REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
SWANK, INC.
(BORROWER)
July 27, 1998
TABLE OF CONTENTS
I. DEFINITIONS 1
1.1. Accounting Terms 1
1.2. General Terms 1
1.3. Uniform Commercial Code Terms 15
1.4. Certain Matters of Construction 15
II. ADVANCES, PAYMENTS 15
2.1. (a) Revolving Advances 15
(b) Changes in Reserves 16
2.2. Procedure for Revolving Advances Borrowing 16
2.3. Disbursement of Advance Proceeds 18
2.4. Maximum Advances 18
2.5. Repayment of Advances 18
2.6. Repayment of Excess Advances 19
2.7. Statement of Account 19
2.8. Letters of Credit 19
2.9. Issuance of Letters of Credit 20
2.10.Requirements For Issuance of Letters of Credit 20
2.11.Additional Payments 21
2.12.Manner of Borrowing and Payment 22
2.13.Use of Proceeds 23
2.14.Defaulting Lender 23
III. INTEREST AND FEES 24
3.1. Interest 24
3.2. Letter of Credit Fees 25
3.3. Facility Fee 25
3.4. Additional Fees 25
3.5. Computation of Interest and Fees 25
3.6. Maximum Charges 25
3.7. Increased Costs 26
3.8. Basis For Determining Interest Rate Inadequate or
Unfair 26
3.9. Capital Adequacy 27
IV. COLLATERAL: GENERAL TERMS 28
4.1. Security Interest in the Collateral 28
4.2. Perfection of Security Interest 28
4.3. Disposition of Collateral 28
4.4. Preservation of Collateral 28
4.5. Ownership of Collateral 29
4.6. Defense of Agent's and Lenders' Interests 29
4.7. Books and Records 29
4.8. Financial Disclosure 30
4.9. Compliance with Laws 30
4.10.Inspection of Premises 30
▇.▇▇.▇▇▇▇▇▇▇▇▇ 30
4.12.Failure to Pay Insurance 31
4.13.Payment of Taxes 31
4.14.Payment of Leasehold Obligations 32
4.15.Receivables 32
(a) Nature of Receivables 32
(b) Solvency of Customers 32
(c) Locations of Borrower 32
(d) Collection of Receivables 32
(e) Notification of Assignment of Receivables 32
(f) Power of Agent to Act on Borrower's Behalf 33
(g) No Liability 33
(h) Establishment of a Lockbox Account, Dominion
Account 33
(i) Adjustments 34
4.16.Inventory 34
4.17.Maintenance of Equipment 34
4.18.Exculpation of Liability 34
4.19.Environmental Matters 35
4.20.Financing Statements 36
V. REPRESENTATIONS AND WARRANTIES 36
5.1. Authority 36
5.2. Formation and Qualification 36
5.3. Survival of Representations and Warranties 37
5.4. Tax Returns 37
5.5. Financial Statements 37
5.6. Corporate Name 37
5.7. OSHA and Environmental Compliance 38
5.8. Solvency; No Litigation, Violation, Indebtedness
or Default 38
5.9. Patents, Trademarks, Copyrights and Licenses 39
5.10.Licenses and Permits 39
5.11.Default of Indebtedness 40
▇.▇▇.▇▇ Default 40
▇.▇▇.▇▇ Burdensome Restrictions 40
▇.▇▇.▇▇ Labor Disputes 40
5.15.Margin Regulations 40
5.16.Investment Company Act 40
5.17.Disclosure 40
5.18.Swaps 40
5.19.Conflicting Agreements 41
5.20.Application of Certain Laws and Regulations 41
▇.▇▇.▇▇▇▇▇▇▇▇ and Property of Borrower 41
5.22.Year 2000 41
5.23.License Agreements 41
VI. AFFIRMATIVE COVENANTS 41
6.1. Payment of Fees 41
6.2. Conduct of Business and Maintenance of Existence
and Assets 41
6.3. Violations 42
6.4. Government Receivables 42
6.5. Fixed Charge Coverage Ratio 42
6.6. Execution of Supplemental Instruments 42
6.7. Payment of Indebtedness 42
6.8. Standards of Financial Statements 42
6.9. Swank Sales 43
VII. NEGATIVE COVENANTS 43
7.1. Merger, Consolidation, Acquisition and Sale of
Assets 43
7.2. Creation of Liens 43
7.3. Guarantees 43
7.4. Investments 43
7.5. Loans 44
7.6. Capital Expenditures 45
7.7. Dividends 45
7.8. Indebtedness 45
7.9. Nature of Business 45
7.10.Transactions with Affiliates 45
7.11.Leases 45
7.12.Subsidiaries 46
7.13.Fiscal Year and Accounting Changes 46
7.14.Pledge of Credit 46
7.15.Amendment of Articles of Incorporation, By-Laws 46
7.16.Compliance with ERISA 46
7.17.Prepayment of Indebtedness 46
VIII.CONDITIONS PRECEDENT. 47
8.1. Conditions to Initial Advances 47
(a) Revolving Credit Note 47
(b) Filings, Registrations and Recordings 47
(c) Corporate Proceedings of Borrower 47
(d) Incumbency Certificates of Borrower 47
(e) Certificates 47
(f) Good Standing Certificates 47
(g) Legal Opinion 48
(h) No Litigation 48
(i) Financial Condition Certificates 48
(j) Collateral Examination 48
(k) Fees 48
(l) Projections 48
(m) Insurance 48
(n) Payment Instructions 48
(o) Blocked Accounts 48
(p) Consents 48
(q) No Adverse Material Change 49
(r) Leasehold Agreements 49
(s) Other Documents 49
(t) Contract Review 49
(u) Closing Certificate 49
(v) Borrowing Base 49
(w) Undrawn Availability 49
(x) Other 49
8.2. Conditions to Each Advance 50
(a) Representations and Warranties 50
(b) No Default 50
(c) Maximum Advances 50
IX. INFORMATION AS TO BORROWER 50
9.1. Disclosure of Material Matters 50
9.2. Schedules 51
9.3. Environmental Reports 51
9.4. Litigation 51
9.5. Material Occurrences 51
9.6. Government Receivables 51
9.7. Annual Financial Statements 51
9.8. Quarterly Financial Statements 52
9.9. Monthly Financial Statements 52
9.10.Other Reports 53
9.11.Additional Information 53
9.12.Projected Operating Budget 53
9.13.Variances From Operating Budget 53
9.14.Notice of Suits, Adverse Events 53
9.15.ERISA Notices and Requests 54
9.16.Additional Documents 54
X. EVENTS OF DEFAULT 54
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT 56
11.1.Rights and Remedies 56
11.2.Agent's Discretion 57
11.3.Setoff 57
11.4.Rights and Remedies not Exclusive 58
XII. WAIVERS AND JUDICIAL PROCEEDINGS 58
12.1.Waiver of Notice 58
12.2.Delay 58
12.3.Jury Waiver 58
XIII.EFFECTIVE DATE AND TERMINATION 58
13.1.Term 58
13.2.Termination 59
XIV. REGARDING AGENT 59
14.1.Appointment 59
14.2.Nature of Duties 59
14.3.Lack of Reliance on Agent and Resignation 60
14.4.Certain Rights of Agent 60
▇▇.▇.▇▇▇▇▇▇▇▇ 61
14.6.Notice of Default 61
14.7.Indemnification 61
14.8.Agent in its Individual Capacity 61
▇▇.▇.▇▇▇▇▇▇▇▇ of Documents 61
XV. MISCELLANEOUS 62
15.1.Governing Law 62
15.2.Entire Understanding 62
15.3.Successors and Assigns; Participations; New
Lenders 64
15.4.Application of Payments 65
15.5.Indemnity 66
15.6.Notice 66
15.7.Survival 67
15.8.Severability 67
15.9.Expenses 67
15.10.Injunctive Relief 68
15.11.Consequential Damages 68
15.12.Captions 68
15.13.Counterparts; Telecopier Signatures 68
▇▇.▇▇.▇▇▇▇▇▇▇▇▇▇▇▇ 68
15.15.Confidentiality; Sharing Information 68
16.16.Publicity 69
List of Exhibits and Schedules
Exhibits
Exhibit 2.1(a) Revolving Credit Note
Exhibit 5.5(a) Projections
Exhibit 8.1(i) Financial Condition Certificate
Exhibit 15.3 Commitment Transfer Supplement
Schedules
Schedule 1.2(a) Permitted Encumbrances
Schedule 1.2(b) Existing Life Insurance Policies
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated as of July 27,
1998 among SWANK, INC.. a corporation organized under the laws of
the State of Delaware ("Borrower"), the financial institutions
which are now or which hereafter become a party hereto
(collectively, "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION, a national banking association
("PNC"), as agent for Lenders (PNC, in such capacity, "Agent").
