.00 representing
the agreed upon value of the Equipment Collateral, until such time as an
Approved Appraised Value of the Equipment Collateral has been delivered to the
Bank and approved by the Bank, and thereafter, 70% of the Approved Appraised
Value of the Equipment Collateral; MINUS the sum of (i) the principal amount of
the Term Loan then outstanding, (ii) the Stated Amount (as to the Letter of
Credit), and (iii) $1,000,000.00.
"Capital Expenditures" means for any period the sum of all
amounts paid and all Debt incurred by the Parent Company and its Consolidated
Subsidiaries during such period for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one (1) year, including the total principal portion of
Capital Leases, all as determined in accordance with generally accepted
accounting principles consistently applied.
"Capital Leases" means all leases reflected on a consolidated
balance sheet of the Parent Company and its Consolidated Subsidiaries or a lease
that should be so reflected in accordance with generally accepted accounting
principles consistently applied.
"Capital Stock" means any nonredeemable capital stock of the
Parent Company or any Consolidated Subsidiary (to the extent issued to a Person
other than the Parent Company), whether common or preferred.
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"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change of Law" has the meaning set forth in Section 3.02.
"Closing Certificate" has the meaning set forth in Section
4.01(d).
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Collateral" means the Collateral defined and described in the
Security Agreement, together with all Real Property Collateral.
"Collateral Documents" shall mean, collectively, (i) the
Security Agreement; (ii) the FMA Agreement; and (iii) the Mortgages; as any one
or more of the foregoing may be amended, modified, extended, supplemented,
restated, replaced or renewed.
"Commitment" means at any time the sum of (a) the Revolving
Credit Commitment and (b) the principal amount of the Term Loan then
outstanding.
"Compliance Certificate" has the meaning set forth in Section
6.01(c).
"Consolidated Cash Interest Expense" means, for any period,
cash interest (whether expensed or capitalized) in respect of Funded Debt
outstanding during such period, determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied.
"Consolidated Debt" means at any date the Debt of the Parent
Company and its Consolidated Subsidiaries, determined on a consolidated basis as
of such date.
"Consolidated EBITDA" means, without duplication, for any
fiscal period, as applied to the Parent Company and its Consolidated
Subsidiaries, the sum of the amounts for such fiscal period of: (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes based on income of
the Parent Company and its Consolidated Subsidiaries and actually paid during
such period, (iv) Depreciation, and (v) amortization expense, all as determined
and computed in accordance with generally accepted accounting principles
consistently applied.
"Consolidated Fixed Charge Coverage Ratio" means, for any
period, the ratio of Consolidated EBITDA for such period to the sum of (without
duplication) during such period of (i)
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Consolidated Cash Interest Expense, plus (ii) regularly scheduled payments of
Funded Debt maturing during such period, plus (iii) Capital Expenditures.
"Consolidated Interest Expense" for any period means interest,
whether expensed or capitalized, in respect of Debt of the Parent Company or any
of its Consolidated Subsidiaries outstanding during such period.
"Consolidated Operating Profits" means, for any period, the
Operating Profits of the Parent Company and its Consolidated Subsidiaries.
"Consolidated Net Income" means, for any period, the Net
Income of the Parent Company and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Parent Company or any Subsidiary in the unremitted earnings of
any Person that is not a Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with generally accepted
accounting principles consistently applied, would be consolidated with those of
the Parent Company in its consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or reflected on
the most recent consolidated balance sheet of the Parent Company and its
Consolidated Subsidiaries, prepared in accordance with generally accepted
accounting principles consistently applied, of
(A) Any surplus resulting from any write-up of assets
subsequent to January 31, 1999;
(B) All assets which would be treated as intangibles under
generally accepted accounting principles, including without limitation
goodwill (whether representing the excess of cost over book value of
assets acquired, or otherwise, with the exception of goodwill generated
from any transaction occurring after November 14, 1996, which is
approved in writing by the Bank), trademarks, trade names, copyrights,
patents and technologies, and unamortized debt discount and expense;
(C) To the extent not included in (B) of this definition, any
amount at which shares of capital stock of the Parent Company appear as
an asset on the consolidated balance sheet of the Parent Company and
its Consolidated Subsidiaries;
(D) Loans or advances to stockholders, directors, officers or
employees; and
(E) To the extent not included in (B) of this definition,
deferred expenses.
"Consolidated Total Assets" means, at any time, the total
assets of the Parent Company and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the
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most recent consolidated balance sheet of the Parent Company and its
Consolidated Subsidiaries, prepared in accordance with generally accepted
accounting principles consistently applied.
"Consolidated Total Capitalization" means, at any time, the
sum of (i) Stockholders' Equity, and (ii) Consolidated Debt, as determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Parent Company, are treated as a single
employer under Section 414 of the Code.
"Convertible Preferred Stock" of any Person means any
nonredeemable preferred stock issued by such Person which is at any time prior
to the Termination Date or the Maturity Date, whichever occurs later,
convertible to Capital Stock at the option of the holder thereof.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under Capital
Leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (viii)
all Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (ix) all Debt of others Guaranteed by such
Person, and (x) all obligations of such Person with respect to interest rate
protection agreements, foreign currency exchange agreements or other hedging
agreements (valued as the termination value thereof computed in accordance with
a method approved by the International Swap Dealers Association and agreed to by
such Person in the applicable hedging agreement, if any).
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means (i) with respect to any Advance, on any
day, the sum of 2% plus the higher of (x) the Adjusted Monthly LIBOR Index Rate,
or (y) the Base Rate plus the Applicable Margin; and (ii) with respect to the
Term Loan, on any day, the sum of 2% plus the higher of (a) the Adjusted London
Interbank Offered Rate plus the Applicable Margin, or (b) the Base Rate plus the
Applicable Margin.
"Depreciation" means for any period the sum of all
depreciation expenses of the Parent Company and its Consolidated Subsidiaries
for such period, as determined in accordance with generally accepted accounting
principles consistently applied.
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
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"Domestic Business Day" means any day on which the Bank is
open to the public for the conduct of banking business at its principal office
in Winston-Salem, North Carolina.
"Eligible Receivables" means those Receivables of a Borrower,
each of which meets the following requirements: (i) such Receivable arose in the
ordinary course of such Borrower's business; (ii) the right to payment has been
fully earned by completed performance and, if Goods are involved, the Goods have
been shipped by the Borrower (or if not so shipped, are held by the Borrower
under a "bill and hold" arrangement satisfactory to the Bank in its sole
discretion); (iii) the Receivable includes only that portion thereof not subject
to any offset, defense, counterclaim, credit, allowance or adjustment; (iv) the
Borrower's title to such Receivable is absolute and is subject to no prior
assignment, claim, lien or security interest; (v) the full amount reflected on
such Borrower's books and on any invoice or statement delivered to the Bank
related to such Receivable is owing to the Borrower and no partial payment has
been made thereon; (vi) such Receivable is currently due and payable and is not
past due beyond the requirements set forth in the definitions for Tier I and
Tier II Eligible Receivables; (vii) such Receivable did not arise out of a
contract or purchase order containing provisions prohibiting assignment thereof
or the creation of a security interest therein, and the Borrower has received no
note, trade acceptance, draft or other instrument with respect to such
Receivable or in payment thereof; (viii) the Borrower has received no notice of
the death of the account debtor or of the dissolution, termination of existence,
insolvency, bankruptcy, appointment of receiver for any part of the property of,
or assignment for the benefit of creditors made by, the account debtor; (ix)
such Receivable is not payable by any Affiliate of the Parent Company, any other
Borrower or any Subsidiary; (x) such Receivable is not payable by any foreign
Person (provided that Persons located in Canada and Persons present in
possessions of the United States of America shall not be considered foreign
Persons), unless such Receivable is payable in the full amount of the face value
of such Receivable in United States dollars and is supported by an irrevocable
letter of credit in form and substance acceptable to the Bank, in its sole
discretion, and issued by a bank satisfactory to the Bank, in its sole
discretion (and, if requested by the Bank, such letter of credit or the proceeds
thereof, as the Bank, in its sole discretion, shall require, have been assigned
to the Bank); (xi) such Receivable is not payable by the United States of
America or any political subdivision or agency thereof, unless the Bank and all
of the Borrowers have complied with the Assignment of Claims Act with respect to
such Receivable; (xii) the account debtor for such Receivable is not located in
the State of New Jersey unless the Borrowers have filed a Notice of Business
Activities Report with the New Jersey Division of Taxation for the then current
year; and (xiii) such Receivable is not payable by any Person who is the account
debtor for other Receivables and who is past due (as provided in (vi) above)
with regard to fifty percent (50%) or more of the aggregate amount of such other
Receivables.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrowers required by any Environmental
Requirement.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon
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consent or written agreements with an Environmental Authority or other entity
arising from or in any way associated with any Environmental Requirement,
whether or not incorporated in a judgment, decree or order.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirement.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with any Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority or from any
other person or entity for correction of any violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrowers,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"Equipment Collateral" means the equipment and fixtures
(excluding fixtures which constitute part of the Illinois Real Property) owned
by the Borrowers as of the Closing Date and used in the Borrowers' respective
businesses, including machinery, furniture, furnishings, leasehold improvements
and computer equipment (but excluding motor vehicles), all of which the Bank has
a perfected first priority security interest in and lien upon at the time of the
Closing Date and thereafter during the term of the Loans.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law, including any rules or
regulations promulgated thereunder. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.
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"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means (i) the Term Loan at the times and
during the periods such Loan bears interest calculated by reference to the
Adjusted London Interbank Offered Rate, and (ii) an Advance made or to be made
(pursuant to this Agreement and the FMA Agreement) as a Euro-Dollar Loan based
on the Adjusted Monthly LIBOR Index Rate.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of the Bank to United States residents). The Adjusted
Monthly LIBOR Index Rate and the Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 7.01.
"Facility Fee" shall have the meaning assigned to it in
Section 2A.06.
"Facility Fee Payment Date" means the first day of each May,
August, November and February, commencing May 1, 1999; provided that if any such
day is not a Domestic Business Day, the Facility Fee Payment Date shall be on
the next succeeding Domestic Business Day.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 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 the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wachovia on such day on
such transactions.
"Fiscal Quarter" means any fiscal quarter of the Borrowers.
"Fiscal Year" means any fiscal year of the Borrowers.
"FMA Agreement" means that certain Financial Management
Account Master Agreement dated of even date herewith, among the Borrowers and
the Bank, together with and as amended by that certain Financial Management
Account Investment/Commercial Loan Access Agreement dated of even date herewith,
among the Borrowers and the Bank, together with all supplements, amendments,
additions and schedules thereto from time to time.
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"Funded Debt" means, at any date, any Debt of the Parent
Company and its Consolidated Subsidiaries.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranty" shall mean that certain Guaranty Agreement executed
by the Borrowers (other than the Parent Company) with respect to the
indebtedness of the Parent Company to the Lender under the Master Agreement.
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Illinois Real Property" means the real property and the
improvements and fixtures located thereon, owned, as of the Closing Date, by
Myco and located in Winnebago County, Illinois, and which is covered by and
subject to a Mortgage in favor of the Bank, and is more particularly described
on Exhibit J hereto.
"Interest Period" means the period described in Section
2B.03(a) and: (1) with respect to any time the Term Loan is a Euro-Dollar Loan,
the period commencing on the last day of the preceding Interest Period, in the
event that the Borrowers have notified the Bank pursuant to Section 2B.03(b)
that the Term Loan is to become or remain a Euro-Dollar Loan, and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrowers may elect pursuant to Section 2B.03(b);
provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business
Day;
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(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and
(c) any Interest Period which begins before the Maturity Date
and would otherwise end after the Maturity Date shall end on the
Maturity Date; and
(2) with respect to any time the Term Loan is a Base Rate Loan, the period
commencing on the last day of the preceding Interest Period, in the event that
the Borrowers have notified the Bank pursuant to Section 2B.03(b) that the Term
Loan is to become or remain a Base Rate Loan or on the date the Term Loan is
converted to or otherwise becomes a Base Rate Loan pursuant to this Agreement,
and in any event ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Domestic Business Day shall be extended to the next
succeeding Domestic Business Day; and
(b) any Interest Period which begins before the Maturity Date
and would otherwise end after the Maturity Date shall end on the
Maturity Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of a
time deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means the Bank's office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as the Bank may
hereafter designate as its Lending Office by notice to the Borrowers.
"Letter of Credit" has the meaning set forth in the
Reimbursement Agreement.
"Letter of Credit Fee" has the meaning set forth in the
Reimbursement Agreement.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, or encumbrance of any kind in respect of such asset. For the purposes of
this Agreement, a Borrower shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset.
"Loan" or "Loans" means, individually or collectively as the
context may require, the Term Loan and the Revolving Credit Loan (and for
purposes of the Revolving Credit Loan, the term shall include any Borrowing or
Advance under the Revolving Credit Commitment).
