AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as
of December 9, 1997 by and between BROTHERS GOURMET COFFEES, INC., each of
the Lenders (as defined herein) and XXXXXXX XXXXX CREDIT PARTNERS, L.P., a
Bermuda Limited Partnership ("GSCP"), individually as a Lender and as Agent
for the Lenders.
W I T N E S S E T H:
WHEREAS, Brothers Gourmet Coffees, Inc., as Borrower and Sanwa
Business Credit Corporation, a Delaware corporation ("SBCC"), as Agent and
Lender entered into that certain Loan and Security Agreement, dated as of May
29, 1996 (as amended, modified, supplemented or restated from time to time
prior to the date hereof, the "Existing Agreement");
WHEREAS, pursuant to that certain Assignment Agreement, dated as of
December 9, 1997 (the "Assignment Agreement"), by and between SBCC and GSCP,
SBCC sold and assigned all of its right, title and interest in, to and under,
among other things, the Transferred Interest (as defined in the Assignment
Agreement), to GSCP in accordance with the terms and conditions of the
Assignment Agreement;
WHEREAS, the Borrower, the Agent and the Lenders desire to amend
certain provisions of the Existing Agreement, upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of the Borrower by the Agent and the
Lenders, the parties hereto hereby agree as follows:
1. DEFINITIONS.
1.1 GENERAL TERMS. When used herein, the following terms shall have
the following meanings:
"ACCOUNT DEBTOR" shall mean any Person who is or may become
obligated on or under an Account.
"ACCOUNTING PERIOD" shall mean any of the twelve (12) consecutive
accounting periods collectively forming a Fiscal Year.
"ACCOUNTS" shall mean all of the Borrower's presently existing
and hereafter arising or acquired accounts, accounts receivable, margin
accounts, futures
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positions, book debts, instruments, documents, contracts, notes, drafts,
acceptances, chattel paper, and other forms of obligations now or hereafter
owned or held by or payable to the Borrower relating in any way to Inventory
or arising from the sale of Inventory or the rendering of services by the
Borrower or howsoever otherwise arising, including the right to payment of
any interest or finance charges with respect thereto, together with all
merchandise represented by any of the Accounts; all such merchandise that may
be reclaimed or repossessed or returned to the Borrower; all of the
Borrower's rights as an unpaid vendor, including, without limitation,
stoppage in transit, reclamation, replevin, and sequestration; all pledged
assets and all letters of credit, guaranty claims, Liens held by or granted
to the Borrower to secure payment of any Accounts; all proceeds and products
of all of the foregoing described properties and interests in properties; and
all proceeds of insurance with respect thereto, including, without
limitation, the proceeds of any applicable casualty or credit insurance or
fidelity bond, whether payable in cash or in kind; and all customer lists,
ledgers, books of account, records, computer programs, computer disks or tape
files (including, without limitation, all microfilm), computer printouts,
computer runs, and other computer prepared information relating to any of the
foregoing.
"ACCOUNTS TRIAL BALANCE" shall have the meaning ascribed
thereto in SUBSECTION 7.1(iii).
"ACCRUED UNPAID AMOUNT" shall have the meaning ascribed
thereto in SUBSECTION 6.35.
"ACQUISITION" shall mean any transaction, or any series of
related transactions, consummated after the Effective Date by which the
Borrower or any Subsidiary (a) acquires, directly or indirectly, any business
or all or substantially all of the assets of any Person or portion thereof,
whether through purchase of assets, merger or otherwise or (b) directly or
indirectly acquires at least (i) a majority (in number of votes of the
securities (or warrants, options or other rights to acquire such securities)
of a Person which have ordinary voting power for the election of directors or
(ii) a majority (by percentage of voting power) of the outstanding
partnership or other interests of a Person or (c) makes any Person a
Subsidiary, or causes any assets of such Person to be merged into the
Borrower or such Subsidiary pursuant to a merger, purchase of assets or other
reorganization providing for the delivery or issuance to the holders of such
Person's then outstanding securities or capital interests, in exchange for
such securities, of cash or securities of the Borrower or such Subsidiary, or
any combination thereof.
"ACQUISITION FEE" shall have the meaning ascribed thereto in
SUBSECTION 2.10.
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"ADDITIONAL ADJUSTMENT FACTOR" shall mean (i) with respect to
any Additional Slotting Fee and the first calendar month such Additional
Slotting Fee is included in the Current Asset Base, one (1) and (ii) as to
each such Additional Slotting Fee and any calendar month after the first
calendar month in which such Additional Slotting Fee is included in the
Current Asset Base, an amount equal to (x) eighteen (18), LESS the number of
full calendar months that have elapsed since such Additional Slotting Fee was
included initially in the Current Asset Base, divided by (y) eighteen (18).
For purposes of determining the Additional Slotting Fee Amount for any
Additional Slotting Fee and the "Current Asset Base" in subsection 2.1(a)(3)
hereof, the Additional Adjustment Factor shall be adjusted for such
Additional Slotting Fee as of 11:59 p.m. (New York time) on the last day of
the applicable calendar month. For purposes of illustration only, if the
Borrower were to deliver an Additional Slotting Fee Certificate to the Agent
pursuant to Section 7.11 on July 15, 1998, as of August 1, 1998, 100% of the
amount of the Additional Slotting Fee would be included in the calculation of
Aggregate Additional Slotting Fee Amount and the Additional Adjustment Factor
for such Additional Slotting Fee would be one (1), and as of 12:00 a.m. (New
York time), September 1, 1998, the Additional Adjustment Factor for such
Additional Slotting Fee would be reduced to 17 divided by 18 (.94444).
"ADDITIONAL SLOTTING FEE" shall mean any Slotting Fee listed
on any Additional Slotting Fee Certificate.
"ADDITIONAL SLOTTING FEE AMOUNT" shall mean, with respect to
any Additional Slotting Fee and as to any calendar month, the product of (x)
the amount of such Additional Slotting Fee, MULTIPLIED BY (y) the applicable
Additional Adjustment Factor for such Additional Slotting Fee for such
calendar month.
"ADDITIONAL SLOTTING FEE CERTIFICATE" shall mean each
certificate delivered by the Borrower to the Agent in any month in accordance
with Section 7.11 hereof.
"ADDITIONAL SUBORDINATED NOTES" shall mean the additional
senior subordinated promissory notes issued pursuant to Section 5(d)(vii) of
the BIB Warrant in the form of Exhibit A to the BIB Warrant.
"ADDITIONAL TERM LOAN B" shall have the meaning ascribed
thereto in SUBSECTION 2.5(a)
"ADJUSTED INITIAL SLOTTING FEE AMOUNT" shall mean with respect
to any calendar month, the product of (x) the Initial Slotting Fee Amount,
MULTIPLIED BY (y) the applicable Initial Adjustment Factor for such calendar
month.
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"AFFILIATE" shall mean any Person (including any member of the
immediate family of any such natural person) (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with the Borrower or any Subsidiary, including, without
limitation, the officers and directors of the Borrower or such Subsidiary,
(b) that directly or beneficially owns or holds five percent (5%) or more of
any equity interest in the Borrower or any Subsidiary, or (c) five percent
(5%) or more of whose voting stock (or in the case of a Person which is not a
corporation, five percent (5%) or more of any equity interest) is owned
directly or beneficially or held by the Borrower or any Subsidiary.
Affiliate shall not be deemed to include the Agent or any Lender. As used
herein, the term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of the power to direct the management or
policies of a Person, whether through ownership of securities, by contract or
otherwise.
"AGENT" shall mean Xxxxxxx Sachs Credit Partners, L.P., a
Bermuda limited partnership, in its capacity as agent for the Lenders and not
in its individual capacity as a Lender, and any successor in such capacity
appointed pursuant to SUBSECTION 12.11.
"AGGREGATE ADDITIONAL SLOTTING FEE AMOUNT" shall mean, with
respect to any calendar month, the sum of all Additional Slotting Fees
Amounts for such calendar month.
"AGREEMENT" shall mean this Amended and Restated Loan and
Security Agreement, as the same may hereafter be restated, amended, modified
or supplemented from time to time.
"APPRAISAL (EQUIPMENT)" shall mean that certain equipment
valuation report dated as of June 19, 1997 and prepared by MB Valuation,
together with a reliance letter from MB Valuation expressly stating that the
Agent is entitled to rely on such equipment valuation report as if it were
addressed to the Agent, each of which shall be in form and substance
satisfactory to the Agent, copies of which have been provided to the Agent
and the Lenders.
"APPRAISED (REAL ESTATE)" shall mean that certain real estate
appraisal dated as of March 19, 1996 prepared by MB Valuation as to the real
estate located in Houston, Texas, together with a reliance letter from MB
Valuation expressly stating that the Agent is entitled to rely on such real
estate appraisal as if it were addressed to the Agent, each of which shall be
in form and substance satisfactory to the Agent, copies of which have been
provided to the Agent and the Lenders.
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"AUTHORIZED OFFICER" shall mean any one of the Chief Executive
Officer, Chief Financial Officer, Treasurer, Vice President Finance and
Administration or any other officer of the Borrower designated to the Agent
in writing as an "Authorized Officer" under this Agreement by the Chief
Executive Officer or the Vice President Finance and Administration of the
Borrower.
"BASE RATE" shall mean the fluctuating interest rate equal to
(a) the Prime Rate from time to time in effect, PLUS (b) two percent (2%).
"BIB WARRANT" shall mean that certain Warrant for the Purchase
of Shares of Common Stock, dated December 27, 1996, issued by the Borrower in
favor of BIB Holdings (Bermuda) Ltd., as the same may be amended, modified,
restated or otherwise supplemented from time to time in accordance with the
terms of this Agreement and the Subordinated Agreement.
"BIB WARRANT SHARES" shall have the meaning ascribed thereto
in the BIB Warrant and the Subordinated Agreement.
"BLOCKED ACCOUNT AGREEMENTS" shall have the meaning ascribed
thereto in SUBSECTION 3.5.
"BLOCKED ACCOUNTS" shall have the meaning ascribed thereto in
SUBSECTION 3.5.
"BORROWER" shall mean Brothers Gourmet Coffees, Inc., a
Delaware corporation.
"BORROWING AVAILABILITY" shall have the meaning ascribed
thereto in SUBSECTION 2.1(a).
"BROTHERS RETAIL" shall mean Brothers Retail Corp., a Delaware
corporation, a wholly owned Subsidiary of the Borrower.
"BROTHERS RETAIL GUARANTY" shall mean the Guaranty, dated as
the Effective Date, executed by Brothers Retail in favor of the Agent, on
behalf of itself and the Lenders, guarantying the Obligations, as the same
may be restated, extended, amended, modified or supplemented from time to
time.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which banks in New York, New York are authorized or
required to be closed.
"CAPITAL EXPENDITURES" shall mean, for any fiscal period,
without duplication, all expenditures (whether made in the form of cash or
other Property) by the
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Borrower or any Subsidiary during such period for, or contracts for
expenditures with respect to, any fixed assets or improvements, or for
renewals, replacements, substitutions or additions thereto, which have a
useful life of more than one (1) year including, without limitation, the
direct or indirect acquisition of such assets by way of increased product or
service charges, offset items or otherwise, and shall include capitalized
lease payments.
"CASH EQUIVALENTS" shall mean (i) bank certificates of
deposit, bankers' acceptances or time deposits (but only with banks organized
under the laws of the United States or of any State thereof (x) which do not
have set-off rights against the foregoing, other than set-offs for nominal
service charges and similar fees incurred in the ordinary course, and (y)
which have combined capital and surplus in excess of Fifty Million Dollars
($50,000,000)), (ii) commercial paper maturing within one (1) year from the
date issued and rated at least A-1 or the equivalent thereof by Standard &
Poors Corporation, or P-1 or the equivalent thereof by Xxxxx'x Investors
Service, Inc., and (iii) obligations maturing within one (1) year from the
date of acquisition issued or directly and fully guaranteed by the United
States government or any agency thereof.
"CHANGE OF CONTROL" shall mean the occurrence of:
(a) an acquisition of any voting securities of the Borrower
(the "Voting Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of forty percent (40%) or more of the then outstanding
shares of common stock of the Borrower or the combined voting power of the
Borrower 's then outstanding Voting Securities;
(b) the individuals who, as of the Effective Date are members
of the Board of Directors of the Borrower (the "Incumbent Board"), cease for
any reason to constitute at least two-thirds of the members of the Board of
Directors of the Borrower; PROVIDED, HOWEVER, that if the election, or
nomination for election by the Borrower 's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be considered
as a member of the Incumbent Board; PROVIDED FURTHER, HOWEVER, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy Contest")
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest;
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(c) the consummation of a merger or consolidation of any
Person with or into the Borrower or in which securities of the Borrower are
issued; or
(d) the consummation of a transaction or series of
transactions pursuant to which all or substantially all of the assets and
properties of the Borrower are sold, conveyed, transferred, leased or
otherwise disposed of, directly or indirectly.
"CHARGES" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including, without
limitation, taxes owed to the PBGC at the time due and payable), duties,
levies, assessments, charges, liens, claims or encumbrances upon or relating
to (i) the Collateral, (ii) the Obligations, (iii) the employees, payroll,
income or gross receipts of the Borrower, (iv) the ownership or use of any
Property of the Borrower, or (v) any other aspect of the Borrower's business.
"CLASS ACTION LAWSUITS" shall mean those certain shareholders
lawsuits listed on EXHIBIT A.
"CODE" shall have the meaning ascribed thereto in SUBSECTION 1.3.
"COLLATERAL" shall mean all property and interests in property
now owned or hereafter acquired by the Borrower in or upon which a Lien is
granted to the Agent, for the benefit of the Lenders, by the Borrower,
whether under the Existing Agreement, this Agreement or the other Financing
Agreements or under any other documents, instruments or writings executed by
the Borrower and delivered to the Agent, including, without limitation,
Accounts, General Intangibles, Fixtures, Inventory, Intellectual Property,
Equipment, Real Estate and leased real property.
"COLLECTING BANKS" shall have the meaning ascribed thereto in
SUBSECTION 3.5.
"COLLECTIONS" means all cash, checks, notes, instruments, and
other items of payment (including, insurance proceeds, proceeds of cash
sales, rental proceeds, and tax refunds) received by the Borrower with
respect to the Accounts.
"COMMITMENT" shall mean, with respect to each Lender, the
commitment of each Lender to make Loans to the Borrower with respect to the
Revolving Loan and each Term Loan as of the Effective Date in the amounts set
forth on SCHEDULE 1; SCHEDULE 1 shall be amended and Lenders' Pro Rata Shares
shall be adjusted from time to time to give effect to the addition of any new
Lenders pursuant to SUBSECTION 11.1.
"CONTINGENT RETAIL STORE OBLIGATIONS" shall mean,
collectively, (a) the obligations of the Borrower or any of its Subsidiaries
(with respect to contracts
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entered into by such Person) for the leasing, operation, financing, shutdown,
sale or other disposition associated with the closing of the Retail Stores
listed on Exhibit 8.7 and (b) the contingent obligations of the Borrower or
any of its Subsidiaries to pay rent, either in its capacity as a co-lessee or
guarantor, with respect to the Retail Stores listed on Exhibit 8.5.
"CONVERSION SHARES" shall have the meaning ascribed thereto in
the BIB Warrant.
"CURRENT ASSET BASE" shall have the meaning ascribed thereto
in SUBSECTION 2.1.
"DEFAULT" shall mean an event which through the passage of
time or the service of notice, or both, would mature into an Event of Default.
"DEFAULT RATE" shall mean a fluctuating interest rate per
annum equal to (a) in the case of principal or interest on any Loan (other
than Term Loan B) and all other Obligations, the sum of (i) the Base Rate
from time to time in effect, PLUS (ii) two percent (2%) and (b) in the case
of principal or interest on Term Loan B, the rate of thirteen and
three-quarters percent (13.75%) per annum. Such interest rate shall be a
fluctuating rate and each change in such interest rate shall take effect
simultaneously with the corresponding change in the Base Rate.
"DEPOSITORY ACCOUNT" shall have the meaning ascribed thereto
in SUBSECTION 3.5.
"DILUTION" means, in each case based upon the experience of
the immediately prior ninety (90) days, the result of dividing the amount of
(a) bad debt write-downs, discounts, advertising, returns, promotions,
creditors, or other dilution with respect to the Accounts, by (b) the
Borrower's Collections (excluding extraordinary items) plus the amount of
clause (a).
"DILUTION RESERVE" means, as of any date of determination, an
amount sufficient to reduce the Lenders' advance rate against Eligible
Accounts by one percentage point for each percentage point by which Dilution
is in excess of 5%.
"DSD WAREHOUSES" shall mean the regional warehouses set forth
on EXHIBIT B at which the Borrower stores Inventory for direct delivery to
customers.
"EBITDA" shall mean, for the applicable computation period set
forth in Section 8.21(a) hereof, determined for the Borrower and its
Subsidiaries on a consolidated basis, Net Income (exclusive of discontinued
operations for Retail Stores) for such period, PLUS to the extent deducted in
determining Net Income, interest expense
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and taxes paid, PLUS to the extent deducted in determining Net Income,
amortization, depreciation and other similar non-cash charges, PLUS to the
extent deducted in determining Net Income, extraordinary losses, MINUS to the
extent added in determining Net Income, extraordinary gains, all as
determined in accordance with GAAP consistently applied.
"EFFECTIVE DATE" shall mean 12:01 a.m. (New York time) on the
date upon which all of the conditions precedent set forth in SUBSECTION 4.2
have been satisfied or waived by the Agent in accordance with the terms
thereof.
"ELIGIBLE ACCOUNTS" shall have the meaning ascribed thereto in
SUBSECTION 3.2.
"ELIGIBLE INVENTORY" shall have the meaning ascribed thereto
in SUBSECTION 3.10.
"ENVIRONMENTAL LAWS" shall mean and includes the following as
now in effect or hereafter amended: the Comprehensive Environmental Response
Compensation and Liability Act, ("CERCLA"), 42 U.S.C. Section 9601 ET SEQ.;
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901 ET SEQ.; the Toxic Substances
Control Act ("TSCA"), 15 U.S.C. Section 2601, ET SEQ.; the Clean Air Act, 42
U.S.C. Section 7401 ET SEQ.; the Federal Water Pollution Control Act ("Clean
Water Act"), 33 U.S.C. Section 1251 ET SEQ.; the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 ET SEQ.; the Atomic
Energy Act, 42 U.S.C. Section 2011 ET SEQ.; the Safe Drinking Water Act, 42
U.S.C. Section 300f ET SEQ. and the state law equivalents; any so-called
"Superfund" or "Superlien" law; and any statute, ordinance, code, rule,
regulation, order, decree or requirement under international, federal, state,
regional, provincial or local law (including, without limitation,
administrative orders and consent decrees) in effect and as amended
regulating, relating to or imposing liability or standards of conduct
concerning public health and safety, protection of the environment, or any
pollutant or contaminant or hazardous, toxic or dangerous substance, waste,
chemical or material, as now or any time hereafter may be existing.
"ENVIRONMENTAL MATTERS" shall have the meaning ascribed
thereto in SUBSECTION 6.26.
"EQUIPMENT" shall mean all of the Borrower's machinery and
equipment, including, without limitation, processing equipment, conveyors,
machine tools, data processing and computer equipment with software and
peripheral equipment (other than software constituting part of the Accounts),
and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment,
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tools, attachments, accessories, automotive equipment, trailers, trucks,
ships, vessels, airplanes, forklifts, molds, dies, stamps, motor vehicles,
rolling stock and other equipment of every kind and nature, trade fixtures
and fixtures not forming a part of real property, all whether now owned or
hereafter acquired, and wherever situated, together with all appurtenances,
additions and accessions thereto, replacements therefor, all parts therefor,
all substitutes for any of the foregoing, fuel therefor, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto, and including, without limitation, the items of
equipment described in the Appraisal (Equipment), which description is
incorporated herein by reference.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and all rules and regulations
promulgated thereunder.
"ERISA AFFILIATE" shall mean any Person, trade or business
that is, or was at any time during the previous six (6) years, along with the
Borrower, in the same controlled group of corporations, under common control,
or otherwise, treated as a single employer for any purpose under Section 414
of the IRC.
"EVENT OF DEFAULT" shall mean the occurrence or existence of
any one or more of the following conditions or events:
(a) the Borrower fails to pay any of its Obligations hereunder when
the Obligations are due or are declared due or fails to deliver any Weekly
Report or Monthly Report as required by SUBSECTION 3.1;
(b) the Borrower fails or neglects to perform, keep or observe any of
the covenants, conditions or agreements contained in any of the subsections
of this Agreement (other than the covenants contained in SUBSECTION 7.12)
or in any of the other Financing Agreements (other than occurrences
referred to or embodied in other provisions of this definition constituting
immediate Events of Default) for a period of ten (10) days after the
earlier of (i) the Borrower's receipt of notice from the Agent or (ii)
actual knowledge of such breach by the Borrower;
(c) any warranty or representation now or hereafter made by the
Borrower or any Subsidiary in connection with this Agreement or any of the
other Financing Agreements is untrue or incorrect in any material respect,
or any schedule, certificate, statement, report, financial data, notice or
other writing furnished at any time by the Borrower or any Subsidiary to
the Agent or any Lender is untrue or incorrect in any material respect, as
of the date on which the
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warranty, representation or the facts set forth therein are stated,
certified or deemed made;
(d) any Lien, levy or assessment is filed or recorded with respect to
or otherwise imposed upon all or any part of the Collateral or the Property
of the Borrower or any Subsidiary by the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipality or
other governmental agency and that either (i) is in excess of Two Hundred
Fifty Thousand Dollars ($250,000), or (ii) is superior to the Liens granted
to the Agent, for the benefit of the Lenders;
(e) all or any part of the Collateral or the Property of the Borrower
or any Subsidiary is attached, seized, subjected to a writ or distress
warrant, or levied upon, or come within the possession or control of any
judgment creditor and on or before the thirtieth (30th) day period
thereafter such Collateral or Property is not returned to the Borrower or
such Subsidiary or such writ, distress warrant or levy is not dismissed,
stayed or lifted;
(f) the Borrower or any Subsidiary makes an assignment for the
benefit of creditors; convenes a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; applies for, seeks, consents to, or acquiesces in
the appointment of a receiver, trustee or custodian to take possession of
all or any substantial portion of the Property of the Borrower or any
Subsidiary; commences any bankruptcy, reorganization or insolvency case or
proceeding or other proceeding under any federal, state or other law for
relief of debtors; or the Borrower or such Subsidiary proposes, authorizes
or consents to the taking of any of the foregoing actions;
(g) the Borrower or any Subsidiary becomes the subject of any
bankruptcy, reorganization or insolvency proceeding, or other proceeding
under any law for the relief of debtors instituted against it;
(h) without the application, approval or consent of the Borrower or
any Subsidiary, any receiver, trustee, examiner, liquidator, custodian or
similar official is appointed to take possession of all or any substantial
portion of the Property of the Borrower or such Subsidiary, or any
committee of the Borrower's or such Subsidiary's creditors or any class
thereof, is formed for the purpose of monitoring or investigating the
financial affairs of the Borrower or such Subsidiary or enforcing such
creditors' rights, or the filing of any motion, complaint or other pleading
in any bankruptcy, reorganization or insolvency case or proceeding of any
Person other than the Borrower or such Subsidiary that seeks the
consolidation
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the Borrower's or such Subsidiary's assets and liabilities with the assets
and liabilities of such Person;
(i) the Borrower or any Subsidiary voluntarily or involuntarily
dissolves or is dissolved, liquidates or is liquidated;
(j) the Borrower or any Subsidiary ceases to be Solvent or admits in
writing that it is not Solvent or fails to pay all or any material portion
(measured in numbers of debts or dollar amounts) of its debts as they
become due or admits in writing its present or prospective inability to pay
its debts as they become due;
(k) the Borrower or any Subsidiary is enjoined, restrained, or in any
way prevented by the order of any court or any administrative or regulatory
agency from conducting all or any material part of its business
representing ten percent (10%) or more of the Borrower's and its
Subsidiaries' business taken as a whole (based upon gross revenues for the
most recent twelve months ending on the date of such occurrence);
(l) any default or breach under any agreement(s) evidencing
Indebtedness of the Borrower or any Subsidiary in an aggregate amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) shall occur and
shall continue after any applicable grace period specified in any such
document if the effect of such default or breach is to accelerate, or to
permit the acceleration of, the maturity of all or any part of any such
Indebtedness, whether or not such default or breach shall be waived by the
holders or trustees (if any) for such Indebtedness, or any such
Indebtedness shall be declared to be due and payable, or be required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(m) a breach by the Borrower or any Subsidiary occurs under any
agreement, document or instrument (other than an agreement, document or
instrument evidencing Indebtedness), whether heretofore, now or hereafter
existing between the Borrower or such Subsidiary and any other Person, and
such breach continues for more than thirty (30) days after such breach
first occurs; PROVIDED that such grace period shall not apply, and such
breach shall constitute an Event of Default, if such breach may not, in the
determination of the Required Lenders, be cured by the Borrower or such
Subsidiary during such thirty (30) day grace period, and the failure to
have cured such breach might have a Material Adverse Effect;
(n) in the sole judgment of the Agent, since the Effective Date, a
material adverse change occurs in the business, properties, operations,
condition (financial or otherwise) or business prospects of the Borrower,
or of the Borrower
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and its Subsidiaries taken as a whole, or in the Agent's Lien priority in,
or the value of, the Collateral;
(o) any material damage to, or loss, theft, or destruction of, any of
the Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other
casualty which results in or causes cessation or substantial curtailment of
production or other revenue producing activities at any Facility;
(p) entry of a judgment or judgments in an aggregate amount in excess
of Two Hundred Fifty Thousand Dollars ($250,000) against the Borrower or
any Subsidiary;
(q) any Termination Event which the Required Lenders, in good faith,
determine might have a Material Adverse Effect and which is not cured
within thirty (30) days after the occurrence of such Termination Event;
(r) the loss, suspension, revocation or failure to obtain or renew
any license or permit now held or hereafter acquired by the Borrower, which
loss, suspension, revocation or failure to renew might have a Material
Adverse Effect;
(s) the Borrower fails to perform, keep or observe any of the
covenants contained in SUBSECTIONS 3.5, 7.5, 7.6, 7.11, or in Section 8;
(t) any civil or criminal action, suit or proceeding is initiated
against the Borrower or any Subsidiary under any federal or state
racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970, as amended);
(u) a Change in Control occurs;
(v) the Agent does not have or ceases to have a legal, valid and
perfected first priority Lien on the Collateral (subject to Permitted
Liens) for any reason other than the failure of the Agent to take any
action within its total control;
(w) any of the Financing Agreements shall cease for any reason to be
in full force and effect or is declared null and void or the Borrower, any
Subsidiary or any other Person (other than the Agent or any Lender) shall
disavow its respective obligations thereunder or shall deny that it has any
further obligations thereunder or shall contest or challenge the validity
or enforceability of any thereof, the legality or enforceability of any of
the Obligations or the perfection or priority of any Lien granted to the
Agent, or gives notice to such effect;
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(x) any breach or default by the Borrower of any of the provisions of
any of the Subordinated Debt Documents other than the breaches or defaults
listed on Exhibit 6.34 hereto;
(y) any Subsidiary fails or neglects to perform, keep or observe any
of the covenants, conditions or agreements contained in any Financing
Agreement to which it is a party, which breach continues after any
applicable grace period specified in such Financing Agreement; or
(z) any of the public filings of the Borrower since December 27, 1996
shall have contained any untrue statement of a material fact or omitted a
material fact necessary to make the statements contained therein not
misleading.
The occurrence or existence of any of the foregoing events
shall constitute an immediate Event of Default unless notice by the Agent or
a cure period is specifically required by the description of such event
before such event matures into an Event of Default.
"EXISTING OBLIGATIONS" shall have the meaning ascribed thereto
in SUBSECTION 6.35.
"FACILITY" shall mean each of the Borrower's facilities
located at 0000 Xxxx Xxxx, Xxxxxxx, Xxxxx and any other facility established
by the Borrower hereafter in accordance with the terms of this Agreement.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System only arranged by Federal Funds brokers as
published as of such day by the Federal Reserve Bank of New York, or if such
rate is not so published, the rate then used by first class banks in
extending overnight loans to other first class banks.
"FINANCIAL STATEMENTS" shall have the meaning ascribed thereto in
SUBSECTION 6.4.
"FINANCING AGREEMENTS" shall mean, collectively, this
Agreement, the Revolving Loan Notes, the Term Loan Notes, the Intellectual
Property Security Agreement, the Mortgages, the Pledge and Security
Agreement, the Maryland Club Foods Guaranty, the Brothers Retail Guaranty,
the Subsidiary Security Agreement, the GSCP Warrant, the Warrant Stock and
all other agreements, instruments and documents, including, without
limitation, security agreements, loan agreements, notes, guaranties,
mortgages, deeds of trust, agreements, documents, instruments, pledges,
powers of attorney, consents, assignments, contracts, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of the
-14-
Borrower or any other Person and delivered to the Agent or any Lender in
connection with this Agreement, together with all agreements and documents
between the Borrower and the Agent or any Lender referred to therein or
contemplated thereby, as the same may hereafter be restated, amended,
modified or supplemented from time to time.
"FISCAL QUARTER" shall mean any of the quarterly Accounting
Periods of the Borrower.
"FISCAL YEAR" shall mean the twelve (12) Accounting Periods of
the Borrower ending on the Friday closest to December 31 of each calendar
year.
"FIXTURES" shall mean all "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by the Borrower, wherever
located.
"FUNDING DATE" shall mean the date of funding of a Term Loan
or the date of each funding under the Revolving Loan, which date in all cases
shall be a Business Day.