IN CONSIDERATION of the mutual covenants and undertakings
herein contained, Borrower, Lenders and Agent hereby agree as
follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, any other
Document or any certificate, report or other document made or
delivered pursuant to this Agreement, accounting terms not
defined in Section 1.2 hereof or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 hereof to the
extent not defined, shall have the respective meanings given to
them under GAAP; provided, however, whenever such accounting
terms are used for the purposes of determining compliance with
the financial covenant in Section 6.5 of this Agreement, such
accounting terms shall be defined in accordance with GAAP as
applied in preparation of the audited financial statements of
Borrower for the fiscal year ended December 31, 1997.
1.2. General Terms. For purposes of this Agreement the
following terms shall have the following meanings:
"Accountants" shall have the meaning set forth in
Section 9.7 hereof.
"Advances" shall mean and include the Revolving
Advances and Letters of Credit.
"Advance Rates" shall have the meaning set forth in
Section 2.1(a) hereof.
"Affiliate" of any Person shall mean (a) any Person
which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person, or (b) any
Person who is a director or officer (i) of such Person, (ii) of
any Subsidiary of such Person or (iii) of any Person described in
clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (x) to vote ten
percent (10%) or more of the securities having ordinary voting
power for the election of directors of such Person, or (y) to
direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the
preamble to this Agreement and shall include its successors and
assigns.
"Agreement" shall mean this Revolving Credit and
Security Agreement, as the same may be amended, supplemented or
modified from time to time.
"Authority" shall have the meaning set forth in Section
4.19(d) hereof.
"Base Rate" shall mean the base commercial lending rate
of PNC as publicly announced to be in effect from time to time,
such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest
is determined from time to time by PNC as a means of pricing some
loans to its customers and is neither tied to any external rate
of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by PNC to any particular class
or category of customers of PNC.
"▇▇▇▇▇▇ License Agreement" shall mean the License
Agreement dated as of March 17, 1997, between Borrower, as
licensor, and ▇.▇. ▇▇▇▇▇▇ & Co., Inc., as licensee.
"Blocked Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.
"Borrower" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted
successors and assigns of such Persons.
"Borrower on a consolidated basis" shall mean the
consolidation in accordance with GAAP of the accounts or other
items of Borrower and its Subsidiaries.
"Borrower's Account" shall have the meaning set forth
in Section 2.7 hereof.
"Business Day" shall mean with respect to Eurodollar
Rate Loans, any day on which commercial banks are open for
domestic and international business, including dealings in Dollar
deposits in London, England and New York, New York and with
respect to all other matters, any day other than a day on which
commercial banks in New York are authorized or required by law to
close.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. '' 9601 et seq.
"Change of Control" shall mean (a) the occurrence of
any event (whether in one or more transactions) which results in
a transfer of control of Borrower to any Person or group of
Persons (within the meaning of Sections 13(d) or 14(a) of the
Securities Exchange Act of 1934, as amended), (b) the Board of
Directors of Borrower shall cease to consist of a majority of
Continuing Directors or the Board of Trustees of the Swank ESOP
shall cease to consist of a majority of Continuing Trustees, (c)
▇▇▇▇ ▇▇▇▇▇ shall cease to be a senior executive officer of
Borrower and involved in the day-to-day operations of Borrower,
or (d) any merger or consolidation of or with Borrower or sale of
all or substantially all of the property or assets of Borrower.
For purposes of this definition, "control of Borrower" shall mean
the power, direct or indirect, to (i) vote (x) thirty percent
(30%) or more of the securities having ordinary voting power for
the election of directors of Borrower, if the Swank ESOP shall
own less than fifty-one percent (51%) of the securities having
ordinary voting power for the election of directors of Borrower
on a fully diluted basis, or (y) fifty percent (50%) or more of
the securities having ordinary voting power for the election of
directors of Borrower, at any other time.
"Charges" shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and
property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts,
imposed by any taxing or other authority, domestic or foreign
(including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the
Collateral or Borrower.
"Closing Date" shall mean July 27, 1998 or such other
date as may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated
thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Subsidiary Stock;
(f) all of Borrower's right, title and interest
in and to (i) its goods and other property including, but not
limited to, all merchandise returned or rejected by Customers,
relating to or securing any of the Receivables; (ii) all of
Borrower's rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all additional amounts due to Borrower from any Customer
relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement;
(v) all of Borrower's contract rights, rights of payment which
have been earned under a contract right, instruments, documents,
chattel paper, warehouse receipts, deposit accounts, money,
securities and investment property; (vi) if and when obtained by
Borrower, all property of third parties in which Borrower has
been granted a lien or security interest as security for the
payment or enforcement of Receivables; and (vii) any other goods
or property now owned or hereafter acquired in which Borrower has
expressly granted a security interest or may in the future grant
a security interest to Agent hereunder or under any Other
Document, or in any amendment or supplement hereto or thereto;
(g) all of Borrower's ledger sheets, ledger
cards, files, correspondence, records, books of account, business
papers, computers, computer software (owned by Borrower or in
which it has an interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), (d), (e) or (f) of this
Paragraph; and
(h) all proceeds and products of (a), (b), (c),
(d), (e), (f) and (g) of this Paragraph in whatever form,
including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the
payment of money, chattel paper, security agreements, documents
and tort claim proceeds.
Notwithstanding the foregoing, the term "Collateral"
shall not include (i) any property or assets contributed or
otherwise transferred to the Costa Rican Joint Venture from time
to time in accordance with the terms of this Agreement, (ii) any
amount due to Borrower in respect of loans and advances made by
Borrower to the Costa Rican Joint Venture (other than prepayments
made on account of products to be manufactured by the Costa Rican
Joint Venture for Borrower) from time to time in accordance with
the terms of this Agreement, and any contract right of Borrower
in connection therewith, (iii) the shares of capital stock and
other ownership interests in the Costa Rican Joint Venture owned
by Borrower, (iv) the License Agreements, or any right, title or
interest therein, except to the extent that such right, title or
interest is expressly permitted to be assigned by Borrower
thereunder, and (v) life insurance contracts, including, without
limitation, those listed on Schedule 1.2(b) hereto, purchased by
Borrower on the lives of certain of its employees to fund death
benefits for active employees and postretirement death benefits,
Borrower's 1987 Deferred Compensation Plan and Borrower's 1993
Deferred Compensation Plan, as well as any life insurance
contracts subsequently purchased by Borrower in the ordinary
course of business pursuant to Borrower's existing benefit
programs, and all cash proceeds of such life insurance contracts.
"Commitment Percentage" of any Lender shall mean the
percentage set forth below such Lender's name on the signature
page hereof as same may be adjusted upon any assignment by a
Lender pursuant to Section 15.3 hereof.
"Commitment Transfer Supplement" shall mean a document
in the form of Exhibit 15.3 hereto, properly completed and
otherwise in form and substance satisfactory to Agent by which
the Purchasing Lender purchases and assumes a portion of the
obligation of Lenders to make Advances under this Agreement.
"Consents" shall mean all filings and all licenses,
permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties,
domestic or foreign, necessary to carry on Borrower's business,
including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
"Continuing Directors" shall mean the Directors of
Borrower on the Closing Date and each other Director if such
Director's nomination for election to the Board of Directors of
Borrower is recommended by a majority of the then Continuing
Directors.
"Continuing Trustees" shall mean the Trustees of the
Swank ESOP on the Closing Date and each other Trustee if such
Trustee's nomination for election to the Board of Trustees of the
Swank ESOP is recommended by a majority of the then Continuing
Trustees.
"Controlled Group" shall mean all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with Borrower, are treated as a single employer under
Section 414 of the Code.
"Costa Rican Joint Venture" shall mean Joyas y Cueros
de Costa Rica, S.A., a Costa Rican corporation, and its
successors and assigns.
"Customer" shall mean and include the account debtor
with respect to any Receivable and/or the prospective purchaser
of goods, services or both with respect to any contract or
contract right, and/or any party who enters into any contract or
other arrangement with Borrower, pursuant to which Borrower is to
deliver any personal property or perform any services.
"Default" shall mean an event which, with the giving of
notice or passage of time or both, would constitute an Event of
Default.
"Default Rate" shall have the meaning set forth in
Section 3.1 hereof.
"Defaulting Lender" shall have the meaning set forth in
Section 2.14(a) hereof.
"Depository Accounts" shall have the meaning set forth
in Section 4.15(h) hereof.
"Documents" shall have the meaning set forth in Section
8.1(c) hereof.
"Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Domestic Rate Loan" shall mean any Revolving Advance
that bears interest based upon the Base Rate.
"Early Termination Date" shall have the meaning set
forth in Section 13.1 hereof.