"Loan Documents" means this Agreement, the Notes, the
Collateral Documents, the Reimbursement Agreement, any Master Agreement, the
Guaranty and any other document evidencing,
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relating to or securing the Loans, and any other document or instrument
delivered by any Borrower or by any third party at the direction or request of a
Borrower or by any guarantor or by any third party at the direction or request
of a guarantor, from time to time in connection with this Agreement, the Notes,
the Collateral Documents, the Reimbursement Agreement, the Letter of Credit, the
Term Loan or the Revolving Credit Loan (including any Advance or Borrowing
thereunder), as such documents and instruments may be amended or supplemented
from time to time.
The "London Interbank Offered Rate" applicable to any Loan
bearing interest based upon the Adjusted London Interbank Offered Rate means,
for the Interest Period of such Loan, the rate per annum determined on the basis
of the rate for deposits in Dollars of amounts equal or comparable to the
principal amount of such Loan offered for a term comparable to such Interest
Period, which rate appears on the display designated as Page "3750" of the
Telerate Service (or such other page as may replace page 3750 of that service or
such other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits), determined as of 1:00 p.m. (New York time), 2 Euro-Dollar
Business Days prior to the first day of such Interest Period.
"Long Term Debt" means at any date any Debt which matures (or
the maturity of which may at the option of a Borrower be extended such that it
matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System, as in
effect from time to time, together with all official rulings and interpretations
issued thereunder.
"Master Agreement" has the meaning set forth in Section
7.01(r).
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business, properties or prospects of
the Parent Company and its Consolidated Subsidiaries taken as a whole, (b) the
rights and remedies of the Bank under the Loan Documents, or the ability of any
Borrower or any Subsidiary to perform its obligations under the Loan Documents
to which it is a party, as applicable, or (c) the legality, validity or
enforceability of any Loan Document.
"Maturity Date" means May 1, 2002.
The "Monthly Libor Index Rate" applicable to any Euro-Dollar
Borrowing means the rate per annum designated by the Bank in its sole discretion
on each Rate Determination Date as the Bank's Monthly Libor Index Rate, taking
into account the offered rate for deposits in Dollars for a term of one month,
which appears on the display designated as Page "3750" of the Telerate Service
(or such other page as may replace Page 3750 of that service or such other
service or services as may be nominated by the British Bankers' Association for
the purpose of displaying London interbank offered rates for U.S. dollar
deposits), determined as of 11:00 a.m. (London time), on each such Rate
Determination Date, and such other factors as the Bank shall deem relevant.
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"Mortgages" means, collectively, (i) that certain Mortgage
executed by Myco in favor of the Bank covering the Illinois Real Property and
recorded in the land records of Winnebago County, Illinois and securing this
Agreement, the Loans, the Notes, the Letter of Credit and the Reimbursement
Obligations, and (ii) that certain Mortgage executed by Xxxxxx in favor of the
Bank covering the Pennsylvania Real Property and recorded in the land records of
Philadelphia County, Pennsylvania and securing this Agreement, the Loans, and
the Notes; and (iii) any New Mortgages as referred to in Section 6.29; each as
originally executed and as the same may from time to time be supplemented,
modified, amended, renewed or extended.
"Multiemployer Plan" has the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period,
gross revenues and other proper income of such Person during such period less
the aggregate during such period of (i) cost of merchandise sold, (ii) selling,
administrative and general expenses, (iii) taxes, (iv) Depreciation, depletion
and amortization of assets, and (v) any other items that are treated as expenses
under generally accepted accounting principles consistently applied, all as
computed in accordance with generally accepted accounting principles
consistently applied.
"Notes" means, collectively, the Term Loan Note and the
Revolving Credit Note, either as originally executed or as may from time to time
be supplemented, modified, amended, renewed or extended.
"Obligations" means all indebtedness, obligations and
liabilities to the Bank existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, of the Borrowers under this
Agreement or any other Loan Document.
"Officer's Certificate" has the meaning set forth in Section
4.01.
"Operating Profits" means, as applied to any Person for any
period, the operating income of such Person for such period, as determined in
accordance with generally accepted accounting principles consistently applied.
"Participant" has the meaning set forth in Section 8.05(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Pennsylvania Real Property" means the real property and the
improvements and fixtures located thereon, owned, as of the Closing Date, by
Xxxxxx and located in Philadelphia County, Pennsylvania, and which is covered by
and subject to a Mortgage in favor of the Bank, and is more particularly
described on Exhibit K hereto.
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"Permitted Encumbrances" means:
(a) Liens for taxes, assessments, or similar charges, incurred
in the ordinary course of business that are not yet due and payable;
(b) Pledges or deposits made in the ordinary course of
business to secure payment of workers' compensation, or to participate in any
fund in connection with workers' compensation, unemployment insurance, old-age
pensions or other social security programs;
(c) Liens of mechanics, materialmen, warehousemen, carriers,
or other like liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(d) Good faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of twenty percent
(20%) of the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(e) Liens in favor of the Bank pursuant to the Loan Documents;
and
(f) Any Lien on any equipment of a Borrower securing Debt of
that Borrower incurred for the purpose of financing all of the cost of acquiring
such equipment, provided that (i) such Lien attaches to such equipment
concurrently with the acquisition thereof, and (ii) such Liens (as to all
Borrowers) shall not exceed, in the aggregate, $100,000.00 in any Fiscal Year.
"Person" means any individual, joint venture, corporation,
company, voluntary association, partnership, trust, joint stock company,
unincorporated organization, association, government, or any agency,
instrumentality, or political subdivision thereof, or any other form of entity
or organization.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Prime Rate" means that interest rate so denominated and set
by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate. A change in the Prime
Rate shall be effective on the date of such change.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrowers, wherever located.
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"Quarterly Receivables Certification" means a certification in
the form attached hereto as Exhibit G and otherwise satisfactory to the Bank,
certified by the chief financial officer or other authorized officer of the
Parent Company regarding the Receivables of the Borrowers.
"Rate Determination Date" means each day that is two
Euro-Dollar Business Days prior to the first day of each calendar month, and if
such day is not a Domestic Business Day, then on the immediately preceding
Domestic Business Day which is also a Euro-Dollar Business Day.
"RDA" has the meaning set forth on Schedule 1.01 attached
hereto.
"RDP" has the meaning set forth on Schedule 1.01 attached
hereto.
"Real Property Collateral" means the Illinois Real Property
and the Pennsylvania Real Property and any other real property added pursuant to
the provisions of Section 6.29.
"Receivables" means all obligations of every kind at any time
owing to a Borrower (whether now existing or hereafter arising, and whether
classified under the Uniform Commercial Code as Accounts, Instruments, Contract
Rights, Chattel Paper, Contracts, General Intangibles, or otherwise), all
proceeds thereof, all security therefor and all of the Borrower's rights to
Goods or other property sold or leased which may be represented thereby.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
or the Maturity Date, whichever occurs later, either (i) mandatorily redeemable
(by sinking fund or similar payments or otherwise) or (ii) redeemable at the
option of the holder thereof.
"Reimbursement Agreement" means that certain Reimbursement
Agreement dated February 26, 1999 executed by and among the Parent Company,
Myco, and Wachovia.
"Reimbursement Obligations" has the meaning set forth in the
Reimbursement Agreement.
"Reportable Event" has the meaning set forth in Section
4043(b) of Title V of ERISA.
"Reported Net Income" means, for any period, the Net Income of
the Parent Company and its Consolidated Subsidiaries determined on a
consolidated basis.
"Restricted Payment" means as to any Borrower (i) any dividend
or other distribution on any shares of such Borrower's capital stock (except
dividends payable solely in shares of its capital stock) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any shares
of such Borrower's capital stock (except shares acquired upon the conversion
thereof into other shares of its capital stock) or (b) any option, warrant or
other right to acquire shares of such Borrower's capital stock.
"Revolving Credit Commitment" means an amount equal to
$15,000,000.00, as such amount may be reduced from time to time as hereinafter
provided in this Agreement.
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"Revolving Credit Loan" has the meaning set forth in Section
2A.01.
"Revolving Credit Note" has the meaning set forth in Section
2A.03.
"Security Agreement" shall have the meaning set forth in
Section 4.01(g).
"Stated Amount" has the meaning set forth in the
Reimbursement Agreement.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Parent Company and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Parent Company
and its Consolidated Subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied, but excluding any Redeemable
Preferred Stock of the Parent Company or any of its Consolidated Subsidiaries,
and including any Convertible Preferred Stock of the Parent Company or any of
its Consolidated Subsidiaries. Shareholders' Equity would generally include, but
not be limited to (i) the par or stated value of all outstanding Capital Stock,
(ii) capital surplus, (iii) retained earnings, and (iv) various deductions such
as (A) purchases of treasury stock, (B) valuation allowances, (C) receivables
due from an employee stock ownership plan, (D) employee stock ownership plan
debt guarantees, and (E) translation adjustments for foreign currency
transactions.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Parent Company or any other
Borrower.
"Termination Date" has the meaning set forth in Section
2A.07(b).
"Termination Fee" has the meaning set forth in Section
2B.06(c).
"Term Loan" has the meaning set forth in Section 2B.01.
"Term Loan Note" has the meaning set forth in Section 2B.02.
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrowers' respective businesses and on a temporary
basis.
"Tier I Eligible Receivables" means, as to each of the
Borrowers, those Receivables of such Borrower, each of which meets the following
requirements: (i) such Receivable meets all of the requirements set forth in the
definition of the term "Eligible Receivables", and (ii) such Receivable is
currently due and payable, and no more than 90 days for RDA and 180 days for RDP
have elapsed from the date the claim evidencing such Receivable was filed with
the publisher for payment, or alternatively, no more than 90 days have elapsed
from invoice date, and (iii) such Receivable is not a Tier II Eligible
Receivable.
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"Tier II Eligible Receivables" means, as to each of the
Borrowers, those Receivables of such Borrower, each of which meets the following
requirements: (i) such Receivable meets all of the requirements set forth in the
definition of the term "Eligible Receivables", (ii) such Receivable is not a
Tier I Eligible Receivable, and (iii) such Receivable is currently due and
payable and more than 90 days for RDA and 180 days for RDP have elapsed from the
date the claim evidencing such Receivable was filed with the publisher for
payment, or alternatively, as may be applicable, from invoice date, but no more
than 365 days have elapsed from the date the claim evidencing such Receivable
was filed with the publisher for payment, or alternatively, as may be
applicable, from invoice date.
"Transferee" has the meaning set forth in Section 8.05(d).
"Unused Commitment" means at any date an amount equal to the
Revolving Credit Commitment less the aggregate outstanding principal amount of
the Advances.
"Wachovia" means Wachovia Bank, National Association,
together with its successors.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Parent
Company or any other Borrower.
"Year 2000 Compliant and Ready" as used herein means that (A)
the Borrowers' hardware and software systems with respect to the operation of
their respective businesses and their respective general business plans will in
all material respects: (i) handle date information involving any and all dates
before, during and/or after January 1, 2000, including accepting input,
providing output and performing date calculations in whole or in part; (ii)
operate, accurately without interruption on and in respect of any and all dates
before, during and/or after January 1, 2000 and without any change in
performance; (iii) store and provide date input information without creating any
ambiguity as to the century and; (B) the Borrowers have developed alternative
plans to ensure business continuity in all material respects in the event of the
failure of any or all of items (i) through (iii) above.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles, applied on a basis
consistent (except for changes concurred in by the Borrowers' independent public
accountants) with the most recent audited consolidated financial statements of
the Parent Company and its Consolidated Subsidiaries delivered to the Bank.
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
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SECTION 1.05. References. Except as otherwise expressly
provided in this Agreement: the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole, including any
Schedules and Exhibits hereto which are a part hereof, and not to any particular
Section, Article, paragraph or other subdivision; "or" is not exclusive; the
words "include," "includes" and "including" are not limiting; a reference to any
agreement or other contract includes past and future permitted supplements,
amendments, modifications and restatements thereto or thereof; a reference to an
Article, Section, paragraph or other subdivision is a reference to an Article,
Section, paragraph or other subdivision of this Agreement; a reference to any
law includes any amendment or modification to such law and any rules and
regulations promulgated thereunder; a reference to a Person includes its
permitted successors and assigns; any right may be exercised at any time and
from time to time; and, except as otherwise expressly provided therein, all
obligations under any agreement or other contract are continuing obligations
throughout the term of such agreement or contract.