"GENERAL INTANGIBLES" shall mean all of the Borrower's
presently owned or hereafter acquired general intangibles, including, without
limitation, goodwill, choses in action, causes of action, franchises,
methods, sales literature, drawings, specifications, descriptions, name
plates, catalogs, confidential business information, dealer contracts,
supplier contracts, distributor agreements, customer lists, contract rights,
confidential information, consulting agreements, employment agreements,
engineering contracts, leasehold interests in real and personal property,
general or limited partnership interests in any Person, insurance policies
(including business interruption insurance), licenses, permits, and such
other Property which uniquely reflect the goodwill of the business of the
Borrower; deposit accounts, letters of credit, and General Intangibles
relating to other items of Collateral, including, without limitation, rights
to refunds or indemnification; reversionary or other rights of the Borrower
to excess Plan assets upon termination or amendment thereof; and proceeds of
all of the foregoing, including without limitation, insurance proceeds,
including proceeds of business interruption insurance, income tax refunds,
and claims for tax or other refunds against any city, county, state, or
federal government, or any agency or authority or other subdivision thereof.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" OR "GAAP" shall
mean, as of the date of any determination with respect thereto, generally
accepted accounting principles as used by the Financial Accounting Standards
Board and/or the American Institute of Certified Public Accountants,
consistently applied and maintained throughout the periods indicated.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government
or any political subdivision thereof, any state or political subdivision
thereof, and any
-15-
agency, authority, court, central bank, department or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government.
"GSCP WARRANTS" shall mean the 400,000 Warrants for the
Purchase of Shares of Common Stock, dated the Effective Date, issued by the
Borrower in favor of GSCP under the GSCP Warrant Agreement.
"GSCP WARRANT AGREEMENT" shall mean that certain Warrant
Agreement, dated as of December 9, 1997, by and between the Borrower and
GSCP, as the same may be amended, modified, restated or supplemented from
time to time in accordance with the terms of this Agreement.
"GUARANTY" of a Person shall mean any agreement by which such
Person guarantees, endorses or otherwise in any way becomes or is responsible
for any obligations of any other Person, whether directly or indirectly, by
agreement to purchase the indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise
assures any creditor of such other Person against loss.
"HAZARDOUS MATERIALS" shall mean the following: hazardous
substances; hazardous wastes; polychlorinated biphenyls ("PCB's") or any
substance or compound containing PCB's; asbestos or any asbestos-containing
materials in any form or condition; radon; any other radioactive materials
including any source, special nuclear or by-product material; petroleum,
crude oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square
inch absolute); and any other pollutant or contaminant or hazardous, toxic or
dangerous chemicals, materials or substances, as all such terms are used in
their broadest sense and defined by Environmental Laws.
"INDEBTEDNESS" of a Person shall mean at a particular time (i)
indebtedness for borrowed money or for the deferred purchase price of
property or services (other than current accounts payable arising in the
ordinary course of business on terms customary in the trade) in respect of
which such person is liable, contingently or otherwise, as guarantor, obligor
or otherwise or any commitment by which such Person assures a creditor
against loss, including contingent reimbursement obligations with respect to
letters of credit, (ii) indebtedness guaranteed in any manner by such Person
including guaranties in the form of an agreement to repurchase or reimburse;
PROVIDED that the amount of indebtedness represented by any guaranty of
limited recourse shall be the lesser of the amount of indebtedness so
guaranteed or the value of the asset to which
-16-
the recourse of such indebtedness is limited, (iii) obligations under leases
which shall have been or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases in respect of which
obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss, (iv) any unfunded obligation of, or
withdrawal liability incurred but not paid by, such Person with respect to a
Multiemployer Plan, and (v) all accounts payable of such Person, which are
not being contested in good faith by appropriate proceedings and which are
more than ninety (90) days past due.
"INITIAL ADJUSTMENT FACTOR" shall mean, as to any month, an
amount equal to (x) eighteen (18), LESS the number of full calendar months
that have elapsed since the Effective Date divided by (y) eighteen (18). For
purposes of determining the Adjusted Initial Slotting Fee Amount and the
"Current Asset Base" in SUBSECTION 2.1(a)(3) hereof, the Initial Adjustment
Factor shall be adjusted as of 11:59 p.m. (New York time) on the last day of
the applicable calendar month such that as of midnight (New York time) on
January 1, 1998, the amount in clause (x) hereof shall be 17 for the entire
month of January 1998.
"INITIAL SLOTTING FEE AMOUNT" shall mean the aggregate amount
of all Slotting Fees listed on the Initial Slotting Fee Certificate.
"INITIAL SLOTTING FEE CERTIFICATE" shall mean the certificate
delivered by the Borrower to the Agent on the Effective Date, which
certificate shall list all "prepaid promotional expenses" and "long-term
promotional expenses" as of the Effective Date in accordance with GAAP.
"INTELLECTUAL PROPERTY" shall mean all of the Borrower's
present and future designs, patents, patent rights and applications therefor,
technology, trademarks and registrations or applications therefor, service
marks and registrations and applications therefor, trade names, trade dress,
logos, inventions, copyrights and all applications and registrations
therefor, advertising matter, software or computer programs, license rights,
trade secrets, methods, processes, know-how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to any
research and development, whether now owned or hereafter acquired by the
Borrower, and proceeds of all of the foregoing, including, without
limitation, proceeds of insurance policies thereon, all income, royalties,
damages and payments under all licenses, and the right to xxx for past,
present and future infringement.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean that
certain Amended and Restated Continuing Security Interest and Collateral
Assignment of Patents, Trademarks, Copyrights and Licenses, dated as of the
Effective Date, duly executed and delivered by the Borrower in favor of the
Agent, for the benefit of the
-17-
Lenders, with respect to Intellectual Property, as the same may hereafter be
amended, modified or supplemented from time to time.
"INVENTORY" shall mean all of the inventory of the Borrower of
every kind and description, now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of the Borrower, wherever
located, including, without limitation, all merchandise, raw materials,
parts, supplies, work-in-process and finished goods intended for sale,
together with all the containers, packing, packaging, shipping and similar
materials related thereto, and including such inventory as is temporarily out
of the Borrower's custody or possession, including inventory on the premises
of other Persons and items in transit, and including any goods reclaimed,
returned or repossessed upon any accounts, documents, instruments or chattel
paper relating to or arising from the sale of inventory, and all
substitutions and replacements therefor, and all additions and accessions
thereto, and all ledgers, books of account, records, computer printouts,
computer runs, microfilm, microfiche and other computer-prepared information
relating to any of the foregoing, and any and all proceeds of any of the
foregoing, including, without limitation, proceeds of insurance policies
thereon.
"INVESTMENT" of a Person shall mean any loan, advance,
extension of credit (other than accounts receivable arising in the ordinary
course of business on terms customary in the trade), deposit account or
contribution of capital by such Person to any other Person or any investment
in, or purchase or other acquisition of, the stock, partnership interests,
notes, debentures or other securities of any other Person made by such Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and all rules and regulations promulgated thereunder.
"LENDERS" shall mean the financial institutions signatory
hereto and, subject to the terms and conditions hereof, their respective
successors and assigns.
"LIABILITIES" shall mean liabilities of the Borrower and each
Subsidiary which are or should be reflected on a balance sheet of the
Borrower and each Subsidiary in accordance with Generally Accepted Accounting
Principles, and shall include Indebtedness.
"LIEN" shall mean, with respect to the Property of any Person,
any statutory or contractual lien, security interest, mortgage, pledge,
claim, encumbrance, charge, hypothecation, assignment, deposit arrangement,
filing of, or agreement to give, a financing statement, encumbrance or
preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever, whether voluntary or involuntary
(including, without limitation, the interest of a vendor or lessor under any
-18-
conditional sale, capitalized lease or other title retention agreement), in,
of or on any of the Property of such Person in favor of any other Person.
"LITIGATION" shall have the meaning ascribed thereto in
SUBSECTION 6.14.
"LOAN" shall mean either the Revolving Loan, Term Loan A or
Term Loan B, and "LOANS" shall mean all such loans collectively.
"LOAN ACCOUNT" shall have the meaning ascribed thereto in
SUBSECTION 2.16.
"LOAN YEAR" shall mean the period of twelve (12) consecutive
months commencing on the Effective Date and each succeeding period of twelve
(12) consecutive months commencing on each anniversary of the Effective Date
during the Term.
"MARYLAND CLUB FOODS" shall mean Maryland Club Foods, Inc., a
Florida corporation, a wholly owned Subsidiary of the Borrower.
"MARYLAND CLUB FOODS GUARANTY" shall mean the Amended and
Restated Guaranty, dated as of the Effective Date, executed by Maryland Club
Foods in favor of the Agent, on behalf of itself and the Lenders, guarantying
the Obligations, as the same may be restated, extended, amended, modified or
supplemented from time to time.
"MATERIAL ADVERSE EFFECT" shall mean, as determined by the
Required Lenders, a material adverse effect upon (a) the Agent's Lien
priority in, or the value of, the Collateral, or (b) the business,
properties, operations or condition (financial or otherwise) or business
prospects of the Borrower or of the Borrower and its Subsidiaries taken as a
whole as a result of the occurrence or existence of any single event or
condition or series of events or conditions in the aggregate, or (c) the
ability of the Borrower or any Subsidiary to perform its obligations under
any of the Financing Agreements, or (d) the validity or enforceability of any
of the Financing Agreements or the rights, powers and remedies of the Agent
or any Lender to enforce or collect the Obligations. In determining whether
any individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events would result in a
Material Adverse Effect.
"MATURITY DATE" shall mean May 29, 1999.
"MB VALUATION" shall mean MB Valuation Services, Inc., a Texas
corporation.
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"MONTHLY REPORT" shall have the meaning ascribed thereto in
SUBSECTION 3.1.
"MORTGAGES" shall mean the first mortgages, deeds of trust,
leasehold mortgages, collateral assignment of leases or other real estate
security documents with respect to the Real Estate, all in form and substance
satisfactory to the Agent, duly executed and delivered by the Borrower or any
Subsidiary in favor of the Agent, for the benefit of the Lenders, as security
for the Obligations, as the same may hereafter be restated, amended, modified
or supplemented from time to time.
"MULTIEMPLOYER PLAN" shall mean any multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate contributes, is obligated to contribute or was required to
contribute within the immediately preceding six (6) years.
"NET INCOME" shall mean, for any applicable fiscal period,
determined for the Borrower and its Subsidiaries on a consolidated basis, the
audited consolidated net income after income and franchise taxes and shall
have the meaning given such term by Generally Accepted Accounting Principles;
PROVIDED that there shall be specifically excluded therefrom tax-adjusted (i)
gains or losses from the sale of capital assets, (ii) net income of any
Person in which the Borrower or any Subsidiary has an ownership interest,
unless received by the Borrower in a cash distribution, and (iii) any gains
arising from extraordinary items.
"NOTE" or "NOTES" shall mean one or more of the Revolving Loan
Notes or the Term Loan Notes, or a combination thereof.
"OBLIGATIONS" shall mean all of the Borrower's obligations,
liabilities and indebtedness to the Agent and the Lenders and/or to any
affiliate of the Agent or the Lenders of any and every kind and nature,
whether heretofore, now or hereafter owing, arising, due or payable and
howsoever evidenced, created, incurred, acquired, or owing, whether primary,
secondary, direct, indirect, contingent, fixed or otherwise (including,
without limitation, obligations of performance) and whether arising or
existing under written agreement, oral agreement or operation of law
including, without limitation, all of the Borrower's indebtedness,
liabilities and obligations to the Agent and the Lenders or any Participant
under this Agreement or any other Financing Agreement.
"OLD TERM LOAN A PIECE" shall have the meaning ascribed
thereto in SUBSECTION 2.4(a).
"ORIGINAL CLOSING DATE" shall mean May 29, 1996.
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"PARTICIPANT" shall mean any Person now or from time to time
hereafter participating with any Lender in the Loans made by such Lender to
the Borrower pursuant to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"PENSION PLAN" shall mean any Plan that is a defined benefit
plan (other than a Multiemployer Plan) defined in Section 3(35) of ERISA.
"PERMITTED INVESTMENTS" shall have the meaning ascribed
thereto in SUBSECTION 8.4.
"PERMITTED LIENS" shall have the meaning ascribed thereto in
SUBSECTION 8.1.
"PERPETUAL INVENTORY SYSTEM" shall have the meaning ascribed
thereto in SUBSECTION 3.12.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, limited liability company, limited
liability partnership, unincorporated organization, association, corporation,
institution, entity, party, or government (whether national, federal, state,
provincial, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
"PHANTOM STOCK PAYMENT" shall have the meaning ascribed in the
BIB Warrant.
"PLAN" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA (other than any Multiemployer Plan) under which the
Borrower or any ERISA Affiliate is, or was at any time within the previous
six (6) years, an "employer" within the meaning of Section 3(5) of ERISA.
"PLEDGE AGREEMENT" shall mean the Amended and Restated Pledge
Agreement, dated as of the Effective Date, executed by the Borrower in favor
of the Agent, on behalf of itself and the Lenders, as the same may be
restated, amended, modified or supplemented from time to time.
"PREPAYMENT FEE" shall have the meaning ascribed thereto in
subsection 2.9(b).
"PRIME RATE" shall mean the "prime rate" of interest reported,
from time to time, by THE WALL STREET JOURNAL in its money rates column
currently reported in Section C; PROVIDED, HOWEVER, that in the event that
THE WALL STREET JOURNAL ceases
-21-
reporting a "prime rate", "Prime Rate" shall mean the per annum rate of
interest reported as the "Bank Prime Loan" rate for the most recent weekday
for which such rate is reported in Statistical Release H.15 (519) published
from time to time by the Board of Governors of the Federal Reserve System;
PROVIDED FURTHER that in the event that both of the aforesaid indices cease
to be published or to report rates of the aforesaid types, the "Prime Rate"
shall be determined from a comparable index mutually chosen by the Agent and
the Borrower in good faith. The "Prime Rate" shall change effective on the
date of the publication of any change in the applicable index by which such
"Prime Rate" is determined.
"PRO RATA SHARE" shall mean the percentage obtained by
dividing (a) the Commitments of a Lender by (b) the aggregate Commitments of
all Lenders, as such percentage may be adjusted by assignments permitted
pursuant to SUBSECTION 11.1. The sum of the Pro Rata Shares of all Lenders at
any date of determination shall equal one hundred percent (100%).
"PROJECTIONS" shall mean the projected balance sheets, profit
and loss statements, and cash flow statements of the Borrower and its
Subsidiaries on a consolidated basis, prepared in accordance with Generally
Accepted Accounting Principles, together with appropriate supporting details
and a statement of underlying assumptions, which have been and will be
delivered to the Agent and the Lenders in accordance with the terms hereof by
the Borrower, a copy of the first of which is attached as EXHIBIT 6.4.
"PROPERTY" of a Person shall mean any and all assets or
property, whether real, personal, tangible, intangible, or mixed, of such
Person, or other assets or property leased or operated by such Person.
"REAL ESTATE" shall mean the real property, mineral rights,
leasehold or other interests in real property together with any purchase
options and other rights related to such leaseholds or other interests owned,
leased, used or operated now or hereafter by the Borrower, all Fixtures and
personal property used in conjunction therewith and the Borrower's rights to
leases, rents and profits with respect thereto.
"REDIRECTION NOTICE" shall have the meaning ascribed thereto
in SUBSECTION 3.5.
"REQUIRED LENDERS" shall mean (i) Lenders having in the
aggregate at least sixty-six and two-thirds percent (66-2/3%) of the Total
Revolving Loan Facility, or (ii) if the Revolving Credit Facility has been
terminated, Lenders having in the aggregate at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate outstanding amount of the Loans.
-22-
"RESTRICTED PAYMENT" of a Person shall mean: (a) any dividend
or other distribution, direct or indirect, on account of any shares of any
class of Stock of such Person now or hereafter outstanding, except a dividend
payable solely in shares of that class of such Stock to the holders of that
class; (b) any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value direct or indirect
of any shares of any class of Stock of such Person now or hereafter
outstanding; (c) any payment or prepayment of principal or premium, if any,
or interest on, fees with respect to, redemption, conversion, exchange,
purchase, retirement, defeasance, sinking fund or similar payment with
respect to Subordinated Debt of a Person; (d) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of Stock of such Person now or hereafter
outstanding; or (e) any payment by such Person of any management fees,
advisor fees or similar fees whether pursuant to a management agreement or
otherwise to any Affiliate of such Person.
"RETAIL STORES" shall mean those current and former Brothers
Coffee Bar and Xxxxxx Xxxx'x retail store locations set forth on Exhibits 8.5
and 8.7.
"RETAIL STORES SALE PROGRAM" shall mean the plan by the
Borrower and its Subsidiaries to (a) dispose of the Retail Stores listed on
Exhibit 8.7 that they are currently operating, (b) eliminate or reduce its
liability as a co-lessee or guarantor with respect to those former Retail
Stores listed on Exhibits 8.5, and (c) shut down any remaining Retail Stores
listed on Exhibit 8.7 that are not being currently operated and which have
not been sold.
"REVOLVING LOAN" shall have the meaning ascribed thereto in
SUBSECTION 2.1.
"REVOLVING LOAN NOTES" shall have the meaning ascribed thereto
in SUBSECTION 2.3.
"SALE EVENT" shall mean the occurrence of (a) the sale or
other disposition of all or substantially all of the assets of the Borrower
to any Person; or (b) the consummation of a merger or consolidation with or
into the Borrower or in which securities of the Borrower are issued, PROVIDED
that either (i) the Borrower is not the corporation resulting from such
merger or consolidation, or (ii) the stockholders of the Borrower immediately
before such merger or consolidation, do not own directly or indirectly
immediately following such merger or consolidation, at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the voting securities of the
Borrower immediately before such merger or consolidation.
-23-
"SBCC" shall have the meaning ascribed thereto in the first
"WHEREAS" clause of this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERVICE" shall mean the Internal Revenue Service and any
successor thereof.
"SINGLEBREW PACKAGING COMPANY" shall mean Singlebrew Packaging
Company, a Colorado general partnership of which the Borrower holds
fifty-one percent (51%) of the partnership interests and Xxxxxxx X.
Xxxxxxxxxx, Inc., a Colorado corporation, holds forty-nine percent (49%) of
the partnership interests.
"SINGLEBREW PARTNERSHIP AGREEMENT" shall mean the Partnership
Agreement, dated as of April 28, 1989, by and between the Borrower and
Xxxxxxx X. Xxxxxxxxxx, Inc., governing the Singlebrew Packaging Company, as
the same may be restated, amended, modified or supplemented from time to time
in accordance with the terms thereof and hereof.
"SLOTTING FEE PAYMENTS" shall mean, for any applicable fiscal
period, any cash payments made by the Borrower, whether by cash or credit or
otherwise, during such period with respect to Slotting Fees.
"SLOTTING FEES" shall mean all fees payable by the Borrower or
its Subsidiaries under a contract with a customer for a designated amount of
shelf space of such customer for a designated length of time; PROVIDED that
each such contract is acceptable to the Agent in its sole and absolute
discretion.
"SOLVENCY AFFIDAVIT" shall mean the Affidavit of Solvency
dated as of the Effective Date executed and delivered by an Authorized
Officer of the Borrower in favor of the Agent, for the benefit of the Lenders.
"SOLVENT" shall mean, when used with respect to any Person,
that (i) the fair saleable value of its Property is in excess of the total
amount of its Liabilities (including for purposes of this definition all
liabilities, whether or not reflected on a balance sheet prepared in
accordance with Generally Accepted Accounting Principles, and whether direct
or indirect, fixed or contingent, secured or unsecured, disputed or
undisputed), (ii) it is able to pay its debts or obligations in the ordinary
course as they mature, and (iii) that Person has capital sufficient to carry
on its business and all businesses in which it is about to engage.
"SOLVENCY" shall have a correlative meaning.
"STOCK" shall mean all shares, options, general or limited
partnership interests or other equivalents (regardless of how designated),
participation or other
-24-
equivalents (however designated) of or in a corporation, partnership or
equivalent entity, whether voting or non-voting, including, without
limitation, common stock, warrants, preferred stock, convertible debentures
or any other debt or equity security, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more of all of
the foregoing.
"SUBORDINATED AGREEMENT" shall mean that certain Subordinated
Agreement, dated as of December 27, 1996, by and among the Agent and the
Subordinated Creditors, as the same may be amended, modified, restated or
supplemented from time to time in accordance with the terms thereof.
"SUBORDINATED CREDITORS" shall mean, collectively, Dilmun
Financial Services and BIB Holdings (Bermuda) Ltd. and their respective
successors and assigns.
"SUBORDINATED DEBT" of a Person shall mean any Indebtedness
Subordinated to the Obligations in a manner and form satisfactory to the
Agent and the Lenders, as to right and time of payment and as to any other
rights and remedies thereunder. Subordinated Debt shall include, without
limitation, the Indebtedness of the Borrower with respect to the Subordinated
Debt Documents.
"SUBORDINATED DEBT DOCUMENTS" shall mean the Subordinated
Note, the Additional Subordinated Notes, the BIB Warrant and the Subordinated
Note Agreement.
"SUBORDINATED NOTE" shall mean that certain senior
subordinated promissory note, dated December 27, 1996, issued by the Borrower
pursuant to the Subordinated Note Agreement in the original principal amount
of Fifteen Million Dollars ($15,000,000), as the same may be amended,
modified, restated or supplemented from time to time in accordance with the
terms of this Agreement and the Subordinated Agreement.
"SUBORDINATED NOTE AGREEMENT" shall mean that certain Senior
Subordinated Note Agreement, dated December 27, 1996, by and between the
Borrower and Dilmun Financial Services, as the same may be amended, modified,
restated or otherwise supplemented from time to time in accordance with the
terms of this Agreement and the Subordinated Agreement.
"SUBSIDIARY" of a Person shall mean (i) any corporation of
which more than fifty percent (50%) of the outstanding securities having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions is at any time of determination,
directly or indirectly, owned or controlled by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, trust, grantor trust, joint venture or
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similar business organization more than 50% of the equity or partnership
interests having ordinary voting power or power of direction of which shall
at any time of determination be so owned or controlled. Unless otherwise
expressly provided or the context requires otherwise, all references herein
to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"SUBSIDIARY SECURITY AGREEMENT" shall mean the Security
Agreement, dated as of the Effective Date, executed by Brothers Retail and
Maryland Club Foods in favor of the Agent, on behalf of itself and the
Lenders, as the same may be restated, extended, amended, modified or
supplemented from time to time.
"TAXES" shall mean taxes, liens, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of any Lender by the jurisdictions
under the laws of which such Lender is organized or any transfer taxes
imposed as a result of the transfer of any Notes.
"TERM" shall have the meaning ascribed thereto in SUBSECTION
2.8.
"TERM LOAN A" shall have the meaning ascribed thereto in
SUBSECTION 2.4.
"TERM LOAN A NOTES" shall have the meaning ascribed thereto in
SUBSECTION 2.4.
"TERM LOAN B" shall have the meaning ascribed thereto in
SUBSECTION 2.5.
"TERM LOAN B NOTES" shall have the meaning ascribed thereto in
SUBSECTION 2.5.
"TERM LOAN NOTES" shall mean the Term Loan A Notes and the
Term Loan B Notes.
"TERM LOANS" shall mean Term Loan A and Term Loan B,
collectively.
"TERMINATION DATE" shall mean the earlier of (i) the Maturity
Date, (ii) the effective date of termination of this Agreement pursuant to
SUBSECTION 2.8(b), and (iii) the date of termination of the Lenders'
obligation to make advances under the Revolving Loan pursuant to SUBSECTION
9.1.
"TERMINATION EVENT" shall mean: (a) the tax disqualification
of a Plan under Section 401(a) of the IRC; (b) a "Reportable Event" described
in Section 4043
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of ERISA and the regulations issued thereunder unless the thirty (30) day
notice to the PBGC has been waived for the event; (c) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a) (2) or
4068(f) of ERISA or was deemed such under Section 4062(e) of ERISA; (d) the
termination of a Pension Plan, the filing of a notice of intent to terminate
a Pension Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041(e) of ERISA; (e) the institution of proceedings to
terminate a Pension Plan by the PBGC; (f) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan; (g) the
partial or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan; (h) the imposition of a Lien pursuant to Section 412 of
the IRC or Section 302 of ERISA; (i) any event or condition which results in
the reorganization or insolvency of a Multiemployer Plan under Section 4241
or Section 4245 of ERISA, respectively; or (j) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A of
ERISA or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.
"TERMINATION FEE" shall have the meaning ascribed thereto in
SUBSECTION 2.8(b).
"TOTAL CAPITAL FUNDS" shall mean, for the applicable Fiscal
Quarter set forth in Section 8.21(b) hereof, determined for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (a) the amount which, in
conformity with GAAP, would constitute the "shareholders' equity" (or
"shareholders' deficit", as the case may be) of the Borrower and its
Subsidiaries on a consolidated basis for such Fiscal Quarter, PLUS (b) the
aggregate amount of Subordinated Debt of the Borrower and its Subsidiaries on
a consolidated basis for such Fiscal Quarter, PLUS (c) the aggregate amount
of all "debt acquisition costs") incurred by the Borrower in connection with,
or otherwise relating to, the transactions contemplated by this Agreement, as
determined in accordance with GAAP.
"TOTAL REVOLVING LOAN FACILITY" shall mean Twenty One Million
Five Hundred Thousand Dollars ($21,500,000), as such amount may be reduced,
if at all, from time to time in accordance with the terms of this Agreement.
"UNUSED LINE FEE" shall have the meaning ascribed thereto in
SUBSECTION 2.11.
"WARRANT STOCK" shall have the meaning ascribed thereto in the
GSCP Warrant Agreement.
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"WEEKLY REPORT" shall have the meaning ascribed thereto in
SUBSECTION 3.1.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings customarily
given them in accordance with Generally Accepted Accounting Principles. All
determinations of the book value of Inventory contemplated hereby shall be at
the lower of cost (on a first-in, first-out basis) or market.
1.3 OTHER TERMS DEFINED IN NEW YORK UNIFORM COMMERCIAL CODE. All
other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided in the Uniform
Commercial Code of the State of New York or the laws of any other state which
are required to be applied in connection with the issue of perfection or
non-perfection of Liens on the Collateral (the "Code") to the extent the same
are used or defined therein.
1.4 REFERENCES. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the defined terms.
Unless otherwise expressly provided or unless the context requires otherwise,
all references in this Agreement to Sections, subsections, Schedules and
Exhibits shall mean and refer to Sections, subsections, Schedules and
Exhibits of this Agreement. References to Persons include their respective
permitted successors and assigns or, in the case of a governmental authority,
Persons succeeding to the relevant functions of such Persons. All references
to statutes shall include all related regulations and shall include all
amendments of same and any successor or replacement statutes and regulations.
2. CREDIT.
2.1 REVOLVING CREDIT FACILITY AND REVOLVING LOANS.
(a) REVOLVING LOAN. Provided there does not then exist a Default
or an Event of Default, and subject to the terms and conditions herein set
forth, each Lender agrees severally (and not jointly) to make its Pro Rata
Share of advances to the Borrower, on a revolving credit basis (the
"Revolving Loan"), in an aggregate amount not in excess of the lesser of (i)
the Total Revolving Loan Facility, or (ii) the Current Asset Base ("Borrowing
Availability"). As used herein, the "Current Asset Base" shall mean an
amount equal to:
(1) Eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to Account
Debtors in connection therewith) then outstanding of existing Eligible
Accounts, less (x) the Dilution Reserve, and (y) such other reserves as the
Agent determines in accordance with its standard credit policies, PLUS
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(2) the lesser of (x) seventy percent (70%) of the book value of
the Borrower's then existing Eligible Inventory and (y) Ten Million Dollars
($10,000,000). The book value of Eligible Inventory shall be determined at
the lower of cost (determined on a first-in-first-out ("FIFO") basis) or
market, less (x) any reserve required by the Agent in its reasonable
discretion during the period from the Effective Date through the date that is
ninety-one (91) days after the Effective Date relating to Inventory that is
situated in the locations listed on Exhibit 2.1 hereto, and (y) such other
reserves as the Agent determines in accordance with its standard credit
policies, and PLUS
(3) (i) the lesser of (x) the sum of (A) sixty-five percent (65%)
of the Initial Slotting Fee Amount for the calendar month ending December 31,
1997 and for each of the seventeen (17) calendar months thereafter, the
Adjusted Initial Slotting Fee Amount for such calendar month, PLUS (B) with
respect to any calendar month during the Term, sixty-five percent (65%) of
the Aggregate Additional Slotting Fee Amount for such calendar month, and (y)
Five Million Dollars ($5,000,000), less (ii) a reserve in the amount of Two
Million Dollars ($2,000,000) during the period from the Effective Date
through and including the date upon which the Borrower performs the covenants
contained in SUBSECTION 7.12; PROVIDED, HOWEVER, that in the event that the
Borrower shall not have performed the covenants contained in SUBSECTION 7.12
prior to January 31, 1998, such reserve shall be in the amount of Three
Million Dollars ($3,000,000) during the period from January 31, 1998 through
and including the date upon which the Borrower performs the covenants
contained in SUBSECTION 7.12.
(b) ADVANCES. Until all amounts outstanding in respect of the
Revolving Loan shall become due and payable on the Termination Date, within
the foregoing limits and subject to the terms, provisions and limitations set
forth herein, the Borrower may from time to time borrow, repay and reborrow
under this SUBSECTION 2.1. Each Advance of the Revolving Loan shall be made
on notice by an Authorized Officer. The Agent shall be entitled to rely
upon, and shall be fully protected under this Agreement from any liability to
any Person in relying upon, any such notice believed by the Agent to be
genuine and to assume that each Person executing and delivering the same was
duly authorized by the Borrower. Each advance to the Borrower shall, on the
day of such advance, be deposited, in immediately available funds, in such
account as the Borrower may, from time to time, designate, unless otherwise
requested by the Borrower in writing.
(c) INTEREST. Subject to the terms and conditions of this
Agreement, interest on the Revolving Loans shall be payable monthly on the
first Business Day of each calendar month. Interest shall be computed by
multiplying the average closing daily balance in the Borrower's Loan Account
during the immediately preceding month by the Base Rate determined to be
applicable hereunder.
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2.2 MAXIMUM PRINCIPAL BALANCE OF REVOLVING LOAN. The aggregate
outstanding principal balance of the Revolving Loan shall at no time exceed
the Borrowing Availability. If at any time the principal balance of the
Revolving Loan exceeds the Borrowing Availability, the Borrower shall
immediately and without notice or demand of any kind repay the Revolving Loan
to the extent necessary to reduce the principal balance to an amount that is
equal to or less than the Borrowing Availability.