"Earnings Before Interest and Taxes" shall mean for any
period the sum of (a) net income (or loss) of Borrower on a
consolidated basis for such period (excluding extraordinary gains
and losses, plus (b) all interest expense of Borrower on a
consolidated basis for such period, plus (c) all charges against
income of Borrower on a consolidated basis for such period for
federal, state and local taxes.
"EBITDA" shall mean for any period the sum of (a)
Earnings Before Interest and Taxes for such period plus (b)
depreciation expenses for such period, plus (c) amortization
expenses for such period.
"Eligible Inventory" shall mean and include Inventory
(excluding work in process), valued at the lower of cost or
market value, determined on a first-in-first-out basis, which is
not, in Agent's reasonable opinion, obsolete, slow moving or
unmerchantable and which Agent, in its reasonable discretion,
shall not deem ineligible Inventory, based on such considerations
as Agent may from time to time deem appropriate including,
without limitation, whether the Inventory conforms in all
material respects to all standards imposed by any governmental
agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof; provided,
that no Inventory shall be Eligible Inventory:
(a) unless such Inventory is subject to Agent's first
priority perfected security interest and no other Lien (other
than Permitted Encumbrances);
(b) if any covenant, representation or warranty
contained in this Agreement with respect to such Inventory has
been breached;
(c) unless such Inventory is located in the United
States of America, or, if not located in the United States of
America, unless (i) such Inventory has left the port from which
such Inventory has been shipped, (ii) such Inventory is insured
to the full value thereof, with loss payable clauses in favor of
Agent in a manner acceptable to Agent, (iii) Agent shall have in
its possession all shipping documents, including all negotiable
bills of lading properly endorsed and all non-negotiable bills of
lading issued in Agent's name with respect to such Inventory, and
(iv) such Inventory has been financed by Advances;
(d) if such Inventory is obsolete or is unusable or
unsalable in the ordinary course of business;
(e) if such Inventory is located, stored, used or held
at the premises of a third party unless (i) reserves reasonably
acceptable to Agent are established in connection therewith, or
(ii) such third party has executed and delivered to Agent a
bailee's or similar letter in form and substance reasonably
acceptable to Agent and appropriate financing statements have
been executed and filed with respect to such location; or
(f) if such Inventory is located, stored, used or held
at any premises leased by Borrower unless (i) reserves reasonably
acceptable to Agent are established in connection therewith, or
(ii) the landlord of such premises has executed and delivered to
Agent a landlord's waiver in form and substance reasonably
acceptable to Agent and appropriate financing statements have
been executed and filed with respect to such location.
Agent reserves the right, in its reasonable discretion,
to create, upon written notice to Borrower from time to time,
additional categories of ineligible Inventory.
"Eligible Receivables" shall mean and include each
Receivable arising in the ordinary course of Borrower's business
and which Agent, in its reasonable judgment, shall deem to be an
Eligible Receivable, based on such considerations as Agent may
from time to time deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to Agent's
first priority perfected security interest and no other Lien
(other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence customarily used by
Borrower and which is reasonably satisfactory to Agent; provided,
that no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an
Affiliate of Borrower or to a Person controlled by an Affiliate
of Borrower;
(b) it is due or unpaid more than sixty (60) days
after its original due date;
(c) fifty percent (50%) or more of the Receivables
from such Customer are not deemed Eligible Receivables hereunder;
(d) any covenant, representation or warranty contained
in this Agreement with respect to such Receivable has been
breached;
(e) the Customer shall (i) apply for, suffer or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or
a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect),
(v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed,
any petition which is filed against it in any involuntary case
under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental
United States of America, unless the sale is on letter of credit,
guaranty or acceptance terms, in each case reasonably acceptable
to Agent, and such letter of credit, guaranty or acceptance has
been assigned to Agent, for the ratable benefit of Lenders, in a
manner reasonably acceptable to Agent;
(g) the sale to the Customer is on a ▇▇▇▇-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment
or any other repurchase or return basis or is evidenced by
chattel paper (unless Borrower shall have delivered such chattel
paper to Agent); provided, that a Receivable shall not be deemed
not an Eligible Receivable solely because the Customer with
respect thereto shall have the right in the ordinary course of
business to return Inventory to Borrower;
(h) Agent believes, in its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable
may not be paid by reason of the Customer's financial inability
to pay;
(i) the Customer is the United States of America, any
state or any department, agency or instrumentality of any of
them, unless Borrower assigns its right to payment of such
Receivable to Agent pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41
U.S.C. Sub-Section 15 et seq.) or has otherwise complied with
other similar applicable statutes or ordinances relating to the
assignment of its right to payment of such Receivable;
(j) the goods giving rise to such Receivable have not
been shipped and delivered to and accepted by the Customer or the
services giving rise to such Receivable have not been performed
by Borrower and accepted by the Customer or the Receivable
otherwise does not represent a final sale; provided, that a
Receivable shall not be deemed not to represent a final sale
solely because such Receivable may in the future be subject to
compromise, allowance, adjustment, discount or credit, or because
the Customer with respect thereto shall have the right in the
ordinary course of business to return the Inventory relating
thereto, all as contemplated by Section 4.15(i) hereof;
(k) the Receivables of the Customer exceed a credit
limit determined by Agent, in its reasonable discretion, to the
extent such Receivable exceeds such limit;
(l) the Receivable is subject to any offset,
deduction, defense, dispute or counterclaim (but only to the
extent of such offset, deduction, defense, dispute or
counterclaim), the Customer is also a creditor or supplier of
Borrower or the Receivable is contingent in any respect or for
any reason; provided, that a Receivable shall not be deemed to be
contingent solely because such Receivable may in the future be
subject to compromise, allowance, adjustment, discount or credit,
or because the Customer with respect thereto shall have the right
in the ordinary course of business to return the Inventory
relating thereto, all as contemplated by Section 4.15(i) hereof;
(m) Borrower has made any agreement with any Customer
for any deduction therefrom, except for compromises, allowances,
adjustments, discounts or credits made in the ordinary course of
business as contemplated by Section 4.15(i) hereof, all of which
compromises, allowances, adjustments, discounts or credits are
reflected in Borrower's books and records;
(n) shipment of the merchandise or the rendition of
services has not been completed;
(o) any return, rejection or repossession of the
merchandise relating to such Receivable has occurred (to the
extent of such return, rejection or repossession); or
(p) such Receivable is not payable to Borrower.
Agent reserves the right, in its reasonable discretion,
to create, upon written notice to Borrower from time to time,
additional categories of ineligible Receivables.
"Environmental Complaint" shall have the meaning set
forth in Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and
local environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing
the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with
respect thereto.
"Equipment" shall mean and include all of Borrower's
goods (other than Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all
equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, parts, accessories and all replacements
and substitutions therefor or accessions thereto.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
"Eurodollar Rate Loan" shall mean a Revolving Advance
at any time that bears interest based on the Eurodollar Rate.
"Eurodollar Rate" shall mean for any Eurodollar Rate
Loan for the then current Interest Period relating thereto the
interest rate per annum determined by PNC by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest
1/100th of 1% per annum) (a) the rate of interest determined by
PNC in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the eurodollar
rate two (2) Business Days prior to the first day of such
Interest Period for an amount comparable to such Eurodollar Rate
Loan and having a borrowing date and a maturity comparable to
such Interest Period by (b) a number equal to 1.00 minus the
Reserve Percentage.
"Event of Default" shall have the meaning set forth in
Article X hereof.
"Federal Funds Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not
so published for any day which is a Business Day, the average of
quotations for such day on such transactions received by PNC from
three Federal funds brokers of recognized standing selected by
PNC.
"Fee Letter" shall mean the fee letter dated May 29,
1998, between Borrower and PNC.
"Finished Goods Inventory Advance Rate" shall have the
meaning set forth in Section 2.1(a)(y)(ii) hereof.
"Fixed Charge Coverage Ratio" shall mean and include,
with respect to any fiscal period, the ratio of (a) EBITDA during
such period, minus (i) actual capital expenditures made by
Borrower on a consolidated basis during such period which were
not financed, and (ii) cash payments of federal, state and local
income taxes made by Borrower on a consolidated basis during such
period, to (b) the sum of (i) the interest expense of Borrower on
a consolidated basis during such period, and (ii) scheduled
principal payments with respect to Indebtedness for borrowed
money and capitalized leases made by Borrower on a consolidated
basis during such period.
"Formula Amount" shall have the meaning set forth in
Section 2.1(a) hereof.
"GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from time to
time.