ARTICLE IIA. THE REVOLVING CREDIT LOAN
SECTION 2A.01. Revolving Credit Commitment. The Bank agrees,
on the terms and conditions set forth herein and in the FMA Agreement, to make
Advances to the Borrowers from time to time before the Termination Date;
provided that, immediately after each such Advance is made, the aggregate
principal amount of outstanding Advances shall not exceed the lesser of: (i) the
Revolving Credit Commitment, or (ii) the Borrowing Base. Within the foregoing
limits, the Borrowers may borrow under this Section, repay or, to the extent
permitted by Section 2A.09, prepay Advances and reborrow under this Section at
any time before the Termination Date. The Bank shall have no obligation to
advance funds pursuant to this Article or the FMA Agreement in excess of the
lesser of: (i) the Revolving Credit Commitment, or (ii) the Borrowing Base. The
aggregate amount of the Advances from time to time is herein referred to as the
"Revolving Credit Loan".
SECTION 2A.02. Method of Borrowing. (a) Advances to the
Borrowers shall be made in accordance with the Bank's Financial Management
Account service as set forth in the FMA Agreement, the terms and provisions of
which are incorporated herein by reference; provided that all Advances shall be
subject to the terms, covenants, conditions, restrictions and provisions of this
Agreement.
(b) Notwithstanding anything to the contrary contained in
this Agreement or the FMA Agreement, at the Bank's sole option, no Advance may
be made if there shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cured or waived.
SECTION 2A.03. Revolving Credit Note. The Advances shall be
evidenced by a single note (the "Revolving Credit Note") payable to the order of
the Bank for the account of its Lending Office in an amount equal to the
original principal amount of the Bank's Revolving Credit Commitment; the
Revolving Credit Note shall be in the form of Exhibit A hereto, with appropriate
insertions, payable to the order of the Bank and dated the Closing Date. The
Revolving Credit Note shall bear interest and be repaid in accordance with the
terms and provisions of the FMA Agreement and this Agreement.
SECTION 2A.04. Payment of Advances. The principal amount of
all outstanding Advances together with all accrued and unpaid interest thereon,
shall be due and payable in full, on the
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Termination Date; provided, however, that the aggregate outstanding principal
amount of all Advances at any one time outstanding shall not exceed the lesser
of: (i) the Revolving Credit Commitment, or (ii) the Borrowing Base. In
addition, the Borrowers have authorized and directed the Bank to effect periodic
payments of principal and interest on Advances under the FMA Agreement.
SECTION 2A.05. Interest Rates. (a) Subject to the provisions
of Article III, each Advance shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to the current Adjusted Monthly LIBOR
Index Rate. The Adjusted Monthly LIBOR Index Rate will change as of the first
(1st) day of each calendar month following the change in the Monthly Libor Index
Rate as of the immediately preceding Rate Determination Date. Such interest
shall be payable on the first (1st) day of each calendar month in accordance
with the FMA Agreement. Any overdue principal of and, to the extent permitted by
law, overdue interest on the Revolving Credit Loan shall bear interest, payable
on demand, for each day until paid at the Default Rate.
(b) The Bank shall determine the interest rate applicable to
each Advance hereunder and under the FMA Agreement, and shall, if requested by
the Borrowers, give prompt notice to the Borrowers by telephone or telecopy of
the rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(c) After the occurrence and during the continuance of a
Default, the principal amount of all outstanding Advances (and, to the extent
permitted by applicable law all accrued interest thereon), may, at the election
of the Bank, bear interest for each day until paid at the Default Rate. All
Advances shall bear interest at the Default Rate following any judgment in favor
of the Bank on the Revolving Credit Note.
SECTION 2A.06. Facility Fee. From and after the date hereof
up to and including the Termination Date, the Borrowers shall pay to the Bank a
facility fee at the rate of three-eighths of one percent (0.375%) per annum
(calculated from the date hereof on the basis of a year of 360 days and paid for
the actual number of days elapsed) on the average daily balance of the Unused
Commitment (the "Facility Fee"). The Facility Fee shall be payable by the
Borrowers quarterly in arrears on each Facility Fee Payment Date and on the
Termination Date, provided that should the Commitment be terminated at any time
prior to the Termination Date (whether by termination of the Commitment as
provided in Section 2A.07 or Section 2A.08, refinancing of the Advances or
otherwise), the entire accrued and unpaid Facility Fee shall be paid on the date
of such termination.
SECTION 2A.07. Optional Termination or Reduction of Revolving
Credit Commitment. (a) The Borrowers may, upon at least three Domestic Business
Days' notice to the Bank, terminate the Revolving Credit Commitment at any time,
or reduce the Revolving Credit Commitment from time to time by an aggregate
minimum amount of at least $1,000,000 or an integral multiple of $100,000 in
excess thereof. If the Revolving Credit Commitment is so reduced, such reduction
shall be accounted for in determining the Facility Fee due under Section 2A.06.
If the Revolving Credit Commitment is terminated in its entirety, (i) all
accrued fees as provided for in Section 2A.06 shall be payable on the effective
date of such termination, and (ii) the Borrowers shall pay to the Bank on the
effective date of such termination a termination fee equal to one tenth of one
percent (0.10%) of the Revolving Credit Commitment. A notice of reduction or
termination of the Revolving Credit Commitment hereunder, once given, shall not
thereafter be revocable by the Borrowers.
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(b) NOTWITHSTANDING ANYTHING HEREIN OR IN THE FMA AGREEMENT
TO THE CONTRARY, the Bank shall have the right, in its sole and absolute
discretion, to terminate the Revolving Credit Commitment and the Bank's
obligation to extend the Revolving Credit Loan and Advances to the Borrowers
hereunder upon not less than thirteen (13) months' prior written notice. Such
termination shall become effective on the date specified in the written notice
which the Bank delivers to the Borrowers exercising the Bank's option under this
Section 2A.07(b) to terminate the Revolving Credit Commitment (the termination
date specified in said written notice being referred to as the "Termination
Date").
SECTION 2A.08. Termination of Revolving Credit Commitment.
The Revolving Credit Commitment shall terminate and the unpaid principal balance
and all accrued and unpaid interest on the Revolving Credit Note will be due and
payable upon the first of the following dates or events to occur: (i)
termination of the Revolving Credit Commitment in accordance with the remedies
contained in Section 7.02; (ii) the Borrower's termination of the Revolving
Credit Commitment pursuant to Section 2A.07(a); (iii) the Bank's termination of
the Revolving Credit Commitment pursuant to Section 2A.07(b); or (iv) upon the
expiration of the Revolving Credit Commitment on the Termination Date. From and
after the date of such termination, no Advances shall be made.
SECTION 2A.09. Optional Prepayments. (a) Optional prepayments
of Advances shall be permitted only as provided in the FMA Agreement.
(b) In connection with any prepayment under this Section
2A.09 or the FMA Agreement, the Borrowers will compensate the Bank for any
liabilities, losses, costs and expenses incurred by the Bank as provided for or
contemplated in Article III.
SECTION 2A.10. Mandatory Prepayments. (a) On each date on
which the Revolving Credit Commitment is reduced pursuant to Section 2A.07(a),
the Borrowers shall repay or prepay such principal amount of the outstanding
Advances, if any (together with interest accrued thereon), as may be necessary
so that after such payment the aggregate unpaid principal amount of the
outstanding Advances does not exceed the aggregate amount of the Revolving
Credit Commitment as then reduced. Each such payment or prepayment shall be
applied to Advances outstanding on the date of such payment.
(b) In the event that the aggregate principal amount of all
Advances at any one time outstanding shall exceed the lesser of: (i) the
Borrowing Base, or (ii) the Revolving Credit Commitment, the Borrowers shall
immediately repay so much of the Advances as is necessary in order that the
aggregate principal amount of the Advances thereafter outstanding shall not
exceed the lesser of: (i) the Borrowing Base, or (ii) the Revolving Credit
Commitment.
(c) In connection with any payment under this Section 2A.10,
the Borrowers will compensate the Bank for any liabilities, losses, costs and
expenses incurred by the Bank as provided for or contemplated in Article III.
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ARTICLE IIB. THE TERM LOAN
SECTION 2B.01. The Term Loan. (a) Subject to the terms and
conditions of this Agreement, on the Closing Date, the Bank agrees to lend to
the Borrowers, and the Borrowers agree to borrow from the Bank, the sum of
Fifteen Million and No/100 Dollars ($15,000,000.00) (the "Term Loan").
(b) The closing of the Term Loan hereunder shall take place
at the office of the Bank in Greensboro, North Carolina, or such other place as
the parties may agree, on the Closing Date. On the Closing Date, upon receipt of
the documents required by, and satisfaction of the conditions specified in,
Article IV, the Bank will advance at the Bank's Lending Office, in immediately
available funds, the amount of the Term Loan to the Borrowers.
SECTION 2B.02. Term Loan Note. The Term Loan shall be
evidenced by a promissory note of the Borrowers (the "Term Loan Note") in the
aggregate principal amount of Fifteen Million and No/100 Dollars
($15,000,000.00) in the form of Exhibit B hereto, with appropriate insertions,
payable to the order of the Bank and dated the Closing Date.
SECTION 2B.03. Selection of Interest Periods. (a) The Term
Loan initially shall be a Euro-Dollar Loan, and the Interest Period applicable
thereto shall commence on the Closing Date and end on the numerically
corresponding day in the first calendar month thereafter.
(b) Thereafter, the Borrowers shall give the Bank irrevocable
written notice (i) at least two Euro-Dollar Business Days prior to the ending
date of the then current Interest Period, if the Borrowers elect to cause the
Term Loan to become or remain (as the case may be) a Euro-Dollar Loan, in which
event such notice shall state such election and the Interest Period applicable
thereto, which shall be for the number of months selected, subject to the
provisions of paragraph (1) of the definition of "Interest Period" contained in
Section 1.01; or (ii) at least two Domestic Business Days prior to the ending
date of the then current Interest Period, if the Borrowers elect to cause the
Term Loan to become or remain (as the case may be) a Base Rate Loan, in which
event such notice shall state such election.
(c) In the event that the Borrowers shall fail to deliver a
notice as provided for in paragraph (b) of this section, the Term Loan shall
become or remain (as the case may be) a Base Rate Loan and the Interest Period
applicable thereto shall be in accordance with paragraph (2) of the definition
of "Interest Period" contained in Section 1.01.
(d) Notwithstanding anything to the contrary contained in
this Agreement, the Borrowers may not elect to cause the Term Loan to become or
remain (as the case may be) a Euro-Dollar Loan if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived.
SECTION 2B.04. Interest Rates. (a) The unpaid principal
balance of the Term Loan from time to time outstanding shall bear interest until
maturity at a rate per annum set in accordance with this Section.
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(b) For each day that the Term Loan is a Base Rate Loan, the
Term Loan shall bear interest on the outstanding principal amount thereof at a
rate per annum equal to the Base Rate for such day plus the Applicable Margin
for Base Rate Loans.
(c) During each period that the Term Loan is a Euro-Dollar
Loan, the Term Loan shall bear interest on the outstanding principal amount
thereof, for each Interest Period applicable thereto, at a rate per annum equal
to the sum of the Applicable Margin for Euro-Dollars Loans plus the applicable
Adjusted London Interbank Offered Rate for such Interest Period; provided that
if such Euro- Dollar Loan shall, as a result of clause (1)(c) of the definition
of Interest Period, have an Interest Period of less than one month, such
Euro-Dollar Loan shall bear interest during such Interest Period at the rate
applicable to a Base Rate Loan during such period.
(d) Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on the Term Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the Default
Rate.
(e) The Bank shall determine each interest rate applicable to
the Term Loan during each Interest Period and the Bank's determination thereof
shall be conclusive in the absence of manifest error.
(f) After the occurrence and during the continuance of a
Default, the principal amount of the Term Loan (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of the Bank,
bear interest at the Default Rate. The Term Loan shall bear interest at the
Default Rate following any judgment in favor of the Bank on the Term Loan Note.
SECTION 2B.05. Payment of Principal and Interest. The
Borrowers promise and agree to pay to the Bank the principal and interest on the
Term Loan and the Term Loan Note as follows:
(a) Interest shall be payable on the first day of each
calendar month.
(b) The principal of the Term Loan shall be payable in twelve
(12) consecutive quarterly installments on the first (1st) day of each August,
November, February and May, commencing August 1, 1999 and continuing until the
Maturity Date in the amounts set forth below:
August 1, 1999 $ 900,000 February 1, 2001 $1,250,000
November 1, 1999 $ 900,000 May 1, 2001 $1,250,000
February 1, 2000 $ 900,000 August 1, 2001 $1,600,000
May 1, 2000 $ 900,000 November 1, 2001 $1,600,000
August 1, 2000 $ 1,250,000 February 1, 2002 $1,600,000
November 1, 2000 $ 1,250,000 May 1, 2002 $1,600,000
A final installment shall be due and payable on the Maturity Date in an amount
equal to the unpaid principal balance of, and all accrued but unpaid interest
on, the Term Loan.