2.3 EVIDENCE OF REVOLVING LOAN INDEBTEDNESS. The advances by each
Lender constituting the Revolving Loan shall be evidenced by a promissory
note in favor of each respective Lender (collectively, the "Revolving Loan
Notes") in the amount of its Revolving Loan Commitment amended and restated
as of the Effective Date in the form attached as EXHIBIT 2.3. All of the
Borrower's Revolving Loan Obligations to the Lenders hereunder shall be
payable by the Borrower by application of the proceeds of all Accounts and
other Collateral in accordance with SUBSECTION 3.5, and shall be payable in
full upon the Termination Date, and the principal amount of such Revolving
Loan Obligations shall bear interest as hereinafter provided. Each advance
by the Lenders and each repayment of principal applicable to such advance
shall be reflected in the Borrower's Loan Account.
2.4 TERM LOAN A. (a) Immediately prior to the Effective Date,
the aggregate outstanding principal amount of "Term Loan A" (as defined in
the Existing Agreement) is Five Million Two Hundred and Fifty Thousand
Dollars ($5,250,000). As of the Effective Date, each Lender shall have its
Pro Rata Share of (i) Two Million Two Hundred Fifty Thousand Dollars
($2,250,000) of such original Term Loan A (the terms and conditions of which
are as so amended and restated herein and in the Term Loan A Notes as of the
Effective Date), evidenced by a promissory note, dated the Original Closing
Date and as amended and restated as of the Effective Date, executed by the
Borrower and payable to the order of such Lender, in the form attached as
EXHIBIT 2.4 (the "Term Loan A Notes") (such original Term Loan A, the terms
and conditions of which are as so amended and restated herein and in the Term
Loan A Notes as of the Effective Date, is herein referred to as the "Term
Loan A"); and (ii) with respect to the Three Million Dollar ($3,000,000)
balance of such original Term Loan A (the "Old Term Loan A Piece"), such loan
shall remain outstanding on the terms and conditions set forth in SUBSECTION
2.5(a) and evidenced by the Term Loan B Notes. As of the Effective Date, the
aggregate outstanding principal amount of Term Loan A will be Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000).
(b) The aggregate principal balance of Term Loan A shall be
payable to the Agent, for the benefit of the Lenders, in (i) seventeen (17)
equal, consecutive monthly installments of Thirty-Seven Thousand Five Hundred
Dollars ($37,500) each plus interest accrued on the Term Loan A, payable on
the first day of each calendar month, commencing January 1, 1998, and (ii)
one (1) installment of One Million Six Hundred
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Twelve Thousand Five Hundred Dollars ($1,612,500) plus accrued interest on
the Term Loan A Payable on the Maturity Date.
(c) In the event this Agreement is terminated by either the
Lenders or the Borrower for any reason whatsoever, Term Loan A shall become
due and payable on the effective date of such termination, notwithstanding
any provision to the contrary in the Term Loan A Notes or this Agreement.
(d) The Borrower shall pay to the Agent, for the benefit of the
Lenders, interest on the outstanding principal balance of Term Loan A at the
Base Rate.
2.5 TERM LOAN B. (a) Simultaneously with the initial advance of
the Revolving Loan hereunder on the Effective Date and subject to the terms
and conditions of this Agreement, each Lender (i) shall have its Pro Rata
Share of the Old Term Loan A Piece, except that, as of the Effective Date,
the terms and conditions of the Old Term Loan A Piece shall be amended and
restated as set forth herein and in the Term Loan B Notes, and (ii) agrees to
loan the Borrower its Pro Rata Share of the sum of One Million Two Hundred
and Fifty Thousand Dollars ($1,250,000) ("Additional Term Loan B"; the Old
Term Loan A Piece, the terms and conditions of which are as so amended herein
and in the Term Loan B Notes, and the Additional Term Loan B are herein
referred to as "Term Loan B"). Term Loan B shall be evidenced by a promissory
note dated the Original Closing Date and as amended and restated as of the
Effective Date, executed by the Borrower and payable to the order of such
Lender, in the form attached as EXHIBIT 2.5 (the "Term Loan B Notes")
(without limiting the foregoing, the Five Million Two Hundred Fifty Thousand
Dollars ($5,250,000) of Term Loan A outstanding immediately prior to the
Effective Date (which was evidenced by the "Term Loan A Notes (as defined in
the Existing Agreement)) will be evidenced as of the Effective Date by both
the Term Loan A Notes and the Term Loan B Notes (which are both dated the
Original Closing Date and amended and restated versions of the original Term
Loan A Notes)). As of the Effective Date, the aggregate outstanding
principal amount of Term Loan B will be Four Million Two Hundred Fifty
Thousand Dollars ($4,250,000).
(b) The aggregate principal amount of Term Loan B shall be payable
to the Agent, for the benefit of Lenders, in (i) seventeen (17) equal,
consecutive monthly installments of One Hundred Thousand Dollars ($100,000)
each, plus interest accrued on the Term Loan B payable on the first day of
each calendar month, commencing January 1, 1998, and (ii) one (1) installment
of Two Million Five Hundred Fifty Thousand Dollars ($2,550,000) plus accrued
interest on the Term Loan B payable on the Maturity Date.
(c) In the event this Agreement is terminated by either the
Lenders or the Borrower for any reason whatsoever, Term Loan B shall become
due and payable on
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the effective date of such termination, notwithstanding any provision to the
contrary in the Term Loan B Notes or this Agreement.
(d) The Borrower shall pay to the Agent, for the benefit of the
Lenders, interest on the outstanding principal balance of Term Loan B of the
rate of eleven and three-quarters percent (11.75%) per annum.
2.6 INTEREST IN GENERAL, ETC. (a) Notwithstanding anything to
the contrary contained herein, at no time shall the interest rate payable on
any Loan hereunder be less then nine percent (9%) per annum.
(b) Interest and all fees (other than prepayment fees) shall be
computed (on a daily basis) on the basis of a 360-day year for the actual
number of days elapsed. In computing interest on any Loan, the date of
funding of the Loan shall be included and the date of payment of such Loan
shall be excluded; PROVIDED that if a Loan is repaid on the same day on which
it is made, one day's interest shall be paid on that Loan. Each
determination by the Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.
(c) So long as an Event of Default shall have occurred and be
continuing, the Borrower shall pay to the Lenders interest from the date of
such Event of Default to and including the date of cure of such Event of
Default on the outstanding principal balance of the Obligations at the
Default Rate applicable to such Obligations.
(d) (i) Interest shall be due at the interest rate calculated in
accordance with SECTION 2.1, SECTION 2.4 above, SECTION 2.5 above or
SUBSECTION (a) of this SECTION 2.6, as applicable, or the Default Rate, as
provided herein, after as well as before demand, default and judgment
notwithstanding any judgment rate of interest provided for in any statute.
If any interest payment or other charge or fee payable hereunder exceeds the
maximum amount then permitted by applicable law, then to the extent permitted
by law and subject to the provisions of subparagraph (ii) of this SUBSECTION
2.6(d), the Borrower shall be obligated to pay the maximum amount then
permitted by applicable law and the Borrower shall continue to pay the
maximum amount from time to time permitted by applicable law until all such
interest payments and other charges and fees otherwise due hereunder (in the
absence of such restraint imposed by applicable law) have been paid in full.
(ii) It is the intention of the Agent, the Lenders and the
Borrower to comply with the laws of the State of New York, and
notwithstanding any provision to the contrary contained herein or in the
other Financing Agreements, the Borrower shall not be required to pay and the
Lenders shall not be permitted to collect any amount in excess of the maximum
amount of interest permitted by law ("Excess Interest"). If any
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Excess Interest is provided for or determined to have been provided for by a
court of competent jurisdiction in this Agreement or in any of the other
Financing Agreements, then in such event: (A) the provisions of this
SUBSECTION 2.6(d)(ii) shall govern and control; (B) neither the Borrower nor
any guarantor or endorser shall be obligated to pay any Excess Interest; (C)
any Excess Interest that any Lender may have received hereunder shall be, at
such Lender's option (1) applied as a credit against the outstanding
principal balance of the Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law), (2) refunded to the payor
thereof, or (3) any combination of the foregoing; (D) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed under applicable law, and this Agreement and the other Financing
Agreements shall be deemed to have been, and shall be, reformed and modified
to reflect such reduction; and (E) neither the Borrower nor any guarantor or
endorser shall have any action against any Lender for any damages arising out
of the payment or collection of any Excess Interest.
(e) Subject to the terms of this Agreement, Borrower shall deliver
to the Agent, with a copy to each Lender, a written or telegraph or facsimile
notice (effective upon receipt) in the form of EXHIBIT 2.6-1 hereto (a
"Borrowing Notice") not later than 1:00 p.m. (New York time) on the Funding
Date of any Revolving Loan, specifying:
(i) the Funding Date of each Revolving Loan, and
(ii) the aggregate amount of such Loan.
2.7 METHOD OF BORROWING; MANNER AND METHOD OF MAKING INTEREST AND
OTHER PAYMENTS. (a) Not later than 1:00 p.m. (New York time) on each
Funding Date, each Lender shall make available its Pro Rata Share of the Loan
or Loans in immediately available funds in New York, New York to the Agent at
its address specified pursuant to SUBSECTION 10.13. The Agent will make the
funds so received from the Lenders available to the Borrower in accordance
with SUBSECTION 2.1(b). Notwithstanding the foregoing provisions of this
SUBSECTION 2.7(a), to the extent that a Loan or portion thereof made by a
Lender matures or is to be repaid on the Funding Date of a requested Loan,
such Lender shall first apply the proceeds of the Loan it is then making to
the repayment of the maturing Loan or portion thereof.
(b) All payments by the Borrower of the Obligations shall be made
without deduction, defense, setoff or counterclaim and in same day funds. In
its sole discretion, the Agent may designate interest and other amounts
payable hereunder (other than the principal balance of the Revolving Loan) to
be paid by causing such amounts to be added to the principal balance of the
Revolving Loan, all as set forth on the Agent's books and records. The
Borrower hereby authorizes and directs the Lenders, at the option of the
Required Lenders, to make advances in the Revolving Loan by appropriate
debits
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to the Loan Account for all payments which the Borrower is required to make
to the Lenders under this Agreement and the other Financing Agreements.
Unless otherwise directed by the Agent, all payments to the Lenders hereunder
shall be made by delivery thereof to the Agent at its address set forth in
SUBSECTION 10.13 or by delivery to the Agent for deposit in the Blocked
Accounts of all proceeds of Accounts or other Collateral in accordance with
SUBSECTION 3.5. If the Agent elects to xxxx the Borrower for any amount due
hereunder, such amount shall be immediately due and payable with interest
thereon as provided herein. Solely for the purpose of calculating interest
earned by each Lender with respect to the Revolving Loan, any check, draft or
similar item of payment by or for the account of the Borrower delivered to
the Agent or deposited in a Blocked Account in accordance with SUBSECTION 3.5
shall be applied by the Agent on account of the Borrower's Revolving Loan
Obligations on the first Business Day after the Agent has received
immediately available funds as a result of the deposit thereof in accordance
with SUBSECTION 3.5. Immediately available funds received by the Agent after
2:00 p.m. (New York time) shall be deemed to have been received on the
following Business Day.
(c) (i) Unless the Borrower or a Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment
to the Agent of (A) in the case of a Lender, such Lender's Pro Rata Share of
the proceeds of a Loan or (B) in the case of the Borrower, a payment of
principal, interest, fees or other Obligations to the Agent for the account
of the Lenders, that it does not intend to make such payment, the Agent may
assume that such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If the Agent shall have so made
such funds available, then if the Borrower or such Lender, as the case may
be, has not in fact made such payment to the Agent, the recipient of such
payment shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to
(x) in the case of payment by a Lender, the Federal Funds Rate for such day
(as determined by the Agent) or (y) in the case of payment by the Borrower,
the interest rate applicable to the relevant Loan.
(ii) Nothing contained in this SUBSECTION 2.7(c) will be
deemed to relieve a Lender of its obligation to fulfill its Commitments or to
prejudice any rights the Agent or the Borrower may have against such Lender
as a result of any default by such Lender under this Agreement.
(iii) If the Agent determines at any time that any amount
received by the Agent under this Agreement must be returned to the Borrower
or paid to any other Person pursuant to any insolvency law or otherwise,
then, notwithstanding any other term or condition of this Agreement, the
Agent will not be required to distribute any portion
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thereof to any Lender. In addition, each Lender will repay to the Agent on
demand any portion of such amount that the Agent has distributed to such
Lender.
2.8 TERM OF THIS AGREEMENT; TERMINATION. (a) Subject to
subsection (b) of this Section 2.8, this Agreement shall be effective from
the Effective Date until the Maturity Date (the "Term"); PROVIDED, HOWEVER,
that all of the Agent's and each Lender's rights and remedies under this
Agreement shall survive such termination until all of the Obligations have
been finally and indefeasibly paid in full in cash.
(b) This Agreement may be terminated by the Borrower prior to the
Maturity Date upon not less than thirty (30) days' prior written notice to
the Agent on the date specified on such notice, which notice shall be
irrevocable. Upon the effective date of such termination, (i) all of the
Obligations shall become immediately due and payable without notice or
demand, notwithstanding any terms contained herein or in any Note to the
contrary, and (ii) the Borrower shall pay to the Agent, as liquidated damages
and compensation for the costs of being prepared to make funds available to
the Borrower hereunder, a fee (the "Termination Fee") in an amount equal to
the greater of (x) the total interest paid by the Borrower hereunder during
the six-month period immediately preceding the effective date of such
termination and (y) Three Hundred Thousand Dollars ($300,000), and (iii)
without limiting SUBSECTION 2.9(b) hereof, to the extent any of the Term
Loans are outstanding at the time of the effectiveness of such termination, a
Prepayment Fee calculated in accordance WITH SUBSECTION 2.9(b) hereof and
based on the aggregate amount of the Term Loans then outstanding; PROVIDED,
HOWEVER, that no Termination Fee or Prepayment Fee shall be payable by the
Borrower in the event that any such termination occurs as a result of a Sale
Event.
(c) Notwithstanding any termination, until all of the Obligations
shall have been indefeasibly paid in full in cash all of the Agent's and the
Lenders' rights and remedies under the Financing Agreements shall survive
such termination and, notwithstanding such payment, for so long as any
pending or threatened action which could result in a claim by the Agent or
any Lender under SUBSECTION 6.26 or 7.10 exists hereunder, the Agent, on
behalf of the Lenders, shall be entitled to retain Liens upon all existing
and future Collateral, and the Borrower shall continue to remit collections
of Accounts and proceeds as provided herein.
2.9 PREPAYMENTS.
(a) TERM LOAN PREPAYMENT. Subject to the payment of the
Prepayment Fee as set forth in SUBSECTION 2.9(b), upon not less than thirty
(30) days prior written notice to the Agent specifying the date of
prepayment, the Borrower may prepay the entire principal amount of the Term
Loans or, in a minimum amount of Five Hundred Thousand Dollars ($500,000) or
any integral multiple of One Hundred Thousand Dollars
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($100,000) if in excess thereof, any portion of the Term Loans by paying the
principal amount to be prepaid, together with all unpaid accrued interest
thereon to the date of prepayment. All prepayments made by the Borrower
under this SUBSECTION 2.9(a) shall be made and applied to scheduled
installments of principal due on the Term Loans in the inverse order of the
maturities thereof in the following priority: (i) so long as Term Loan A
shall be outstanding, to Term Loan A until paid in full and (ii) after Term
Loan A has been paid in full, to Term Loan B.
(b) PREPAYMENT FEE. If the Borrower shall prepay all or any
portion of the Term Loan A or the Term Loan B prior to the Maturity Date, the
Borrower shall pay to the Agent as liquidated damages and compensation for
the costs of being prepared to make funds available to the Borrower
hereunder, a fee (the "Prepayment Fee") in an amount equal to five percent
(5%) of the aggregate amount prepaid.
(c) PRO RATA REDUCTION. Any prepayment of the Term Loans shall
ratably reduce the amounts outstanding under the applicable Term Loan Notes
of each Lender.
(d) TOTAL REVOLVING LOAN FACILITY. The Borrower shall not be
entitled to permanently reduce the Total Revolving Loan Facility in whole or
in part, except in connection with the termination of this Agreement pursuant
to SUBSECTION 2.8(b) hereof.
2.10 ACQUISITION FEE. On the Effective Date, the Borrower shall
pay to the Agent a fee (the "Acquisition Fee") in the amount of Two Hundred
Eighty Thousand Dollars ($280,000), which shall be fully earned and
non-refundable as of the date such fee is payable.
2.11 REVOLVING LOAN UNUSED LINE FEE. From and after the Effective
Date, the Borrower shall pay to the Agent, for the ratable benefit of the
Lenders, a fee (the "Unused Line Fee") in an amount equal to the Total
Revolving Loan Facility LESS the average daily closing balance of the
Revolving Loan advanced to the Borrower during the preceding month (or
shorter period with respect to the period commencing with the Effective Date
or the period ending with the Termination Date) MULTIPLIED by one-half of one
percent (.50%) per annum. The Unused Line Fee shall be payable in arrears on
the first day of each calendar month following the Effective Date commencing
January 1, 1998 and at maturity, whether on the termination of this Agreement
or earlier.
2.12 LINE FEE. On the Effective Date, the Borrower shall pay to
the Agent an initial Line Fee in the amount of Two Hundred Eighty Thousand
($280,000), which shall be fully earned and non-refundable as of the date
such fee is payable, and, commencing on the first anniversary of the
Effective Date, the Borrower shall pay to the Agent additional Line Fees in
the amount of Twenty Three Thousand Three Hundred
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Thirty-Three Dollars and Thirty-Seven Cents ($23,333.37) on the first day of
each calendar month commencing January 1, 1999, which shall be fully earned
and non-refundable as of the date such fee is payable.
2.13 SLOTTING LINE FEE. The Borrower shall pay to the Agent a
monthly Slotting Line Fee in the amount of Five Thousand Dollars ($5,000),
which shall be fully earned and non-refundable as of the date such fee is
payable. The initial Slotting Line Fee shall be payable on the Effective Date
and thereafter the Slotting Line Fee shall be payable on the first day of
each calendar month following the Effective Date commencing January 1, 1998.
2.14 OTHER FEES, COSTS AND EXPENSES. (a) LOAN SERVICING FEE.
The Borrower shall pay to the Agent a monthly Loan Servicing Fee in the
amount of Three Thousand Five Hundred Dollars ($3,500), which shall be fully
earned as of the date such fee is payable. The initial Loan Servicing Fee
shall be payable on the Effective Date and thereafter the Loan Servicing Fee
shall be payable on the first day of each calendar month following the
Effective Date commencing January 1, 1998.
(b) FINANCIAL ANALYSIS FEE. The Borrower shall pay to the Agent,
upon demand, a Financial Analysis Fee in the amount of Six Hundred and Fifty
Dollars ($650) per man day, plus all reasonable fees and expenses incurred by
the Agent or any Lender, in respect of any financial analysis performed by
the Agent or any Lender in connection herewith.
(c) APPRAISAL FEE. The Borrower shall pay to the Agent, upon
demand, an Appraisal Fee in the amount of One Thousand Dollars ($1,000) per
man day, plus all reasonable fees and expenses incurred by the Agent, in
respect of any appraisals performed by the Agent in connection herewith.
(d) LEGAL LOAN DOCUMENTATION REVIEW FEE. The Borrower shall pay
to the Agent an annual Legal Loan Documentation Review Fee in the amount of
One Thousand Dollars ($1,000), which shall be fully earned and non-refundable
as of the date such fee is payable. The initial Legal Loan Documentation Fee
shall be payable on the Effective Date and thereafter the Legal Loan
Documentation Review Fee shall be payable on each anniversary of the
Effective Date.
(e) FEES, COSTS AND EXPENSES IN GENERAL. The Borrower shall pay
to the Agent, upon demand, all fees, costs and expenses incurred by the Agent
in connection with any matters contemplated by or arising out of this
Agreement or any other Financing Agreement (which fees, costs and expenses
shall be part of the Obligations and secured by the Collateral) including,
without limitation: (i) in verifying or inspecting the Accounts or the
Inventory or the Borrower's records with respect thereto; (ii) in connection
with
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opening and maintaining the Blocked Accounts and depositing for collection
any check or item of payment received by and/or delivered to any Collecting
Bank or the Agent or any Lender on account of the Obligations; (iii) arising
out of the Agent's indemnification of any Collecting Bank against damages
incurred by such Collecting Bank in the operation of a Blocked Account; (iv)
in connection with the Agent's forwarding to the Borrower the proceeds of
loans or advances hereunder including, without limitation, transfer fees; (v)
in connection with the negotiation, preparation, review, execution, delivery
and ongoing administration of the Financing Agreements and all amendments,
modifications and waivers with respect hereto or with respect to the other
Financing Agreements including, without limitation, search fees, appraisal
fees and expenses, title insurance policy fees, costs and expenses; filing
and recording fees; fees, costs and expenses of the Agent's attorneys and
paralegals and all Taxes payable in connection with this Agreement or the
other Financing Agreements, whether such fees, costs and expenses are
incurred prior to, on or after the Effective Date; (vi) in connection with
any documentation, negotiation, review or closing with respect to any
subordinated indebtedness, including, without limitation, the fees, costs and
expenses of the Agent's attorneys and paralegals; and (vii) arising from the
Agent's employment of counsel or otherwise in connection with protecting,
perfecting or preserving the Agent's Liens in the Collateral in accordace
with SUBSECTION 10.2 or in connection with any refinancing or restructuring
of the credit arrangements provided under the Financing Agreements, whether
in the nature of a "workout" or in connection with any insolvency or
bankruptcy proceedings, or in connection with any other matters contemplated
by or arising out of this Agreement or the other Financing Agreements. Any
portion of the foregoing fees, costs and expenses which remains unpaid ten
(10) days following the Agent's statement and request for payment thereof
shall bear interest from the date of such statement and request for payment
at the Default Rate.
2.15 [Intentionally Omitted]
2.16 LOAN ACCOUNT. The Agent shall maintain a loan account ("Loan
Account") on its books in which shall be recorded (i) all Loans and advances
made to the Borrower pursuant to this Agreement, (ii) all payments made by
the Borrower on all such Loans and advances and (iii) all other appropriate
debits and credits as provided in this Agreement including, without
limitation, all fees, charges, expenses and interest. All entries in the
Loan Account shall be made in accordance with the Agent's customary
accounting practices as in effect from time to time. The Borrower shall pay
the Obligations reflected as owing by it under the Loan Account and all other
Obligations hereunder as such amounts become due or are declared due pursuant
to the terms of this Agreement. So long as a Default or an Event of Default
shall have occurred and be continuing, the Borrower irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by the Agent or any Lender from or on behalf of the
Borrower, and the Borrower does hereby irrevocably agree that each
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Lender shall have the continuing exclusive right to apply and to reapply any
and all payments received at any time or times hereafter against the
Obligations in such manner as such Lender may deem advisable notwithstanding
any previous entry by the Agent upon the Loan Account or by the Agent or such
Lender on any other books and records.
Notwithstanding a termination of this Agreement in accordance with
SUBSECTION 2.8, 9.1 or otherwise, the Borrower expressly agrees that to the
extent the Borrower makes a payment or payments and such payment or payments,
or any part thereof, are subsequently invalidated, declared to be fraudulent
or preferential, set aside or are required to be repaid to a trustee,
receiver, or any other Person under any bankruptcy law, other state or
federal law, common law or equitable cause, then to the extent of such
payment or repayment, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if said
payment or payments had not been made.
2.17 STATEMENTS. All advances to the Borrower, and all other
debits and credits provided for in this Agreement, shall be evidenced by
entries made by the Agent in the Loan Account and in the Agent's books and
records showing the date, amount and reason for each such debit or credit.
Until such time as the Agent shall have rendered to the Borrower written
statements of account as provided herein, the balance in the Borrower's Loan
Account, as set forth on the Agent's most recent printout or other written
statement, shall be rebuttably presumptive evidence of the amounts due and
owing to each Lender by the Borrower; PROVIDED that any failure to so record
or any error in so recording shall not limit or otherwise affect the
Borrower's obligations to pay the Obligations. Not more than twenty (20)
days after the last day of each calendar month, the Agent shall render to the
Borrower a statement setting forth the principal balance of the Borrower's
Loan Account and the calculation of interest due thereon. Each such
statement shall be subject to subsequent adjustment by the Agent but shall,
absent manifest errors or omissions, be presumed correct and binding upon the
Borrower, and shall constitute an account stated unless, within thirty (30)
days after receipt of any statement from the Agent, the Borrower shall
deliver to the Agent by registered or certified mail written objection
thereto specifying the error or errors, if any, contained in such statement.
In the absence of a written objection delivered to the Agent as set forth in
this SUBSECTION 2.17, the Agent's statement of the Borrower's Loan Account
shall be conclusive evidence of the amount of the Obligations.
2.18 PAYMENT DATES. Any payment due hereunder on any day other
than a Business Day shall be due on the next succeeding Business Day, and if
such payment shall bear interest in accordance herewith, interest shall
accrue to the date of payment.
2.19 TAXES; CHANGES IN LAW.
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(a) Any and all payments or reimbursements made hereunder or under
the Notes shall be made free and clear of and without deduction for any and
all present and future Taxes. If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Agent
or any Lender, then (i) the sum payable hereunder shall be increased as may
be necessary so that, after making all required deductions, the Agent or such
Lender receives an amount equal to the sum it would have received had no such
deductions been made and (ii) the Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with applicable law.
The Borrower hereby indemnifies and agrees to hold the Agent and each Lender
harmless from and against all Taxes.
(b) In the event that, subsequent to the Effective Date, or, in
the case of a Participant assigned an interest in or sold a participation in
the Loans pursuant to SUBSECTION 11.1, subsequent to the date of such
assignment or sale, (a) any change in any existing law, regulation, rule,
guideline, treaty or directive or in the interpretation or application
thereof (including, without limitation, any change resulting from the
implementation of risk based capital guidelines), (b) any new law,
regulation, rule, guideline, treaty or directive enacted or any
interpretation or application thereof or (c) compliance by any Lender with
any request or directive (whether or not having the force of law and
including by way of withdrawal or termination of any previously available
exemption) from any central bank, governmental authority, agency or
instrumentality (including, without limitation, any request or directive
regarding capital adequacy):
(i) does or shall subject any Lender or such Participant to any Taxes
with respect to this Agreement, the other Financing Agreements or any Loans
made hereunder, or change the basis of taxation of payments to any Lender
or such Participant of principal, commitment, fees, interest or any other
amount payable hereunder (except for changes in the rate of tax on the
overall net income of such Lender or such Participant); or
(ii) does or shall impose on any Lender or such Participant any other
condition or increased cost in connection with the transactions
contemplated hereby or participation herein; or
(iii) affects the amount of any reserve, special deposit, capital
adequacy, assessment or similar charge required or expected to be
maintained by any Lender or such Participant or any corporation controlling
such Lender or such Participant and such Lender or such Participant
determines that such amount required or expected is increased by or based
upon the existence of this Agreement or its Loans hereunder,
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and the result of any of the foregoing is to increase the cost to such Lender
or such Participant of making or continuing any Loan hereunder or selling any
participation therein or assigning any of its Commitments to make Loans
hereunder, as the case may be, or to reduce any amount receivable thereunder,
then, in any such case, the Borrower shall within fifteen (15) days after
written demand pay to such Lender or such Participant any additional amounts
which are necessary to compensate such Lender or such Participant for such
additional cost or reduced amount receivable which such Lender or such
Participant reasonably deems to be material as determined by such Lender or
such Participant with respect to this Agreement, the other Financing
Agreements or the Loans made hereunder. If such Lender or Participant
becomes entitled to claim any additional amounts pursuant to this SUBSECTION
2.19, it shall promptly notify the Borrower in writing of the event by reason
of which such Lender or Participant has become so entitled. A certificate as
to any additional amounts payable pursuant to this SUBSECTION 2.19 submitted
by such Lender or Participant to the Borrower shall be presumed correct in
the absence of manifest error.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
3.1 REPORTS REGARDING COLLATERAL. The Borrower shall submit to
the Agent and each Lender, not later than the fourth (4th) day of each week,
a weekly report ("Weekly Report"), accompanied by a certificate in the form
attached as EXHIBIT 3.1-1, which shall be signed by an Authorized Officer.
The Weekly Report (including the initial Weekly Report) shall be in form and
substance satisfactory to the Required Lenders and shall include, as of the
last Business Day of the preceding week (i) an Accounts Trial Balance, (ii) a
payables report in a form satisfactory to the Agent, (iii) a written report
reflecting activity for the period since the date of the preceding Weekly
Report describing, in form and substance satisfactory to the Agent, all
Eligible Accounts and ineligible Accounts created or acquired by the Borrower
subsequent to the immediately preceding Weekly Report, and (iv) from and
after the establishment by the Borrower of the Perpetual Inventory System, a
schedule of Inventory owned by the Borrower and in the Borrower's possession
valued at the lower of cost or market on a FIFO basis. In addition, the
Borrower shall provide the Agent and each Lender, not later than the
twentieth (20th) day of each month, a monthly report ("Monthly Report"),
accompanied by a certificate in the form attached as Exhibit 3.1-2, which
shall be signed by an Authorized Officer. The Monthly Report shall be in
form and substance satisfactory to the Agent and shall include, as of the
last Business Day of the preceding month (and with respect to the initial
Monthly Report as of a date not more than two (2) Business Days prior to the
Effective Date), a schedule of Inventory owned by the Borrower and in the
Borrower's possession valued at the lower of cost or market on a FIFO basis.
The Borrower shall also provide in all Monthly Reports a written report
regarding the Borrower's most recent monthly physical inventory count in form
and substance satisfactory to the Agent including, without limitation, all
backup materials related
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thereto; PROVIDED that, from and after the establishment by the Borrower of
the Perpetual Inventory System, the Lenders reserve the right to require the
Borrower to provide more detailed information on the Inventory. The Borrower
shall furnish copies of any other reports or information, in a form and with
such specificity as is satisfactory to the Required Lenders, concerning
Accounts included, described or referred to in the Monthly Reports and any
other documents in connection therewith requested by the Required Lenders
including, without limitation, but only if specifically requested by the
Required Lenders, copies of all invoices prepared in connection with such
Accounts. The Monthly Reports shall also include, in form satisfactory to
the Agent all credit memoranda issued by the Borrower (the Borrower shall
issue such credit memoranda in accordance with its current practice and
without delay, but in any event within three (3) Business Days of receipt of
notice of a dispute with respect to an Account) and information on all
amounts collected by the Borrower on Accounts subsequent to the immediately
preceding Monthly Report. The Weekly Reports and the Monthly Reports shall
contain such additional information as the Agent may require.