"General Intangibles" shall mean and include all of
Borrower's general intangibles, whether now owned or hereafter
acquired including, without limitation, all choses in action,
causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control
procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, registrations, licenses, franchises,
customer lists, tax refunds, tax refund claims, computer
programs, all claims under guaranties, security interests or
other security held by or granted to Borrower to secure payment
of any of the Receivables by a Customer, all rights of
indemnification and all other intangible property of every kind
and nature (other than Receivables).
"Governmental Body" shall mean any nation or
government, any state or other political subdivision thereof or
any entity exercising the legislative, judicial, regulatory or
administrative functions of or pertaining to a government.
"Hazardous Discharge" shall have the meaning set forth
in Section 4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation,
any flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related
materials as defined in CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et
seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant
thereto.
"Hazardous Wastes" shall mean all waste materials
regulated under CERCLA, RCRA or applicable state law, and any
other applicable Federal and state laws now in force or hereafter
enacted relating to hazardous waste disposal.
"Indebtedness" of a Person at a particular date shall
mean all obligations of such Person which in accordance with GAAP
would be classified upon a balance sheet as liabilities (except
capital stock and surplus earned or otherwise) and in any event,
without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any,
due at the required prepayment dates of such indebtedness, and
all indebtedness secured by a Lien on assets owned by such
Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any
assets subject to any Lien shall be deemed, for the purposes
hereof, to be the equivalent of the creation, assumption and
incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
"Interest Period" shall mean the period provided for
any Eurodollar Rate Loan pursuant to Section 2.2 hereof.
"Inventory" shall mean and include all of Borrower's
now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any
contract of service or held for sale or lease, all raw materials,
work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or
consumed in Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
"Issuer" shall mean any Person who issues a Letter of
Credit pursuant to the terms hereof.
"Lender" and "Lenders" shall have the meaning ascribed
to such term in the preamble to this Agreement and shall include
each Person which becomes a transferee, successor or assign of
any Lender.
"Letter of Credit Fees" shall have the meaning set
forth in Section 3.2 hereof.
"Letters of Credit" shall have the meaning set forth in
Section 2.8 hereof.
"License Agreements" shall mean each license or similar
agreement pursuant to which Borrower is granted a license to use
the trademark, trade name or similar intellectual property of a
third party in connection with the manufacture, distribution
and/or sale by Borrower of products bearing such trademark, trade
name or similar intellectual property.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether
statutory or otherwise), claim or encumbrance, or preference,
priority or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or nature
whatsoever including, without limitation, any conditional sale or
other title retention agreement, any lease having substantially
the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the condition, operations, assets, business or
prospects of Borrower, (b) Borrower's ability to pay the
Obligations in accordance with the terms thereof, (c) the value
of the Collateral, or Agent's Liens on the Collateral, including
the priority thereof, or (d) the ability of Agent and Lenders to
enforce their rights and remedies under this Agreement and the
Other Documents.
"Maximum Revolving Advance Amount" shall mean thirty
million dollars ($30,000,000).
"Maximum Seasonal Advance Amount" shall mean three
million dollars ($3,000,000).
"Monthly Advances" shall have the meaning set forth in
Section 3.1 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Obligations" shall mean and include any and all of
Borrower's Indebtedness, obligations and/or liabilities to Agent,
Issuer or Lenders of every kind, nature and description, direct
or indirect, secured or unsecured, joint, several, joint and
several, absolute or contingent, due or to become due, now
existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, whether arising under this Agreement
or under any Other Document.
"Other Documents" shall mean the Revolving Credit Note
and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, powers of
attorney, heretofore, now or hereafter executed by Borrower or
any guarantor of any of the Obligations and/or delivered to Agent
or any Lender in respect of the transactions contemplated by this
Agreement.
"Participant" shall mean each Person who, in accordance
with the terms and conditions of this Agreement, (a) shall be
granted the right by any Lender to participate in any of the
Advances and (b) shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
"Payment Office" shall mean initially ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; thereafter, such
other office of Agent, if any, which it may designate by notice
to Borrower and to each Lender to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor
of Agent for the benefit of Agent and Lenders; (b) Liens for
taxes, assessments or other governmental charges not delinquent
or being contested in good faith and by appropriate proceedings
and with respect to which proper reserves have been taken by
Borrower in accordance with GAAP; (c) deposits or pledges to
secure obligations under worker's compensation, social security
or similar laws, or under unemployment insurance; (d) deposits or
pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in
the ordinary course of Borrower's business; (e) judgment Liens
that have been stayed or bonded and mechanics', workers',
materialmen's or other like Liens arising in the ordinary course
of Borrower's business with respect to obligations which are not
due or which are being contested in good faith by Borrower; (f)
Liens placed upon fixed assets hereafter acquired to secure a
portion of the purchase price thereof, provided that (x) any such
Lien shall not encumber any other property of Borrower and (y)
the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year
shall not exceed the amount provided for in Section 7.6 hereof;
(g) Liens disclosed on Schedule 1.2(a); and (h) rights of the
licensors under the License Agreements .
"Person" shall mean any individual, sole
proprietorship, partnership, corporation, business trust, joint
stock company, trust, unincorporated organization, association,
limited liability company, institution, public benefit
corporation, joint venture, entity or government (whether
Federal, state, county, city, municipal or otherwise, including
any instrumentality, division, agency, body or department
thereof).
"Plan" shall mean any employee benefit plan within the
meaning of Section 3(2) of ERISA, maintained for employees of
Borrower or any member of the Controlled Group or any such Plan
to which Borrower or any member of the Controlled Group is
required to contribute on behalf of any of its employees.
"Postcapitalization Period" shall mean during the
twelve (12) month period commencing on the day after the date of
the second of the initial two capitalizations of the Costa Rican
Joint Venture by Borrower and Borrower's initial joint venture
partner in respect of the Costa Rican Joint Venture.
"Projections" shall have the meaning set forth in
Section 5.5(a) hereof.
"Purchasing Lender" shall have the meaning set forth in
Section 15.3 hereof.
"Raw Materials Inventory Advance Rate" shall have the
meaning set forth in Section 2.1(a)(y)(ii) hereof.
"RCRA" shall mean the Resource Conservation and
Recovery Act, 42 U.S.C. '' 6901 et seq., as same may be amended
from time to time.
"Real Property" shall mean all of Borrower's right,
title and interest in and to all of its now or hereafter owned
and leased premises, including, without limitation, the owned and
leased premises identified on Schedule 4.19 hereto.
"Receivables" shall mean and include all of Borrower's
accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrower by its Affiliates),
documents, chattel paper, general intangibles relating to
accounts, drafts and acceptances, and all other forms of
obligations owing to Borrower arising out of or in connection
with the sale or lease of Inventory or the rendition of services,
all guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set
forth in Section 2.1(a)(y)(i) hereof.
"Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"Reportable Event" shall mean a reportable event
described in Section 4043(b) of ERISA or the regulations
promulgated thereunder (other than an event for which the thirty
(30) day notice requirement has been waived).
"Required Lenders" shall mean, at any time, Lenders
holding at least fifty-one percent (51%) of the Advances at such
time and, if no Advances are outstanding, shall mean Lenders
holding fifty-one percent (51%) of the Commitment Percentages at
such time.
"Reserve Percentage" shall mean the maximum effective
percentage in effect on any day as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding.
"Revolving Advances" shall mean Advances made other
than Letters of Credit.
"Revolving Credit Note" shall mean the promissory notes
referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate
per annum equal to (a) the Base Rate with respect to Domestic
Rate Loans, or (b) the sum of the Eurodollar Rate plus one and
three-quarters percent (1-3/4%) with respect to Eurodollar Rate
Loans.
"Seasonal Advance Period" shall mean the period
commencing on July 1 of each year and ending on September 30 of
such year during the Term.
"Settlement Date" shall mean the Closing Date and
thereafter Wednesday of each week unless such day is not a
Business Day in which case it shall be the next succeeding
Business Day.
"Subsidiary" shall mean a corporation or other entity
of whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the issued and
outstanding shares of stock of Swank Sales.
"Swank ESOP " shall mean The New Swank, Inc. Retirement
Plan.
"Swank Sales" shall mean Swank Sales International
(V.I.), Inc., a Virgin Islands corporation and a wholly owned
Subsidiary of Borrower, and its successors and assigns.
"Term" shall have the meaning set forth in Section 13.1
hereof.