SECTION 2B.06. Prepayment. (a) The Borrowers shall have the
right to prepay the outstanding principal of the Term Loan in whole or in part;
provided, however, (i) that all partial prepayments of the Loan made under this
section shall be in whole multiples of $100,000.00; (ii) at any
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time the Term Loan is a Euro-Dollar Loan, prepayments may be made only on the
last day of the Interest Period applicable to the Term Loan; and (iii) at any
time the Term Loan is a Base Rate Loan, prepayments may be made at any time.
(b) Notwithstanding anything to the contrary in this Section,
no prepayment may be made pursuant to paragraph (a) of this Section except after
not more than ten (10), nor less than three (3), days prior written notice to
the Bank, specifying the prepayment date, the amount of such prepayment and that
such prepayment is being made pursuant to Section 2B.06 of this Agreement. Any
such notice shall be irrevocable. The Borrowers shall pay with such prepayment
all accrued interest on the principal of the Term Loan so prepaid to the date of
such prepayment and, if the prepayment is in whole, any and all other amounts
payable by the Borrowers to the Bank under this Agreement or any other Loan
Document, including, without limitation, the Termination Fee referred to below.
(c) If the Borrowers prepay the Term Loan in whole from
sources other than (i) excess cash flow of the Borrowers or (ii) proceeds from a
public equity offering by the Parent Company within the first twelve calendar
months following the Closing Date, the Borrowers shall pay to the Bank on the
effective date of such prepayment a termination fee equal to one half of one
percent (0.50%) of the amount prepaid ("Termination Fee").
(d) In connection with any prepayment under this Section
2B.06, the Borrowers will compensate the Bank for any liabilities, losses, costs
and expenses incurred by the Bank as provided for or contemplated in Article
III.
ARTICLE IIC. GENERAL PROVISIONS CONCERNING PAYMENTS AND FEES
SECTION 2C.01. General Provisions Concerning Payments. (a)
All payments of principal of, or interest on, the Notes, and of the Facility
Fee, the Termination Fee and any other fees due hereunder, shall be made in
Federal or other funds immediately available to the Bank at its office in
Greensboro, North Carolina not later than 1:00 p.m., Greensboro, North Carolina
time. Funds received after 1:00 p.m. shall be deemed to have been paid on the
next following Domestic Business Day.
(b) Whenever any payment of principal of, or interest on, the
Loans shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day,
except as to any payment of principal of or interest on the Term Loan during a
period that the Term Loan is a Euro-Dollar Loan, in which case the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(c) All payments of principal, interest and fees and all
other amounts to be made by the Borrowers pursuant to this Agreement shall be
paid without deduction for, and free from, any tax, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime hereafter imposed by
any governmental authority or by any taxing authority thereof or therein
excluding in the case of the
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Bank, taxes imposed on or measured by its net income, and franchise taxes
imposed on it by the jurisdiction under the laws of which the Bank is organized
or any political subdivision thereof (all such non-excluded taxes, imposts,
levies, duties, deductions or withholdings of any nature being "Taxes"). In the
event that the Borrowers are required by applicable law to make any such
withholding or deduction of Taxes with respect to the Term Loan or Advances or
any fee relating thereto or other amount, the Borrowers shall pay such deduction
or withholding to the applicable taxing authority, shall promptly furnish to the
Bank all receipts and other documents evidencing such payment and shall pay to
the Bank additional amounts as may be necessary in order that the amount
received by the Bank after the required withholding or other payment shall equal
the amount the Bank would have received had no such withholding or other payment
been made. If no withholding or deduction of Taxes are payable in respect of the
Term Loan or any Advances or fee relating thereto, the Borrowers shall furnish,
at the Bank's request, a certificate from each applicable taxing authority or an
opinion of counsel acceptable to the Bank, in either case stating that such
payments are exempt from or not subject to withholding or deduction of Taxes. If
the Borrowers fail to provide such original or certified copy of a receipt
evidencing payment of Taxes or certificate(s) or opinion of counsel of
exemption, the Borrowers hereby agrees to compensate the Bank for, and indemnify
the Bank with respect to, the tax consequences of the Borrowers' failure to
provide evidence of tax payments or tax exemption.
In the event the Bank receives a refund of any Taxes paid by
the Borrowers pursuant to this Section 2C.01, it will pay to the Borrowers the
amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter the Bank is required to return such refund, the Borrowers
shall promptly repay to the Bank the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 2C.01 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by such
provisions (i) shall be made based upon the circumstances of such Participant,
Assignee or other Transferee, and (ii) constitute a continuing agreement and
shall survive the termination of this Agreement and the payment in full or
cancellation of the Notes.
SECTION 2C.02. Computation of Interest. Interest shall be
calculated on the basis of a year of 360 days for the actual number of days in
each interest period.
ARTICLE III. CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 3.01. Basis for Determining Interest Rate Inadequate
or Unfair. If at any time:
(a) The Bank determines that it is not possible to determine
the Monthly Libor Index Rate, or the Monthly Libor Index Rate is no
longer available, or the Monthly Libor Index Rate will not adequately
and fairly reflect the cost to the Bank of funding Advances as
Euro-Dollar Loans; or
(b) On or prior to the first day of an Interest Period, the
Bank determines that (i) deposits in Dollars (in the applicable
amounts) are not being offered in the
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relevant market for such Interest Period, or (ii) the Interbank Offered
Rate as determined by the Bank will not adequately and fairly reflect
the cost to the Bank of funding the Term Loan as a Euro-Dollar Loan for
such Interest Period;
the Bank shall give notice thereof to the Borrowers, whereupon until the Bank
notifies the Borrowers that the circumstances giving rise to such suspension no
longer exist, the obligation of the Bank to make or maintain Euro-Dollar Loans
shall be suspended and the Borrowers shall, in the case of the Revolving Credit
Loan, immediately prepay in full the then outstanding principal amount of all
Euro-Dollar Borrowings, together with accrued interest thereon and concurrently
therewith shall borrow a Base Rate Loan in an equal principal amount from the
Bank, and, in the case of the Term Loan, the Term Loan shall immediately convert
to a Base Rate Loan.
SECTION 3.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof (any such authority, bank or agency being referred to as
an "Authority" and any such event being referred to as a "Change of Law"), or
compliance by the Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority shall make it unlawful
or impossible for the Bank (or its Lending Office) to make, maintain or fund
Euro-Dollar Loans and the Bank shall so notify the Borrowers, whereupon until
the Bank notifies the Borrowers that the circumstances giving rise to such
suspension no longer exist, the obligation of the Bank to make or maintain
Euro-Dollar Loans shall be suspended and the Borrowers shall, in the case of the
Revolving Credit Loan, immediately prepay in full the then outstanding principal
amount of all Euro-Dollar Borrowings, together with accrued interest thereon and
concurrently therewith shall borrow a Base Rate Loan in an equal principal
amount from the Bank, and, in the case of the Term Loan, the Term Loan shall
immediately convert to a Base Rate Loan.
SECTION 3.03. Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by the Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall subject the Bank (or its Lending Office) to any
tax, duty or other charge with respect to Euro-Dollar Loans, either of
the Notes or the Bank's obligation to make or maintain Euro-Dollar
Loans, or shall change the basis of taxation of payments to the Bank
(or its Lending Office) of the principal of or interest on its Euro-
Dollar Loans or any other amounts due under this Agreement in respect
of its Euro- Dollar Loans or its obligation to make or maintain
Euro-Dollar Loans (except for changes in the rate of tax on the overall
net income of the Bank or its Lending Office imposed by the
jurisdiction in which the Bank's principal executive office or Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding any such requirement included in an
applicable Euro-Dollar Reserve Percentage) against assets of, deposits
with or for the account of, or credit extended by, the Bank (or its
Lending Office); or
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(iii) shall impose on the Bank (or its Lending Office) or the London
interbank market any other condition affecting Euro-Dollar Loans, either
of the Notes, or the Bank's obligation to make or maintain Euro-Dollar
Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by the Bank (or its Lending Office)
under this Agreement or under the Notes with respect thereto, by an amount
deemed by the Bank to be material, then, within 15 days after demand by the
Bank, the Borrowers shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such increased cost or reduction.
(b) If the Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof, or compliance by the Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any Authority, has or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations under this Agreement with
respect to any Loan to a level below that which the Bank could have achieved but
for such adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, within 15 days after demand by the Bank, the
Borrowers shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrowers of any event of
which it has knowledge, occurring after the date hereof, which will entitle the
Bank to compensation pursuant to this Section and will designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section shall be applicable with respect
to any Participant in, or Assignee or other Transferee of, the obligations of
the Borrowers hereunder to the Bank, and any calculations required by such
provisions shall be made based upon the circumstances of such Participant,
Assignee or other Transferee.
SECTION 3.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If the Bank has demanded compensation under Section 3.03, and if the
Borrowers, by at least one Domestic Business Day's prior notice to the Bank,
shall have elected that the provisions of this Section shall apply, then, unless
and until the Bank notifies the Borrowers that the circumstances giving rise to
such demand for compensation no longer apply:
(a) all Loans which would otherwise be made by the Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans, and
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(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.
SECTION 3.05. Compensation. Upon the request of the Bank, delivered
to the Borrowers, the Borrowers shall pay to the Bank such amount or amounts as
shall compensate the Bank for any loss, cost or expense incurred by the Bank as
a result of or in connection with:
(a) any optional or mandatory payment or prepayment (pursuant to
this Agreement, the FMA Agreement or otherwise) of a Euro-Dollar Loan on
a date other than (i) the last day of an Interest Period for such
Euro-Dollar Loan, or (ii) the first day of a calendar month with respect
to an Advance or otherwise on an approved date for payment or prepayment
as provided for in the FMA Agreement; or
(b) any failure by the Borrowers to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment,
or with respect to the Revolving Credit Loan, specified in the notice of
reduction of the Revolving Credit Commitment; or
(c) canceling, terminating, unwinding or replacing any interest rate
swap, cap, collar, floor, or similar hedging transaction under any
interest rate protection agreement, foreign currency exchange agreement
or other hedging agreement.
ARTICLE IV. CONDITIONS PRECEDENT
SECTION 4.01. Conditions to First Borrowing. The obligation of the
Bank to make any Loan on the Closing Date is subject to the satisfaction of the
conditions set forth in Section 4.02 and the following additional conditions:
(a) receipt by the Bank from the Borrowers of a duly executed
counterpart of this Agreement signed by the Borrowers;
(b) receipt by the Bank of the duly executed Notes;
(c) receipt by the Bank of an opinion of counsel of Xxxxxxxxx
Xxxxxxxx LLP, counsel for the Borrowers, substantially in the form of
Exhibit "C" hereto, and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) receipt by the Bank of a certificate (the "Closing
Certificate"), dated the Closing Date, substantially in the form of
Exhibit "E" hereto, signed by the principal financial officer of each
Borrower to the effect that (i) no Default hereunder has occurred and is
continuing on the Closing Date and (ii) the representations and
warranties of the Borrowers contained in Article V are true on and as of
the Closing Date;
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(e) receipt by the Bank of all documents which the Bank may
reasonably request relating to the existence of the Borrowers, the
corporate authority for and the validity of this Agreement, the Notes and
the other Loan Documents, and any other matters relevant hereto, all in
form and substance satisfactory to the Bank, including without limitation
a certificate of incumbency of each Borrower, signed by the Secretary or
an Assistant Secretary of such Xxxxxxxx and substantially in the form of
Exhibit "F" hereto (the "Officer's Certificate"), certifying as to the
names, true signatures and incumbency of the officer or officers of such
Borrower authorized to execute and deliver the Loan Documents, and
certified copies of the following items as to each Borrower: (i) the
Borrower's Certificate of Incorporation, (ii) the Borrower's Bylaws,
(iii) a certificate of the Secretary of State (or other appropriate
office) of the jurisdiction of such Xxxxxxxx's incorporation as to the
good standing of such Borrower as a corporation of such jurisdiction, and
(iv) the action taken by the Board of Directors of such Borrower
authorizing such Xxxxxxxx's execution, delivery and performance of this
Agreement, the Notes, the Collateral Documents and the other Loan
Documents to which such Borrower is a party;
(f) receipt by the Bank of the FMA Agreement with all Schedules and
supplements thereto, on the Bank's form and duly executed by the
Borrowers;
(g) receipt by the Bank of a General Security Agreement on the
Bank's form duly executed by the Borrowers (the "Security Agreement"),
granting to or for the benefit of the Bank a first priority lien on and
security interest in the Collateral;
(h) receipt by the Bank of duly executed and filed Uniform
Commercial Code financing statements from the Borrowers covering the
Collateral and perfecting the Bank's first priority lien on and security
interest in the Collateral;
(i) receipt by the Bank of Uniform Commercial Code searches
confirming the Bank's first lien position with respect to the Collateral;
(j) receipt by the Bank of the Mortgage covering the Illinois Real
Property, in form and substance satisfactory to the Bank, executed by
Xxxx, and recorded on or prior to the Closing Date, in the land records
of Winnebago County, Illinois, and receipt by the Bank of an ALTA
mortgagee title insurance policy satisfactory to the Bank, insuring the
Bank's first lien position with respect to the Illinois Real Property;
(k) receipt by the Bank of the Mortgage covering the Pennsylvania
Real Property, in form and substance satisfactory to the Bank, executed
by Xxxxxx, and recorded on or prior to the Closing Date, in the land
records of Philadelphia County, Pennsylvania, and receipt by the Bank of
an ALTA mortgagee title insurance policy satisfactory to the Bank,
insuring the Bank's first lien position with respect to the Pennsylvania
Real Property;
(l) receipt by the Bank of policies of insurance or certificates
evidencing such policies (with loss payable clauses and mortgagee clauses
satisfactory to the Bank), all as required pursuant to the Security
Agreement and the Mortgages;
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(m) receipt by the Bank of a Quarterly Receivables Certification
dated as of October 31, 1998;
(n) receipt by the Bank of the financial information required in
Section 6.01(b) and (c) of this Agreement with respect to the Fiscal
Quarter ending October 31, 1998;
(o) receipt by the Bank of a satisfactory appraisal of the Illinois
Real Property together with satisfactory surveys of the Real Property
Collateral;
(p) satisfaction of all conditions precedent to closing set forth in
the Bank's commitment letter dated January 29, 1999;
(q) no default or event of default under the Loan and Security
Agreement between Wachovia and the Parent Company dated November 14,
1996, as amended, has occurred and is continuing; and
(r) such other documents or items as the Bank or its counsel may
reasonably request.