3.2 ELIGIBLE ACCOUNTS. "Eligible Accounts" shall mean all
Accounts other than the following: (i) Accounts which remain unpaid as of
ninety (90) days after the date of the original invoice with respect thereto;
(ii) all Accounts owing by a single Account Debtor, including a currently
scheduled Account, if fifty percent (50%) or more of the balance owing by
such Account Debtor is ineligible by reason of the criterion set forth in
clause (i) of this SUBSECTION 3.2; (iii) Accounts with respect to which the
Account Debtor is an Affiliate of the Borrower or a director, officer or
employee of the Borrower or its Affiliates; (iv) Accounts with respect to
which the Account Debtor is the United States of America or any department,
agency or instrumentality or prime contractor thereof (other than military
commissaries) unless the Borrower has complied in a manner satisfactory to
the Agent with the Federal Assignment of Claims Act of 1940, as amended,
relative to the assignment of such Accounts; (v) Accounts with respect to
which the Account Debtor is not a resident of the United States unless the
Account Debtor has (A) supplied the Borrower with an irrevocable letter of
credit, issued by a financial institution satisfactory to the Required
Lenders, or (B) obtained foreign credit insurance, in each case in an amount
sufficient to cover such Account in form and substance satisfactory to the
Agent and without right of setoff and the Account is payable in full in
United States dollars; (vi) Accounts arising with respect to goods which have
not been shipped and delivered to and accepted as satisfactory by the Account
Debtor or arising with respect to services which have not been fully
performed and accepted as satisfactory by the Account Debtor; (vii) Accounts
for which the prospect of payment in full or performance in a timely manner
by the Account Debtor is or is likely to become impaired as determined by the
Agent in the exercise of its discretion; (viii) Accounts which are not
invoiced (and dated as of the date of such invoice) and sent to the Account
Debtor within five (5) days after delivery of the underlying goods to or
performance of the underlying
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services for the Account Debtor; (ix) Accounts with respect to which the
Agent, on behalf of the Lenders, does not have a first and valid fully
perfected Lien, free and clear of any other Lien whatsoever; (x) Accounts
with respect to which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding or has made an assignment for the benefit of
creditors or whose assets have been conveyed to a receiver or trustee; (xi)
Accounts with respect to which the Account Debtor's obligation to pay the
Account is conditional upon the Account Debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
guaranteed sale, xxxx-and-hold, sale-or-return, sale on approval (except with
respect to Accounts in connection with which Account Debtors are entitled to
return Inventory solely on the basis of the quality of such Inventory) or
consignment basis; (xii) Accounts to the extent that the Account Debtor's
indebtedness to the Borrower exceeds a credit limit determined by the Agent
in the Agent's discretion following ten (10) Business Days' prior written
notice of such credit limit from the Agent to the Borrower; (xiii) Accounts
with respect to which any disclosure is required in accordance with
SUBSECTION 3.3; (xv) contra Accounts to the extent of the amount of the
accounts payable (including, without limitation, accrued Slotting Fee
Payments) owed by the Borrower to the Account Debtor; (xvi) Accounts with
respect to which the Account Debtor is located in any state denying creditors
access to its courts in the absence of a Notice of Business Activities Report
or other similar filing unless the Borrower has either qualified as a foreign
corporation authorized to transact business in such state or has filed a
Notice of Business Activities Report or similar filing with the applicable
state agency in such state for the then current year; (xvii) Accounts
evidenced by chattel paper or any instrument of any kind, to the extent
possession of such chattel paper or instrument is not granted to the Agent,
for the benefit of the Lenders; (xviii) Accounts which are the subject of a
dispute between the Borrower and an Account Debtor; and (xix) Accounts which
the Agent determines in good faith to be unacceptable. In the event that a
previously scheduled Eligible Account ceases to be an Eligible Account under
the above described criteria, the Borrower shall notify the Agent thereof.
3.3 ACCOUNT WARRANTIES. With respect to Accounts scheduled,
listed or referred to on the initial Accounts Trial Balance (included in the
initial Weekly Report in form and substance satisfactory to the Agent) or on any
subsequent Accounts Trial Balance or Monthly Report, the Borrower represents and
warrants to the Agent and each Lender that, except as disclosed in the
applicable Accounts Trial Balance or Monthly Report: (i) the Accounts represent
bona fide sales of Inventory or the provision of services to customers in the
ordinary course of business completed in accordance with the terms and
provisions contained in the documents available to the Agent and each Lender
with respect thereto and are not evidenced by a judgment, instrument or chattel
paper; (ii) the amounts shown on the applicable Accounts Trial Balance and on
the Borrower's books and records and all invoices and statements which may be
delivered to the Agent or any Lender with respect thereto are actually and
absolutely owing to the Borrower and are
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not in any way contingent; (iii) no payments have been or shall be made
thereon except payments immediately delivered to a Blocked Account pursuant
to this Agreement; (iv) there are no setoffs, claims or disputes existing or
asserted with respect thereto and the Borrower has not made any agreement
with any Account Debtor for any deduction therefrom except a discount or
allowance allowed by the Borrower in the ordinary course of its business for
prompt payment and which discount and allowance is reflected in the
calculation of the face amount of each invoice related to such account; (v)
to the best of the Borrower's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or
tend to reduce the amount payable thereunder as shown on the respective
Accounts Trial Balances or Monthly Reports, the Borrower's books and records
and all invoices and statements delivered to the Agent or any Lender with
respect thereto; (vi) to the best of the Borrower's knowledge, all Account
Debtors have the capacity to contract and are solvent; (vii) the Borrower has
received no notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any material adverse change
in such Account Debtor's financial condition; (viii) the Borrower has no
knowledge that any Account Debtor is unable generally to pay its debts as
they become due; (ix) the Accounts do not arise from the sale of Inventory
produced in violation of the Fair Labor Standards Act so as to be subject to
the so-called "hot goods" provision contained in Title 29 U.S.C., Section
215(a)(1); (x) the services furnished and/or goods sold giving rise thereto
are not subject to any Lien except that of the Agent; (xi) the goods, the
sale of which gave rise to the Account, are not, and will not at the time of
sale thereof, subject to any Lien except that of the Agent, for the benefit
of the Lenders; (xii) the Accounts have not been pledged or sold to any
Person or otherwise encumbered and the Borrower is the owner of the Accounts
free and clear of any Lien except that of the Agent, for the benefit of the
Lenders; and (xiii) with respect to Accounts for which the Account Debtor is
located in any state denying creditors access to its courts in the absence of
a Notice of Business Activities Report or other similar filing, the Borrower
has either qualified as a foreign corporation authorized to transact business
in such state or has filed all required Notice of Business Activities Reports
or comparable filings with the applicable governmental agency or authority.
3.4 VERIFICATION OF ACCOUNTS. The Agent shall have the right, at
any time or times hereafter, in the name of the Borrower or a nominee of the
Agent, or during the pendency of an Event of Default, in the Agent's name, to
verify the validity, amount or any other matter relating to any Account, by
mail, telephone, or in person.
3.5 COLLECTION OF ACCOUNTS AND PAYMENTS. Prior to December 19,
1997, the Borrower shall establish lock box accounts (the "Blocked Accounts")
in the Borrower's name with such banks as are acceptable to the Agent
("Collecting Banks") and enter into blocked account agreements among the
Borrower, the Agent and each Collecting Bank (the "Blocked Account
Agreements"). All Account Debtors shall
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directly remit all payments on Accounts into a Blocked Account and the
Borrower will immediately deposit all cash payments made for Inventory or
other cash payments constituting proceeds of Collateral into a Blocked
Account in the identical form in which such payment was made, whether by cash
or check. On or prior to the Effective Date, the Borrower shall notify in
writing each of the existing Account Debtors of the name and address of the
Blocked Account to which each such Account Debtor shall be directed to remit
all payments on its Accounts. In addition, the Agent shall, on or prior to
the Effective Date, establish a depository account at each Collecting Bank or
at a centrally located bank (the "Depository Account"). Each Blocked Account
Agreement shall provide, among other things, that (i) all items of payment
deposited in each Blocked Account are held by such Collecting Bank as agent
and bailee-in-possession for the Agent, (ii) the Collecting Bank has no
rights of setoff or recoupment or any other claim against such Blocked
Account, other than for payment of its service fees or other charges directly
related to the administration of such Blocked Account and for returned checks
or other items of payment, (iii) unless and until the Agent shall have given
such Collecting Bank a Redirection Notice (as such term is defined below),
such Collecting Bank agrees to forward all amounts received in such Blocked
Account to such accounts or for such uses as the Borrower may from time to
time instruct, and (iv) at all times following delivery of notice by the
Agent to such Collecting Bank to do so (a "Redirection Notice"), such
Collecting Bank agrees to immediately forward all amounts received in such
Blocked Account to the Depository Account through daily sweeps from the
Blocked Account into the Depository Account in accordance with the terms of
the applicable Blocked Account Agreement. The Agent shall not be entitled to
deliver a Redirection Notice to any Collecting Bank until the occurrence of a
Default or an Event of Default. The Borrower hereby agrees that all payments
received by the Agent, whether by cash, check, wire transfer or any other
instrument, made to such Blocked Accounts or otherwise received by the Agent
and whether on the Accounts or as proceeds of other Collateral or otherwise
will be the sole and exclusive property of the Agent, for the benefit of the
Lenders. The Borrower shall irrevocably instruct each Collecting Bank that,
upon receipt of a Redirection Notice, each Collecting Bank shall promptly
transfer all payments or deposits to the Blocked Accounts into the Agent's
Depository Account in accordance with the terms of the applicable Blocked
Account Agreement. The Borrower, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with the Borrower, shall,
acting as trustee for the Agent, receive, as the sole and exclusive property
of the Agent, for the benefit of the Lenders, any monies, checks, notes,
drafts or any other payments relating to and/or proceeds of Accounts or other
Collateral which come into the possession or under the control of the
Borrower or any Affiliates, employees, agents or other Persons acting for or
in concert with the Borrower, and immediately upon receipt thereof, the
Borrower or such Persons shall remit the same or cause the same to be
deposited, in kind, into a Blocked Account or, at the direction of the
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Agent, shall remit the same, or cause the same to be remitted, in kind, to
the Agent at the Agent's address set forth in SUBSECTION 10.13.
3.6 APPOINTMENT OF THE AGENT AS BORROWER'S ATTORNEY-IN-FACT. The
Borrower hereby irrevocably designates, makes, constitutes and appoints the
Agent (and all Persons designated by the Agent) the Borrower's true and
lawful agent and attorney-in-fact (which appointment shall for all purposes
be deemed to be coupled with an interest and shall be irrevocable for so long
as any Obligations are outstanding), and authorizes the Agent, in the
Borrower's or the Agent's name, without notice to the Borrower, to: (A)
following the occurrence of a Default or an Event of Default (i) demand
payment of Accounts, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of the Borrower's rights and remedies with
respect to the collection of the Collateral or any legal proceedings brought
to collect an Account, (iv) sell or assign any Collateral upon such terms,
for such amount and at such time or times as the Agent deems advisable, (v)
settle, adjust, compromise, extend or renew any Collateral, (vi) discharge
and release any Account, (vii) prepare, file and sign the Borrower's name on
any proof of claim in bankruptcy or other similar document against an Account
Debtor or on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with any of the Collateral, (viii) notify the
postal authorities of any change of the address for delivery of the
Borrower's mail to an address designated by the Agent, and receive, open and
dispose of all mail addressed to the Borrower, (ix) take control in any
manner of any item of payment or proceeds of any Account, (x) have access to
any lockbox or postal box into which the Borrower's mail is deposited, (xi)
endorse the Borrower's name upon any items of payment or proceeds thereof and
deposit the same in the Agent's account on account of the Borrower's
Obligations, (xii) endorse the Borrower's name upon any chattel paper,
document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to any Account or any goods pertaining
thereto, and (xiii) do all acts and things which are necessary, in the
Agent's sole discretion, to fulfill the Borrower's Obligations under the
Financing Agreements; and (B) at any time, to (i) execute in the Borrower's
nam and on the Borrower's behalf any financing statements or amendments
thereto, (ii) endorse the Borrower's name on any verification of Accounts and
notices thereof to Account Debtors, (iii) use the information recorded or
contained in any data processing equipment and computer hardware and software
relating to the Accounts and any other Collateral, and (iv) communicate with
the Borrower's independent certified public accountants.
3.7 ACCOUNT RECORDS. The Borrower shall at all times
hereafter maintain a record of Accounts, keeping correct and accurate records
itemizing and describing the names and addresses of Account Debtors, relevant
invoice numbers, shipping dates and due dates, collection histories, and
Accounts agings, all of which records shall be available during the Borrower's
usual business hours at the request of any of the Agent's officers, employees or
agents. The Borrower shall cooperate fully with the Agent and its
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agents who shall have the right at any time or times to inspect the Accounts
and the records with respect thereto. The Borrower shall conduct a review of
its bad debt reserves and collection histories at least once each year and
promptly following such review shall supply the Agent with a report in a form
and with such specificity as may be satisfactory to the Agent concerning such
review of the Accounts.
3.8 INSTRUMENTS AND CHATTEL PAPER. Upon the request of the
Required Lenders and at all times after the occurrence of a Default or Event
of Default, the Borrower shall immediately upon the receipt thereof deliver
or cause to be delivered to the Agent, with appropriate endorsement and
assignment to vest title, with full recourse to the Borrower, and possession
in the Agent, on behalf of the Lenders, all instruments and chattel paper
which the Borrower now owns or may at any time or times hereafter acquire.
3.9 NOTICE TO ACCOUNT DEBTORS. The Agent may, in its sole
discretion, at any time or times, after the occurrence of a Default or an
Event of Default and without prior notice to the Borrower, notify any or all
Account Debtors that the Accounts have been assigned to the Agent, for the
benefit of the Lenders, and that the Agent has a Lien therein. After the
occurrence of an Event of Default, the Agent may direct or, at the request of
the Agent, the Borrower shall direct, any or all Account Debtors to make all
payments upon the Accounts directly to the Agent. The Agent shall furnish
the Borrower with a copy of any such notice.
3.10 ELIGIBLE INVENTORY. "Eligible Inventory" shall consist of
all of the Inventory, except the following: (i) Inventory which is damaged,
obsolete, not in good condition, or not either currently usable or currently
saleable in the ordinary course of the Borrower's business as determined by
the Agent; (ii) Inventory which the Agent determines, or which in accordance
with the Borrower's customary business practices, is unacceptable due to age,
type, category and/or quantity, including, without limitation, any Inventory
which is in excess of a one (1) year's supply or is otherwise slow-moving;
(iii) Inventory with respect to which the Agent does not have a first and
valid, fully perfected Lien; (iv) Inventory consisting of cream, film, boxes,
packaging or supplies or rework coffee; (v) Inventory in the possession of
the Borrower but not owned by the Borrower; (vi) Inventory produced in
violation of the Fair Labor Standards Act and subject to the so-called "hot
goods" provision contained in Title 29 U.S.C. Section 215(a)(1); (vii)
Inventory with respect to which any disclosure is required in the applicable
Monthly Report in accordance with SUBSECTION 3.11; (viii) Inventory which is
located at a place other than the collateral locations of the Borrower listed
on EXHIBIT 8.6; provided that, subject to SUBSECTION 7.9, in the case of
leased locations listed on EXHIBIT 8.6, no Inventory located at any such
location shall be "Eligible Inventory" until the applicable landlord has
executed a lien waiver in form and substance satisfactory to the Agent)
including, without limitation, Inventory in transit; (ix) Inventory
consisting of finished goods which do not
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meet the specifications of the purchase order for which such Inventory was
produced; (x) Inventory which fails to meet the standards imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such goods, its use and/or sale; (xi) Inventory which is held
on consignment by the Borrower; (xii) Inventory owned by the Borrower which
is held on consignment by other Persons; and (xii) Inventory which the Agent
determines in good faith to be unacceptable. In the event that Inventory
previously scheduled in a Monthly Report ceases to be Eligible Inventory, the
Borrower shall notify the Agent thereof immediately.
3.11 INVENTORY WARRANTIES. With respect to Inventory scheduled,
listed or referred to in any Monthly Report, the Borrower represents and
warrants that, except as disclosed in such Monthly Reports (i) such Inventory
is located at one of the Facilities or warehouses set forth on EXHIBIT 8.6,
(ii) the Borrower has good, indefeasible and merchantable title to such
Inventory and such Inventory is not subject to any Lien or document
whatsoever except for the prior, first perfected Lien granted to the Agent
hereunder, (iii) such Inventory is of good and merchantable quality, free
from any defects and is not goods returned to the Borrower by or repossessed
from an Account Debtor or goods taken in trade, (iv) such Inventory is not
subject to any licensing, patent, royalty, trademark, tradename or copyright
agreements with any third parties, (v) the completion of manufacture, sale or
other disposition of such Inventory by the Agent following an Event of
Default shall not require the consent of any Person and shall not constitute
a breach or default under any contract or agreement to which the Borrower is
a party or to which the Inventory is subject, and (vi) no Inventory has been
produced in violation of the Fair Labor Standards Act so as to be subject to
the so-called "hot goods" provision contained in Title 29 U.S.C., Section
215(a)(1).
3.12 INVENTORY RECORDS. The Borrower shall at all times maintain
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory and of Eligible Inventory, the Borrower's cost
therefor and daily withdrawals therefrom and additions thereto, and the
locations of all Inventory in the possession of bailees, all of which records
shall be available during the Borrower's usual business hours at the request
of any of the Agent's officers, employees or agents. The Borrower shall
cooperate fully with the Agent and its agents who shall have the right at any
time or times to inspect the Inventory and the records with respect thereto.
On or before December 31, 1998, the Borrower shall establish a perpetual
inventory system (the "Perpetual Inventory System"). Until the establishment
of the Perpetual Inventory System, the Borrower shall conduct a physical
count of the Inventory at least once each month. After the Borrower has
established the Perpetual Inventory System, the Borrower shall conduct a
physical count of the Inventory at least once each year and promptly
following such physical inventory shall supply the Agent with a report in
form and substance satisfactory to the Agent concerning such physical count
of the Inventory, and shall furnish to the Agent, at the Agent's request,
such other documents and reports with respect to the Inventory.
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3.13 SAFEKEEPING OF INVENTORY AND INVENTORY COVENANTS. Neither
the Agent nor any Lender shall be responsible for any act or default of any
carrier, warehouseman, bailee, forwarding agency or any other Person. Subject
to SUBSECTION 10.4, as between the Borrower and the Agent and each Lender, all
responsibility for the safekeeping of the Inventory and all risk of loss,
spoilage, damage, destruction or diminution in value of the Inventory shall be
borne by the Borrower. No Inventory is or shall be at any time or times
hereafter kept on the premises of or stored with a bailee, warehouseman,
consignee or similar third party without the Agent's prior written consent and
unless the Agent shall have received warehouse receipts or bailee letters or
such other documents, agreements and financing statements satisfactory to the
Agent prior to the commencement of such Person's possession or storage. The
Borrower shall not sell any Inventory to any customer on approval or on any
other basis which entitles the customer to return, or which may obligate the
Borrower to repurchase, such Inventory.
3.14 EQUIPMENT WARRANTIES. With respect to the Equipment, the
Borrower represents and warrants to the Agent and the Lenders that: (i) the
Borrower has good, indefeasible and merchantable title to the Equipment; (ii)
the Equipment is located only on the premises listed on EXHIBIT 3.14; (iii)
the Equipment is not subject to any Lien whatsoever except for the Lien
granted to the Agent, for the benefit of the Lenders, hereunder and except as
disclosed in EXHIBIT 6.5; (iv) the Equipment is in good condition and repair
(ordinary wear and tear excepted) and is currently used or usable in the
Borrower's business; and (v) except as described in EXHIBIT 3.14, none of the
Equipment used in the conduct of the Borrower's business is leased.
3.15 EQUIPMENT RECORDS. The Borrower shall at all times hereafter
keep complete and accurate records itemizing and describing the kind, type
and age of Equipment, and the Borrower's cost therefor and accumulated
depreciation thereon and acquisitions, retirements, sales, or other
dispositions thereof, all of which records shall be available during the
Borrower's usual business hours on demand to any of the Agent's officers,
employees or agents.
3.16 MAINTENANCE OF EQUIPMENT. The Borrower shall keep and
maintain the Equipment in good operating condition and repair (ordinary wear
and tear excepted) and shall make all necessary replacements thereof and
renewals thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. The Borrower shall not permit any
item of Equipment to become a fixture to real property or an accession to
other personal property. The Borrower shall not permit the Equipment to be
operated or maintained in violation of any applicable law, statute, rule or
regulation. In addition, with respect to all items of leased equipment, the
Borrower shall keep, maintain, repair, replace and operate such leased
equipment in accordance with the terms of the applicable lease.
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3.17 REAL ESTATE. EXHIBIT 3.17 describes all Real Estate or
interests in Real Estate owned or leased by the Borrower. Except as
disclosed on EXHIBIT 3.17, the Borrower represents and warrants to the Agent
and the Lenders that the Borrower has good, indefeasible and merchantable
title to and ownership of, or a valid leasehold interest in, each parcel of
Real Estate described in EXHIBIT 3.17, free and clear of all Liens, except
Liens in favor of the Agent, for the benefit of the Lenders, and the
Permitted Liens. Except as disclosed on EXHIBIT 3.17, the Borrower further
represents and warrants to the Agent and the Lenders that no parcel of Real
Estate is subject to any boundary or encroachment dispute, special
assessment, condemnation or eminent domain proceeding, restrictive covenant,
zoning or building code violation or any other dispute, assessment, claim or
violation of law which might restrict or interfere with the Borrower's use of
such parcel of Real Estate in the ordinary course of the Borrower's business
or which might have a Material Adverse Effect. Except as disclosed on
EXHIBIT 3.17, the Borrower does not own any other real property or use or
occupy any real property that it leases from any other Person.
3.18 MAINTENANCE OF REAL ESTATE. The Borrower shall keep and
maintain the Real Estate and all improvements thereon in good condition and
repair and shall maintain the value and utility thereof and shall maintain
such Real Estate in conformity with all applicable building and zoning codes
and other applicable laws, statutes, rules and regulations. The Borrower
shall maintain its leased real property in the same manner as its owned Real
Estate, and comply with the terms of its leases of such real property, in
accordance with the applicable leases.
3.19 INTELLECTUAL PROPERTY AND GENERAL INTANGIBLES .
Except as disclosed on EXHIBIT 3.19, the Borrower is the owner of all the
Intellectual Property and General Intangibles free and clear of all Liens
other than Liens in favor of the Agent, for the benefit of the Lenders and
(ii) Permitted Liens. The Borrower shall maintain complete and accurate
records with respect to its Intellectual Property and General Intangibles and
shall defend such Intellectual Property and General Intangibles against
infringement, interference, opposition or similar actions or challenges and
shall maintain and preserve all of its rights with respect thereto.
4. CONDITIONS TO ADVANCES.
4.1 CONDITIONS TO ALL ADVANCES. In addition to those conditions
set forth in SUBSECTION 4.2, the funding of each Loan shall be conditioned
upon the matters set forth in this SUBSECTION 4.1:
(a) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Borrower contained herein or in any other Financing Agreement
shall be true and correct in all material respects on and as of the date of such
advance as if made
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on such date, except to the extent that any such representation or warranty
expressly relates to an earlier date.
(b) BORROWER'S REQUEST. The Agent shall receive (i) a Notice of
Borrowing on or prior to the date required by the terms of the Agreement with
respect to any Loan, (ii) a Monthly Report from the Borrower in accordance
with the terms of this Agreement and (iv) all other documents required to
have been delivered to the Agent hereunder prior to such date.
(c) FINANCIAL CONDITION. As determined by the Required Lenders in
their reasonable discretion, no Material Adverse Effect shall have occurred
at any time or times subsequent to the most recent annual financial
statements provided pursuant to SUBSECTION 7.1(ii).
(d) NO DEFAULT. As determined by the Required Lenders, neither a
Default nor an Event of Default shall have occurred and be continuing or will
result from such advance.
(e) NO LITIGATION. (i) No Litigation shall be pending or
threatened against the Borrower or any officer, director, or executive of the
Borrower (A) in connection with this Agreement or the other Financing
Agreements or (B) other than as disclosed on EXHIBIT 6.14, which, if
adversely determined, would have a Material Adverse Effect; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to the Borrower shall have been issued or threatened by any
Governmental Authority.
(f) OTHER REQUIREMENTS. The Agent shall have received, in form
and substance satisfactory to the Agent, all certificates, orders,
authorizations, consents, affidavits, schedules, instruments, security
agreements, financing statements, mortgages and other documents which are
provided for hereunder, or which the Agent may at any time reasonably
request. All legal matters incident to the making of the Loan shall be
satisfactory to the Agent and its counsel.
Each request and acceptance by the Borrower of the proceeds of any
advance under the Revolving Loan shall constitute a representation and warranty
by the Borrower that the conditions contained in SUBSECTIONS 4.1(a), 4.1(d), and
4.1(e) have been satisfied.
4.2 CONDITIONS TO EFFECTIVE DATE AND INITIAL ADVANCE. In
addition to those conditions set forth in SUBSECTION 4.1 with respect to all
advances hereunder, the making of the initial advance of funds under the
Revolving Loan partial funding of Term Loan B shall be conditioned upon the
satisfaction on or before the Effective Date of the conditions set forth in this
SUBSECTION 4.2 and the delivery on or before the Effective Date
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of the following documents to each Lender, in form and substance satisfactory
to each Lender in all respects, and consummation of all of the transactions
or the satisfaction of each condition contemplated by each such document in a
manner satisfactory to each Lender and its counsel.
(a) AGREEMENT; NOTES. Duly executed copies of this Agreement, the
other Financing Agreements and one (1) duly executed copy of each of the
Revolving Loan Notes, the Term Loan A Notes, dated the Original Closing Date and
as amended and restated as of the Effective Date, and the Term Loan B Notes
dated the Original Closing Date and as amended and restated as of the Effective
Date, conforming to the requirements hereof, together with all Schedules,
Exhibits, certificates, instruments, documents and financial statements required
to be delivered pursuant hereto and thereto, all in form and substance
satisfactory to each Lender in all respects.
(b) LEGAL OPINION. The legal opinion of the Borrower's counsel and
such local counsel deemed necessary by the Lenders in form and substance
satisfactory to the Lenders and their counsel.
(c) UCC. Evidence of the proper filing of UCC financing statements
perfecting Liens in favor of the Agent in the Collateral and in the Property of
Maryland Club Foods and Brothers Retail with respect to which a security
interest will be granted to the Agent under the Subsidiary Security Agreement,
and copies of searches of financing statements filed under the Code, together
with tax lien and judgment searches with respect to the Property of the
Borrower, Maryland Club Foods and Brothers Retail, in such jurisdictions as the
Agent may request.
(d) OFFICER'S CERTIFICATE. A certificate executed by an Authorized
Officer stating that (i) no Default or Event of Default has occurred and is
continuing, (ii) since June 27, 1997, no material and adverse change has
occurred in the business, prospects, assets, liabilities, operations or
condition (financial or other) of the Borrower or of the Borrower and its
Subsidiaries taken as a whole, (iii) no litigation, investigation or proceeding,
or injunction, writ or restraining order of the type described in SUBSECTION
4.1(e) is pending or threatened, (iv) each of the conditions precedent to the
consummation of the Loans contemplated hereby has been met or satisfied, and (v)
the representations and warranties of the Borrower contained in the Financing
Agreements are correct and complete in all material respects on and as of the
Effective Date.
(e) INSURANCE POLICIES AND ENDORSEMENTS. Copies of policies of
insurance required hereby together with loss payable endorsements on the Agent's
standard form, duly executed, and evidence of the payment of the current premium
therefor.
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(f) INITIAL REPORTS AND OTHER EXHIBITS. Copies the initial Weekly
Report, the Solvency Affidavit, the Initial Slotting Fee Certificate, the
initial Projections, and all financial statements and other Exhibits and
Schedules required hereby.
(g) FEES, COSTS AND EXPENSES; ACCRUED UNPAID AMOUNT. The Accrued
Unpaid Amount shall have been paid to the Agent and each of the fees, costs and
expenses payable on the Effective Date pursuant to SUBSECTION 2.10, SUBSECTION
2.12, SUBSECTION 2.13 AND SUBSECTION 2.14 have been paid to the Agent.
(h) CHARTER AND BYLAWS. A copy of the Borrower's Certificate of
Incorporation, certified by the Secretary of State of Delaware as of a date not
more than ten (10) days prior to the Effective Date and a copy of the Borrower's
bylaws and any amendments thereto certified by the Secretary of the Borrower.
(i) GOOD STANDING CERTIFICATES. Good Standing Certificate for the
Borrower from the State of Delaware and a certificate of good standing as a
foreign corporation from each other state set forth on EXHIBIT 6.1-1, as of a
date not more than ten (10) days prior to the Effective Date.
(j) BOARD RESOLUTIONS. Certified copies of resolutions of the board
of directors of the Borrower authorizing the execution and delivery of and the
consummation of the transactions contemplated by this Agreement, the other
Financing Agreements and all other documents or instruments to be executed and
delivered in conjunction herewith and therewith. Such resolutions shall also
designate which Authorized Officers of the Borrower shall be authorized to make
a request for an advance of the Revolving Loan, Term Loan A and Term Loan B
hereunder.
(k) INCUMBENCY CERTIFICATES. Incumbency certificates with respect to
the officers of the Borrower executing the documents referred to in item (j)
above, certified as of the Effective Date by the Borrower's secretary as being
true and correct.
(l) WAIVERS. Landlord waivers, bailee letters and mortgagee
agreements in form and substance satisfactory to Agent, in each case as
required pursuant to SUBSECTION 7.9. In the event the Borrower is unable to
obtain a landlord waiver, bailee letter and/or mortgagee agreement acceptable
to Agent as to any such location on or before the Effective Date, the
eligibility of such Inventory at that location shall be determined in
accordance with SUBSECTION 7.9.