"Termination Event" shall mean (a) a Reportable Event
with respect to any Plan or Multiemployer Plan; (b) the
withdrawal of Borrower or any member of the Controlled Group from
a Plan or Multiemployer Plan during a plan year in which such
entity was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (c) the providing of notice of intent to
terminate a Plan in a distress termination described in Section
4041(c) of ERISA; (d) the institution by the PBGC of proceedings
to terminate a Plan or Multiemployer Plan; (e) any event or
condition (i) which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan or Multiemployer Plan, or (ii) that may
result in termination of a Multiemployer Plan pursuant to Section
4041A of ERISA; or (f) the partial or complete withdrawal within
the meaning of Sections 4203 and 4205 of ERISA, of Borrower or
any member of the Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material
present on the Real Property which has been shown to have
significant adverse effect on human health or which is subject to
regulation under the Toxic Substances Control Act (TSCA), 15
U.S.C. '' 2601 et seq., applicable state law, or any other
applicable Federal or state laws now in force or hereafter
enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs)
and lead-based paints.
"Transactions" shall have the meaning set forth in
Section 5.8 hereof.
"Transferee" shall have the meaning set forth in
Section 15.3(b) hereof.
"Undrawn Availability" on a particular date shall mean
an amount equal to (a) the lesser of (i) the Formula Amount on
such date or (ii) the Maximum Revolving Advance Amount, minus (b)
the sum of (i) the outstanding amount of Advances on such date,
plus (ii) all amounts due and owing to Borrower's trade creditors
on such date which are unpaid for more than sixty (60) days past
the original due date thereof, plus (iii) fees and expenses
hereunder and under the Other Documents for which Borrower is
liable on such date but which have not been paid or charged to
Borrower's Account.
"Week" shall mean the time period commencing with the
opening of business on a Wednesday and ending on the end of
business the following Tuesday.
1.3. Uniform Commercial Code Terms. All terms used herein
and defined in the Uniform Commercial Code as adopted in the
State of New York shall have the meaning given therein unless
otherwise defined herein.
1.4. Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to
cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice
versa. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations relating thereto. Unless otherwise provided, all
references to any instruments or agreements, including, without
limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.
II. ADVANCES, PAYMENTS.
2.1. (a) Revolving Advances. Subject to the terms and
conditions set forth in this Agreement, each Lender, severally
and not jointly, will make Revolving Advances to Borrower in
aggregate amounts outstanding at any time equal to such Lender's
Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount less the aggregate amount of outstanding Letters
of Credit and all unreimbursed payments or disbursements made by
Issuer under all Letters of Credit, or (y) an amount equal to the
sum of:
(i) eighty-five percent (85%) ("Receivables Advance
Rate"), of Eligible Receivables, plus
(ii) the lesser of (A) (1) fifteen percent (15%) ("Raw
Materials Inventory Advance Rate"), of the value of the
Eligible Inventory consisting of raw materials, plus
(2) fifty percent (50%) ("Finished Goods Inventory
Advance Rate"), of the value of the Eligible Inventory
consisting of finished goods (the Receivables Advance
Rate, the Raw Materials Inventory Advance Rate and the
Finished Goods Inventory Advance Rate shall be referred
to collectively as the "Advance Rates") or (B) fifteen
million dollars ($15,000,000), in the aggregate at any
one time, plus
(iii) solely during the Seasonal Advance Period, an
additional equal to the Maximum Seasonal Advance
Amount, minus
(iv) the aggregate amount of outstanding Letters of
Credit, minus
(v) such reserves as Agent may reasonably deem proper
and necessary from time to time based on such
considerations as Agent may from time to time deem
appropriate including, without limitation, the default
and delinquency rates with respect to Receivables and
the return and rejection rates with respect to
Inventory.
The amount derived from the sum of (x) Sections
2.1(a)(y)(i), (ii) and (iii) hereof minus (y) Section 2.1
(a)(y)(v) hereof at any time and from time to time shall be
referred to as the "Formula Amount". The Revolving Advances
shall be evidenced by the secured promissory note ("Revolving
Credit Note") substantially in the form attached hereto as
Exhibit 2.1(a).
(b) Change in Reserves. The reserves may be increased
or decreased by Agent at any time and from time to time as
provided in Section 2.1(a)(y)(v) hereof. Borrower consents to
any increases or decreases in reserves and acknowledges that
increasing the reserves may limit or restrict Advances requested
by Borrower. Agent shall give Borrower five (5) days prior
written notice of its intention to increase the reserves.
2.2. Procedure for Revolving Advances Borrowing.
(a) Borrower may notify Agent in writing (or by
telephone and promptly confirmed in writing) prior to 1:00 p.m.
(New York City time) on a Business Day of Borrower's request to
incur, on that day, a Revolving Advance hereunder. Should any
amount required to be paid as interest hereunder, or as fees or
other charges under this Agreement or any Other Document, or with
respect to any other Obligation, become due, same shall be deemed
a request for a Revolving Advance as of the date such payment is
due, in the amount required to pay in full such interest, fee,
charge or Obligation and such request shall be irrevocable. No
Revolving Advance shall be made available to Borrower during the
continuance of an Event of Default.
(b) Notwithstanding the provisions of (a) above, in
the event Borrower desires to obtain a Eurodollar Rate Loan,
Borrower shall give Agent at least three (3) Business Days' prior
written notice (or telephonic notice promptly confirmed in
writing), specifying (i) the date of the proposed borrowing
(which shall be a Business Day), (ii) the type of borrowing and
the amount on the date of such Revolving Advance to be borrowed,
which amount shall be an integral multiple of one million dollars
($1,000,000), and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be
for one, two or three months; provided, if an Interest Period
would end on a day that is not a Business Day, it shall end on
the next succeeding Business Day unless such day falls in the
next succeeding calendar month in which case the Interest Period
shall end on the next preceding Business Day.
(c) Each Interest Period of a Eurodollar Rate Loan
shall commence on the date such Eurodollar Rate Loan is made and
shall end on such date as Borrower may elect as set forth in
(b)(iii) above; provided that the exact length of each Interest
Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
Borrower shall elect the initial Interest Period
applicable to a Eurodollar Rate Loan by its notice of borrowing
given to Agent pursuant to Section 2.2(b) hereof or by its notice
of conversion given to Agent pursuant to Section 2.2(d) hereof,
as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice
(or by telephonic notice promptly confirmed in writing) to Agent
of such duration not less than three (3) Business Days prior to
the last day of the then current Interest Period applicable to
such Eurodollar Rate Loan. If Agent does not receive timely
notice of the Interest Period elected by Borrower, Borrower shall
be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereof.
(d) Provided that no Event of Default shall have
occurred and be continuing, Borrower may, on the last Business
Day of the then current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or on any Business Day with
respect to Domestic Rate Loans, convert any such loan into a loan
of another type in the same aggregate principal amount provided
that any conversion of a Eurodollar Rate Loan shall be made only
on the last Business Day of the then current Interest Period
applicable to such Eurodollar Rate Loan. If Borrower desires to
convert a loan, Borrower shall give Agent not less than three (3)
Business Days' irrevocable prior written notice (or telephonic
notice promptly confirmed in writing) to convert from a Domestic
Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's
irrevocable prior written notice (or telephonic notice promptly
confirmed in writing) to convert from a Eurodollar Rate Loan to a
Domestic Rate Loan, specifying the date of such conversion, the
loans to be converted and if the conversion is from a Domestic
Rate Loan to a Eurodollar Rate Loan, the duration of the first
Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than six (6)
Eurodollar Rate Loans, in the aggregate.
(e) At its option and upon three (3) Business Days'
prior written notice, Borrower may prepay the Eurodollar Rate
Loans in whole at any time or in part from time to time, without
premium or penalty (except as provided in Section 13.1 hereof),
but with accrued interest on the principal being prepaid to the
date of such repayment. Borrower shall specify the date of
prepayment of Revolving Advances which are Eurodollar Rate Loans
and the amount of such prepayment. In the event that any
prepayment of a Eurodollar Rate Loan is required or made on a
date other than the last Business Day of the then current
Interest Period with respect thereto, Borrower shall indemnify
Agent and Lenders therefor in accordance with Section 2.2(f)
hereof.
(f) Borrower shall indemnify Agent and Lenders and
hold Agent and Lenders harmless from and against any and all
losses or expenses that Agent and Lenders may sustain or incur as
a consequence of any prepayment, conversion of or any default by
Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar
Rate Loan after notice thereof has been given, including, but not
limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any
additional amounts payable pursuant to the foregoing sentence
shall be submitted by Agent or any Lender to Borrower and shall
be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if the
adoption or implementation of, or any change in or in the
interpretation or application of, any applicable law, treaty,
regulation or directive shall make it unlawful for any Lender
(for purposes of this Section 2.2(g), the term "Lender" shall
include any Lender and the office or branch where any Lender or
any corporation or bank controlling such Lender makes or
maintains any Eurodollar Rate Loans) to make or maintain its
Eurodollar Rate Loans, the obligation of Lenders to make
Eurodollar Rate Loans hereunder shall forthwith be canceled and
Borrower shall, if any affected Eurodollar Rate Loans are then
outstanding, promptly upon request from Agent, at Borrower's
option either pay all such affected Eurodollar Rate Loans or
convert such affected Eurodollar Rate Loans into loans of another
type. If any such payment or conversion of any Eurodollar Rate
Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrower shall
pay Agent, upon Agent's request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained
or incurred by Lenders in respect of such Eurodollar Rate Loan as
a result of such payment or conversion, including (but not
limited to) any interest or other amounts payable by Lenders to
lenders of funds obtained by Lenders in order to make or maintain
such Eurodollar Rate Loan. A certificate as to any additional
amounts payable pursuant to the foregoing sentence shall be
submitted by Lenders to Borrower and shall be conclusive absent
manifest error.