SECTION 4.02. Conditions to All Loans or Advances. The obligation of
the Bank to make any Loan or Advance is subject to the satisfaction of the
following conditions:
(a) the fact that no Default shall have occurred and be continuing
(before or after such Loan or Advance);
(b) the fact that the representations and warranties of the
Borrowers contained in Article V shall be true on and as of the date of
such Loan or Advance; and
(c) the fact that, immediately after such Advance, the aggregate
outstanding principal amount of the Advances will not exceed the lesser
of: (i) the Revolving Credit Commitment, or (ii) the Borrowing Base.
Each Loan or Advance hereunder and each Advance under the FMA Agreement shall be
deemed to be a representation and warranty by the Borrowers on the date thereof
as to the facts specified in clauses (a), (b) and (c) of this Section; provided
that, in the case of the Revolving Credit Commitment, no Advance shall be deemed
to be such a representation and warranty to the effect set forth in Section
5.04(b) as to any event, act or condition having a Material Adverse Effect which
has theretofore been disclosed in writing by the Borrowers to the Bank if the
aggregate outstanding principal amount of the Advances immediately after such
Borrowing will not exceed the aggregate outstanding principal amount of Advances
immediately before such Borrowing.
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ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant that:
SECTION 5.01. Corporate Existence and Power. Each Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION 5.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrowers of this
Agreement, the Notes and the other Loan Documents (i) are within each Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrowers or any of them or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrowers or any of them or any of their respective Subsidiaries, and
(v) do not result in the creation or imposition of any Lien on any asset of the
Borrowers or any Subsidiary of a Borrower.
SECTION 5.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrowers enforceable in accordance with its terms, and
the Notes and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrowers enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 5.04. Financial Information. (a) The consolidated balance
sheet of the Parent Company and its Consolidated Subsidiaries as of January 31,
1998 and the related consolidated statements of income, shareholders' equity and
cash flows for the Fiscal Year then ended, reported on by BDO Xxxxxxx LLP,
copies of which have been delivered to the Bank, and the unaudited consolidated
financial statements of the Parent Company and its Consolidated Subsidiaries for
the interim period ended October 31, 1998, copies of which have been delivered
to the Bank, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Parent Company and its
Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since October 31, 1998 there has been no event, act, condition
or occurrence having a Material Adverse Effect.
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(c) The Parent Company's federal taxpayer identification number is
00-0000000.
Myco's federal taxpayer identification number is 00-0000000.
Xxxxxx'x federal taxpayer identification number is 00-0000000.
Marketing's federal taxpayer identification number is
00-0000000.
Chestnut's federal taxpayer identification number is 00-0000000.
Canada Corp.'s business number is 89869 6653.
T.C.E. Corp.'s federal taxpayer identification number is
00-0000000.
Brand's federal taxpayer identification number is 00-0000000.
Xxxx'x federal taxpayer identification number is 00-0000000.
SECTION 5.05. Litigation. Except as disclosed in Schedule 5.05,
there is no action, suit or proceeding pending, or to the knowledge of the
Borrowers threatened, against or affecting the Borrowers or any Subsidiary of a
Borrower before any court or arbitrator or any governmental body, agency or
official which could have or cause a Material Adverse Effect, or which in any
manner draws into question the validity of, or could impair the ability of the
Borrowers to perform their obligations under, this Agreement, the Notes or any
of the other Loan Documents.
SECTION 5.06. Compliance with ERISA. (a) The Borrowers do not have
any employee pension benefit plan which is covered by Title IV of ERISA or that
is subject to the minimum funding standards under Section 412 of the Code.
(b) The Borrowers and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA.
(c) No Borrower other than Brand or any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
(d) Brand has not incurred any withdrawal liability with respect to
any Multiemployer Plan under Title IV of ERISA, and no such liability is
expected to be incurred.
SECTION 5.07. Taxes. Except as disclosed in Schedule 5.07, there
have been filed on behalf of each Borrower and each Subsidiary of a Borrower all
Federal, state and local income, excise, property and other tax returns which
are required to be filed by them (or valid extensions have been received and the
Borrowers are within the extension period(s)) and all taxes due pursuant to such
returns or pursuant to any assessment received by or on behalf of the Borrowers
or any Subsidiary of a Borrower have been paid. The charges, accruals and
reserves on the books of the Borrowers and the Subsidiaries of the Borrowers in
respect of taxes or other governmental charges are, in the opinion of the
Borrowers, adequate.
SECTION 5.08. Subsidiaries. Each of the Subsidiaries of the
Borrowers is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, is duly qualified to
transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Borrowers have no
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Subsidiaries except those Subsidiaries listed on Schedule 5.08, which accurately
sets forth each such Subsidiary's complete name and jurisdiction of
incorporation.
SECTION 5.09. Not an Investment Company. No Borrower is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 5.10. Public Utility Holding Company Act. No Borrower or any
Subsidiary of a Borrower is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
SECTION 5.11. Ownership of Property; Liens. Each Borrower and each
Subsidiary of a Borrower has title to or, alternatively, leases, its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 6.12 or disclosed in Schedule 5.11
hereto. All patents, trademarks, trade names and applications for such owned by
or registered in the name of any Borrower are shown on Schedule 5.11 hereto.
SECTION 5.12. No Default. No Borrower or any Subsidiary of a
Borrower is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which could have or cause a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.
SECTION 5.13. Full Disclosure. All information heretofore furnished
by the Borrowers to the Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrowers to the Bank will be, true, accurate and
complete in every material respect or based on reasonable estimates on the date
as of which such information is stated or certified. The Borrowers have
disclosed to the Bank in writing any and all facts which could reasonably be
expected to have or cause a Material Adverse Effect.
SECTION 5.14. Environmental Matters. (a) No Borrower or any
Subsidiary of a Borrower is subject to any Environmental Liability which could
have or cause a Material Adverse Effect and no Borrower or any Subsidiary of a
Borrower has been designated as a potentially responsible party under CERCLA or
under any state statute similar to CERCLA. None of the Properties have been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list arising from a state statute
similar to CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, managed at, or shipped
or transported to or from the Properties or are otherwise present at, on, in or
under the Properties, or, to the best of the knowledge of the Borrowers, at or
from any adjacent site or facility, except for Hazardous Materials, such as
cleaning solvents, pesticides and other materials used, produced, manufactured,
processed, generated, stored, disposed of, and managed in the ordinary course of
business in compliance with all applicable Environmental Requirements. Myco and
Marketing hereby disclose to the Bank the environmental matters set forth on
Schedule 5.14 hereto.
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(c) The Borrowers, and each of their respective Subsidiaries and
Affiliates, have procured all Environmental Authorizations necessary for the
conduct of their respective businesses, and are in compliance with all
Environmental Requirements in connection with the operation of the Properties
and the Borrowers, and each such Subsidiary's and Affiliate's, respective
businesses.
SECTION 5.15. Compliance with Laws. The Borrowers and each
Subsidiary of a Borrower is in compliance with all applicable laws, including,
without limitation, all Environmental Laws, except where any failure to comply
with any such laws would not, alone or in the aggregate, have a Material Adverse
Effect.
SECTION 5.16. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrowers and the Subsidiaries of the
Borrowers presently issued and outstanding are validly and properly issued in
accordance with all applicable laws, including, but not limited to, the "Blue
Sky" laws of all applicable states and the federal securities laws. The issued
shares of Capital Stock of the Wholly Owned Subsidiaries of the Borrowers are
owned by the Borrowers free and clear of any Lien or adverse claim. At least a
majority of the issued shares of capital stock of each of the other Subsidiaries
(other than Wholly Owned Subsidiaries) of the Borrowers is owned by the
Borrowers free and clear of any Lien or adverse claim.
SECTION 5.17. Margin Stock. No Borrower or any Subsidiary of a
Borrower is engaged principally, or as one of its important activities, in the
business of purchasing or carrying any Margin Stock, and no part of the proceeds
of any Advance or the Term Loan will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
SECTION 5.18. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Term Loan and Advances
under this Agreement and the FMA Agreement, no Borrower or any Subsidiary will
be "insolvent," within the meaning of such term as used in N.C. Gen. Stat. ss.
39-23, et. seq. or as defined in ss. 101 of Title 11 of the United States Code
or Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable
state law pertaining to fraudulent transfers, as each may be amended from time
to time, or be unable to pay its debts generally as such debts become due, or
have an unreasonably small capital to engage in any business or transaction,
whether current or contemplated.
SECTION 5.19. Insurance. Each Borrower and each Subsidiary of a
Borrower maintains (either in the name of such Borrower or in such Subsidiary's
own name), with financially sound and reputable insurance companies, insurance
on all of its Properties, Equipment, Fixtures, and Inventory, in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies of established repute engaged in the same or
similar business.
SECTION 5.20. Year 2000. The Borrowers have developed and delivered
to the Bank a comprehensive plan (the "Y2K Plan") for insuring that the
Borrowers' and their Subsidiaries' software and hardware systems which impact or
affect in any material way the business operations of the Borrowers and their
Subsidiaries will be Year 2000 Compliant and Ready. The Borrowers and their
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Subsidiaries have met or will meet the Y2K Plan milestones such that all
hardware and software systems will be Year 2000 Compliant and Ready in
accordance with the Y2K Plan on or before June 30, 1999.
ARTICLE VI. COVENANTS
The Borrowers agree that, so long as the Commitment is in effect
hereunder or any amount payable under this Agreement or the FMA Agreement or any
Note remains unpaid:
SECTION 6.01. Information. The Borrowers will deliver to the Bank:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Parent Company
and its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders' equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous fiscal year, all certified by BDO Xxxxxxx LLP
or other independent public accountants of nationally recognized standing,
with such certification to be free of exceptions and qualifications not
acceptable to Bank;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each Fiscal Year, a consolidated
balance sheet of the Parent Company and its Consolidated Subsidiaries as of
the end of such quarter and the related statement of income and statement
of cash flows for such quarter and for the portion of the Fiscal Year ended
at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of
the previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of each Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate
substantially in the form of Exhibit I attached hereto (the "Compliance
Certificate"), of the chief financial officer or the chief accounting
officer of each Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrowers were in compliance
with the requirements of Sections 6.03 through 6.08, inclusive on the date
of such financial statements and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth
the details thereof and the action which the Borrowers are taking or
propose to take with respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the
effect that nothing has come to their attention to cause them to believe
that any Default existed on the date of such financial statements;
(e) within five Domestic Business Days after any Borrower becomes
aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting
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officer of such Borrower setting forth the details thereof and the action
which the Borrowers are taking or propose to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrowers generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Borrowers shall have filed with the Securities and Exchange
Commission;
(h) if and when the Borrowers or any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any Reportable Event
with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator
of any Plan has given or is required to give notice of any such Reportable
Event, a copy of the notice of such Reportable Event given or required to
be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a copy of such
notice;
(i) promptly after any Borrower knows of the commencement thereof,
notice of any litigation, dispute or proceeding involving a claim against
any Borrower or any Subsidiary of a Borrower for $100,000.00 or more in
excess of amounts covered in full by applicable insurance; and
(j) as soon as available and in any event within forty-five (45)
days after the end of each Fiscal Quarter of each Fiscal Year, a Quarterly
Receivables Certification, dated as of the last day of the applicable
Fiscal Quarter; and
(k) from time to time such additional information regarding the
financial position or business of the Borrowers and the Subsidiaries of the
Borrowers as the Bank may reasonably request.