(m) ACCOUNTANTS' LETTER. A letter authorizing Borrower's independent
certified public accountants to communicate with the Agent and the Lenders in
accordance with SUBSECTION 7.1 and acknowledging the Agent's and each Lender's
reliance on future financial statements.
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(n) POWER OF ATTORNEY. A power of attorney in favor of the Agent
with respect to the matters set forth in SUBSECTIONS 3.6, 5.2 and 7.6 in form
and substance satisfactory to the Agent.
(o) AGENT FOR SERVICE. An acknowledgment by CT Corporation System
that it has been appointed as the Borrower's agent to accept service of process
for the Borrower.
(p) LETTER OF DIRECTION. A letter of direction from the Borrower
with respect to the disbursement of the proceeds of the initial advances of the
Loans hereunder.
(r) NO MATERIAL ADVERSE CHANGE. No material and adverse change in
the business, properties, operations or condition (financial or otherwise) or
business prospects of the Borrower, or of the Borrower and its Subsidiaries
taken as a whole, shall have occurred since September 26, 1997.
(s) NO ACCOUNTING CHANGES. The Borrower shall not have made any
material change in its accounting methods or principles since September 26,
1997.
(t) NO TERMINATION OF CONTRACTS. No materially advantageous
agreement now in effect between the Borrower and any other Person shall have
been terminated, modified or declared to be in default since September 26, 1997.
(u) REAL ESTATE TAXES AND FEES. Evidence of payment of all taxes on
each parcel of Real Estate due prior to the Effective Date and all recording and
mortgage filing fees or taxes.
(v) FIELD SURVEY, ETC. The Agent shall have conducted a field survey
of the Borrower and its Property, including a review of revised Projections
which have been updated to reflect the most recently available financial results
and giving effect to this Agreement, as well as such additional financial and
business due diligence as the Agent deems appropriate in its sole and absolute
discretion, the results of all to be acceptable to the Agent in its sole and
absolute discretion.
(w) APPRAISALS. The Agent shall have received the Appraisal
(Equipment) and the Appraisal (Real Estate).
(x) ENVIRONMENTAL MATTERS. The Agent shall have received such
environmental review and audit reports with respect to the properties of the
Borrower and its Subsidiaries as the Agent shall have requested and the Agent
shall be satisfied, in its sole discretion, with the contents of all such
environmental reports.
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(y) FORM W-9. A copy of IRS Form W-9, Taxpayer Identification Number
and Certification.
(z) MARYLAND CLUB FOODS GUARANTY. A duly executed copy of the
Maryland Club Foods Guaranty.
(aa) BROTHERS RETAIL GUARANTY. A duly executed copy of the Brothers
Retail Guaranty.
(bb) SUBSIDIARY SECURITY AGREEMENT. A duly executed copy of the
Subsidiary Security Agreement.
(cc) PLEDGE AGREEMENT. A duly executed copy of the Pledge Agreement,
together with the original stock certificates representing all of the capital
stock of each Subsidiary of the Borrower, accompanied by undated stock powers
executed in blank.
(dd) GSCP WARRANT. A duly executed copy of the GSCP Warrant.
(ee) GSCP WARRANT AGREEMENT. A duly executed copy of the GSCP Warrant
Agreement.
(ff) OTHER DOCUMENTS. All corporate and legal proceedings and all
agreements in connection with the transactions contemplated by this Agreement
and the other Financing Agreements shall be satisfactory to the Agent, and the
Agent shall have received all information and copies of all documents including,
without limitation, records of corporate existence, authority and proceedings
and governmental approvals, if any, which the Agent reasonably may have
requested in connection therewith, and such documents, where appropriate, shall
be certified by proper corporate or governmental authorities.
5. COLLATERAL.
5.1 SECURITY INTEREST. All of the Borrower's Obligations
constitute one (1) loan secured by the Agent's Liens on the Collateral now or
from time to time hereafter granted by the Borrower to the Agent. The
Borrower hereby acknowledges, confirms and agrees that the Agent, as
successor in interest to SBCC, has and shall continue to have, to secure
timely payment and performance in full of the Obligations, for the benefit of
the Lenders, a right of setoff against and a valid, continuing, enforceable
and fully perfected first-priority Lien (subject only to Permitted Liens)
upon all of the Borrower's right, title and interest in and to all Property
and interests in Property of the Borrower, whether now owned or hereafter
acquired by the Borrower and wheresoever located, including, without
limitation: (i) all Accounts; (ii) all General Intangibles; (iii) all
Fixtures; (iv) all Inventory; (v) all Equipment; (vi) all Intellectual
Property; (vii) all of the Borrower's
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deposit accounts (general or special) with any financial institution with
which the Borrower maintains deposits; (viii) all of the Borrower's now owned
or hereafter acquired monies, and any and all other property and interests in
property of the Borrower now or hereafter coming into the actual possession,
custody or control of the Agent or any Lender or any agent or affiliate of
the Agent or any Lender in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or
otherwise); (ix) all documents, instruments and chattel paper; (x) all
insurance policies relating to any of the foregoing, including without
limitation business interruption insurance; (xi) all of the Borrower's books
and records relating to any of the foregoing; (xii) all accessions and
additions to, substitutions for, and replacements of any of the foregoing;
and (xiii) all cash collections from, and all other cash and non-cash
proceeds of, any of the foregoing including, without limitation, proceeds of
and unearned premiums with respect to insurance policies insuring any of the
Collateral and claims against any Person for loss of, damage to, or
destruction of, any or all of the Collateral. In addition, concurrently with
the execution and delivery hereof the Borrower shall deliver the Mortgages,
and concurrently with the acquisition of any real property after the
Effective Date, the Borrower shall grant and convey to the Agent, for the
benefit of the Lenders, as security for the Obligations, first mortgage Liens
on all such real property.
5.2 PRESERVATION OF COLLATERAL AND PERFECTION OF LIENS THEREON.
Prior to the execution of this Agreement, the Borrower shall have executed
and delivered to the Agent, and at any time or times hereafter at the request
of the Agent, the Borrower shall execute and deliver all financing
statements, security agreements, pledge agreements, mortgages, leasehold
mortgages, bailee letters, amendments thereto, or other documents (and pay
the cost of filing or recording the same in all public offices deemed
necessary by the Agent), as the Agent may request, in a form satisfactory to
the Agent, to perfect and maintain the Liens on the Collateral granted by the
Borrower to the Agent or to otherwise protect and preserve the Collateral and
the Liens thereon or to enforce the Agent's Liens on the Collateral. Should
the Borrower fail to do so, the Agent is authorized to sign any such
financing statements or other documents as the Borrower's agent. The
Borrower further agrees that a carbon, photocopy or other reproduction of
this Agreement or of a financing statement is sufficient as a financing
statement. The Borrower shall make appropriate entries upon its books and
records disclosing the Agent's Liens on the Collateral.
5.3 CONSIGNED INVENTORY. With respect to consigned Inventory,
the Borrower shall perfect its interest in such Inventory by filing and
delivering notice to the creditors of record of the consignee, all as provided
in Section 9-114 of the Code, and in form and substance satisfactory to the
Agent, and the Borrower shall execute and deliver all financing statements,
security agreements, amendments thereto, or other documents (and pay the cost of
filing or recording the same in all public offices deemed necessary by the
Agent), as the Agent may request, in a form satisfactory to the Agent, to
perfect and
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maintain the Liens on such Collateral granted by the Borrower to the Agent
hereunder. With respect to goods in the hands of bailees, the Borrower shall
deliver notice to such bailees of Agent's interest in such goods and
instructions with respect to the disposition thereof, all in form and
substance satisfactory to the Agent, and Borrower shall execute and deliver
all financing statements, security agreements, amendments thereto, or other
documents (and pay the cost of filing or recording the same in all public
offices deemed necessary by the Agent), as the Agent may request, in a form
satisfactory to the Agent, to perfect and maintain the Liens on such
Collateral granted by the Borrower to the Agent hereunder.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants and covenants and agrees that
(even if there shall be no Obligations outstanding) so long as this Agreement
remains in effect:
6.1 Existence. (a) The Borrower and each Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and is qualified to
transact business as a foreign corporation in, and, except as provided on
EXHIBIT 6.1-1, is in good standing under the laws of, all states in which it
is required by applicable law to maintain such qualification and good
standing except where the failure to so qualify would not have a Material
Adverse Effect. All such jurisdictions in which such Persons are in good
standing are listed on EXHIBIT 6.1-1. With respect to those jurisdictions in
which the Borrower and its Subsidiaries are not in good standing, the
Borrower and the Subsidiaries, as applicable, have filed all of the
documents, paid all taxes and fees and taken all other actions necessary to
be in good standing in such jurisdictions. The Borrower is not aware of any
reason why any such jurisdiction would not issue a good standing certificate
to the Borrower or a Subsidiary, as applicable.
(b) STOCK OF THE BORROWER. All shares of capital stock of the
Borrower and each Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable. Except as disclosed on EXHIBIT 6.1-2 and as
otherwise permitted by this Agreement (i) no authorized but unissued or treasury
share of capital stock of the Borrower or any Subsidiary is subject to any
option, warrant, right to call or commitment of any kind or character, (ii)
neither the Borrower nor any Subsidiary has any outstanding stock or securities
convertible into or exchangeable for any shares of its capital stock, or any
rights issued to any Person (either preemptive or other) to subscribe for or to
purchase, or any options or warrants for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to any of its capital stock or
any stock or securities convertible into or exchangeable for any of its capital
stock, and (iii) neither the Borrower nor any Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or
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otherwise acquire or retire any shares of its capital stock or any
convertible securities, rights, warrants or options of the type described in
the clause (ii) above.
6.2 AUTHORITY. The Borrower and each Subsidiary has full power,
authority and legal right to enter into this Agreement and the other
Financing Agreements. The execution and delivery by the Borrower and each
Subsidiary of the Financing Agreements to which it is a party: (i) have been
duly authorized by all necessary action on its part; (ii) are not in
contravention of the terms of its Articles of Incorporation or Bylaws or of
any indenture, agreement or undertaking to which it is a party or by which it
or any of its Property is bound; (iii) do not and will not require any
registration with, or approval or the consent or approval of, any
Governmental Authority or of any other Person that has not been obtained;
(iv) do not and will not contravene any contractual or governmental
restriction to which it or any of its Property may be subject; (v) do not and
will not, except as contemplated herein, result in the imposition of any Lien
upon any Property of it under any existing indenture, mortgage, deed of
trust, loan or credit agreement or other material agreement or instrument to
which it is a party or by which it or any of its Property may be bound or
affected; and (vi) has not enabled and will not enable any Person to
accelerate or enforce any claim against the Borrower or any Subsidiary under
any agreement or instrument to which the Borrower or any Subsidiary is a
party or by which it or its assets are bound. The Borrower and each
Subsidiary has the full corporate power and authority and legal right to own,
operate, pledge, mortgage or otherwise encumber its Property, to lease the
Property it now operates under lease and conduct its business as now,
heretofore and proposed to be conducted, and has all material licenses,
permits, consents and approvals from or by, and has made all material filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and
conduct.
6.3 BINDING EFFECT. This Agreement and the other Financing
Agreements to which it is a party have been duly executed and delivered by
the Borrower, are the legal, valid and binding obligations of the Borrower
and are enforceable against the Borrower in accordance with their terms.
6.4 FINANCIAL DATA. (a) The Borrower has furnished to the
Agent and each Lender the consolidated financial statements (the "Financial
Statements") of the Borrower and its Subsidiaries based on financial data as of
September 26, 1997. The Financial Statements are complete and accurate and
fairly represents the consolidated assets, liabilities, financial condition and
results of operations of the Borrower in accordance with Generally Accepted
Accounting Principles, consistently applied, as of September 26, 1997 (subject
to normal year-end adjustment) and the consolidated results of its operations
for the respective periods then ended (subject to normal year-end adjustments).
There are no omissions from the Financial Statements or other facts and
circumstances not reflected in the Financial Statements which are or may be
material.
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Except as contemplated hereby or otherwise permitted by the Financing
Agreements, since the date of the Financial Statements through the Effective
Date, neither the Borrower nor any Subsidiary has: (i) except with respect to
Contingent Retail Store Obligations and Permitted Liens, incurred any debts,
obligations, or liabilities (absolute, accrued, or contingent and whether due
or to become due) except current liabilities incurred in the ordinary course
of business which (individually or in the aggregate) will not have a Material
Adverse Effect; (ii) except with respect to Contingent Retail Store
Obligations and Permitted Liens, paid any obligation or liability other than
current liabilities in the ordinary course of business, or discharged or
satisfied any Liens other than those securing current liabilities, in each
case in the ordinary course of business; (iii) declared or made any
Restricted Payment or obligated itself to do so; (iv) except with respect to
Contingent Retail Store Obligations and Permitted Liens, mortgaged, pledged,
or subjected to any Lien on any of its Property; (v) except with respect to
Contingent Retail Store Obligations and Permitted Liens, sold, transferred,
or leased any of its Property except in the usual and ordinary course of
business; (vi) except with respect to Contingent Retail Store Obligations and
Permitted Liens, entered into any transaction other than in the usual and
ordinary course of business; (vii) encountered any labor difficulties or
labor union organizing activities; (viii) except as disclosed on EXHIBIT
6.1-2, issued or sold any shares of capital stock or other securities or
granted any options or similar rights with respect thereto other than
pursuant hereto; or (ix) except with respect to Contingent Retail Store
Obligations and Permitted Liens, agreed to do any of the foregoing other than
pursuant hereto.
(b) The Borrower has also furnished to the Agent and each Lender
initial Projections for the Borrower dated as of the Effective Date and
attached as EXHIBIT 6.4, containing the information required by clause (v) of
SUBSECTION 7.1. The initial Projections have been prepared, and all
Projections hereafter delivered in accordance with clause (v) of SUBSECTION
7.1 shall be prepared, by an Authorized Officer on the basis of the
assumptions set forth therein and do represent, and in the future will
represent, the best available good faith estimate of the Borrower's
management regarding the course of business of the Borrower and each
Subsidiary for the periods covered thereby. The assumptions set forth in the
initial Projections are, and the assumptions set forth in the future
Projections delivered hereafter shall be, reasonable and realistic based on
then current economic conditions. The Projections represent the good faith
belief of the Borrower as to reasonably achievable results and the Borrower
has no knowledge of any reason (other than unexpected adverse general
economic conditions) that would cause the Projections not to be achieved.
(c) The Borrower has also provided to the Agent and each Lender
audited statements of income and cash flow and balance sheets for the Borrower
and each Subsidiary on a consolidated basis for each of the three (3) most
recent Fiscal Years ending with December 29, 1996 certified by Ernst & Young
L.L.P. and such financial
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statements fairly present the financial condition and results of operations
of the Borrower and its Subsidiaries for the periods indicated therein, in
accordance with Generally Accepted Accounting Principles, consistently
applied.
6.5 COLLATERAL. Except as disclosed on EXHIBIT 6.5, all of the
Collateral is and will continue to be owned by the Borrower free and clear of
all Liens except those of the Agent, for the benefit of the Lenders, and the
Permitted Liens. Since the Original Closing Date and from and after the
Effective Date, the provisions of ARTICLE 5 of this Agreement have been and
will continue to be effective to create and will continue to give the Agent,
for the benefit of the Lenders, as security for the repayment of the
Obligations, a legal, valid, perfected and enforceable Lien (which priority
is subject only to Permitted Liens) upon all right, title and interest of the
Borrower in any and all of the Collateral (including, without limitation, the
Lien in the items and amounts deposited in the Blocked Accounts).
6.6 SOLVENCY. The Borrower and each Subsidiary is solvent and
will continue to be Solvent following the consummation of the transactions
contemplated by this Agreement and the payment of all fees, costs and
expenses payable by the Borrower with respect thereto.
6.7 PLACES OF BUSINESS. The principal places of business and
chief executive office of the Borrower is set forth on EXHIBIT 6.7 and,
except as disclosed on EXHIBIT 6.7, none of such locations have changed
within the past six (6) months. The books and records of the Borrower and
all chattel paper and all records of account are located and hereafter shall
continue to be located at one of the Facilities of the Borrower.
6.8 OTHER NAMES. The business conducted by the Borrower has not
been conducted under any corporate, trade or fictitious name other than those
names disclosed on EXHIBIT 6.8.
6.9 TAX OBLIGATIONS. The Borrower and each Subsidiary has filed
complete and correct federal, state and local tax reports and returns
required to be filed by it, prepared in accordance with applicable laws or
regulations, and, except for extensions duly obtained, has either duly paid
all Charges owed by it, or made adequate provision for the payment thereof.
There are no material unresolved questions or claims concerning any tax
liability of the Borrower or any Subsidiary except those for which the
validity, amount or imposition of such Charges are being contested in good
faith by an appropriate proceeding promptly initiated and diligently
conducted and as to which (i) such proceeding will prevent the forfeiture or
sale of any Property of the Borrower or such Subsidiary and no Lien which
will have priority over the Agent's Liens granted hereunder with respect to
the Collateral is filed of record, (ii) adequate reserves have been provided
in accordance with Generally Accepted Accounting Principles and (iii) such
proceeding
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does not have a Material Adverse Effect. No tax Liens have been filed and no
claims are being asserted with respect to any such Charges which might have a
Material Adverse Effect. The charges, accruals and reserves on the books of
the Borrower and each Subsidiary are adequate for all open years and for the
current Fiscal Year. Neither the Borrower nor any Subsidiary has consented
to any extension of, or otherwise waived, any statute of limitation with
respect to any such Charges. Neither the Borrower nor any Subsidiary is a
party to any tax indemnity, tax sharing or tax allocation agreement with any
other Person. Proper and accurate amounts have been withheld by the Borrower
from its employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities.
6.10 INDEBTEDNESS AND LIABILITIES. (a) Neither the Borrower nor
any Subsidiary has Indebtedness other than Indebtedness reflected on the
Financial Statements, Indebtedness underlying the Permitted Liens and
Indebtedness disclosed on EXHIBIT 8.2 and (b) except for the Indebtedness
referred to above and Liabilities reflected on the Financial Statements,
neither the Borrower nor any Subsidiary has any Liabilities required to be
reflected on a balance sheet prepared in accordance with GAAP.
6.11 USE OF PROCEEDS AND MARGIN SECURITY. The Borrower shall use
the One Million Two Hundred and Fifty Thousand Dollar ($1,250,000) advance of
the Additional Term Loan B on the Effective Date to partially repay the
Revolving Loan and shall use the proceeds of the initial advance under the
Revolving Loan and shall use subsequent advances under the Revolving Loan
solely for the working capital requirements of the Borrower in the ordinary
course of the Borrower's business consistent with past practices and with all
applicable laws, statutes, rules and regulations and for no other purposes.
The Borrower does not own any margin security and none of the Loans advanced
or funded hereunder will be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities
or for any other purpose not permitted by Regulation G or U of the Board of
Governors of the Federal Reserve System.
6.12 GOVERNMENT CONTRACTS. Except as disclosed on EXHIBIT 6.12,
neither the Borrower nor any Subsidiary is a party to or bound by any supply
agreements with the federal government or any state or local government or
any agency thereof.
6.13 INVESTMENTS. Except as disclosed on EXHIBIT 8.4, neither the
Borrower nor any Subsidiary has any Investment in any Person other than
Permitted Investments and is not engaged in any joint venture or partnership
with any other Person.
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6.14 LITIGATION AND PROCEEDINGS. No judgments are outstanding
against the Borrower or any Subsidiary or binding upon any of its Property,
nor, except as disclosed on EXHIBIT 6.14, is there now pending or threatened,
any litigation, claim, arbitration, investigation, administrative proceeding
or other governmental proceeding ("Litigation") by or against the Borrower or
any Subsidiary, and to the best of the Borrower's knowledge after diligent
inquiry, there are no presently existing facts or circumstances likely to
give rise to any such Litigation. Except as disclosed on EXHIBIT 6.14, there
is no Litigation pending or threatened against the Borrower or any
Subsidiary, which, if adversely determined, might have a Material Adverse
Effect. None of the Litigation will prevent, enjoin or delay the
consummation of the transactions contemplated by the Financing Agreements.
6.15 OTHER AGREEMENTS AND DELIVERIES. (a) Except as disclosed on
EXHIBIT 6.15, neither the Borrower nor any Subsidiary is in default under any
indenture, loan agreement, mortgage, deed of trust or similar document
relating to the borrowing of monies or any other material contract, lease, or
commitment to which it is a party or by which it is bound. There is no
dispute regarding any contract, lease, or commitment which might have a
Material Adverse Effect.
(b) The Borrower has provided to the Agent accurate and complete
copies of all of the following agreements or documents to which the Borrower
or any Subsidiary is subject:
(i) each Plan and other compensation or nonqualified benefit
plan arrangement which the Borrower or any ERISA Affiliate sponsors or is
committed to contribute to as of the Effective Date and, where applicable,
each Plan's most recent summary plan description, actuarial report,
determination letter from the Service and Forms 5500 for the previous five
(5) years filed in respect of each such Plan;
(ii) collective bargaining agreements or other labor
contracts;
(iii) leases of real property;
(iv) licenses and permits with respect to Environmental
Matters;
(v) all management and employment agreements between the
Borrower or any Subsidiary and any other Person;
(vi) contracts or agreements between the Borrower or any
Subsidiary and its Affiliates requiring or providing for payments in excess
of Two Hundred Fifty Thousand Dollars ($250,000) per annum;
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(vii) all contracts giving rise to Contingent Retail Store
Obligations; and
(viii) all pending contracts for the sale or other disposition
of Retail Stores.
6.16 LABOR MATTERS. Except as disclosed on EXHIBIT 6.16, there are
no strikes, work stoppages, labor disputes, decertification petitions, union
organizing efforts, grievances or other controversies pending or, to the best
of the Borrower's knowledge after diligent inquiry, threatened, between the
Borrower or any Subsidiary and any of its employees, other than employee
grievances arising in the ordinary course of business which, in the
aggregate, would not have a Material Adverse Effect. All collective
bargaining agreements labor agreements or other contracts with or affecting
any employee of the Borrower or any Subsidiary necessary to continue to
conduct the business operations of the Borrower or such Subsidiary are in
full force and effect. Except as disclosed on EXHIBIT 6.15 and/or EXHIBIT
6.16, neither the Borrower nor any Subsidiary has any obligation under any
collective bargaining agreement or any employment agreement. To the best of
the Borrower's knowledge, there is no organizing activity pending or
threatened by any labor union or group of employees. Except as disclosed on
EXHIBIT 6.16, there are no representation proceedings pending or threatened
with the National Labor Relations Board, and no labor organization or group
of employees has made a pending demand for recognition. There are no
material complaints or charges pending or threatened to be filed with any
local or Governmental Authority based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment by the
Borrower or any Subsidiary of any individual.
6.17 COMPLIANCE WITH LAWS AND REGULATIONS. The execution and
delivery by the Borrower of this Agreement, the other Financing Agreements
and the performance of the Borrower's obligations hereunder and thereunder
are not in contravention of any order applicable to the Borrower or, to the
Borrower's best knowledge, any laws, regulations or ordinances. The Borrower
and each Subsidiary are in compliance with all laws, orders, regulations and
ordinances of all federal, foreign, state and local governmental authorities
relating to the business operations and the Property of the Borrower or any
Subsidiary except for laws, orders, regulations and ordinances the
non-compliance or violation of which would not, in the aggregate, have a
Material Adverse Effect.
6.18 PATENTS, TRADEMARKS AND LICENSES. Except as disclosed on
EXHIBIT 6.18, the Borrower owns or possesses all rights to use all future
designs, licenses, patents, patent applications, copyrights and all applications
and registrations therefor, service marks and all applications and registrations
therefor, logos, names, trademarks and all applications and registrations
therefor, tradenames, trade secrets, methods, processes,
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know-how, drawings, specifications, descriptions, software, computer programs
and research and development required to continue to conduct its business as
heretofore conducted and as proposed to be conducted; all such licenses,
patents, patent applications, copyrights and all applications and
registrations therefor, service marks and all applications and registrations
therefor, trademarks and all applications and registrations therefor and
tradenames are disclosed on EXHIBIT 6.18; and no such license, or
Intellectual Property has been declared invalid, been limited by order of any
court or by agreement, or is the subject of any infringement, interference or
similar proceeding or challenge. The Intellectual Property is valid,
subsisting and enforceable, and the use or other exploitation of the
Intellectual Property does not infringe, dilute or misappropriate the rights
of any Person.
6.19 ERISA. (a) Neither the Borrower nor any ERISA Affiliate has
sponsored or contributed to or has had any obligation under, any Plan or
Multiemployer Plan other than those disclosed on EXHIBIT 6.19.
(b) With respect to all Plans, the Borrower and each ERISA
Affiliate is in compliance with the applicable provisions of ERISA and the
IRC in all material respects. Each Plan that is intended to be qualified
under Section 401(a) of the IRC has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such Plans has been
determined to be exempt from federal income tax under Section 501(a) of the
IRC. No liability has been incurred by the Borrower or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to any Plan
or any Multiemployer Plan.
(c) The present value of all benefit liabilities under all Pension
Plans does not exceed the present value of the assets of such Plans. No
Pension Plan has been terminated, nor has any accumulated funding deficiency
(as defined in Section 412 of the IRC) been incurred (without regard to any
waiver granted under Section 412 of the IRC), nor has any funding waiver from
the Internal Revenue Service been received or requested with respect to any
Pension Plan, nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by Section 412
of the IRC, Section 302 of ERISA or the terms of any Pension Plan by the
applicable due dates, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C), or 4062(e) or 4063(a) of ERISA with respect to
any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate has: (i) engaged
in a nonexempt prohibited transaction described in Section 406 of ERISA or
Section 4975 of the IRC; (ii) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid; or (iii) failed to make a required
contribution or payment to a Multiemployer Plan.
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(e) No Termination Event has occurred and no Termination Event is
reasonably expected to occur which could result in a liability to the
Borrower or any ERISA Affiliate.
(f) Neither the Borrower nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefit under any
Plan which is a welfare plan (as defined in Section 3(l) of ERISA), other
than liability for health plan continuation coverage described in Part 6 of
Title I of ERISA.
6.20 PROPERTY. The Borrower and each Subsidiary owns, possesses,
or has unrestricted rights to use or exercise all Property and rights
necessary for the conduct of the Borrower's business as heretofore conducted.
Except as disclosed on EXHIBIT 6.20, there are no actual, threatened, or
alleged defaults with respect to any agreements relating to, or evidencing,
any Property. Except as disclosed on EXHIBIT 6.20, no consent, approval,
license, authorization or other action in respect of any Person is required,
except as have been obtained, in connection with the right to use any
Property. None of the items disclosed on EXHIBIT 6.20 might have a Material
Adverse Effect.
6.21 ADVERSE CONTRACTS. Neither the Borrower nor any Subsidiary is
a party to, nor is the Borrower or any of its Property subject to or bound
by, any long term lease, forward purchase contract or futures contract,
covenant not to compete, or other agreement which restricts its ability to
conduct its business and might have a Material Adverse Effect.
6.22 PURCHASE OR OTHER COMMITMENTS AND OUTSTANDING BIDS. No
material purchase or other commitment of the Borrower or any Subsidiary is in
excess of the normal, ordinary, and usual requirements of its business, or
was made at any price in excess of the then current market price, or contains
terms and conditions more onerous than those usual and customary in the
applicable industry. There is no outstanding bid, sales proposal, contract,
or unfilled order of the Borrower or any Subsidiary which (i) will, or could
if accepted, require the Borrower to supply goods or services at a cost to
the Borrower in excess of the revenues to be received therefor, or (ii)
quotes prices which do not include a xxxx-up over reasonably estimated costs
consistent with past xxxx-ups on similar business or market conditions
current at that time.
6.23 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither the Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" or a "holding
company" or an "affiliate" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
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6.24 BROKER'S FEES. Other than the commissions, fees, expenses or
charges of Xxxxxx Xxxxxxx Imperial LLC (which commissions, fees, expenses or
charges will be paid by the Borrower) neither the Agent or any Lender nor the
Borrower or any Subsidiary is or will become obligated to any Person with
respect to any finder's or brokerage or similar fee or commission in
connection with the transactions contemplated hereby and the Borrower agrees
to indemnify the Agent, each Lender, their respective Affiliates and their
respective employees and agents against, and agrees to hold the Agent, each
Lender and each of their Affiliates and their respective employees and agents
harmless from, any and all losses, claims, damages, liabilities, and related
expenses, including expenses and costs arising out of any such obligation.
6.25 LICENSES AND PERMITS. Except as disclosed on EXHIBIT 6.25,
the Borrower and each Subsidiary has been and is current and in good standing
with respect to all governmental approvals, permits, certificates, licenses,
inspections, consents and franchises (collectively, the "Licenses") necessary
to continue to conduct its business and to own or lease and operate, its
properties as heretofore conducted, owned, leased or operated including any
and all Licenses with respect to Environmental Laws. None of the items
disclosed on EXHIBIT 6.25 might have a Material Adverse Effect.
6.26 ENVIRONMENTAL COMPLIANCE.
(a) The operations of the Borrower and each Subsidiary comply in
all material respects with all applicable Environmental Laws.
(b) Except as disclosed on EXHIBIT 6.26, there are no claims,
investigations, litigation, administrative proceedings, whether pending or,
to the knowledge of the Borrower after diligent inquiry, threatened, or
judgments or orders, relating to any Hazardous Materials or alleging the
violation of any Environmental Laws (collectively "Environmental Matters")
relating in any way to any real property leased or otherwise used by the
Borrower or any Subsidiary or to the operations of the Borrower or any
Subsidiary.
(c) Except as disclosed on EXHIBIT 6.26, no Hazardous Materials
are presently stored or otherwise located on, in or under any real property
leased, owned, operated or otherwise used by the Borrower or any Subsidiary
except in compliance with all applicable Environmental Laws, and, no part of
any real property leased, owned, operated or otherwise used by the Borrower
or any Subsidiary or, to the Borrower's best knowledge, adjacent parcels,
including the groundwater located thereon, is presently contaminated by any
such Hazardous Material.