2.3. Disbursement of Advance Proceeds. All Advances shall
be disbursed from whichever office or other place Agent may
designate from time to time. During the Term, Borrower may use
the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrower or
deemed to have been requested by Borrower under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the
extent Lenders make such Revolving Advances, be made available to
Borrower on the day so requested by way of credit to Borrower's
operating account at PNC, or such other bank as Borrower may
designate following notification to Agent, in Dollars and in
immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed
to Agent to be applied to the outstanding Obligations giving rise
to such deemed request.
2.4. Maximum Advances. The aggregate balance of Advances
outstanding at any time shall not exceed the lesser of (a)
Maximum Revolving Advance Amount or (b) the Formula Amount.
2.5. Repayment of Advances.
(a) The Revolving Advances shall be due and payable in
full on the last day of the Term subject to earlier prepayment as
herein provided.
(b) Borrower recognizes that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to
and/or proceeds of Collateral may not be collectible by Agent on
the date received. In consideration of Agent's agreement to
conditionally credit Borrower's Account as of the Business Day
on which Agent receives those items of payment, Borrower agrees
that, in computing the charges under this Agreement, all items of
payment shall be deemed applied by Agent on account of the
Obligations one (1) Business Days after the Business Day Agent
receives such payments via wire transfer or electronic depository
check. Agent is not, however, required to credit Borrower's
Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrower's Account
for the amount of any item of payment which is returned to Agent
unpaid.
(c) All payments of principal, interest and other
amounts payable hereunder, or under any of the related agreements
shall be made to Agent at the Payment Office not later than 1:00
p.m. (New York city time) on the due date therefor in lawful
money of the United States of America in federal funds or other
funds immediately available to Agent. Agent shall have the right
to effectuate payment on any and all Obligations due and owing
hereunder by charging Borrower's Account or by making Revolving
Advances as provided in Section 2.2 hereof.
(d) Borrower shall pay principal, interest, and all
other amounts payable hereunder, or under any Other Document,
without any deduction whatsoever, including, but not limited to,
any deduction for any setoff or counterclaim. In addition, any
and all payments made by Borrower hereunder or under any Other
Document shall be made free and clear and without deduction for
any present or future taxes, levies, imposts, charges or
withholdings, and all liabilities with respect thereto, excluding
taxes imposed on Agent's, any Issuer's or any Lender's income or
profits (all such non-excluded taxes, levies, imposts, charges or
withholdings and liabilities being hereinafter referred to as
"Taxes". If Borrower shall be required by law to withhold or
deduct any Taxes from or in respect of any sum payable by
Borrower hereunder or under any Other Document to Agent, any
Issuer or any Lender, (x) such sum payable shall be increased as
may be necessary so that after making all required withholdings
or deductions, Agent, such Issuer or such Lender, as the case may
be, receives an amount equal to the sum it would have received
had no such withholdings or deductions been made, (y) Borrower
shall make such withholdings or deductions, and (z) Borrower
shall pay the full amount withheld or deducted to the relevant
Governmental Body in accordance with applicable law. Borrower
will indemnify Agent, each Issuer and each Lender, and reimburse
each on demand and certification for the full amount of all Taxes
incurred or paid by Agent, such Issuer or such Lender, as the
case may be, and any liability arising therefrom or with respect
thereto, whether or not such Taxes were correctly or lawfully
payable. A certificate of Agent, such Issuer or such Lender
setting forth the amount payable under this Section 4.13 shall be
delivered to Borrower and shall be conclusive absent manifest
error.
2.6. Repayment of Excess Advances. The aggregate balance of
Advances outstanding at any time in excess of the maximum amount
of Advances permitted hereunder shall be immediately due and
payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has
occurred.
2.7. Statement of Account. Agent shall maintain, in
accordance with its customary procedures, a loan account ("
Borrower's Account") in the name of Borrower in which shall be
recorded the date and amount of each Advance made by Agent and
the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of
any Advance shall not adversely affect Agent or any Lender. Each
month, Agent shall send to Borrower a statement showing the
accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Agent and
Borrower, during such month. The monthly statements shall be
deemed correct and binding upon Borrower in the absence of
manifest error and shall constitute an account stated between
Lenders and Borrower unless Agent receives a written statement of
Borrower' specific exceptions thereto within thirty (30) days
after such statement is received by Borrower. The records of
Agent with respect to the loan account shall be conclusive
evidence absent manifest error of the amounts of Advances and
other charges thereto and of payments applicable thereto.
2.8. Letters of Credit. Subject to the terms and conditions
hereof, Agent shall (a) issue or cause the issuance of (a)
irrevocable standby letters of credit denominated in Dollars
issued to support obligations of Borrower in the ordinary course
of business (the "Standby Letters of Credit", or (b) irrevocable
sight documentary letters of credit denominated in Dollars issued
in respect to the purchase of goods by Borrower in the ordinary
course of business (the "Trade Letters of Credit" and, together
with the Standby Letters of Credit, the "Letters of Credit") on
behalf of Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to
the extent that the face amount of such Letters of Credit would
then cause the sum of (A) the outstanding Revolving Advances plus
(B) outstanding Letters of Credit to exceed the lesser of (1) the
Maximum Revolving Advance Amount or (2) the Formula Amount. The
maximum amount of outstanding Letters of Credit shall not exceed
five million dollars ($5,000,000) in the aggregate at any time.
All disbursements or payments related to Letters of Credit shall
be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the Revolving Interest Rate
for Domestic Rate Loans; Letters of Credit that have not been
drawn upon shall not bear interest.
2.9. Issuance of Letters of Credit.
(a) Borrower may request Agent to issue or cause the
issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Issuer's form of Letter of Credit Application
(the "Letter of Credit Application") completed to the
satisfaction of Issuer; and, such other certificates, documents
and other papers and information as Agent may reasonably request.
Borrower also has the right to give instructions and make
agreements with respect to any application, any applicable letter
of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement,
any letter of credit and the disposition of documents,
disposition of any unutilized funds, and to agree with Agent upon
any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things,
(i) be in a form customarily used by the Issuer or in such other
form as has been approved by the Issuer, and (ii) have an expiry
date not later than one (1) year after such Letter of Credit's
date of issuance and in no event later than one (1) month prior
to the last day of the Term. Each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer and, to the extent not inconsistent
therewith, the laws of the State of New York.
(c) Agent shall use its reasonable efforts to notify
Lenders of the request by Borrower for a Letter of Credit
hereunder.
2.10. Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of
Credit, Borrower shall indemnify, save and hold Agent, each
Lender and each Issuer harmless from any loss, cost, expense or
liability, including, without limitation, payments made by Agent,
any Lender or any Issuer and expenses and reasonable attorneys'
fees incurred by Agent, any Lender or Issuer arising out of, or
in connection with, any Letter of Credit to be issued for
Borrower, except to the extent due to Agent's, a Lenders or an
Issuer's gross (not mere) negligence or willful misconduct.
Borrower shall be bound by Agent's or any Issuer's policies and
good faith interpretations of any Letter of Credit issued for
Borrower's account, although this interpretation may be different
from its own; and, neither Agent, nor any Lender, nor any Issuer
nor any of their correspondents shall be liable for any error,
negligence, or mistakes, whether of omission or commission, in
following Borrower's instructions or those contained in any
Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's, any Lender's, any Issuer's or such
correspondents' gross (not mere) negligence or willful
misconduct.
(b) Borrower shall authorize and direct any Issuer to
name Borrower as the "Applicant" or "Account Party" of each
Letter of Credit. If Agent is not the Issuer of any Letter of
Credit, Borrower shall authorize and direct the Issuer to deliver
to Agent all instruments, documents, and other writings and
property received by the Issuer pursuant to the Letter of Credit
and to accept and rely upon Agent's instructions and agreements
with respect to all matters arising in connection with the Letter
of Credit, the application therefor or any acceptance thereof.