SECTION 6.02. Inspection of Property, Books and Records. The
Borrowers will keep proper books of record and account which fairly state the
financial position of the Borrowers and their respective Subsidiaries in all
material respects in conformity with generally accepted accounting principles
with respect to all dealings and transactions in relation to their respective
businesses and activities; and will permit representatives of the Bank at the
Bank's expense prior to the occurrence of an Event of Default and at the
Borrowers' expense after the occurrence of an Event of Default to visit and
inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants. The Borrowers agree to cooperate and assist in
such visits and inspections, in each case at such reasonable times and as often
as may reasonably be desired.
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SECTION 6.03. Consolidated Fixed Charges Coverage Ratio. The
Borrowers shall maintain a Consolidated Fixed Charge Coverage Ratio of not less
than 2.00 to 1.00, at all times, to be determined as of the last day of each
Fiscal Quarter hereafter for the four (4) Fiscal Quarters then ending.
SECTION 6.04. Ratio Funded Debt to Consolidated EBITDA. As of
April 30, 1999 and as of the end of each Fiscal Quarter thereafter, the ratio of
Funded Debt for the Fiscal Quarter then ending to Consolidated EBITDA for such
Fiscal Quarter and for the immediately preceding three Fiscal Quarters, will not
be more than 3.50 to 1.00.
SECTION 6.05. Ratio of Funded Debt to Consolidated Total
Capitalization. As of April 30, 1999 and as of the end of each Fiscal Quarter
thereafter, the ratio of Funded Debt to Consolidated Total Capitalization shall
not exceed 50%.
SECTION 6.06. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than $20,000,000.00 plus
the sum of 50% of the cumulative Reported Net Income during any period after
January 31, 1999 (taken as one accounting period), calculated quarterly but
excluding from such calculations any quarter in which the Net Income of the
Parent Company and its Consolidated Subsidiaries is negative.
SECTION 6.07. Accounts Receivable. Tier I Eligible Receivables
shall at all times comprise more than fifty percent (50%) of the Borrowers'
Receivables. At no time shall total Receivables to foreign Persons located in
Canada exceed in the aggregate ten percent (10%) of Eligible Receivables.
SECTION 6.08. Capital Expenditures. Capital Expenditures will
not exceed in the aggregate in any Fiscal Year the sum of $1,500,000.00;
provided that after giving effect to the incurrence of any Capital Expenditures
permitted by this Section, the Borrowers will be in full compliance with all the
provisions of this Agreement.
SECTION 6.09. Restricted Payments. No Borrower will declare or
make any Restricted Payment during any Fiscal Year except from Net Income and
then only after providing for payment of all current principal payments on
Long-Term Debt; provided that after giving effect to the payment of any such
Restricted Payments, such Borrower will be in full compliance with all of the
provisions of this Agreement.
SECTION 6.10. Loans or Advances. None of the Borrowers nor any
of their respective Subsidiaries shall make loans or advances to any Person
except: (i) the existing loans to officers of the Borrowers as reflected on the
financial information submitted by the Borrowers to the Bank under Section
6.01(b) and (c) of this Agreement for the Fiscal Quarter ending October 31,
1998; (ii) other loans not exceeding $7,500.00 in the aggregate plus two loans
to Xxxxxxx X. Xxxxxxxx not to exceed in the aggregate $975,000.00 and meeting
the criteria set out in Schedule 6.10 attached hereto; and (iii) deposits
required by government agencies or public utilities; provided that after giving
effect to the making of any loans, advances or deposits permitted by clause (i),
(ii) or (iii) of this Section, the Borrowers will be in full compliance with all
the provisions of this Agreement.
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SECTION 6.11. Investments. The Borrowers shall not make
Investments in any Person except investments in (i) direct obligations of the
United States Government maturing within one year, (ii) certificates of deposit
issued by a commercial bank whose credit is satisfactory to the Bank, (iii)
commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Corporation or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc.
and in either case maturing within 6 months after the date of acquisition and/or
(iv) tender bonds the payment of the principal of and interest on which is fully
supported by a letter of credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the equivalent thereof by
Standard & Poor's Corporation and Aa or the equivalent thereof by Xxxxx'x
Investors Service, Inc.
SECTION 6.12. Negative Pledge. No Borrower or any Subsidiary
of a Borrower will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except for Permitted Encumbrances.
SECTION 6.13. Maintenance of Existence. The Borrowers shall,
and shall cause each Subsidiary to, maintain its corporate existence and carry
on its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained.
SECTION 6.14. Dissolution. No Borrower or any Subsidiary of a
Borrower shall suffer or permit dissolution or liquidation either in whole or in
part or redeem or retire any shares of its own stock.
SECTION 6.15. Consolidations, Mergers and Sales of Assets. The
Borrowers will not, nor will they permit any Subsidiary to, consolidate or merge
with or into, or sell, lease or otherwise transfer all or any substantial part
of their respective assets to, any other Person, or create or acquire any
Subsidiary, or discontinue or eliminate any business line or segment, provided
that
(a) a Borrower may merge with another Person if (i) such
Person was organized under the laws of the United States of America or
one of its states, (ii) such Borrower is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no
Default shall have occurred and be continuing, and
(b) the foregoing limitation on the sale, lease or other
transfer of assets and on the discontinuation or elimination of a
business line or segment shall not prohibit, during any Fiscal Quarter,
a transfer of assets or the discontinuance or elimination of a business
line or segment (in a single transaction or in a series of related
transactions) unless the aggregate assets to be so transferred or
utilized in a business line or segment to be so discontinued, when
combined with all other assets transferred, and all other assets
utilized in all other business lines or segments discontinued, during
such Fiscal Quarter and the immediately preceding seven Fiscal
Quarters, either (x) constituted more than 10% of Consolidated Total
Assets at the end of the eighth Fiscal Quarter immediately preceding
such Fiscal Quarter, or (y) contributed more than 10% of Consolidated
Operating Profits during the eight Fiscal Quarters immediately
preceding such Fiscal Quarter.
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SECTION 6.16. Use of Proceeds. The proceeds of the Loans will
be used to fund asset acquisitions and for working capital purposes. No portion
of the proceeds of the Loans will be used by the Borrowers (i) in connection
with any tender offer for, or other acquisition of, stock of any corporation
with a view towards obtaining control of such other corporation, (ii) directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock, or (iii) for any purpose in violation
of any applicable law or regulation.
SECTION 6.17. Compliance with Laws; Payment of Taxes. The
Borrowers will, and will cause each of their respective Subsidiaries and each
member of the Controlled Group to, comply with applicable laws (including but
not limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where the necessity of
such compliance is being contested in good faith through appropriate
proceedings. The Borrowers will, and will cause each of their respective
Subsidiaries to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the property of the Borrowers or any
Subsidiary, except liabilities being contested in good faith by appropriate
proceedings diligently pursued and against which, if requested by the Bank, the
Borrowers will set up reserves satisfactory to the Bank.
SECTION 6.18. Insurance. The Borrowers will maintain, or cause
to be maintained, public liability insurance and fire and extended coverage
insurance on all assets owned by the Borrowers, all in such form and amounts as
are consistent with industry practices and satisfactory to the Bank and with
such insurers as may be satisfactory to the Bank. The Borrowers will maintain,
or cause to be maintained, business interruption insurance in such form and
amounts as are satisfactory to the Bank and with insurers as may be satisfactory
to the Bank. Such policies of insurance or certificates evidencing such policies
shall be deposited with the Bank, or the Borrowers will furnish to the Bank such
evidence of insurance as the Bank may require. All such policies insuring
Collateral shall contain a loss payable clause and standard mortgagee clause, in
form satisfactory to the Bank, in its sole discretion, naming the Bank as loss
payee and mortgagee, as its interests may appear. Each such policy of insurance
or endorsement shall contain a clause requiring the insurer to give the Bank not
less than thirty (30) days written notice before any such policy shall be
altered or cancelled or the coverage thereunder reduced or restricted. Unless
written consent to the contrary is first obtained from the Bank, all proceeds
payable under any such policy shall be payable in any event to the Bank
(regardless of whether an Event of Default has occurred hereunder), and the
insurer named therein is hereby authorized and directed by the Borrowers to make
payment for any loss under any such policy of insurance to the Bank as its
interests may appear, rather than to the Borrowers, or any one or more of them,
and the Bank jointly. The Bank may act as any Borrower's agent in adjusting or
compromising any loss under any such insurance policy and in collecting and
receiving the proceeds from any such policy, and the Bank is hereby appointed
each Borrower's attorney-in-fact (without requiring the Bank to act as such) to
endorse any check which may be payable to such Borrower and to collect such
returned or unearned premiums or the proceeds of such insurance, and any amount
so collected may be applied toward satisfaction of any of the liabilities,
indebtedness or obligations of the Borrowers evidenced by the Notes or arising
from or in connection with this Agreement or any other Loan Document. The
Borrowers hereby agree that, if any Borrower shall default in its obligation
hereunder to insure the Collateral in a manner satisfactory to the Bank, or in
the event any Borrower fails to pay or cause to be paid the premium on any
insurance required hereunder, then the Bank shall have the right (but not the
obligation), in its sole discretion, to procure such insurance and/or pay any
premium on such insurance,
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and to charge the costs of same to the Borrowers, and the Bank may, at its
option, demand reimbursement by the Borrowers for such amounts so paid with
interest thereon at the Default Rate, or the Bank may, at its option, add all
such costs and expenses incurred by the Bank to the unpaid principal amount of
the liabilities, indebtedness and obligations of the Borrowers evidenced by the
Notes and arising from or in connection with this Agreement (which costs and
expenses shall become a part thereof and shall bear interest at the Default Rate
or the highest contract rate permitted by applicable law whichever is less); and
all of the foregoing shall be secured by the Collateral.
SECTION 6.19. Change in Fiscal Year. The Borrowers will not
change their Fiscal Year without the consent of the Bank.
SECTION 6.20. Maintenance of Property. The Borrowers shall
maintain all of their respective Properties and assets in good condition, repair
and working order, ordinary wear and tear excepted, and will pay and discharge
or cause to be paid and discharged when due, the cost of repairs to or
maintenance of the same, and will pay or cause to be paid all rental or mortgage
payments due on such real estate. The Borrowers hereby agree that, in the event
any Borrower fails to pay or to cause to be paid any such payment which failure
continues for five (5) days (unless the validity or amount of such payment is
being contested in good faith, by appropriate proceedings diligently pursued and
the amount thereof is adequately reserved), the Bank may (but shall have no
obligation to) do so and shall be reimbursed by the Borrowers therefor on demand
with interest thereon at the Default Rate. Each Borrower will comply with all
obligations under the leases to which such Borrower is a party with regard to
the Properties.
SECTION 6.21. Environmental Notices. The Borrowers shall
furnish to the Bank prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions that could lead to any of the foregoing.
SECTION 6.22. Environmental Matters. The Borrowers will not,
and will not permit any Third Party to, use, produce, manufacture, process,
generate, store, dispose of, manage at, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials such as
cleaning solvents, pesticides and other similar materials used, produced,
manufactured, processed, generated, stored, disposed or managed in the ordinary
course of business in compliance with all applicable Environmental Requirements.
SECTION 6.23. Environmental Release. The Borrowers agree that
upon the occurrence of an Environmental Release they will act immediately to
investigate the extent of, and to take appropriate remedial action to eliminate,
such Environmental Release, whether or not ordered or otherwise directed to do
so by any Environmental Authority.
SECTION 6.24. Transactions with Affiliates. The only
transactions with Affiliates of a Borrower to which any Borrower is a party are
those transactions with Affiliates disclosed in the Parent Company's Form 10-K
annual report for the Fiscal Year ending January 31, 1998 and the Parent
Company's Form 10-Q quarterly report for October 31, 1998, copies of which have
been provided to the Bank; and otherwise, no Borrower shall enter into, or be a
party to, any transaction with any Affiliate
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of a Borrower (which Affiliate is not a Borrower under this Agreement), except
as permitted by law and in the ordinary course of business and pursuant to
reasonable terms which are disclosed to the Bank, consented to in writing by the
Bank, and are no less favorable to such Borrower than would be obtained in a
comparable arm's length transaction with a Person which is not an Affiliate.
SECTION 6.25. Collateral. (a) The Borrowers will collect their
Accounts and sell their Inventory only in the ordinary course of business.
(b) The Borrowers will keep accurate and complete records of
their Accounts, Inventory and Equipment, consistent with sound business
practices.