(d) Except as disclosed on EXHIBIT 6.26, neither the Borrower nor any
Subsidiary has filed any notice under any international, federal, state,
regional, provincial
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or local law indicating past or present treatment, storage or disposal of a
Hazardous Material or reporting a spill or release of a Hazardous Material
into the environment.
(e) Except as disclosed on EXHIBIT 6.26, neither the Borrower nor any
Subsidiary has any known material liability, contingent or otherwise, in
connection with any release of any Hazardous Material into the environment.
(f) So long as any Obligations are outstanding, no Hazardous
Materials may be used, generated, treated, stored or disposed of by any
Person for any purpose upon any real property leased, owned, operated, or
otherwise used by the Borrower or any Subsidiary except in compliance with
all applicable Environmental Laws.
(g) The Borrower hereby indemnifies the Agent and each Lender and
agrees to hold the Agent and each Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs, expenses and claims of any
and every kind whatsoever (including, without limitation, court costs and
reasonable attorneys' fees and legal expenses) which at any time or from time
to time may be paid, incurred or suffered by, or asserted against, the Agent
or any Lender arising directly or indirectly from the violation of any
Environmental Law or the imposition of liability on the Borrower or any
Subsidiary under any Environmental Law or any laws or regulations relating to
Hazardous Material, treatment, storage, disposal, generation and
transportation, air, water and noise pollution, soil or ground or water
contamination, the handling, storage or release into the environment of
Hazardous Materials, and the transportation of Hazardous Materials; or with
respect to, or as a direct or indirect result of the presence on or under, or
the escape, seepage, leakage, spillage, discharge, emission or release from,
properties utilized, owned or operated by the Borrower or any Subsidiary in
the conduct of its business into or upon any land, the atmosphere, or any
watercourse, body of water or wetland, of any Hazardous Material (including,
without limitation, any losses, liabilities, damages, injuries, costs,
expenses or claims asserted or arising under the Environmental Laws);
provided that to the extent that the Borrower or any Subsidiary is strictly
liable under any Environmental Laws, the Borrower's obligations to indemnify
the Agent and each Lender under this SUBSECTION 6.26(g) shall likewise be
without regard to fault on the part of the Borrower or any Subsidiary and
with respect to the violation of law which results in liability to the
Borrower or any Subsidiary. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this SUBSECTION 6.26(g) may be
unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all
indemnifications set forth in this SUBSECTION 6.26(g). Notwithstanding any
other provision of this Agreement to the contrary, the provisions of, and the
undertakings and indemnifications set forth in, this SUBSECTION 6.26(g) shall
survive the satisfaction and payment of the obligations and the termination
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of this Agreement, and shall continue to be the liability, obligation and
indemnification of the Borrower.
(h) So long as any Obligations are outstanding, if the Agent or
any Lender, at any time, has a reasonable basis to believe that any real
property leased or otherwise used by the Borrower or any Subsidiary, or real
property adjacent to such real property, has or may become contaminated or
subject to a clean up order or decree by an agency having jurisdiction over
the Borrower or such Subsidiary; then the Borrower agrees, upon request from
the Agent, to provide the Agent and each Lender with such reports,
certificates, engineering studies or other written material or data as the
Agent or such Lender, in its reasonable discretion, may require from it so as
to satisfy the Agent or such Lender that it is in compliance with all
applicable Environmental Laws; PROVIDED that with respect to real property
adjacent to real property owned by or leased to the Borrower or any
Subsidiary, such reports, certificates, studies and other material or data
shall not be required to be provided by the Borrower if (i) they are not
otherwise required to be created or provided pursuant to statute, regulation,
order or otherwise, and (ii) such contamination is not attributable to the
acts or omissions of the Borrower or any Subsidiary or any Affiliate or
predecessor of any of them or any previous owner, lessee, lessor or other
user of such real property.
(i) The materiality standard used in this SUBSECTION 6.26 shall be
exceeded if the facts giving rise to a breach or breaches of the
representations or warranties contained herein might result in liability or
potential liability in excess of One Hundred Thousand Dollars ($100,000) in
the aggregate.
(j) None of the items disclosed on EXHIBIT 6.26 might have a
Material Adverse Effect.
6.27 FULL DISCLOSURE. This Agreement, the other Financing
Agreements, the financial statements delivered in connection herewith, the
representations and warranties of the Borrower contained in this Agreement,
the other Financing Agreements or in any other document, certificate or
written statement by or on behalf of the Borrower delivered or to be
delivered to the Agent or any Lender, do not and will not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading. There is no material fact which the
Borrower has not disclosed to the Agent in writing which has had or, so far
as the Borrower can now foresee, might have a Material Adverse Effect.
6.28 INSURANCE POLICIES. EXHIBIT 7.5 lists all insurance of any
nature maintained for current occurrences by the Borrower, as well as a
summary of the terms of such insurance.
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6.29 CUSTOMER AND TRADE RELATIONS. There exists no actual or
threatened termination, cancellation or limitation of, or any modification or
change in (a) the business relationship of the Borrower or any Subsidiary
with any customer or group of customers whose purchases individually or in
the aggregate are material to the operations of the Borrower or such
Subsidiary, or (b) the business relationship of the Borrower or any
Subsidiary with any material supplier.
6.30 SURVIVAL OF WARRANTIES. All representations and warranties of
the Borrower contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and the
termination hereof. The Borrower shall supplement in writing and deliver to
the Agent all EXHIBITS required in accordance with this Agreement so that the
representations and warranties subject to such supplemental disclosure shall
continue to be true and accurate in all material respects; PROVIDED that the
furnishing of such supplemental disclosure shall not constitute a cure or
waiver of any Default or Event of Default resulting from the matters
disclosed therein or otherwise then existing.
6.31 CORPORATE AND CONTRACTUAL RESTRICTIONS. Neither the Borrower
nor any Subsidiary is a party or subject to any contract, agreement or
charter or other corporate restriction, which materially and adversely
affects its business or the use or ownership of any of its Property. The
Borrower has not agreed or consented to cause or permit in the future (upon
the happening of a contingency or otherwise) any of its Property, whether now
owned or hereafter acquired, to be subject to a Lien that is not a Permitted
Lien. The Borrower is not a party to or bound by any indenture, contract,
instrument or other agreement which prohibits the creation, incurrence or
sufferance to exist of any Lien upon its Property except the Financing
Agreements.
6.32 SUBSIDIARIES. Except as set forth on EXHIBIT 6.32, the
Borrower has no Subsidiaries. EXHIBIT 6.32 contains an accurate list of all
Subsidiaries of the Borrower, setting forth their respective jurisdictions of
incorporation and the percentages of their capital stock owned by the
Borrower or other Subsidiaries.
6.33 DEPOSIT AND DISBURSEMENT ACCOUNTS. EXHIBIT 6.33 lists all
banks and other financial institutions at which the Borrower maintains
deposits and/or other accounts, including any disbursement accounts, and such
Exhibit correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number.
6.34 DEFAULTS AND EVENTS OF DEFAULT. Except as set forth on
EXHIBIT 6.34, no Default or Event of Default has occurred and is continuing.
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6.35 OBLIGATIONS IMMEDIATELY PRIOR TO THE EFFECTIVE DATE. (a)
Immediately prior to the Effective Date, the Obligations consist of (i) the
sum of (a) Term Loans in the outstanding principal amount of $5,250,000, (b)
Revolving Loans in the outstanding principal amount of $10,281,769.40, (c)
accrued and unpaid interest on the Loans in the amount of $40,557.45, and (d)
accrued and unpaid fees and other amounts owing under the Financing
Agreements in the amount of $534.50, LESS (ii) a credit for early payoff in
the amount of $7,800.00 (the aggregate amounts set forth in clauses (i)(c)
and (i)(d) hereof, less the amount set forth in clause (ii) hereof, shall be
referred to as the "Accrued Unpaid Amount"), upon which no judgment has been
entered (the "Existing Obligations"). The Accrued Unpaid Amount shall be
paid to the Agent on the Effective Date. The Existing Obligations are not,
and from and after the Effective Date neither the Existing Obligations nor
the Obligations will be, subject to any right of setoff, expungement or
recoupment, other rights, remedies, objections, counterclaims or claims of
any kind or nature (including, without limitation, any avoidance claim for
actual or constructive fraudulent transfers, preference payments, equitable
subordination or violations of any federal or state statute or laws), or
legal or equitable defenses, in each case, that have been or may be asserted
by or on behalf of the Borrower, any Subsidiary of the Borrower or any other
Person (whether on legal or equitable grounds) to reduce the amount of the
Existing Obligations, to affect the validity or enforceability of the
Existing Obligations, in whole or in part, or to disallow, subordinate, avoid
or void the Existing Obligations, in whole or in part.
(b) As of the Effective Date (i) the aggregate outstanding
principal amount of Term Loan A will be Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000) and (ii) the aggregate outstanding principal
amount of Term Loan B will be Four Million Two Hundred Fifty Thousand Dollars
($4,250,000).
6.36 OTHER REPRESENTATIONS AND WARRANTIES. (a) The Borrower has
no knowledge of any litigation or adversary proceeding threatened against it
or SBCC which would affect in any way (i) the Existing Obligations, (ii) any
action to be taken or that may be taken by the Agent or any Lender hereunder
or under any other Financing Agreement, or (iii) the Agent's and the Lenders'
rights and remedies hereunder or under any other Financing Agreement.
(b) SBCC has not breached, defaulted under or otherwise failed to
perform any of its representations, warranties, covenants, agreements,
indemnities or obligations hereunder or under any of the other Financing
Agreements to which it is a party.
(c) Each of the Financing Agreements is in full force and effect.
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(d) The Agent has, for its benefit and the ratable benefit of the
Lenders, a valid and fully perfected first priority security interest in and
upon the Collateral, enforceable as such against all creditors of the
Borrower and its Affiliates and any Persons purporting to purchase or
otherwise acquire any Collateral from the Borrower and its Affiliates.
7. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, so long as any Obligations
remain outstanding, and (even if there shall be no Obligations outstanding)
so long as this Agreement remains in effect:
7.1 FINANCIAL STATEMENTS. The Borrower shall keep proper books of
record and account in which full and true entries will be made of all
dealings or transactions in respect of or in relation to the business and
affairs of the Borrower, in accordance with Generally Accepted Accounting
Principles consistently applied, and the Borrower shall furnish or cause to
be furnished to the Agent and each Lender: (i) as soon as practicable and in
any event within thirty (30) days after the end of each Accounting Period
(other than for the last Accounting Period of a Fiscal Quarter which shall be
forty-five (45) days), statements of net income and cash flow of the Borrower
and its Subsidiaries on a consolidated basis for such Accounting Period and
for the period from the beginning of the then current Fiscal Year to the end
of such Accounting Period and a balance sheet of the Borrower and its
Subsidiaries on a consolidated basis as of the end of such Accounting Period,
setting forth in each case, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year and as of a date one (1)
year earlier, all in reasonable detail and certified as accurate by the Vice
President-Finance and Administration of the Borrower, subject to changes
resulting from normal year-end adjustments but excluding footnotes; (ii) as
soon as practicable and in any event within ninety (90) days after the end of
each Fiscal Year, statements of net income and cash flow of the Borrower and
its Subsidiaries on a consolidated basis for such year, and a balance sheet
of the Borrower and its Subsidiaries on a consolidated basis as of the end of
such year, setting forth in each case, in comparative form, corresponding
figures for the period covered by the preceding annual audit and as of the
end of the preceding Fiscal Year, all in reasonable detail and satisfactory
in scope to the Required Lenders and examined and certified by Ernst & Young
LLP or any other independent public accountants of recognized national
standing selected by the Borrower and acceptable to the Required Lenders,
whose opinion shall be unqualified and shall be in scope and substance
satisfactory to the Required Lenders; (iii) as part of the Monthly Report, an
aged trial balance of Accounts ("Accounts Trial Balance") indicating which
Accounts are current, up to 30, 30 to 60, 60 to 90 and 90 days or more past
the original invoice date and listing the names and addresses of all
applicable Account Debtors, and a summary of accounts payable showing which
accounts payable are current, up to 30, 30 to 60, 60 to 90 and 90
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days or more past due and listing the names and addresses of applicable
creditors; (iv) concurrently with the preparation of the financial
statements, the Borrower shall send a letter to such accountants with a copy
to the Agent and each Lender, notifying such accountants that one of the
primary purposes for retaining such accountants' services and having audited
financial statements prepared by them is for use by the Agent and the Lenders
and such accountants shall deliver a letter addressed to the Agent and the
Lenders acknowledging the Agent's and the Lenders' reliance thereon in form
and substance satisfactory to the Required Lenders; (v) within thirty (30)
days after the end of each Fiscal Year Projections prepared in the same manner
as the Projections attached as EXHIBIT 6.4, including projected balance
sheets for the forthcoming Fiscal Year, Accounting Period-by-Accounting
Period; projected cash flow statements (including proposed Capital
Expenditures) for the forthcoming Fiscal Year, Accounting
Period-by-Accounting Period; projected profit and loss statements for the
forthcoming Fiscal Year, Accounting Period-by-Accounting Period, together
with appropriate supporting details as requested by the Required Lenders, all
for the Borrower and its Subsidiaries on a consolidated basis and within
forty-five (45) days after the close of each Accounting Period, a statement
in which the actual results of such Accounting Period are compared with the
most recent Projections for such Accounting Period; (vi) as soon as
practicable and in any event within ten (10) days of delivery to the
Borrower, a copy of any letter issued by the Borrower's independent public
accountants or other management consultants with respect to the Borrower's
financial or accounting systems or controls, including all so-called
"management letters"; (vii) not later than the fourth (4th) day of each week,
a Weekly Report for the Borrower computed as of the last Business Day of the
preceding week, signed by an Authorized Officer; (viii) not later than the
twentieth (20th) day of each month, a Monthly Report of the Borrower computed
as of the last Business Day of the preceding month, signed by an Authorized
Officer; (ix) promptly following the filing or furnishing thereof, copies of
all regular and periodic reports, proxy statements, financial statements,
registration statements prospectuses and other material filed by the Borrower
or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any other governmental or private
regulatory authority or distributed to the stockholders of any such Person;
and (x) with reasonable promptness, such other business or financial data as
the Required Lenders may reasonably request.
All financial statements delivered to the Agent or any Lender
pursuant to the requirements of this subsection (except where otherwise
expressly indicated) shall be prepared in accordance with Generally Accepted
Accounting Principles consistently applied on a consolidated basis for the
Borrower and its Subsidiaries. All financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain items or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be
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construed to limit the foregoing. In the event that any "Accounting Changes"
(as defined below) occur and such changes result in a change in the
calculation of the financial covenants, standards, advance rates or terms
used in this Agreement or any other Financing Agreement, then the Borrower,
the Agent and the Lenders agree to enter into negotiations in order to amend
such provisions of this Agreement so as to equitably reflect such Accounting
Changes with the desired result that the criteria for evaluating the
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
PROVIDED that the agreement of the Required Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"ACCOUNTING CHANGES" means (a) changes in accounting principles required by
the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants (or successor thereto or any agency with similar
functions) or (b) changes in accounting principles concurred in by the
Borrower's certified public accountants. In the event that the Agent, the
Borrower and the Required Lenders shall have agreed upon the required
amendments, then after such agreement has been evidenced in writing and the
underlying Accounting Changes with respect thereto has been implemented, any
reference to GAAP contained in this Agreement or in any other Financing
Agreement shall, only to the extent of such Accounting Changes, refer to
GAAP, consistently applied after giving effect to the implementation of such
Accounting Changes. If the Agent, the Borrower and the Required Lenders
cannot agree upon the required amendments within thirty (30) days following
the date of implementation of any Accounting Change, then all financial
statements delivered and all calculations of financial covenants and other
standards, advance rates and terms in accordance with this Agreement and the
other Financing Agreements shall be prepared, delivered and made without
regard to any underlying Accounting Change. Together with each delivery of
financial statements required by SUBSECTIONS 7.1(i) and 7.1(ii), the Borrower
shall deliver to the Agent and the Lenders a certificate of an Authorized
Officer (i) certifying that no Default or Event of Default exists, or, if any
Default or Event of Default exists, specifying the nature thereof, the period
of existence thereof and what action the Borrower proposes to take with
respect thereto and (ii) for the last Accounting Period of each Fiscal
Quarter, setting forth computations in reasonable detail satisfactory to the
Agent demonstrating compliance with the covenant contained in SUBSECTION
7.11. Together with each delivery of financial statements required by
SUBSECTION 7.1(ii), the Borrower shall deliver to the Agent and the Lenders a
certificate of the accountants who performed the audit in connection with
such statements stating that in making the audit necessary to the issuance of
a report on such financial statements, they have obtained no knowledge of any
Default or Event of Default, or, if such accountants have obtained knowledge
of a Default or Event of Default, specifying the nature and period of
existence thereof. Such accountants shall not be liable by reason of any
failure to obtain knowledge of any Default or Event of Default which would
not be disclosed in the ordinary course of an audit. The Agent and
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each Lender shall exercise reasonable efforts to keep such information, and
all information acquired as a result of any inspection conducted in
accordance with SUBSECTION 7.2, confidential; PROVIDED that the Agent or any
Lender may communicate such information (a) to any other Person in accordance
with the customary practices of commercial lenders relating to routine trade
inquiries, (b) to any regulatory authority having jurisdiction over the Agent
or such Lender, (c) subject to the restrictions of SECTION 11, to any other
Person in connection with the Agent's or such Lender's sale of any
participations in the Obligations, or (d) to any other Person in connection
with the exercise of the Agent's or such Lender's rights hereunder or under
any of the other Financing Agreements. The Borrower authorizes the Agent to
discuss the financial condition of the Borrower with the Borrower's
independent public accountants and agrees that such discussion or
communication shall be without liability to either the Agent or the
Borrower's independent public accountants. The Borrower shall deliver a
letter addressed to such accountants authorizing them to comply with the
provisions of this SUBSECTION 7.1.
7.2 INSPECTIONS AND AUDITS. The Agent, any Lender or any Person
designated by the Agent or any Lender in writing, shall have the right, from
time to time hereafter, to call at the Borrower's place or places of business
(or any other place where the Collateral or any information relating thereto
is kept or located) during normal business hours, and, without hindrance or
delay (i) to inspect, audit, check and make copies of and extracts from the
Borrower's books, records, journals, orders, receipts and any correspondence
and other data relating to the Borrower's or any Subsidiary's business or to
any transactions between the parties hereto, (ii) to make such verification
concerning the Collateral as the Agent or any Lender may consider reasonable
under the circumstances, and (iii) to discuss the affairs, finances and
business of the Borrower with any officers, employees or directors of the
Borrower. In accordance with SECTION 2.14 hereof, all out-of-pocket costs
and expenses incurred by the Agent or any Lender in connection with the
Agent's or any Lender's field audits permitted under this SUBSECTION 7.2
shall be reimbursed by the Borrower; PROVIDED that so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower shall
not be liable for reimbursing the Agent or any Lender for the costs and
expenses of more than four (4) field audits in any Fiscal Year.
7.3 CONDUCT OF BUSINESS; COMPLIANCE WITH LAWS. The Borrower
shall, and shall cause each Subsidiary to, maintain its corporate existence
and good standing in its respective state of incorporation and qualify and
remain qualified as a foreign corporation in each jurisdiction in which such
qualification is required, and shall maintain in full force and effect all
licenses, bonds, franchises, leases, patents, contracts and other rights
necessary or desirable to the profitable conduct of its business and shall
comply with all applicable laws, rules, regulations and orders of any
federal, state or local governmental authority, except for such laws, rules
and regulations the violation of which
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would not, in the aggregate, have a Material Adverse Effect. The Borrower
shall conduct its business only under those corporate, trade or fictitious
names duly registered with the appropriate Governmental Authorities or within
thirty (30) days of the Effective Date the Borrower shall provide the Agent
with good standing certificates for each of the jurisdictions listed on
EXHIBIT 6.1-1 for which the Borrower or a Subsidiary is not in good standing
as of the Effective Date or disclosed on EXHIBIT 6.8.
7.4 CLAIMS AND TAXES. (a) The Borrower agrees to indemnify and
hold the Agent and each Lender harmless from and against any and all claims,
demands, obligations, losses, damages, penalties, costs, and expenses
(including reasonable attorneys' fees) asserted by any Person (other than the
Borrower) in connection with this Agreement or the other Financing Agreements
or asserted by any Person and relating to or in any way arising out of the
possession, use, operation or control of any of the Borrower's or any
Subsidiary's Property by any Person. The Borrower shall, and shall cause
each Subsidiary to, file all tax and information returns and reports required
by and prepared in accordance with applicable law and shall pay or cause to
be paid all license fees, bonding premiums and related taxes and charges, and
shall pay or cause to be paid all real and personal property taxes,
assessments and charges and franchise, income, unemployment, use, excise, old
age benefit, withholding, sales and other taxes and other governmental
charges assessed against, or payable by, the Borrower or any Subsidiary, at
such times and in such manner as to prevent any penalty from accruing or any
Lien from attaching to Property of the Borrower or any Subsidiary, provided
that the Borrower and each Subsidiary shall have the right to contest in good
faith, by an appropriate lawful proceeding promptly initiated and diligently
conducted, the validity, amount or imposition of any such tax, assessment or
charge, and upon such good faith contest to delay or refuse payment thereof
so long as (i) no Lien which will have priority over the Agent's Lien granted
hereunder with respect to any Collateral is filed or recorded with respect
thereto, (ii) the execution or other enforcement of such subordinate Lien is
and continues to be effectively stayed, (iii) such proceeding will prevent
the forfeiture or sale of any Property of the Borrower or such Subsidiary,
(iv) adequate reserves have been provided therefor in accordance with GAAP,
(v) such contest does not have a Material Adverse Effect and (vi) if such
contest is abandoned or determined adversely to the Borrower or such
Subsidiary, the Borrower pays, or causes to be paid, all such taxes and other
charges and any penalties and interest payable in connection therewith.
(b) The Borrower shall notify the Agent and each Lender promptly (and
in no event later than ten (10) days) after becoming aware of the intent of the
Service to assert a deficiency with respect to the Borrower or any Subsidiary,
and shall promptly (and in no event later than five (5) days after receipt) send
the Agent and each Lender copies of any notices of proposed deficiency and any
notices of deficiency received from the Service. If the Required Lenders so
request, the Borrower shall take all reasonable actions necessary to contest
such claimed deficiency and shall appoint outside tax counsel
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acceptable to the Required Lenders to contest such claims of deficiency and
shall direct such counsel to consult with the Lenders and to provide the
Agent and the Lenders with periodic status reports and assessments of the
legal merits of the contest. At the Required Lenders' request, such contest
shall continue through the appropriate administrative and court procedures
including appeals therefrom until such outside tax counsel informs the Agent
that it is of the opinion that further contest would be inadvisable taking
into account all factors (including any proposed settlement or compromise by
the Service).
7.5 BORROWER'S LIABILITY INSURANCE. The Borrower shall maintain,
at its expense, such product liability insurance, general public liability
and third party property damage insurance with financially sound and
reputable insurance companies reasonably satisfactory to the Agent in such
amounts and covering such risks and with such deductibles as are acceptable
to the Required Lenders naming the Agent as an additional insured. The
policy or policies shall further provide for thirty (30) days' written notice
to the Agent prior to cancellation or any material change in coverage.
7.6 BORROWER'S PROPERTY INSURANCE. The Borrower shall, and shall
cause each Subsidiary to, at its expense, keep and maintain its assets
insured against loss or damage by fire, theft, explosion, spoilage and all
other hazards and risks ordinarily insured against by other owners or users
of such properties in similar businesses in an amount at least equal to the
full insurable value thereof (including at least six (6) months business
interruption insurance in an amount not less than $50,000,000). All such
policies of insurance shall contain a breach or violation of warranties,
declarations or conditions endorsement in favor of the Agent, shall provide
that the Agent shall receive 30 days' written notice prior to cancellation or
any material change in coverage and shall otherwise be in form and substance
satisfactory to the Required Lenders. The Borrower shall deliver to each
Lender the original (or a certified) copy of each policy of insurance and,
upon the renewal thereof, a binder evidencing such renewal, and evidence of
payment of all premiums therefor. Such policies of insurance shall contain
an endorsement, substantially in the form of EXHIBIT 7.6, naming the Agent,
on behalf of the Lenders, as the lender loss payee and additional insured.
The Borrower hereby directs all insurers under such policies of insurance to
pay all proceeds of such insurance policies directly to the Agent. The
Borrower irrevocably makes, constitutes and appoints the Agent (and all
officers, employees or agents designated by the Agent) as the Borrower's true
and lawful attorney-in-fact for the purpose of making, settling and adjusting
claims under all such policies of insurance, endorsing the name of the
Borrower on any check, draft, instrument or other item of payment received by
the Borrower or the Agent pursuant to any such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. If the Borrower or any Subsidiary, at any time or times
hereafter, shall fail to obtain or maintain any of the policies of insurance
required above or to pay any premium in whole or in part relating thereto,
then the Agent, without waiving or releasing any Obligation, Default or Event
of Default by
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the Borrower hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance
and pay such premiums and take any other action with respect thereto which
the Agent deems advisable.
7.7 PENSION PLANS. (a) The Borrower shall (i) maintain all Plans
which are presently in existence or may, from time to time, come into
existence, in compliance with ERISA, the IRC and all other applicable laws in
all material respects unless such Plans can be terminated or merged without
material liability to the Borrower in connection with such termination or
merger (as distinguished from any continuing funding obligation), (ii) make
contributions to all of the Borrower's Pension Plans in a timely manner and
in a sufficient amount to comply with the requirements of ERISA, (iii) comply
with all material requirements of ERISA and the IRC which relate to such
Plans so as to preclude the occurrence of any Termination Event, prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the IRC) or material "accumulated funding deficiency" as such term is defined
in ERISA, and (iv) not permit any Plan to provide post-retirement medical
benefits, nor shall the Borrower or any ERISA Affiliate undertake any new or
increased obligation with respect to any Pension Plan or Multiemployer Plan
which might result in a Material Adverse Effect.
(b) The Borrower shall promptly deliver written notice of any of the
following to the Agent and each Lender, but in no event later than thirty (30)
days after such event or occurrence:
(1) the Borrower or any ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, with such notice setting forth the
details of such event;
(2) the filing of a request for a funding waiver by the Borrower or any
ERISA Affiliate with respect to any Pension Plan, a copy of such
request and all correspondence received by Borrower or any ERISA
Affiliate with respect to such request;
(3) the Borrower or any ERISA Affiliate fails to make a required
installment or payment under Section 302 of ERISA or Section 412 of
the IRC by the applicable due date;
(4) the Borrower or any ERISA Affiliate knows or has reason to know that a
prohibited transaction (as defined in Section 406 of ERISA or Section
4975 of the IRC) has occurred with respect to any Plan with a
statement describing such transaction and the action or response taken
with respect thereto;
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(5) any increase in the benefits of any existing Plan or contribution rate
to a Multiemployer Plan or the establishment of any new Plan or the
commencement of contributions to any Plan or Multiemployer Plan to
which the Borrower or any ERISA Affiliate had not been contributing;
(6) receipt by the Borrower or any ERISA Affiliate of any adverse ruling
from the Service regarding the qualification of a Plan under Section
401(a) of the IRC, with a copy of such ruling; and
(7) any other report such as an annual report on Form 5500 or actuarial
report in which any Lender may request from time to time.
7.8 NOTICE OF CERTAIN MATTERS. The Borrower shall, as soon as
possible, and in any event within five (5) days after the Borrower learns of
the following, give written notice to the Agent and each Lender of (i) any
material Litigation being instituted or threatened to be instituted by or
against the Borrower or any Subsidiary in any federal, state, local or
foreign court or before any commission or other regulatory body (federal,
state, local or foreign) including, without limitation, any and all pending
or threatened proceedings with respect to Environmental Matters, (ii) any
labor dispute to which the Borrower or any Subsidiary may become a party and
which has had or might have a Material Adverse Effect, any strikes or
walkouts relating to any of its plants or Facilities, and the expiration of
any labor contract to which it is a party or by which it is bound, (iii) any
Default or Event of Default, (iv) any judgment rendered against the Borrower
or any Subsidiary, and (v) any other event or occurrence which could have a
Material Adverse Effect.
7.9 LANDLORD AND WAREHOUSEMAN AGREEMENTS. The Borrower shall
provide the Agent and each Lender with copies of all agreements between the
Borrower and any landlord or warehouseman which owns any premises at which
Inventory or any other Collateral may, from time to time, be located. The
Borrower shall deliver to the Agent on or before the Effective Date a
landlord waiver with respect to the Houston, Texas Facility in form and
substance satisfactory to the Agent. The Borrower shall deliver to the Agent
a landlord's waiver in form and substance acceptable to the Agent from the
lessor of each other leased property currently being used by the Borrower or
any Subsidiary where Collateral is located. The Borrower shall deliver to
the Agent a bailee letter in form and substance acceptable to the Agent with
respect to any warehouse or other location where Collateral is located. With
respect to locations or warehouse space leased on the Effective Date to the
Agent (i) if the Borrower did not deliver such a landlord waiver or xxxxxx
letter to SBCC prior to the Effective Date, the Inventory at that location
shall, from and after the Effective Date, automatically be deemed ineligible
without further action by the Agent or any Lender, and (ii) if the Borrower
is unable to
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deliver a new landlord waiver or bailee letter to the Agent on or before
January 31, 1998 (regardless of whether the Borrower delivered such a
landlord waiver or bailee letter to SBCC prior to the Effective Date), the
Inventory at that location shall automatically be deemed ineligible without
further action by the Agent or any Lender. In the event that the Borrower
delivers to the Agent such landlord waiver or bailee letter, as applicable,
after such date, subject to the terms and conditions of this Agreement
including, without limitation, SUBSECTION 3.10, Inventory located at such
leased location or warehouse location, as applicable, may be considered
Eligible Inventory. The Borrower shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. The
Borrower shall promptly deliver to the Agent copies of (i) any and all
default notices received under or with respect to any such leased location or
public warehouse, and (ii) such other notices or documents as the Agent may
request in its reasonable discretion.