(c) In connection with all Letters of Credit issued or
caused to be issued by Agent under this Agreement, Borrower
hereby appoints Agent, or its designee, as its attorney, with
full power and authority if an Event of Default shall have
occurred and be continuing, (i) to sign and/or endorse Borrower's
name upon any warehouse or other receipts, letter of credit
applications and acceptances; (ii) to sign Borrower's name on
bills of lading; (iii) to clear Inventory through the United
States of America Customs Department ("Customs") in the name of
Borrower or Agent or Agent's designee, and to sign and deliver to
Customs officials powers of attorney in the name of Borrower for
such purpose; and (iv) to complete in Borrower's name or Agent's,
or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof. Neither Agent nor
its attorneys will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for
Agent's or its attorney's gross (not mere) negligence or willful
misconduct. This power, being coupled with an interest, is
irrevocable as long as any Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage
amount equal to the product of such Lender's Commitment
Percentage times the aggregate amount of all unreimbursed
reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be
deemed to have irrevocably purchased an undivided participation
in each such unreimbursed reimbursement obligation. In the event
that at the time a disbursement is made the unpaid balance of
Revolving Advances plus the outstanding amount of other Letters
of Credit exceeds or would exceed, with the making of such
disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by
Borrower within two (2) Business Days, Agent shall promptly
notify each Lender and upon Agent's demand each Lender shall pay
to Agent such Lender's proportionate share of such unreimbursed
disbursement together with such Lender's proportionate share of
Agent's unreimbursed costs and expenses relating to such
unreimbursed disbursement. Upon receipt by Agent of a repayment
from Borrower of any amount disbursed by Agent for which Agent
had already been reimbursed by Lenders, Agent shall deliver to
each Lender that Lender's pro rata share of such repayment. Each
Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit
hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and unconcealed or (C) all Persons (other than
Borrower) have been fully reimbursed for all payments made under
or relating to Letters of Credit.
2.11. Additional Payments. Any sums expended by Agent
or any Lender due to Borrower's failure to perform or comply with
its obligations under this Agreement or any Other Document
including, without limitation, Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrower's Account as a Revolving Advance and added
to the Obligations.
2.12. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be
advanced according to the applicable Commitment Percentages of
Lenders.
(b) Each payment (including each prepayment) by
Borrower on account of the principal of and interest on the
Revolving Advances, shall be applied to the Revolving Advances
pro rata according to the applicable Commitment Percentages of
Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by Borrower on account of
principal, interest and fees shall be made without set-off or
counterclaim and shall be made to Agent on behalf of the Lenders
to the Payment Office, in each case on or prior to 1:00 p.m. (New
York City time), in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary
contained in Sections 2.12(a) and (b) hereof, commencing with the
first Business Day following the Closing Date, each borrowing of
Revolving Advances shall be advanced by Agent and each payment by
Borrower on account of Revolving Advances shall be applied first
to those Revolving Advances advanced by Agent. On or before 1:00
p.m. (New York City time), on each Settlement Date commencing
with the first Settlement Date following the Closing Date, Agent
and Lenders shall make certain payments as follows: (A) if the
aggregate amount of new Revolving Advances made by Agent during
the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide Agent with funds
in an amount equal to its applicable Commitment Percentage of the
difference between (1) such Revolving Advances and (2) such
repayments and (B) if the aggregate amount of repayments applied
to outstanding Revolving Advances during such Week exceeds the
aggregate amount of new Revolving Advances made during such Week,
then Agent shall provide each Lender with funds in an amount
equal to its applicable Commitment Percentage of the difference
between (1) such repayments and (2) such Revolving Advances.
(ii) Each Lender shall be entitled to earn
interest at the applicable Revolving Interest Rate on outstanding
Revolving Advances which it has funded.
(iii) Promptly following each Settlement Date,
Agent shall submit to each Lender a certificate with respect to
payments received and Revolving Advances made during the Week
immediately preceding such Settlement Date. Such certificate of
Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted
Lender") shall at any time receive any payment of all or part of
its Advances, or interest thereon, or receive any Collateral in
respect thereof (whether voluntarily or involuntarily or by set-
off) in a greater proportion than any such payment to and
Collateral received by any other Lender, if any, in respect of
such other Lender's Advances, or interest thereon, and such
greater proportionate payment or receipt of Collateral is not
expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide
each such other Lender with the benefits of any such Collateral,
or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each Lender; provided,
however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender,
such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without
interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such
portion.
(e) Unless Agent shall have been notified by
telephone, confirmed in writing, by any Lender that such Lender
will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent
may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date
and, in reliance upon such assumption, make available to Borrower
a corresponding amount. Agent will promptly notify Borrower of
its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Rate (computed
on the basis of a year of 360 days) during such period as quoted
by Agent, times (ii) such amount, times (iii) the number of days
from and including such Settlement Date to the date on which such
amount becomes immediately available to Agent. A certificate of
Agent submitted to any Lender with respect to any amounts owing
under this paragraph (e) shall be conclusive, in the absence of
manifest error. If such amount is not in fact made available to
Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an
amount, with interest thereon at the rate per annum then
applicable to Revolving Advances hereunder, on demand from
Borrower; provided, however, that Agent's right to such recovery
shall not prejudice or otherwise adversely affect Borrower'
rights (if any) against such Lender.
2.13. Use of Proceeds. Borrower shall apply the
proceeds of Advances to (a) repay existing indebtedness owed to
IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company and General Electric Capital
Corporation, (b) pay fees and expenses relating to this
transaction, and (c) to provide for its working capital needs,
including, without limitation, for capital expenditures to the
extent permitted hereunder.
2.14. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained
herein, in the event any Lender (x) has refused (which refusal
constitutes a breach by such Lender of its obligations under this
Agreement) to make available its portion of any Advance or (y)
notifies either Agent or Borrower that it does not intend to make
available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations
hereunder of such Lender (a "Defaulting Lender") as to which a
Lender Default is in effect and of the other parties hereto shall
be modified to the extent of the express provisions of this
Section 2.14 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders
(the "Non-Defaulting Lenders") which are not Defaulting Lenders
based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any
Advances required to be advanced by any Lender shall be increased
as a result of such Lender Default. Amounts received in respect
of principal of any type of Advances shall be applied to reduce
the applicable Advances of each Lender pro rata based on the
aggregate of the outstanding Advances of that type of all Lenders
at the time of such application; provided, that, such amount
shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of
Advances of any Non-Defaulting Lender exceeds such Non-Defaulting
Lender's Commitment Percentage of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or
vote on any matters relating to this Agreement and the Other
Documents. All amendments, waivers and other modifications of
this Agreement and the Other Documents may be made without regard
to a Defaulting Lender and, for purposes of the definition of
"Required Lenders", a Defaulting Lender shall be deemed not to be
a Lender and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section
2.14, the rights and obligations of a Defaulting Lender
(including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section
2.15 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall
alter such obligations, shall operate as a waiver of any default
by such Defaulting Lender hereunder, or shall prejudice any
rights which Borrower, Agent or any Lender may have against any
Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively
cures to the satisfaction of Agent the breach which caused a
Lender to become a Defaulting Lender, such Defaulting Lender
shall no longer be a Defaulting Lender and shall be treated as a
Lender under this Agreement.
(f) In the event and for so long as a Defaulting
Lender fails to cure to the reasonable satisfaction of Borrower
the breach which caused such Lender to become a Defaulting
Lender, Borrower shall have the right to require such Defaulting
Lender to sell, assign and transfer all of such Defaulting
Lender's rights and interests under this Agreement (including,
without limitation, all of such Defaulting Lender's outstanding
Advances, commitments to make additional Advances and
participating interests in outstanding Letters of Credit) to a
Purchasing Lender designated by Agent and reasonably acceptable
to Borrower, upon the terms set forth in Section 15.3(c) hereof;
provided that such Defaulting Lender shall be obligated to pay
the fee set forth in Section 15.3(c) hereof.
III. INTEREST AND FEES.
3.15. Interest. Interest on Revolving Advances shall be
payable in arrears on the first day of each month with respect to
Domestic Rate Loans and, with respect to Eurodollar Rate Loans,
at the end of each Interest Period. Interest charges shall be
computed on the actual principal amount of Revolving Advances
outstanding during the month (the "Monthly Advances") at a rate
per annum equal to the applicable Revolving Interest Rate.
Whenever, subsequent to the date of this Agreement, the Base Rate
is increased or decreased, the Revolving Interest Rate for
Domestic Rate Loans shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of such
change in the Base Rate during the time such change or changes
remain in effect. The Eurodollar Rate shall be adjusted with
respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve
Percentage as of such effective date. Upon and after the
occurrence and during the continuance of an Event of Default, (i)
the Obligations other than Eurodollar Rate Loans shall bear
interest at the applicable Revolving Interest Rate for Domestic
Loans plus two percent (2%) per annum and (ii) Eurodollar Rate
Loans shall bear interest at the Revolving Interest Rate for
Eurodollar Rate Loans plus two percent (2%) per annum (as
applicable, the "Default Rate").