(c) The Borrowers will notify the Bank ten (10) days in
advance of any change in the location of any place of business of a Borrower or
of the establishment of any new, or the discontinuance of any existing, place of
business or location at which any of the Collateral is kept; and all locations
of the Borrowers' places of business and all locations at which any of the
Collateral is kept are listed on Exhibit H attached hereto.
(d) If requested by the Bank in writing, the Borrowers will
furnish to the Bank written reports, in addition to the other reports and
certificates required of the Borrowers under this Agreement, detailing the aging
of the Receivables and collections thereof, and containing such information with
respect thereto as the Bank may specify. Such reports shall be furnished by the
Borrowers daily, if required by the Bank.
(e) If requested by the Bank in writing from time to time and
at intervals designated by the Bank, the Borrowers shall provide the Bank with
schedules, in addition to the other reports and certificates required of the
Borrowers under this Agreement, of all of Borrowers' Inventory, itemizing and
describing the kind, type, quality and quantity of such Inventory, Borrowers'
cost therefor and selling price thereof, together with such support documents as
the Bank may request, including, without limitation, invoices relating to
Borrowers' purchase of goods listed in said schedule; and the Borrowers shall
not sell Inventory on consignment.
SECTION 6.26. Interest Rate Protection. The Borrowers will
obtain and maintain interest rate protection (for example, without limitation,
an interest rate swap, cap, floor or collar), satisfactory to the Bank on at
least fifty percent (50%) of the Commitment. The Borrowers agree that they will,
from time to time, execute and deliver to the Bank, or cause to be executed and
delivered, such further instruments, documents, contracts and agreement as may
reasonably be required by the Bank for carrying out the requirements for
interest rate protection or facilitating the performance by the Borrowers of
their obligations under this Section 6.26.
SECTION 6.27. Creation, Formation or Acquisition of a
Subsidiary. The Borrowers shall provide the Bank prompt written notice of any
Borrower's desire to create, form or acquire a Subsidiary and shall obtain the
Bank's consent thereto. As soon as practicable and in any event within thirty
(30) days after the creation, formation or acquisition of such Subsidiary, the
Borrowers shall (i) cause such Subsidiary to (A) become a Borrower under this
Agreement, (B) execute in favor of the Bank a security agreement, deed of trust,
security deed, mortgage or other collateral assignment document satisfactory to
the Bank, pledging to the Bank and granting to the Bank a first priority lien on
and
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security interest in all of the Subsidiary's assets, tangible and intangible
personal property and real property interests, and (C) execute in favor of the
Bank a Joinder Agreement in the form of Exhibit "L" attached hereto; and (ii)
deliver to the Bank all resolutions, certifications, security agreements, deeds
of trust, security deeds, mortgages, assignments, Uniform Commercial Code
financing statements, opinions of legal counsel and other documents that the
Bank may reasonably request relating to the existence of such Subsidiary, the
corporate authority for and validity of the Joinder Agreement and this
Agreement, the collateral and any other matters relevant thereto.
SECTION 6.28. Y2K. The Borrowers will meet the milestones
contained in the Y2K Plan and will have all hardware and software systems Year
2000 Compliant and Ready (including all internal and external testing) on or
before June 30, 1999.
SECTION 6.29. New Mortgages. If any Borrower shall acquire at
any time or times hereafter any fee or ground leasehold interest in any real
property, such Borrower agrees promptly to notify the Bank thereof in writing
and, if requested by the Bank, to execute and deliver to the Bank, as additional
security and collateral for the Obligations, deeds of trust, security deeds,
mortgages or other collateral assignments satisfactory in form and substance to
the Bank and its counsel (herein collectively referred to as "New Mortgages")
covering such real property. Each New Mortgage shall be duly recorded in each
office where such recording is required to constitute a valid lien on the real
property covered thereby. The Borrowers shall deliver to the Bank, if requested
by the Bank, at the Borrowers' expense, a satisfactory mortgagee title insurance
policy with respect to each New Mortgage, issued by a title insurance company
satisfactory to the Bank, insuring a valid first lien in favor of the Bank on
the real property covered thereby. The Borrowers shall deliver to the Bank such
other items and documents, as the Bank and its counsel may reasonably request,
relating to the real property subject to any New Mortgage.
SECTION 6.30. Inactive Subsidiaries. No Borrower will create,
acquire or form any inactive Subsidiary or cause any inactive Subsidiary to
become active (for example, by acquiring assets, incurring liabilities,
commencing operations, generating revenues, doing business, etc.) without the
Bank's prior written consent. The only inactive Subsidiaries of a Borrower are
listed on Schedule 6.30 attached hereto and incorporated herein by reference.
The Borrowers agree that if at any time an inactive Subsidiary becomes, with the
Bank's consent, an active Subsidiary, such Subsidiary shall immediately be
subject to the provisions of Section 6.27 of this Agreement.
ARTICLE VII. DEFAULTS
SECTION 7.01. Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default by the
Borrowers under this Agreement:
(a) any of the Borrowers shall fail to pay when due any
principal of any Loan, or shall fail to pay any interest on any Loan within five
(5) Domestic Business Days after such interest shall become due, or shall fail
to pay any fee or other amounts payable hereunder within five (5) Domestic
Business Days after such fee or other amount becomes due; or
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(b) any of the Borrowers shall fail to observe or perform any
covenant contained in Sections 6.03 through 6.17, inclusive and Sections 6.18,
6.25 and 6.27; or
(c) any of the Borrowers shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for thirty days after the earlier of (i) the first day
on which a responsible officer of any Borrower has knowledge of such failure, or
(ii) written notice thereof has been given to any Borrower by the Bank; or
(d) any representation, warranty, certification or statement
made or deemed made by any of the Borrowers in Article V or in any certificate,
financial statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect or misleading in any material respect when made (or
deemed made); or
(e) any of the Borrowers or any Subsidiary of a Borrower shall
fail to make any payment when due or within any applicable grace period in
respect of Debt outstanding (other than the Notes), which Debt in the aggregate
exceeds $100,000.00; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of any Borrower or any
Subsidiary of a Borrower which in the aggregate exceeds $100,000.00 or the
mandatory prepayment or purchase of such Debt by any Borrower (or its designee)
or such Subsidiary (or its designee) prior to the scheduled maturity thereof or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holders of such Debt or any Person acting on such holders' behalf to
accelerate the maturity thereof or require the mandatory prepayment or purchase
thereof prior to the scheduled maturity thereof, without regard to whether such
holders or other Person shall have exercised or waived their right to do so;
(g) any Borrower or any Subsidiary of a Borrower shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against any Borrower or any Subsidiary of a Borrower seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against any Borrower
or any Subsidiary of a Borrower under the federal bankruptcy laws as now or
hereafter in effect; or
(i) any Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become liable to
pay to the PBGC or to any Plan under Title IV of ERISA; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
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a trustee to be appointed to administer any such Plan or Plans or a proceeding
shall be instituted by a fiduciary of any such Plan or Plans to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated; or any Borrower or any other member of the Controlled
Group shall enter into, contribute or be obligated to contribute to, terminate
or incur any withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $100,000.00 shall be rendered against any
Borrower or any Subsidiary of a Borrower and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against any Borrower or
any Subsidiary of a Borrower under Section 6323 of the Code or a lien of the
PBGC shall be filed against a Borrower or any Subsidiary of a Borrower under
Section 4068 of ERISA and in any case such lien shall remain undischarged for a
period of 25 days after the date of filing; or
(l) (i) any Person or two or more Persons (other than S.
Xxxxxx Xxxxxx and Xxxxxxx X. Xxx, Xx. with respect to the Parent Company) acting
in concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of the voting stock of any
Borrower; or (ii) as of any date a majority of the Board of Directors of a
Borrower consists of individuals who were not either (A) directors of such
Borrower as of the corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of such Borrower of
which a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Directors of such
Borrower of which a majority consisted of individuals described in clause (A)
and individuals described in clause (B); or
(m) a judgment creditor of any Borrower shall lawfully obtain
and retain for at least five (5) days possession of any material portion of the
Collateral by any lawful means, including, but without limitation, levy,
distraint, replevin or self-help; or
(n) the occurrence of an Event of Default under the
Reimbursement Agreement; or
(o) a default or an event of default under the Security
Agreement or any one or more of the Mortgages shall occur and be continuing; or
(p) the occurrence of any event, act or condition which the
Bank determines either does or has a reasonable probability of causing a
Material Adverse Effect; or
(q) a breach, violation, failure of performance, default or
event of default shall occur and be continuing under the FMA Agreement or the
FMA Agreement is terminated; or
(r) a breach, violation, failure of performance, default or
event of default shall occur and be continuing under any International Swap
Dealers Association, Inc. Master Agreement now or
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hereafter executed by and between the Bank and the Parent Company or any other
Borrower (herein referred to as a "Master Agreement"); or
(s) a breach, violation, failure of performance, default or
event of default shall occur and be continuing under the Guaranty or the
Guaranty is terminated.
SECTION 7.02. Remedies on Default. Upon the occurrence of an
Event of Default, the Bank may, by notice to the Borrowers, terminate the
Revolving Credit Commitment which shall thereupon terminate, and by notice to
the Borrowers declare the Notes (together with accrued interest thereon) to be,
and the Notes and all outstanding Loans shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers; provided that if any Event of
Default specified in clause (g) or (h) above occurs with respect to any
Borrower, without any notice to the Borrowers or any other act by the Bank, the
Revolving Credit Commitment shall thereupon terminate and the Notes and all
outstanding Loans (together with accrued interest thereon) and fees shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers. In addition and
upon the occurrence of an Event of Default, the Bank may exercise any rights,
powers or remedies under any of the Loan Documents. Notwithstanding the
foregoing, the Bank shall have available to it all rights and remedies provided
under the Loan Documents (including, without limitation, the Collateral
Documents) and in addition thereto, all other remedies at law or in equity, and
may exercise any one or all of them.
SECTION 7.03. Security Interest; Offset. In addition to, and
not in limitation of, all rights of offset that the Bank or other holder of the
Notes may have under applicable law, the Borrowers hereby grant to the Bank, and
to each Participant, Assignee or other Transferee, as security for the full and
punctual payment and performance of the obligations to pay to the Bank the
principal of and interest on the Loans and other amounts due hereunder, a
continuing lien on and security interest in all deposits and other sums credited
by or due from the Bank (or such Participant, Assignee or other Transferee) to
the Borrowers or subject to withdrawal by the Borrowers; and regardless of the
adequacy of any collateral or other means of obtaining repayment of the
Obligations, the Bank (and each such Assignee and, to the extent permitted by
applicable law, each such Participant and other Transferee) may, at any time
after the occurrence of an Event of Default and without notice to the Borrowers,
set off the whole or any portion or portions of any or all such deposits and
other sums against the amounts owing under this Agreement and the Notes, whether
or not any other Person or Persons could also withdraw money therefrom.
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ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth below or such other address or facsimile number as
such party may hereafter specify for the purpose by notice to the other party:
(a) If to the Borrowers:
The Source Information Management Company
00000 Xxxxxxx Xxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Mr. X. Xxxxxx Xxxxxx
Fax number: (000) 000-0000
(b) If to the Bank:
Wachovia Bank, N.A.
Post Office Box 21048
Greensboro, North Carolina 27420-1048
[000 Xxxxx Xxx Xxxxxx - 00000-0000]
Attention: Xxxx X. Xxxxxxxx, Xx.
Fax number: 000-000-0000
Each such notice, request or other communication shall be effective (i) if given
by facsimile transmission, when such facsimile is transmitted to the fax number
specified in this Section and the facsimile machine used by the sender provides
a written confirmation that such facsimile has been so transmitted or receipt of
such facsimile transmission is otherwise confirmed, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Bank under Article IIA, Article IIB, Article IIC or Article III shall not
be effective until received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under the Notes or any
other Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrowers shall pay (i) all out-of-pocket expenses of the Bank,
including without limitation, reasonable attorneys' fees and all disbursements
of attorneys for the Bank, in connection with the preparation of this Agreement
and the other Loan Documents, any waiver or consent hereunder or any amendment
hereof or any actual or alleged Default hereunder and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the Bank, including fees
and disbursements of counsel, in connection with such
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Event of Default and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing this Agreement
and the other Loan Documents.
(b) The Borrowers shall indemnify the Bank against any
transfer taxes, documentary taxes, assessments or charges made by any Authority
by reason of the execution and delivery of this Agreement or the other Loan
Documents.
(c) The Borrowers shall indemnify the Bank and each Affiliate
thereof and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrowers of the proceeds of any extension of credit by the
Bank hereunder or breach by the Borrowers of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Bank to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrowers shall
reimburse the Bank, and each Affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation, reasonable attorneys' fees and all disbursements of attorneys for
the Bank, any Affiliate thereof, or any such other Person) incurred in
connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 8.04. Amendments and Waivers. Any provision of this
Agreement, the Notes or any other Loan Document may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Borrowers
and the Bank.