7.10 INDEMNITY. The Borrower agrees to indemnify, pay and hold
harmless the Agent and each Lender and the officers, directors, employees,
agents, affiliates, representatives and attorneys of the Agent and such
Lender (collectively called the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, proceedings,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, all fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may be imposed on,
incurred by, or instituted or asserted against any Indemnitee in any manner
in connection with or relating to or arising out of this Agreement or the
other Financing Agreements or any other transaction contemplated hereby or
thereby, the statements contained in the commitment letters delivered by the
Agent, the Agent and the Lenders' agreement to make the Loans hereunder, the
direct or indirect application or proposed application of the proceeds of the
Loans or the exercise of any right, power or remedy hereunder or under any
other Financing Agreement (the "Indemnified Liabilities"); provided that the
Borrower shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities if a court of competent jurisdiction shall render a
judgment, final and not subject to review on appeal, that such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of
that Indemnitee. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any o them. The provisions of and
undertakings and indemnifications set forth in this SUBSECTION 7.10 shall
survive
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the satisfaction and payment of the Obligations and the termination of this
Agreement, and shall continue to be the liability, obligation and
indemnification of the Borrower.
7.11. ADDITIONAL SLOTTING FEE CERTIFICATE. To the extent that the
Borrower intends to add any new Additional Slotting Fees in the Current Asset
Base, prior to the last Business Day of any calendar month during which such
new Additional Slotting Fees are incurred, the Borrower shall deliver to the
Agent an Additional Slotting Fee Certificate setting forth, in reasonable
detail, (i) any such Additional Slotting Fee Amounts and the basis for the
calculation of such Additional Slotting Fee Amounts, (ii) the then current
Adjusted Initial Slotting Fee Amount and the basis for the calculation of
such Adjusted Initial Slotting Fee Amount, and (iii) the then current
Aggregate Additional Slotting Fee Amount and the basis for the calculation of
such Aggregate Additional Slotting Fee Amount, in form and substance
satisfactory to the Agent in all respects. For purposes of determining the
"Current Asset Base" in SUBSECTION 2.1(a)(3) hereof, any new Additional
Slotting Fee as to which the Borrower has delivered an Additional Slotting
Fee Certificate in accordance with the immediately preceding sentence shall
be included in the calculation of the Aggregate Additional Slotting Fee as of
12:01 a.m. (New York time) on the first day of the calendar month immediately
following the month in which the applicable Additional Slotting Fee
Certificate was delivered to the Agent.
7.12. REAL ESTATE. As promptly as practicable following the
Effective Date, (i) the Borrower shall deliver the following documents to
each Lender in form and substance satisfactory to each Lender in all
respects, (ii) each of the transactions contemplated by each such document
shall be consummated in a manner satisfactory to each Lender and its counsel
in all respects, and (iii) each of the conditions contemplated by each such
document shall be satisfied in a manner satisfactory to each Lender and its
counsel in all respects:
(a) MORTGAGES. Duly executed copies of the Mortgages.
(b) MORTGAGEE'S TITLE INSURANCE. A Loan Policy, dated the Effective
Date for each parcel of Real Estate subject to a Mortgage, from a title
insurance company acceptable to the Agent, in the fair market value of such
parcel and subject only to such exceptions and exclusions as are acceptable to
the Agent and containing such information and endorsements as may be required by
the Agent, including, without limitation, usury, zoning, comprehensive and
revolving credit endorsements.
(c) SURVEYS. A survey for each parcel of Real Estate subject to a
Mortgage prepared in accordance with the minimum standard detail requirement for
land title surveys as adopted by the American Title Association and by the
American Congress
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on Surveying and Mapping, dated within thirty (30) days of the Effective Date
and certified by a licensed surveyor.
(d) ESTOPPEL CERTIFICATES. A duly executed landlord's estoppel
certificate from each Person (other than the Borrower) that holds any
interest in the Real Estate.
(e) LEGAL OPINION. The legal opinion of the Borrower's counsel
and such local counsel deemed necessary by the Lenders in form and substance
satisfactory to the Lenders and their counsel.
(f) OTHER DOCUMENTS. All corporate and legal proceedings and all
agreements in connection with the transactions contemplated by this
Agreement, the Mortgages and the other Financing Agreements shall be
satisfactory to the Agent, and the Agent shall have received all information
and copies of all documents including, without limitation, records of
corporate existence, authority and proceedings and governmental approvals, if
any, which the Agent reasonably may have requested in connection therewith,
and such documents, where appropriate, shall be certified by proper corporate
or governmental authorities.
8. NEGATIVE COVENANTS.
The Borrower covenants and agrees that so long as any of the
Obligations remain outstanding and (even if there shall be no obligations
outstanding) so long as this Agreement remains in effect (unless the Required
Lenders shall give their prior written consent thereto):
8.1 ENCUMBRANCES. The Borrower shall not, and shall not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien of any
nature whatsoever on any of its Property, including, without limitation, the
Collateral, other than the following "Permitted Liens": (i) Liens (other than
Liens relating to Environmental Laws or ERISA) securing the payment of
Charges not yet due and payable, (ii) pledges or deposits under workmen's
compensation, unemployment insurance, social security and other similar laws,
or to secure the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations or surety
or appeal bonds, or to secure indemnity, performance or other similar bonds
in the ordinary course of business, (iii) the Liens in favor of the Agent,
for the benefit of the Lenders, (iv) purchase money Liens (including
capitalized leases and other forms of installment purchase financing) granted
to the Person financing a purchase of Equipment so long as the Lien granted
is limited to the specific Equipment so acquired, the debt secured by the
Lien is not more than the lesser of the acquisition cost or the fair market
value of the specific item of Equipment on which the Lien is granted, the
aggregate amount of indebtedness secured by such Liens as a result of
purchases shall not exceed One Million
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Dollars ($1,000,000) at any time outstanding during the term hereof, and the
transaction does not violate any other provision of this Agreement
(notification of such purchase money Lien to be provided to the Agent and
each Lender within ten (10) days of acquisition of such Equipment), (v) Liens
permitted in accordance with SUBSECTION 7.4(a), (vi) other Liens on Real
Estate, which do not, in the Agent's sole determination, (a) materially
impair the use of such property, or (b) materially lessen the value of such
property for the purposes for which the same is held by the Borrower or such
Subsidiary, and (vii) Liens existing on the Effective Date and disclosed on
EXHIBIT 8.1.
8.2 INDEBTEDNESS AND LIABILITIES. The Borrower shall not, and
shall not permit any Subsidiary to, incur, create, assume, become or be
liable in any manner with respect to, or suffer to exist, any Indebtedness,
except for (i) the Obligations, (ii) Indebtedness existing on the Effective
Date and disclosed on EXHIBIT 8.2 and/or Indebtedness underlying Permitted
Liens, (iii) Indebtedness secured by purchase money Liens permitted by
SUBSECTION 8.1(iv), (iv) Indebtedness permitted by SUBSECTION 8.5, (v)
Contingent Retail Store Obligations, and (vi) Indebtedness incurred under the
Subordinated Note and the Additional Subordinated Notes. Except for the
Indebtedness permitted in the immediately preceding sentence, the Borrower
shall not, and shall not permit any Subsidiary to, incur any Liabilities
except for trade obligations and normal accruals in the ordinary course of
business not yet due and payable, or with respect to which the Borrower or
such Subsidiary is contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent that the Borrower or
such Subsidiary has set aside on its books adequate reserves therefor, if
appropriate under Generally Accepted Accounting Principles. Except as
permitted by SUBSECTION 8.20, the Borrower shall not, and shall not permit
any Subsidiary to prepay, defease, purchase, redeem, retire or otherwise
acquire any Indebtedness other than the Obligations.
8.3 CONSOLIDATIONS, ACQUISITIONS. The Borrower shall not, and
shall not permit any Subsidiary to, merge or consolidate with, purchase,
lease or otherwise acquire all or substantially all of the assets or
properties of, or acquire any capital stock, equity interests, debt or other
securities of, any other Person; PROVIDED that any Subsidiary may merge or
consolidate with or into any other Subsidiary or with or into the Borrower
(provided that the Borrower is the surviving entity). Except as disclosed on
EXHIBIT 8.3, the Borrower shall not, and shall not permit any Subsidiary to,
dissolve, terminate, enter into any joint venture or become a partner in any
partnership. Except for sales of stock or assets in connection with the
Retail Stores Sale Program, the Borrower shall not sell, assign, encumber,
pledge, transfer or otherwise dispose of any interest in the Borrower or any
Subsidiary or transfer any Property to any Affiliate except as otherwise
expressly permitted hereby.
8.4 INVESTMENTS. The Borrower shall not, and shall not permit any
Subsidiary to, make or permit to exist Investments in, or commitments
therefor, or create
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any Subsidiary other than the following "Permitted Investments": (i) loans
made in accordance with SUBSECTION 8.8, (ii) Investments existing on the
Effective Date and disclosed on EXHIBIT 8.4, (iii) Investments arising in
connection with the Retail Store Sale Program, and (iv) so long as no Event
of Default shall have occurred and be continuing, investments in Cash
Equivalents, not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate.
8.5 GUARANTIES. The Borrower shall not, and shall not permit any
Subsidiary to, make or suffer to exist any Guaranty, except (i) endorsements
of negotiable instruments or items of payment for collection in the ordinary
course of business, (ii) the Contingent Retail Store Obligations and (iii)
Guaranties existing on the Effective Date and disclosed on EXHIBIT 8.5.
8.6 COLLATERAL LOCATIONS. The Borrower shall not, and shall not
permit any Subsidiary to, sell any of the Inventory on a guaranteed sale,
sale-and-return, sale on approval or consignment basis or any other basis
subject to a repurchase obligation or return right. Neither the location of
the principal place of business and chief executive office of the Borrower as
set forth on EXHIBIT 6.7, the locations of items of Collateral as set forth
in EXHIBIT 8.6 nor the corporate name or mailing address of the Borrower
shall be changed, nor shall there be established additional places of
business or additional locations at which Collateral is stored, kept or
processed unless (i) the Borrower shall have given the Agent not less than 30
days prior written notice thereof, (ii) the Agent shall have determined that,
after giving effect to any such change of name, address or location, the
Agent shall have a first perfected Lien in the Collateral except for
Permitted Liens, (iii) in the case of Collateral locations, the Borrower
shall have delivered a landlord waiver or bailee letter, as applicable, in
form and substance satisfactory to the Agent with respect to such location,
and (iv) all negotiable documents and receipts in respect of any Collateral
maintained at such premises are promptly delivered to the Agent. Prior to
making any such change or establishing such new location, the Borrower shall
execute any additional financing statements or other documents or notices
required by the Agent.
8.7 DISPOSAL OF PROPERTY. The Borrower shall not, and shall not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose
of any of its Property, assets and rights to any Person except for (i) bona
fide sales of Inventory to customers for fair value in the ordinary course of
business, (ii) sales of Equipment which is obsolete, worn-out or otherwise
not useable in the Borrower's business (up to Two Hundred Fifty Thousand
Dollars ($250,000) in sales proceeds in the aggregate in any Fiscal Year),
and (iii) assets to be sold pursuant to the Retail Stores Sale Program as set
forth on EXHIBIT 8.7. In the event any Equipment of the Borrower or any
Subsidiary (other than Equipment included in the Retail Stores Sale Program)
is sold, transferred or otherwise disposed of as permitted by clause (ii) of
this SUBSECTION 8.7 or with the Required
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Lenders' consent, and (x) such sale, transfer or disposition is effected
without replacement of the Equipment so sold, transferred or disposed of or
such Equipment is replaced by Equipment leased by the Borrower, the Borrower
shall promptly (but in any event within three (3) Business Days of the
receipt thereof) deliver all of the cash proceeds of any such sale, transfer
or disposition to the Agent, which proceeds shall be applied to the Term
Loans (or, if the Term Loans have been paid in full, the Revolving Loans, and
the Total Revolving Loan Facility shall be permanently reduced by such
amount) without premium or penalty, except as provided in SUBSECTION 2.7(b),
or (y) such sale, transfer or disposition is made in connection with the
purchase by the Borrower of replacement Equipment, the Borrower shall use the
proceeds of such sale, transfer or disposition to finance the purchase by the
Borrower of replacement Equipment and shall deliver to the Agent written
evidence of the use of the proceeds for such purchase. Except as permitted
by SUBSECTION 8.1, all replacement Equipment purchased by the Borrower shall
be free and clear of all Liens, except for Liens in favor the Agent, for the
benefit of the Lenders.
8.8 EMPLOYEE LOANS. Except for (i) advances for travel and
related expenses by the Borrower or any Subsidiary to its employees in the
ordinary course of business in an amount not to exceed from time to time Two
Hundred Fifty Thousand Dollars ($250,000) in the aggregate at any one time,
(ii) commission advances by the Borrower or any Subsidiary to its employees
in an amount not to exceed from time to time Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate at any one time and (iii) those employee
loans disclosed on EXHIBIT 8.4, the Borrower shall not, and shall not permit
any Subsidiary to, make any loans or other advances to any Person.
8.9 PLANS. The Borrower shall not, nor will it permit any ERISA
Affiliate to:
(i) assume or incur any Liability under any Plan other than
those Plans disclosed in EXHIBIT 6.19(a);
(ii) permit the amendment, establishment, assumption or
maintenance of any Pension Plan;
(iii) commence participation or permit an ERISA Affiliate to
participate in a Multiemployer Plan;
(iv) permit the termination of any Plan if such termination
might have Material Adverse Effect;
(v) permit the occurrence of an accumulated funding deficiency
(as defined in Section 302 of ERISA or Section 412 of the IRC) as to
any Plan;
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(vi) engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of
the IRC; or
(vii) permit the establishment, adoption, or assumption of
any Plan providing post-retirement welfare benefits.
8.10 RESTRICTED PAYMENTS. The Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly declare, pay, order, make or
set apart any Restricted Payment except for (i) dividends paid by any
Subsidiary to any Subsidiary owning its capital stock or to the Borrower, and
(ii) Restricted Payments under the Subordinated Debt Documents, but only to
the extent expressly permitted by SUBSECTION 8.20.
8.11 SECURITIES. Other than the payment of the Phantom Stock
Payment to the extent permitted by SUBSECTION 8.20, the Borrower shall not,
and shall not permit any Subsidiary to, redeem, prepay, repurchase or acquire
any capital Stock of the Borrower of any description for consideration or
otherwise.
8.12 CHANGES IN CHARTER, BYLAWS OR FISCAL YEAR. Borrower shall
not, and shall not permit any Subsidiary to, (i) change its Fiscal Year or
(ii) amend its Certificate of Incorporation or Bylaws or other constitutional
documents in a manner which could have a Material Adverse Effect; PROVIDED
that the Borrower may amend its Certificate of Incorporation to effect an
increase in the number of authorized shares of its Common Stock.
8.13 TRANSACTIONS WITH AFFILIATES. Except as set forth on EXHIBIT
8.13 and as permitted by SUBSECTION 8.8, the Borrower shall not, and shall
not permit any Subsidiary to, enter into any transaction including, without
limitation, the purchase, sale, lease or exchange of property or the
rendering or purchase of any service to or from any Affiliate except in the
ordinary course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms
that are fully disclosed to the Agent and the Lenders in advance and are no
less favorable to the Borrower than the Borrower would obtain in a comparable
arm's length transaction with an unaffiliated Person. Notwithstanding
anything herein to the contrary, the Borrower shall not, and shall not permit
any Subsidiary to, enter into any transaction with or otherwise have any
dealings with, the Singlebrew Packaging Company, other than in accordance
with, or as permitted by, the Singlebrew Partnership Agreement as in effect
on the date hereof.
8.14 CAPITAL STRUCTURE; OTHER BUSINESS. Except for sales pursuant
to the Retail Stores Sale Program, the Borrower shall not, and shall not
permit any Subsidiary
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to, engage in any business unrelated to its current businesses, engage in any
transaction out of the ordinary course of business, or engage in any
transaction which might have a Material Adverse Effect.
8.15 SALE AND LEASEBACK. The Borrower shall not, and shall not
permit any Subsidiary to, sell or transfer any of its Property (other than
customer display equipment) in order to concurrently or subsequently lease as
lessee such or similar Property unless (i) any such sale is made for the fair
market value of the Property, (ii) the sale consideration received is cash,
(iii) the sale is upon fair and reasonable terms in an arm's length
transaction, and (iv) all proceeds of any sale are used to prepay the
Obligations in the priority set forth in SUBSECTION 8.7.
8.16 IMPAIRMENT AGREEMENTS. Except as disclosed on EXHIBIT 8.16,
the Borrower shall not, and shall not permit any Subsidiary to, enter into or
assume any agreement, instrument, indenture or other obligation (other than
the Financing Agreements and other than the Subordinated Note Agreement with
respect to clause (iii) below) which (i) contains a negative pledge provision
which would require a sharing of any interest in the Collateral, (ii)
prohibits or limits the creation or assumption of any Lien upon its Property,
whether now owned or hereafter acquired, or (iii) restricts, prohibits or
requires the consent of any Person with respect to the payment of Restricted
Payments.
8.17 CORPORATE ACCOUNTS. The Borrower shall not maintain corporate
deposit accounts jointly with any Affiliate or commingle any of its funds
with funds of any Affiliate.
8.18 CAPITAL EXPENDITURES LIMITATIONS. The Borrower shall not, and
shall not permit any Subsidiary to, make Capital Expenditures aggregating in
excess of Five Million Dollars ($5,000,000) in any Fiscal Year.
8.19 PARTNERSHIP AGREEMENT. The Borrower shall not amend, modify,
terminate or waive, nor suffer the amendment, modification, termination or
waiver of, any of the terms or provisions of the Singlebrew Partnership
Agreement.
8.20 SUBORDINATED DEBT. The Borrower shall not, and shall not
permit any Subsidiary to:
(a) amend, modify, restate, waive or otherwise supplement, or
suffer the amendment, modification, restatement, waiver or supplement of, any
provision of any of the Subordinated Debt Documents, without the prior
written consent of the Lenders;
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(b) make any required payment or other distribution (other than
the Phantom Stock Payment) to the Subordinated Creditor except in accordance
with the terms of the Subordinated Debt Documents and the Subordinated
Agreement;
(c) make the Phantom Stock Payment to the Subordinated Creditor
except in accordance with the terms of the Subordinated Debt Documents;
PROVIDED, HOWEVER, that, notwithstanding any provision of the Subordinated
Debt Documents or the Subordinated Agreement to the contrary, the Borrower
shall not make the Phantom Stock Payment if a Default or an Event of Default
shall have occurred and be continuing or would result after giving effect to
such payment; or
(d) prepay, defease, purchase, redeem, retire or otherwise acquire
any Subordinated Debt, except that the Borrower may prepay the principal
amount of the Subordinated Note in an aggregate amount not to exceed
$5,000,000; PROVIDED that (i) no prepayment may be made prior to the first
anniversary of the funding of the Subordinated Note, (ii) no Default or Event
of Default shall have occurred and be continuing or would result after giving
effect to any such prepayment; and (iii) after giving effect to any such
prepayment, the Borrower shall have unused Borrowing Availability of at least
$2,000,000 and all trade payables of the Borrower and its Subsidiaries shall
be within their terms.
8.21 FINANCIAL COVENANTS. (a) EBITDA. The Borrower shall not
permit EBITDA, as of the end of each of the computation periods set forth
below, to be less than the following:
Computation Period EBITDA
------------------ ------
First Fiscal Quarter of Fiscal Year $1,300,000
1998
From the beginning of the first Fiscal $2,500,000
Quarter of Fiscal Year 1998 through
the end of the second Fiscal Quarter
of Fiscal Year 1998
From the beginning of the first Fiscal $3,600,000
Quarter of Fiscal Year 1998 through
the end of the third Fiscal Quarter of
Fiscal Year 1998
From the beginning of the first Fiscal $7,000,000
Quarter of Fiscal Year 1998 through
the end of the fourth Fiscal Quarter
of Fiscal Year 1998
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From the beginning of the second $7,000,000
Fiscal Quarter of Fiscal Year 1998
through the end of the first Fiscal
Quarter of Fiscal Year 1999
(b) TOTAL CAPITAL FUNDS. The Borrower shall not permit Total
Capital Funds, as of the end of each of the Fiscal Quarters set forth below,
to be less than the following:
Fiscal Quarter Total Capital Funds
-------------- -------------------
First Fiscal Quarter of Fiscal Year 1998 $66,000,000
Second Fiscal Quarter of Fiscal Year 1998 $64,000,000
Third Fiscal Quarter of Fiscal Year 1998 $62,000,000
Fourth Fiscal Quarter of Fiscal Year 1998 $62,500,000
First Fiscal Quarter of Fiscal Year 1999 $61,000,000
8.22 SUBSIDIARIES. The Borrower will not have any Subsidiaries
other than those listed on Exhibit 6.32 hereto. The Subsidiaries will not
conduct any business other than as described on Exhibit 6.32 hereto.
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.
9.1 OBLIGATIONS. If a Default or an Event of Default shall exist
or occur, the Required Lenders (or the Agent with the consent of the Required
Lenders) may elect to do one or more of the following at any time or times
and in any order: (i) reduce the Maximum Revolving Loan Amount, or (ii)
restrict the amount of, or suspend its obligations to make, Revolving Loans.
If an Event of Default shall exist or occur, in addition to the actions
described in the preceding sentence, the Required Lenders (or the Agent with
the consent of the Required Lenders) may elect to do one or more of the
following at any time or times: (a) terminate this Agreement or the
Commitments, (b) declare any or all Obligations to be immediately due and
payable; PROVIDED that upon the occurrence of any Event of Default referred
to in clauses (f), (g) or (h) within the definition of "Event of Default,"
such Commitments shall automatically and immediately terminate and all
Obligations shall automatically become immediately due and payable without
notice, demand or other actions of any kind by any Person, or (c) pursue its
other rights and remedies under the Financing Agreements and applicable law.
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9.2 RIGHTS AND REMEDIES GENERALLY. Upon acceleration of the
Obligations, the Agent, on behalf of the Lenders, shall have, in addition to
any other rights and remedies contained in this Agreement or in any of the
other Financing Agreements, all of the rights and remedies of a secured party
under the Code or other applicable laws, all of which rights and remedies
shall be cumulative and non-exclusive, to the extent permitted by law. In
addition to all such rights and remedies, the Agent shall have the right to
sell, lease or otherwise dispose of all or any part of the Collateral and the
sale, lease or other disposition of the Collateral, or any part thereof, by
the Agent after an Event of Default may be for cash, credit or any
combination thereof, and the Agent or any Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale, and in
lieu of actual payment of such purchase price, may set-off the amount of such
purchase price against the Obligations then owing. Any sales of the
Collateral may be adjourned from time to time with or without notice. The
Agent shall have the right to conduct such sales on the Borrower's premises,
at the Borrower's expense, or elsewhere, on such occasion or occasions as the
Agent may see fit.
9.3 ENTRY UPON PREMISES AND ACCESS TO INFORMATION. Upon
acceleration of the Obligations, the Agent shall have the right (i) to cause
the Collateral to remain on the Borrower's premises, without any obligation
to pay rent, (ii) to enter upon the premises of the Borrower where the
Collateral is located or any other place or places where the Collateral is
believed to be located and kept, without any obligation to pay rent, to
render the Collateral useable or saleable, or to remove the Collateral
therefrom to the premises of the Agent or any agent of the Agent, at the
Borrower's expense, for such time as the Agent may desire in order
effectively to collect or liquidate the Collateral, and (iii) to require the
Borrower to assemble the Collateral and make it available to the Agent at a
place or places to be designated by the Agent. Upon acceleration of the
Obligations, the Agent shall have the right to take possession of the
Borrower's original books and records, to obtain access to Borrower's data
processing equipment, computer hardware and software relating to the
Collateral and to use all of the foregoing and the information contained
therein in any manner the Agent deems appropriate; and the Agent shall have
the right to notify postal authorities to change the address for delivery of
the Borrower's mail to an address designated by the Agent and to receive,
open and dispose of all mail addressed to the Borrower and to take possession
of all checks or other original remittances contained in such mail.
9.4 SALE OR OTHER DISPOSITION OF COLLATERAL BY THE AGENT. Any
notice required to be given by the Agent of a sale, lease or other
disposition or other intended action by the Agent with respect to any of the
Collateral which is deposited in the United States mails, postage prepaid and
duly addressed to the Borrower at the address specified in SUBSECTION 10.13,
at least ten (10) days prior to such proposed action, shall constitute fair
and reasonable notice to the Borrower of any such action. The net proceeds
realized by the Agent upon any such sale or other disposition, after
deduction for the expenses of
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retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by the Agent in connection
therewith, shall be applied as provided herein toward satisfaction of the
obligations including, without limitation, the Obligations described in
SUBSECTIONS 2.14, 2.19 and 10.2. The Agent shall account to the Borrower for
any surplus realized upon such sale or other disposition, and the Borrower
shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's Liens on the Collateral until the
Obligations are fully paid. The Borrower agrees that the neither the Agent
nor any Lender has no obligation to preserve rights to the Collateral against
any other Person. For the purpose of enabling the Agent to exercise its
rights, powers and remedies under this SECTION 9, in order to take possession
of, hold, preserve, process, assemble, prepare for sale, market for sale,
sell or otherwise dispose of the Collateral, at such time as the Agent shall
be entitled to exercise such rights and remedies, the Agent is hereby granted
a license, lease or other right to use, without charge, the Borrower's
General Intangibles, Intellectual Property, Equipment, Fixtures, Real Estate,
whether part of the Collateral or not including, without limitation, any
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any other Property of a
similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale or lease and selling or leasing any Inventory or
other Collateral and the Borrower's rights under all licenses, leases and
franchise agreements shall inure to the Agent's benefit until all Obligations
are paid in full.
9.5 WAIVER OF DEMAND. DEMAND, PRESENTMENT, PROTEST AND NOTICE OF
DEMAND, PRESENTMENT, PROTEST, NONPAYMENT, INTENT TO ACCELERATE AND
ACCELERATION ARE HEREBY WAIVED BY THE BORROWER. THE BORROWER ALSO WAIVES THE
BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
9.6 WAIVER OF NOTICE. UPON THE OCCURRENCE OF A DEFAULT OR AN
EVENT OF DEFAULT, THE BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING
OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OF ITS RIGHTS TO REPOSSESS THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE BORROWER ACKNOWLEDGES THAT
IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION
AND THIS AGREEMENT.
10. OTHER RIGHTS AND OBLIGATIONS.
10.1 WAIVER. The failure of the Agent or any Lender, at any time
or times hereafter, to require strict performance by the Borrower of any
provision of this
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Agreement shall not waive, affect or diminish any right of the any such
Person thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Lenders or Required Lenders, as applicable, of a
Default or an Event of Default under this Agreement or any of the other
Financing Agreements shall not suspend, waive or affect any other Default or
Event of Default under this Agreement or any of the other Financing
Agreements, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. None of the undertakings,
agreements, warranties, covenants and representations of the Borrower
contained in this Agreement or any of the other Financing Agreements and no
Default or Event of Default by the Borrower under this Agreement or any of
the other Financing Agreements shall be deemed to have been suspended or
waived by the Lenders or Required Lenders, as applicable, unless such
suspension or waiver is in writing and signed by an officer of each of the
Lenders or Required Lenders, as applicable, and directed to the Borrower
specifying such suspension or waiver. Neither this Agreement nor the other
Financing Agreements may be modified or amended except in a written agreement
signed by the Borrower, the Agent and the Lenders.
10.2 COSTS AND ATTORNEYS' FEES. All fees, costs and expenses
incurred by the Agent or any Lender in connection with protecting, perfecting
or preserving the Agent's Lien in the Collateral or in connection with any
matters contemplated by or arising out of this Agreement or the other
Financing Agreements, whether (a) to commence, defend, or intervene in any
litigation or to file a petition, complaint, answer, motion or other
pleadings, (b) to take any other action in or with respect to any suit or
proceedings (bankruptcy or otherwise), (c) to consult with officers of the
Agent or any Lender or to advise the Agent or any Lender, (d) to protect,
collect, lease, sell, take possession of, or liquidate any of the Collateral,
(e) to reimburse SBCC for its fees and expenses in accordance with the terms
and conditions of the Assignment Agreement, or (f) to attempt to enforce or
to enforce any Lien on any of the Collateral, or to enforce any rights of the
Agent or any Lender to collect any of the obligations, including, without
limitation, reasonable fees, costs and expenses of the attorneys and
paralegals of the Agent or any Lender, the usual and customary charges of the
internal counsel and the out-of-pocket costs and the per diem charges for the
examiners of such Persons at their then applicable rates, together with
interest thereon at the Default Rate then applicable to the Revolving Loan,
shall be part of the Obligations, payable on demand and secured by the
Collateral.
10.3 EXPENDITURES BY THE AGENT AND THE LENDERS. In the event the
Borrower shall fail to pay Charges, insurance, assessments, costs or expenses
which the Borrower is, under any of the terms hereof, required to pay, or
fails to keep the Collateral free from Liens, except Permitted Liens, or
fails to maintain, replace or repair the Collateral as required hereby, the
Agent or any Lender may, in its sole discretion, make expenditures for any or
all of such purposes and acquire or accept an assignment of any
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Lien against the Collateral, and the amount so expended (including, without
limitation attorneys' fees and expenses, court costs, filing fees and other
charges), together with interest thereon at the Base Rate or the Default Rate
then applicable to the Revolving Loan shall be part of the Obligations,
payable on demand and secured by the Collateral.
10.4 CUSTODY AND PRESERVATION OF COLLATERAL. Beyond the safe
custody thereof, the Agent shall have no duty with respect to any Collateral
in its possession or control (or in the possession or control of any agent or
bailee) or with respect to any income thereon. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Borrower shall request in writing, but failure by the Agent to comply with
any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by the Agent to comply with any such request
shall of itself be deemed a failure to exercise reasonable care, and no
failure by the Agent to preserve or protect any right with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Borrower, shall of
itself be deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral. The Agent shall not be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the Agent
in good faith.
10.5 RELIANCE BY THE AGENT AND LENDERS. All covenants, agreements,
representations and warranties made herein or in any of the other Financing
Agreements by the Borrower shall, notwithstanding any investigation by the
Agent or any Lender, be deemed to be material to and to have been relied upon
by the Agent and each Lender.
10.6 PARTIES AND ASSIGNMENT. This Agreement and the other
Financing Agreements shall be binding upon and inure to the benefit of the
Agent, the Lenders, the Borrower and their respective successors and assigns.
The Borrower's successors and assigns shall include, without limitation, any
trustee, receiver or debtor in possession of or for the Borrower.
Notwithstanding the foregoing, the Borrower may not sell, assign or transfer
this Agreement, or the other Financing Agreements or any portion thereof
including, without limitation, its rights, titles, interests, remedies,
powers and/or duties hereunder or thereunder. The Borrower hereby consents
to each Lender's sale, assignment, transfer or other disposition pursuant
hereto, at any time and from time to time hereafter, of this Agreement, or
the other Financing Agreements or any portion thereof, including without
limitation all or any part of each Lender's rights, titles, interests,
remedies, powers and/or duties hereunder or thereunder.
10.7 APPLICABLE LAW; SEVERABILITY. This Agreement and the other
Financing Agreements have been submitted to the Agent and each Lender at its
office in
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New York, except for the perfection and enforcement of Liens in other
jurisdictions which shall be governed by the laws of those jurisdictions.
Whenever possible, each provision of this Agreement shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. THE
BORROWER, THE AGENT AND EACH LENDER HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR THE OTHER FINANCING AGREEMENTS
SHALL BE LITIGATED IN SUCH COURTS, AND THE BORROWER, THE AGENT AND EACH
LENDER EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT
AT THE ADDRESS SET FORTH IN SUBSECTION 10.13 AND THAT SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OF FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN POSTED TO THE BORROWERS ADDRESS. THE BORROWER
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX XXXX, XXX
XXXX 00000 AND SUCH OTHER PERSON AS MAY HEREAFTER BE SELECTED BY THE BORROWER
WHICH IRREVOCABLY AGREES IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON
ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE BORROWER TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL
BE MAILED BY REGISTERED MAIL TO THE BORROWER AT ITS ADDRESS PROVIDED IN
SUBSECTION 10.13, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW,
ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICES OF
PROCESS. IF ANY AGENT APPOINTED BY THE BORROWER REFUSES TO ACCEPT SERVICE,
THE BORROWER HEREBY AGREES THAT SERVICE UPON
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IT BY MAIL OR OTHERWISE IN ACCORDANCE WITH SUBSECTION 10.13 SHALL CONSTITUTE
SUFFICIENT NOTICE. THE AGENT, EACH LENDER AND THE BORROWER ACKNOWLEDGE THAT
THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE
REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW,
TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE AGENT OR ANY LENDER. NOTHING
CONTAINED IN THIS SUBSECTION 10.8 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
TO THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH
JURISDICTIONS. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
10.9 MARSHALLING. The Agent shall be under no obligation to
xxxxxxxx any assets in favor of the Borrower or any other Person or against
or in payment of any or all of the Obligations.
10.10 SECTION TITLES. The section titles contained in this
Agreement shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties.
10.11 CONTINUING EFFECT. This Agreement, the Agent's Liens on the
Collateral, and all of the other Financing Agreements shall continue in full
force and effect so long as any obligations shall be owed to the Agent or any
Lender, and (even if there shall be no obligations outstanding) so long as
this Agreement has not been terminated as provided in SUBSECTION 2.8;
provided that the Borrower's obligations to indemnify the Agent and each
Lender under any Financing Agreement shall continue notwithstanding any
termination of this Agreement.
10.12 INCORPORATION BY REFERENCE. The provisions of the other
Financing Agreements are incorporated in this Agreement by this reference.
Except as otherwise provided in this Agreement and except as otherwise
provided in the other Financing Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provisions in the
other Financing Agreements, the provision contained in this Agreement shall
govern and control.
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10.13 NOTICES. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall
be in writing, and shall be deemed to have been validly served, given or
delivered three (3) days after deposit in the United States mails (by
certified mail, return receipt requested), with proper postage prepaid, or
upon delivery by courier or upon transmission by telex, telecopy or similar
electronic medium to the following addresses:
(i) If to the Agent, at:
XXXXXXX SACHS CREDIT PARTNERS, L.P.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
FRIED, FRANK, HARRIS, XXXXXXX & XXXXXXXX
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. First
Telecopy No.: (000) 000-0000
(ii) If to a Lender, at the address set forth opposite its name on
Schedule 1 hereto
(iii) If to the Borrower, at:
Brothers Gourmet Coffees, Inc.
One Boca Place
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Vice President-Finance and Administration
Telecopy: (000) 000-0000
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With a copy to:
BROWNSTEIN, HYATT, XXXXXX & XXXXXXXXXX, P.C.
Twenty-Second Floor
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Telecopy: (000) 000-0000
or to such other address as each Person designates to the other in the manner
herein prescribed.
10.14 WAIVERS WITH RESPECT TO OTHER INSTRUMENTS. The Borrower
waives presentment, demand and protest and notice of presentment, demand
protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, Accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time held
by the Agent on which the Borrower may in any way be liable and hereby
ratifies and confirms whatever the Agent may do regarding the enforcement,
collection, compromise, or release thereof.
10.15 RETENTION OF THE BORROWER'S DOCUMENTS. The Agent or any
Lender may destroy or otherwise dispose of all documents, schedules, invoices
or other papers (other than Collateral) delivered to such Person in
accordance with its customary practices unless the Borrower requests in
writing that same be returned. Upon the Borrower's request and at the
Borrower's expense, such Person shall return such papers when such Person's
actual or anticipated need for same has terminated.
10.16 ENTIRE AGREEMENT. This Agreement, including all Exhibits,
Schedules and other documents attached hereto or incorporated by reference
herein, constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all other negotiations, understandings
and representations, oral or written, with respect to the subject matter
hereof.
10.17 EQUITABLE RELIEF. The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its
Obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Agent or any Lender; therefore, the Borrower agrees
that the Agent or any Lender, if such Person so requests, shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
10.18 LENDERS' FIRST RIGHT OF REFUSAL. If at any time during the
term of this Agreement the Borrower enters into, or proposes to enter into,
an agreement or understanding to acquire any Person, or the assets of any
Person, the Lenders shall have
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the right at their sole discretion (but not an obligation) upon the mutual
agreement of all Lenders to provide the Borrower with the financing for such
acquisition and the Borrower shall not enter into any agreement or
understanding with any other Person to provide such financing without first
offering such financial opportunity to the Lenders and the Lenders have
declined to provide such financing.
10.19 COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all of which counterparts
together shall constitute but one and the same agreement.
10.20 NO FIDUCIARY RELATIONSHIP. No provision contained herein or
in any other Financing Agreement and no course of dealing between the parties
shall be deemed to create any fiduciary relationship between the Agent or any
Lender and the Borrower.
10.21 EXCEPTIONS TO COVENANTS. The Borrower shall not be deemed
to be permitted to take any action or omit to take any action which is
permitted as an exception to any of the terms, provisions or covenants
contained in any of the Financing Agreements if such action or omission would
result in a Default or Event of Default or the breach of any term, provision
or covenant contained in any Financing Agreement.
10.22 CONSTRUCTION. The Borrower acknowledges that it and its
counsel have approved the Financing Agreements and that the usual rule of
construction to the effect that any ambiguities or inconsistencies are to be
resolved against the drafting Person shall not be applicable in the
interpretation of any of the Financing Agreements.
11. ASSIGNMENT AND PARTICIPATION.
11.1 ASSIGNMENTS. Upon ten (10) days prior notice to the
Borrower, each Lender may, in the ordinary course of its business and in
accordance with applicable law, assign all or any part of its rights and
obligations under the Financing Agreements to any Person; PROVIDED that such
Lender shall first obtain the written consent of the Agent prior to any such
assignment becoming effective; PROVIDED FURTHER that so long as no Event of
Default has occurred and is continuing no Lender may make any such assignment
to any Person known to such Lender to be a competitor of the Borrower or any
of its Subsidiaries. The assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitments or assigned portion
thereof. The Borrower hereby acknowledges and agrees that any assignment
will give rise to a direct obligation of the Borrower to the assignee and
that the assignee shall be considered to be a "Lender".
11.2 PARTICIPATIONS. Each Lender shall have the right to sell or
assign to a Participant or Participants participating interests in the
Borrower's Obligations hereunder
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in such amounts and on such terms and conditions as such Lender shall
determine; PROVIDED that so long as no Event of Default has occurred and is
continuing no Lender may grant any such participation to any Person known to
such Lender to be a competitor of the Borrower or any of its Subsidiaries.
12. AGENT.
12.1 APPOINTMENT. Without in any way limiting Section 12.11
hereof, GSCP is hereby appointed Agent hereunder and under each other
Financing Agreements, and each of the Lenders authorizes the Agent to act as
the Agent of such Lender. The Agent agrees to act as such upon the express
conditions contained in this SECTION 12. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender by reason of
this Agreement.
12.2 POWERS. The Agent shall have and may exercise such powers
under the Financing Agreements as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The powers, rights and obligations of the Agent under
the Financing Agreements may be delegated to one or more "Co-Agents" (each, a
"Co-Agent") and the Borrower, the Agent and the Lenders hereby agree to amend
this Agreement in a manner consistent with any such delegation. The Agent
shall have no implied duties to the Lenders, or any obligation to the Lenders
to take any action thereunder, except any action specifically provided by the
Financing Agreements to be taken by the Agent.
12.3 GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, Affiliates, Agents or employees shall be liable to the
Borrower or any Lender for any action taken or omitted to be taken by it or
them hereunder or under any other Financing Agreements or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct as determined by a final order, not subject to review, of a court
of competent jurisdiction.
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Agent nor any of its directors, officers, Affiliates, Agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in connection with
any Financing Agreements or any borrowing hereunder, (b) the performance or
observance of any of the covenants or agreements of any obligor under any
Financing Agreements, (c) the satisfaction of any condition specified in
SECTION 4, except receipt of items required to be delivered to the Agent and
not waived at closing, or (d) the validity, effectiveness or genuineness of
any Financing Agreements or any other instrument or writing furnished in
connection therewith.
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12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Financing Agreements in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of
the Lenders and on all holders of Notes. The Agent shall be fully justified
in failing or refusing to take any action hereunder and under any other
Financing Agreements unless it shall first be indemnified to its satisfaction
by the Lenders pro-rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any
of its duties as Agent hereunder and under any other Financing Agreements by
or through employees, Agents and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized Agents, for the default or misconduct of any such Agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Financing
Agreements.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons, and,
in respect to legal matters, upon the opinion of counsel selected by the
Agent, which counsel may be employees of the Agent.
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree
to reimburse and indemnify the Agent and any Co-Agent ratably in proportion
to their respective Commitments (a) for any amounts not reimbursed by the
Borrower for which the Agent and any Co-Agent is entitled to reimbursement by
the Borrower under the Financing Agreements, (b) for any other expenses
incurred by the Agent and any Co-Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Financing Agreements, and (c) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent and any Co-Agent in any
way relating to or arising out of the Financing Agreements or any other
document delivered in connection therewith or the transactions contemplated
hereby and thereby, or the enforcement of any of the terms thereof or of any
such other documents; PROVIDED that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent and any Co-Agent as determined by a final order, not
subject to appeal, of a court of competent jurisdiction. The obligations of
the Lenders under this SUBSECTION 12.8 shall survive payment of the
Obligations and termination of this Agreement.
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12.9 RIGHTS AS A LENDER. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other
Financing Agreements as any Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, at any time
when the Agent is a Lender, unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from,
lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Financing Agreements, with the Borrower or any of its Subsidiaries in
which the Borrower or such Subsidiary is not restricted hereby from engaging
with any other Person.
12.10 LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Financing
Agreements. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Financing Agreements.
12.11 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. The Agent may be
removed at any time for cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint,
on behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty days after the retiring
Agent's giving notice of resignation or within thirty days after the removal
of such Agent, then the retiring Agent shall use reasonable efforts to
appoint, on behalf of the Borrower and the Lenders, a successor Agent. Such
successor Agent shall be a financial institution having capital and retained
earnings of at least One Hundred Fifty Million Dollars ($150,000,000). Upon
the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Financing Agreements. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this SECTION 12
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and
under the other Financing Agreements.
12.12 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder
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unless the Agent has received notice from a Lender or the Borrower referring
to this Agreement describing such Default or Event of Default and stating
that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. Subject to the provisions of SUBSECTION 12.5, the Agent shall take
any action of the type specified in this Agreement with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so required by SECTION 13, by all Lenders); PROVIDED that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as the Agent shall
determine is in the best interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
Subject to the provisions of this SECTION 13, the Required Lenders
(or the Agent with the consent in writing of the Required Lenders) and the
Borrower may enter into agreements supplemental hereto for the purpose of
adding, terminating or modifying any provisions to the Financing Agreements
or changing in any manner the rights of the Lenders or the Borrower hereunder
or waiving any Event of Default hereunder; PROVIDED that no such supplemental
agreement shall, without the consent of each Lender affected thereby:
(a) extend the final maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest or fees thereon;
(b) reduce the percentage specified in the definition of Required
Lenders;
(c) reduce the amount or extend the payment date for the mandatory
payments required hereunder, or increase the amount of the Revolving Credit
Commitment of any Lender hereunder (other than an increase in the Revolving
Credit Commitment of any Lender as a result of an assignment consummated
between such Lender and another Lender pursuant to SUBSECTION 11.1);
(d) extend the Revolving Loan Initial Term or the Revolving Loan
Renewal Term, as applicable (except as contemplated by SUBSECTION 2.8);
(e) amend this SECTION 13;
(f) release all or any substantial portion of the Collateral or
the real property subject to the Mortgages;
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(g) permit any assignment by the Borrower of its Obligations or
its rights hereunder; or
(h) amend the definition of the term "Commitment" without the
consent of each Lender affected thereby.
No amendment, modification, termination or waiver affecting the
rights or duties of the Agent under any Financing Agreement shall be
effective without the written consent of the Agent.
Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall
be required for the Agent to take additional Collateral pursuant to any
Financing Agreement. No notice to or demand on the Borrower not required by
the terms hereof in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
SECTION 13 shall be binding upon each holder of the Notes at the time
outstanding, each future holder of the Notes and the Borrower.
Notwithstanding anything to the contrary contained herein, the
Agent may, at its sole discretion, release or compromise Collateral and the
proceeds thereof to the extent of asset dispositions permitted by the terms
hereof.
14. SETOFF AND SHARING OF PAYMENTS.
14.1 SETOFF. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon
the occurrence and during the continuance of any Event of Default, each
Lender is hereby authorized by the Borrower at any time or from time to time,
with reasonably prompt subsequent notice to the Borrower or to any other
Person (any prior or contemporaneous notice being hereby expressly waived) to
set off and to appropriate and to apply any and all (a) balances (including,
without limitation, all account balances, whether provisional or final and
whether or not collected or available) held or owing by such Lender at any of
its offices to or for the credit or account of the Borrower (regardless of
whether such balances are then due to the Borrower) and (b) other property
held or owing by such Lender to or for the credit or the account of the
Borrower, toward the payment of the Obligations owing to such Lender, whether
or not the Obligations, or any part hereof, shall then be due.
14.2 RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments
received pursuant to SUBSECTION 2.19) in a greater proportion than its Pro
Rata Share of such Loans, such Lender agrees, promptly upon demand, to
purchase a portion of the Loans held by the
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other Lenders so that after such purchase each Lender will hold its ratable
proportion of Loans. If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, received collateral or
other protection for its Obligations or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is disturbed
by legal process, or otherwise, appropriate further adjustments shall be
made. If an amount to be setoff to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of the Notes
held by such Lender, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by such Notes. The Borrower
agrees, to the fullest extent permitted by law, that (x) any Lender may
exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participation in such excess to
other Lenders, and (y) any Lender so purchasing a participation in the Loans
made or other Obligations held by other Lenders may exercise all rights of
setoff, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans and
other Obligations in the amount of such participation.
15. CERTAIN ACKNOWLEDGMENTS. The Borrower hereby affirms and
ratifies the following in all respects:
(a) The Borrower has no grounds for disputing the validity or
enforceability of the Financing Agreements or any of the Obligations, or the
validity, priority, enforceability or extent of the Agent's security interest
in or lien against any of Collateral in any judicial, administrative or other
proceeding; and
(b) The Borrower, for itself and any other Person who may claim an
interest through the Borrower, hereby releases and discharges, with
prejudice, the Agent, each Lender, and each of their respective directors,
officers, Affiliates, agents, attorneys and employees from any and every
claim, right, cause, action, cause of action, damage, liability, and other
matter or proceeding arising from, relating to or in connection with any acts
or omissions of the Agent, each Lender, and each of their respective
directors, officers, Affiliates, agents, attorneys and employees prior to the
Effective Date. This provision shall survive and continue in full force and
effect whether or not (i) the Borrower shall satisfy all other provisions of
the Financing Agreements, including payment in full by the Borrower of all
Obligations, or (ii) this Agreement is otherwise terminated.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
BROTHERS GOURMET COFFEES, INC.
By:
-----------------------------------
Title:
-----------------------------------
XXXXXXX XXXXX CREDIT PARTNERS, L.P.,
as Agent and as a Lender
By:
-----------------------------------
Title:
-----------------------------------
THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF
ITS CHOICE WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, AND THE BORROWER ACKNOWLEDGES AND AGREES THAT (i) EACH OF THE WAIVERS
SET FORTH HEREIN, INCLUDING, WITHOUT LIMITATION, THOSE WAIVERS SET FORTH IN
SUBSECTIONS 9.5, 9.6 AND 10.8 AND IN SECTION 15 WERE KNOWINGLY AND
VOLUNTARILY MADE, (ii) THE OBLIGATIONS OF THE AGENT AND EACH LENDER
HEREUNDER, INCLUDING THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE BORROWER
IN ACCORDANCE HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE EXPRESSLY
SUBJECT TO THE BORROWER'S COMPLIANCE IN ALL RESPECTS WITH THE TERMS AND
CONDITIONS HEREIN SET FORTH, AND (iii) NO REPRESENTATIVE OF THE AGENT OR ANY
LENDER HAS WAIVED OR MODIFIED ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF
THE DATE HEREOF AND NO SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE HEREOF
SHALL BE EFFECTIVE UNLESS MADE IN ACCORDANCE WITH SUBSECTION 10.1.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
BROTHERS GOURMET COFFEES, INC.
as Borrower,
THE LENDERS NAMED HEREIN
as Lenders,
AND
XXXXXXX SACHS CREDIT PARTNERS, L.P.
as Agent and Lender
Dated as of
December 9, 1997
TABLE OF CONTENTS
Page
----
1. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 GENERAL TERMS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.3 OTHER TERMS DEFINED IN NEW YORK UNIFORM COMMERCIAL CODE.. . . . . . . . . 28
1.4 REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.1 REVOLVING CREDIT FACILITY AND REVOLVING LOANS.. . . . . . . . . . . . . . 28
2.2 MAXIMUM PRINCIPAL BALANCE OF REVOLVING LOAN.. . . . . . . . . . . . . . . 30
2.3 EVIDENCE OF REVOLVING LOAN INDEBTEDNESS.. . . . . . . . . . . . . . . . . 30
2.4 TERM LOAN A.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.5 TERM LOAN B.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.6 INTEREST IN GENERAL, ETC. . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7 METHOD OF BORROWING; MANNER AND METHOD OF MAKING INTEREST AND OTHER
PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.8 TERM OF THIS AGREEMENT; TERMINATION.. . . . . . . . . . . . . . . . . . . 35
2.9 PREPAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.10 ACQUISITION FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.11 REVOLVING LOAN UNUSED LINE FEE.. . . . . . . . . . . . . . . . . . . . . 36
2.12 LINE FEE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.13 SLOTTING LINE FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.14 OTHER FEES, COSTS AND EXPENSES.. . . . . . . . . . . . . . . . . . . . . 37
2.15 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . 38
2.16 LOAN ACCOUNT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.17 STATEMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.18 PAYMENT DATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.19 TAXES; CHANGES IN LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 39
3. REPORTING AND ELIGIBILITY REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . 41
3.1 REPORTS REGARDING COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . 41
3.2 ELIGIBLE ACCOUNTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.3 ACCOUNT WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.4 VERIFICATION OF ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . 44
3.5 COLLECTION OF ACCOUNTS AND PAYMENTS.. . . . . . . . . . . . . . . . . . . 44
3.6 APPOINTMENT OF THE AGENT AS BORROWER'S ATTORNEY-IN-FACT.. . . . . . . . . 46
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3.7 ACCOUNT RECORDS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.8 INSTRUMENTS AND CHATTEL PAPER.. . . . . . . . . . . . . . . . . . . . . . 47
3.9 NOTICE TO ACCOUNT DEBTORS.. . . . . . . . . . . . . . . . . . . . . . . . 47
3.10 ELIGIBLE INVENTORY.. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.11 INVENTORY WARRANTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.12 INVENTORY RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.13 SAFEKEEPING OF INVENTORY AND INVENTORY COVENANTS . . . . . . . . . . . . 49
3.14 EQUIPMENT WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.15 EQUIPMENT RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.16 MAINTENANCE OF EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . 49
3.17 REAL ESTATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.18 MAINTENANCE OF REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . 50
3.19 INTELLECTUAL PROPERTY AND GENERAL INTANGIBLES. . . . . . . . . . . . . . 50
4. CONDITIONS TO ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.1 CONDITIONS TO ALL ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . 50
4.2 CONDITIONS TO EFFECTIVE DATE AND INITIAL ADVANCE. . . . . . . . . . . . . 51
5. COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.1 SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.2 PRESERVATION OF COLLATERAL AND PERFECTION OF LIENS THEREON. . . . . . . . 56
5.3 CONSIGNED INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . 57
6.1 EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.3 BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.4 FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.5 COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.6 SOLVENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.7 PLACES OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.8 OTHER NAMES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.9 TAX OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.10 INDEBTEDNESS AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 61
6.11 USE OF PROCEEDS AND MARGIN SECURITY. . . . . . . . . . . . . . . . . . . 61
6.12 GOVERNMENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.13 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.14 LITIGATION AND PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . 62
6.15 OTHER AGREEMENTS AND DELIVERIES. . . . . . . . . . . . . . . . . . . . . 62
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6.16 LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.17 COMPLIANCE WITH LAWS AND REGULATIONS . . . . . . . . . . . . . . . . . . 63
6.18 PATENTS, TRADEMARKS AND LICENSES . . . . . . . . . . . . . . . . . . . . 63
6.19 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.20 PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.21 ADVERSE CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.22 PURCHASE OR OTHER COMMITMENTS AND OUTSTANDING BIDS . . . . . . . . . . . 65
6.23 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT . . . . . . . 65
6.24 BROKER'S FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.25 LICENSES AND PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.26 ENVIRONMENTAL COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . 66
6.27 FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.28 INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.29 CUSTOMER AND TRADE RELATIONS . . . . . . . . . . . . . . . . . . . . . . 69
6.30 SURVIVAL OF WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.31 CORPORATE AND CONTRACTUAL RESTRICTIONS . . . . . . . . . . . . . . . . . 69
6.32 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.33 DEPOSIT AND DISBURSEMENT ACCOUNTS. . . . . . . . . . . . . . . . . . . . 69
6.34 DEFAULTS AND EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 69
6.35 OBLIGATIONS IMMEDIATELY PRIOR TO THE EFFECTIVE DATE. . . . . . . . . . . 70
6.36 OTHER REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 70
7. AFFIRMATIVE COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.1 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.2 INSPECTIONS AND AUDITS. . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.3 CONDUCT OF BUSINESS; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . 74
7.4 CLAIMS AND TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.5 BORROWER'S LIABILITY INSURANCE. . . . . . . . . . . . . . . . . . . . . . 76
7.6 BORROWER'S PROPERTY INSURANCE . . . . . . . . . . . . . . . . . . . . . . 76
7.7 PENSION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.8 NOTICE OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 78
7.9 LANDLORD AND WAREHOUSEMAN AGREEMENTS. . . . . . . . . . . . . . . . . . . 78
7.10 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.11. ADDITIONAL SLOTTING FEE CERTIFICATE . . . . . . . . . . . . . . . . . . 80
7.12. REAL ESTATE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.1 ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.2 INDEBTEDNESS AND LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 82
8.3 CONSOLIDATIONS, ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . 82
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8.4 INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.5 GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.6 COLLATERAL LOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.7 DISPOSAL OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.8 EMPLOYEE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.9 PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.10 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.11 SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.12 CHANGES IN CHARTER, BYLAWS OR FISCAL YEAR. . . . . . . . . . . . . . . . 85
8.13 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . 85
8.14 CAPITAL STRUCTURE; OTHER BUSINESS. . . . . . . . . . . . . . . . . . . . 85
8.15 SALE AND LEASEBACK . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.16 IMPAIRMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.17 CORPORATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.18 CAPITAL EXPENDITURES LIMITATIONS . . . . . . . . . . . . . . . . . . . . 86
8.19 PARTNERSHIP AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.20 SUBORDINATED DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.21 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.22 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9. DEFAULT, RIGHTS AND REMEDIES OF THE AGENT AND THE LENDERS.. . . . . . . . . . . 88
9.1 OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.2 RIGHTS AND REMEDIES GENERALLY . . . . . . . . . . . . . . . . . . . . . . 89
9.3 ENTRY UPON PREMISES AND ACCESS TO INFORMATION . . . . . . . . . . . . . . 89
9.4 SALE OR OTHER DISPOSITION OF COLLATERAL BY THE AGENT. . . . . . . . . . . 89
9.5 WAIVER OF DEMAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.6 WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10. OTHER RIGHTS AND OBLIGATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . 90
10.1 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.2 COSTS AND ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . 91
10.3 EXPENDITURES BY THE AGENT AND THE LENDERS. . . . . . . . . . . . . . . . 91
10.4 CUSTODY AND PRESERVATION OF COLLATERAL . . . . . . . . . . . . . . . . . 92
10.5 RELIANCE BY THE AGENT AND LENDERS. . . . . . . . . . . . . . . . . . . . 92
10.6 PARTIES AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.7 APPLICABLE LAW; SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 92
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. . . . . . . . . . . 93
10.9 MARSHALLING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
10.10 SECTION TITLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
10.11 CONTINUING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
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10.12 INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . . 94
10.13 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.14 WAIVERS WITH RESPECT TO OTHER INSTRUMENTS . . . . . . . . . . . . . . . 96
10.15 RETENTION OF THE BORROWER'S DOCUMENTS . . . . . . . . . . . . . . . . . 96
10.16 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.17 EQUITABLE RELIEF. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
10.18 LENDERS' FIRST RIGHT OF REFUSAL . . . . . . . . . . . . . . . . . . . . 96
10.19 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.20 NO FIDUCIARY RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . 97
10.21 EXCEPTIONS TO COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 97
10.22 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . . . . . . . . . . . . 97
11.1 ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.2 PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12. AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.1 APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.2 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.3 GENERAL IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC.. . . . . . . . . . . . . . . 98
12.5 ACTION ON INSTRUCTIONS OF LENDERS. . . . . . . . . . . . . . . . . . . . 99
12.6 EMPLOYMENT OF AGENTS AND COUNSEL . . . . . . . . . . . . . . . . . . . . 99
12.7 RELIANCE ON DOCUMENTS; COUNSEL . . . . . . . . . . . . . . . . . . . . . 99
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. . . . . . . . . . . . . . . . 99
12.9 RIGHTS AS A LENDER.. . . . . . . . . . . . . . . . . . . . . . . . . . .100
12.10 LENDER CREDIT DECISION. . . . . . . . . . . . . . . . . . . . . . . . .100
12.11 SUCCESSOR AGENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . .100
12.12 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . .100
13. AMENDMENTS AND WAIVERS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .101
14. SETOFF AND SHARING OF PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . .102
14.1 SETOFF.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
14.2 RATABLE PAYMENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .102
15. CERTAIN ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .103
-v-
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Shareholders Lawsuits
Exhibit B [RESERVED]
Exhibit C Retail Store Locations
Exhibit 2.1 Certain Inventory Locations
Exhibit 2.3 Form of Revolving Loan Promissory Note
Exhibit 2.4 Form of Term Loan A Promissory Note
Exhibit 2.5 Form of Term Loan B Promissory Note
Exhibit 2.6-1 Form of Borrowing Notice
Exhibit 3.1-1 Form of Weekly Report
Exhibit 3.1-2 Form of Monthly Report
Exhibit 3.14 Equipment Locations and Leased Equipment
Exhibit 3.17 Real Estate Owned or Leased by Borrower
Exhibit 3.19 Intellectual Property and General Intangibles
Exhibit 6.1-1 Good Standing Jurisdictions of Borrower and its
Subsidiaries
Exhibit 6.1-2 Certain Reserved Shares and Agreements
Exhibit 6.4 Projections
Exhibit 6.5 Encumbrances on Collateral
Exhibit 6.7 Principal Place of Business and Chief Executive Office
of the Borrower
Exhibit 6.8 Trade Names of Borrower
Exhibit 6.11 Use of Proceeds
Exhibit 6.12 Government Contracts
Exhibit 6.14 Litigation and Proceedings
Exhibit 6.15 Defaults Under Executory Contracts
Exhibit 6.16 Labor Matters
Exhibit 6.18 Intellectual Property
Exhibit 6.19 Plans or Multiemployer Plans
Exhibit 6.20 Exceptions to Title
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Exhibit 6.25 Licenses and Permits
Exhibit 6.26 Environmental Matters
Exhibit 6.32 Subsidiaries of the Borrower
Exhibit 6.33 Deposit and Disbursement Accounts
Exhibit 6.34 List of Defaults or Events of Default
Exhibit 7.5 Insurance Policies
Exhibit 7.6 Form of Insurance Endorsement
Exhibit 8.1 Permitted Liens
Exhibit 8.2 Permitted Indebtedness
Exhibit 8.3 Consolidations, Acquisitions
Exhibit 8.4 Permitted Investments
Exhibit 8.5 Permitted Guaranties
Exhibit 8.6 Collateral Locations
Exhibit 8.7 List of Assets to be Sold Pursuant to the Retail
Stores Sale Program
Exhibit 8.13 Transactions with Affiliates
Exhibit 8.16 Impairment Agreements
Schedule 1 Lenders' Commitments
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