SECTION 8.05. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no Borrower
may assign or otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each
a "Participant") participating interests in any Loan, Advance, Note, the
Revolving Credit Commitment or any other interest of the Bank hereunder. In the
event of any such sale by the Bank of a participating interest to a Participant,
the Bank's obligations under this Agreement shall remain unchanged, the Bank
shall remain solely responsible for the performance thereof, the Bank shall
remain the holder of the Notes for all purposes under this Agreement, and the
Borrowers shall continue to deal solely and directly with the Bank in connection
with the Bank's rights and obligations under this Agreement. In no event shall
the Bank be obligated to the Participant to take or refrain from taking any
action hereunder except that the Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
Loan or Loans, (ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the related Loan
or Loans, (iii) the change of the principal of the related Loan or Loans, (iv)
any change in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) commitment fee is payable hereunder
from the rate at which the Participant is entitled to receive interest or
commitment fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the Collateral held as
security
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for the Loans. The Bank shall, within ten Domestic Business Days after selling a
participating interest in any Loan, any Note, the Revolving Credit Commitment or
other interest under this Agreement, provide the Borrowers with written
notification stating that such sale has occurred and identifying the Participant
and the interest purchased by such Participant. The Borrowers agree that each
Participant shall be entitled to the benefits of Article III and Section 7.03
with respect to its participation in Loans outstanding from time to time.
(c) The Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume all such rights and obligations, pursuant to an Assignment
and Acceptance in the form attached hereto as Exhibit D executed by such
Assignee, the Bank and the Borrowers; provided that (i) no interest may be sold
by the Bank pursuant to this paragraph (c) unless the Assignee shall agree to
assume ratably equivalent portions of the Commitment, and (ii) no interest may
be sold by the Bank pursuant to this paragraph (c) to any Assignee which is not
an Affiliate of the Bank without the consent of the Borrowers, which consent
shall not be unreasonably withheld or delayed, provided that the Borrowers'
consent shall not be necessary with respect to any assignment made during the
existence of a Default or Event of Default. Upon (A) execution of the Assignment
and Acceptance by the Bank, such Assignee, and the Borrowers, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrowers, and (C) payment
by such Assignee to the Bank of an amount equal to the purchase price agreed
between the Bank and such Assignee, such Assignee shall for all purposes be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank under this Agreement to the same extent as if it were an original party
hereto with a Commitment as set forth in such instrument of assumption, and the
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by the Borrowers or the Bank shall be required.
Upon the consummation of any transfer to an Assignee pursuant to this paragraph
(c), the Bank and the Borrowers shall make appropriate arrangements so that, if
required, a new Note is issued to such Assignee.
(d) Subject to the provisions of Section 8.06, the Borrowers
authorize the Bank to disclose to any Participant, Assignee or other transferee
(each a "Transferee") and any prospective Transferee any and all financial
information in the Bank's possession concerning the Borrowers which has been
delivered to the Bank by the Borrowers pursuant to this Agreement or which has
been delivered to the Bank by the Borrowers in connection with the Bank's credit
evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 3.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrowers' prior written consent or by reason of the provisions of
Section 3.03 requiring the Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Anything in this Section 8.05 to the contrary
notwithstanding, the Bank may assign and pledge all or any Loans and/or
obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrowers to the Bank in
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accordance with the terms of this Agreement shall satisfy the Borrowers'
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the Bank from its
obligations hereunder.
SECTION 8.06. Confidentiality. The Bank agrees to exercise its
best efforts to keep any information delivered or made available by the
Borrowers to it which is clearly indicated to be confidential information,
confidential from any one other than persons employed or retained by the Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided, however, that nothing herein shall prevent
the Bank from disclosing such information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of any regulatory agency
or authority having jurisdiction over the Bank, (iii) which has been publicly
disclosed, (iv) to the extent reasonably required in connection with any
litigation to which the Bank or their respective Affiliates may be a party, (v)
to the extent reasonably required in connection with the exercise of any remedy
hereunder, (vi) to the Bank's legal counsel and independent auditors and (vii)
to any actual or proposed Participant, Assignee or other Transferee of all or
part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section.
SECTION 8.07. Interest Limitation. Notwithstanding any other
term of this Agreement, the Notes or any other Loan Document, the maximum amount
of interest which may be charged to or collected from any person liable
hereunder or under the Notes by the Bank shall be absolutely limited to, and
shall in no event exceed, the maximum amount or interest which could lawfully be
charged or collected under applicable law (including, to the extent applicable,
the provisions of section 5197 of the Revised Statutes of the United States of
America, as amended, 12 U.S.C. ss.85, as amended), so that the maximum of all
amounts constituting interest under applicable law, howsoever computed, shall
never exceed as to any Person liable therefor such lawful maximum, and any term
of this Agreement, the Notes or any other Loan Document which could be construed
as providing for interest in excess of such lawful maximum shall be and hereby
is made expressly subject to and modified by the provisions of this paragraph.
SECTION 8.08. Survival of Certain Obligations. Article III and
the obligations of the Borrowers thereunder, and Section 8.03 and the
obligations of the Borrowers thereunder, shall survive, and shall continue to be
enforceable notwithstanding, the termination of this Agreement and the
Commitment and the payment in full of the principal of and interest on the
Loans.
SECTION 8.09. Governing Law. This Agreement and the Notes
shall be construed in accordance with and governed by the law of the State of
North Carolina. This Agreement and the Notes are intended to be effective as
instruments executed under seal.
SECTION 8.10. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 8.11. Consent to Jurisdiction. The Borrowers (a)
submit to personal jurisdiction in the State of North Carolina, the courts
thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Notes and the other Loan Documents, (b) waive
any and all personal rights under the law of any jurisdiction to object on any
basis (including, without
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limitation, inconvenience of forum) to jurisdiction or venue within the State of
North Carolina for the purpose of litigation to enforce this Agreement, the
Notes or the other Loan Documents, and (c) agree that service of process may be
made upon them in the manner prescribed in Section 8.01 for the giving of notice
to the Borrowers. Nothing herein contained, however, shall prevent the Bank from
bringing any action or exercising any rights against any security and against a
Borrower personally, and against any assets of a Borrower, within any other
state or jurisdiction.
SECTION 8.12. Joint and Several Liability.
(a) The Borrowers are accepting the joint and several
liability provided for hereunder in consideration of the financial
accommodations provided and to be provided by the Bank under this Agreement for
the mutual benefit, directly and indirectly, of the Borrowers and in
consideration of each of the undertakings of each Borrower herein to accept
joint and several liability, for their mutual benefit, for the obligations of
each of the other of them.
(b) The Borrowers, jointly and severally as hereinafter
described, hereby irrevocably and unconditionally accept, not merely as surety
but also as co-debtors, joint and several liability with respect to the payment
and performance of all of the indebtedness, liabilities and obligations under
this Agreement, the Notes and the other Loan Documents, it being the intention
of the parties hereto that all the indebtedness, liabilities and obligations
under this Agreement, the Notes and the other Loan Documents shall be the joint
and several obligations of all the Borrowers without preference or distinction
among them.
(c) If and to the extent that any Borrower shall fail to make
any payment with respect to any of the indebtedness, liabilities and obligations
under this Agreement, the Notes and the other Loan Documents, as and when due or
to perform any of the indebtedness, liabilities and obligations under this
Agreement, the Notes and the other Loan Documents in accordance with the terms
thereof, then in each such event each of the other Borrowers will, forthwith
upon demand by the Bank, make such payment with respect to, or perform, such
indebtedness, liabilities and obligations under this Agreement, the Notes and
the other Loan Documents pursuant to the terms hereof.
(d) Each Borrower hereby acknowledges and consents to all
provisions of this Agreement. In connection with its obligations under this
Section, except to the extent that notice is expressly required by this
Agreement, each Borrower hereby waives notice of acceptance of the joint and
several liability contained in this Section, notice of any loan or advance to
any Borrower under this Agreement, notice of the occurrence of any Default or
any Event of Default or of any demand upon any Borrower for any payment under
this Agreement, notice of any action at any time taken or omitted by the Bank
under or in respect of this Agreement, any Note or any other Loan Document and,
generally, all demands, notices, protests and other formalities of every kind in
connection with the joint and several liability contained in this Section and
the other provisions of this Agreement. In connection with its obligations under
this Section, each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the
indebtedness, liabilities and obligations under this Agreement, the Notes and
the other Loan Documents, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Bank at any time or times
in respect of any Default by any Borrower in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, the Notes or any
other Loan Document, any and all other indulgences
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54
whatsoever by the Bank in respect of any of the indebtedness, liabilities and
obligations under this Agreement, the Notes and the other Loan Documents, and
the taking, addition, substitution or release, in whole or in part, at any time
or times, of any security for any of the indebtedness, liabilities and
obligations under this Agreement, the Notes and the other Loan Documents or the
addition, substitution or release, in whole or in part, of any Person or Persons
primarily or secondarily liable in respect of any of the indebtedness, liability
and obligations under this Agreement, the Notes and the other Loan Documents.
Each of the Borrowers also waives: (i) any right to require the Bank to (A)
proceed against any other Person, including any other Borrower, or (B) pursue
any other remedy; and (ii) any defense arising by reason of (A) any disability
or other defense of any Borrower or any other Person, (B) the cessation from any
cause whatsoever, other than payment or performance in full, of any of the
indebtedness, liabilities and obligations under this Agreement, the Notes and
the other Loan Documents of the Borrowers or any other Person, or (C) any act or
omission by the Bank which directly or indirectly results in or aids the
discharge of any Borrower or any indebtedness, liabilities and obligations under
this Agreement, the Notes and the other Loan Documents by operation of law or
otherwise. The obligations of each Borrower under this Section shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or the Bank. The joint and several liability of each Borrower in
this Section shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
charter, membership, constitution or place of formation of any Borrower or the
Bank. Each of the Borrowers agrees that each of the waivers set forth above are
made with such Borrower's full knowledge of their significance and consequences,
and such Xxxxxxxx agrees that, under the circumstances, the waivers are
reasonable and not contrary to public policy or law. If any of said waivers are
determined to be contrary to any applicable law or public policy, such waivers
shall be effective only to the extent permitted by law.
(e) The provisions of this Section 8.12 are made for the
benefit of the Bank and its successors and assigns, and may be enforced by the
Bank from time to time against any of the Borrowers as often as occasion
therefore may arise and without requirement on the Bank's part first to marshal
any claims or to exercise any rights against any other Borrower or to exhaust
any remedies available to the Bank against another Borrower or to resort to any
other source or means of obtaining payment of any of the indebtedness,
liabilities and obligations evidenced by or arising under this Agreement, the
Notes and the Loan Documents or to elect any other remedy. The provisions of
this Section 8.12 shall remain in effect until all the indebtedness, liabilities
and obligations evidenced by or arising under this Agreement, the Notes and the
Loan Documents shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any of the
indebtedness, liabilities and obligations evidenced by or arising under this
Agreement, the Notes and the Loan Documents, is rescinded or must otherwise be
restored or returned by the Bank upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of this
Section 8.12 will forthwith be reinstated in effect, as though such payment had
not been made.
(f) Notwithstanding any provision to the contrary contained
herein, in the Notes or in any other of the Loan Documents, to the extent the
joint obligations of any Borrower shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of
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55
each Borrower hereunder shall be limited to the maximum amount that is
permissible under applicable law (whether federal or state and including,
without limitation, the federal Bankruptcy Code).
SECTION 8.13. Severability. If any provisions of this
Agreement shall be held invalid under any applicable laws, such invalidity shall
not affect any other provision of this Agreement that can be given effect
without the invalid provision, and, to this end, the provisions hereof are
severable.
SECTION 8.14. Captions. Captions in this Agreement are for the
convenience of reference only and shall not affect the meaning or interpretation
of the provisions hereof.
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56
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the year and day first above written.
BORROWERS:
THE SOURCE INFORMATION MANAGEMENT COMPANY
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
SOURCE-MYCO, INC.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
SOURCE-XXXXXX INDUSTRIES, INC.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: President
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
SOURCE-U.S. MARKETING SERVICES, INC.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: President
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
SOURCE-CHESTNUT DISPLAY SYSTEMS, INC.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: President
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
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57
THE SOURCE-CANADA CORP.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
T.C.E. CORPORATION
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
BRAND MANUFACTURING CORP.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
VAIL COMPANIES, INC.
ATTEST:
By: X. Xxxxxx Xxxxxx
---------------------------------------------
X. Xxxxx Xxxxxxx Title: CEO
---------------------------- ------------------------------------------
Secretary
[CORPORATE SEAL]
BANK:
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
----------------------------------------
Title:
-------------------------------------
Lending Office
Wachovia Bank, N.A.
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
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