3.16. Letter of Credit Fees. Borrower shall pay (a) to
Agent, for the benefit of Lenders, fees for each Letter of Credit
for the period from and excluding the date of issuance of same to
and including the date of expiration or termination, equal to the
average daily face amount of each outstanding Letter of Credit
multiplied by one and three-quarters percent (1-3/4%) per annum,
such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable monthly in
arrears on the first day of each month and on the last day of the
Term and (b) to the Issuer, any and all fees and expenses as
agreed upon by the Issuer and Borrower in connection with any
Letter of Credit, including, without limitation, in connection
with the opening, amendment or renewal of any such Letter of
Credit and any acceptances created thereunder and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to
the Issuer (all of the foregoing fees, the "Letter of Credit
Fees"). Any such charge in effect at the time of a particular
transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer's prevailing
charges for that type of transaction. All Letter of Credit Fees
payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject
to rebate or proration upon the termination of this Agreement for
any reason.
3.17. Facility Fee. If, for any month during the Term,
the average daily unpaid balance of the Revolving Advances for
each day of such month does not equal the Maximum Revolving
Advance Amount, then Borrower shall pay to Agent for the ratable
benefit of Lenders a fee at a rate equal to three-eighths of one
percent (.375%) per annum on the amount by which the Maximum
Revolving Advance Amount exceeds such average daily unpaid
balance. Such fee shall be payable quarterly in arrears on the
first day of each calendar quarter and on the last day of the
Term.
3.18. Additional Fees. Borrower shall pay to Agent all
fees specified in the Fee Letter in the amounts and at the times
specified therein.
3.19. Computation of Interest and Fees. Interest and
fees hereunder shall be computed on the basis of a year of 360
days and for the actual number of days elapsed. If any payment
to be made hereunder becomes due and payable on a day other than
a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be
payable at the Revolving Interest Rate for Domestic Rate Loans
during such extension.
3.20. Maximum Charges. In no event whatsoever shall
interest and other charges charged hereunder exceed the highest
rate permissible under law. In the event interest and other
charges as computed hereunder would otherwise exceed the highest
rate permitted under law, such excess amount shall be first
applied to any unpaid principal balance owed by Borrower, and if
the then remaining excess amount is greater than the previously
unpaid principal balance, Lenders shall promptly refund such
excess amount to Borrower and the provisions hereof shall be
deemed amended to provide for such permissible rate.
3.21. Increased Costs. In the event that the adoption
or implementation of, or any change in or in the interpretation
or application of, any applicable law, treaty or governmental
regulation, or compliance by any Lender (for purposes of this
Section 3.7, the term "Lender" shall include Agent, any Issuer or
any Lender and any corporation or bank controlling Agent, any
Issuer or any Lender) and the office or branch where Agent or any
Lender makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law)
from any central bank or other financial, monetary or other
authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Other Document
or change the basis of taxation of payments to Agent or any
Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by
the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve,
special deposit, assessment or similar requirement against assets
held by, or deposits in or for the account of, advances or loans
by, or other credit extended by, any office of Agent or any
Lender, including (without limitation) pursuant to Regulation D
of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London
interbank Eurodollar market any other condition with respect to
this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to
Agent or any Lender of making, renewing or maintaining its
Advances hereunder by an amount that Agent or such Lender deems
to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be
material, then, in any case Borrower shall promptly pay Agent or
such Lender, upon its demand and written certification, such
additional amount as will compensate Agent or such Lender for
such additional cost or such reduction, as the case may be,
provided that the foregoing shall not apply to increased costs
which are reflected in the Eurodollar Rate. Agent or such Lender
shall certify in writing the amount of such additional cost or
reduced amount to Borrower, and such certification shall be
conclusive absent manifest error.
3.22. Basis For Determining Interest Rate Inadequate or
Unfair. In the event that Agent or any Lender shall have
determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank
Eurodollar market, with respect to an outstanding Eurodollar Rate
Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Domestic Rate Loan into a Eurodollar Rate Loan;
then Agent shall give Borrower prompt written, telephonic or
telegraphic notice of such determination. If such notice is
given, (i) any such requested Eurodollar Rate Loan shall be made
as a Domestic Rate Loan, unless Borrower shall notify Agent in
writing (or by telephone and promptly confirmed in writing) no
later than 10:00 a.m. (New York City time) two (2) Business Days
prior to the date of such proposed borrowing, that its request
for such borrowing shall be canceled or made as an unaffected
type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or
Eurodollar Rate Loan which was to have been converted to an
affected type of Eurodollar Rate Loan shall be continued as or
converted into a Domestic Rate Loan, or, if Borrower shall notify
Agent in writing (or by telephone and promptly confirmed in
writing), no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be
maintained as an unaffected type of Eurodollar Rate Loan, and
(iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrower shall notify
Agent in writing (or by telephone and promptly confirmed in
writing), no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan,
shall be converted into an unaffected type of Eurodollar Rate
Loan on the last Business Day of the then current Interest Period
for such affected Eurodollar Rate Loan. Until such notice has
been withdrawn, Lenders shall have no obligation to make an
affected type of Eurodollar Rate Loan or maintain outstanding
affected Eurodollar Rate Loans and Borrower shall not have the
right to convert a Domestic Rate Loan or an unaffected type of
Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.23. Capital Adequacy.
(a) In the event that Agent or any Lender shall have
determined that the adoption or implementation of, or any change
in, any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Agent or any Lender (for
purposes of this Section 3.9, the term "Lender" shall include
Agent, any Issuer or any Lender and any corporation or bank
controlling Agent, any Issuer or any Lender) and the office or
branch where Agent or any Lender makes or maintains any
Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Agent or any
Lender's capital as a consequence of its obligations hereunder to
a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to
be material, then, from time to time, Borrower shall pay to Agent
or such Lender, upon request and written certification, such
additional amount or amounts as will compensate Agent or such
Lender for such reduction. In determining such amount or
amounts, Agent or such Lender may use any reasonable averaging or
attribution methods. The protection of this Section 3.9 shall be
available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting
forth such amount or amounts as shall be necessary to compensate
Agent or such Lender with respect to Section 3.9(a) hereof shall
be delivered to Borrower and shall be conclusive absent manifest
error.
IV. COLLATERAL: GENERAL TERMS
4.24. Security Interest in the Collateral. To secure
the prompt payment and performance to Agent and each Lender of
the Obligations, Borrower hereby assigns, pledges and grants to
Agent for the ratable benefit of each Lender a continuing
security interest in and to all of the Collateral, whether now
owned or existing or hereafter acquired or arising and
wheresoever located. Borrower shall ▇▇▇▇ its books and records
as may be necessary or appropriate to evidence, protect and
perfect Agent's security interest and shall cause its financial
statements to reflect such security interest.
4.25. Perfection of Security Interest. Borrower shall
take all action that may be necessary or desirable, or that Agent
may request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent's security
interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all
Liens other than Permitted Encumbrances, (ii) obtaining
landlords' or mortgagees' lien waivers, (iii) delivering to
Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as
Agent may specify, any and all chattel paper, instruments,
letters of credits and advices thereof and documents evidencing
or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements
satisfactory to Agent, including, without limitation, those
contemplated by Section 8.1(r) hereof, and (v) executing and
delivering financing statements, instruments of pledge and
notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security
interest under the Uniform Commercial Code or other applicable
law. Agent is hereby authorized to file financing statements
signed by Agent instead of Borrower in accordance with Section 9-
402(2)(e) of the Uniform Commercial Code as adopted in the State
of New York if a Default or Event of Default has occurred or is
continuing, or at any other time if Agent has requested that
Borrower sign such financing statements and Borrower has failed
to do so within three (3) Business Days. All charges, expenses
and fees Agent may incur in doing any of the foregoing, and any
local taxes relating thereto, shall be charged to Borrower's
Account as a Revolving Advance of a Domestic Rate Loan and added
to the Obligations, or, at Agent's option, shall be paid to Agent
for the ratable benefit of Lenders promptly upon demand.
4.26. Disposition of Collateral. Borrower will
safeguard and protect all Collateral for Agent's general account
and make no disposition thereof whether by sale, lease or
otherwise except (a) the sale of Inventory in the ordinary course
of business, (b) the disposition or transfer of obsolete and worn-
out Equipment and Equipment no longer used by Borrower, in each
case in the ordinary course of business, and (c) the contribution
or transfer of property and assets to the Costs Rican Joint
Venture to the extent permitted under Sections 7.4 and 7.5
hereof.
4.27. Preservation of Collateral. Following the
occurrence and during the continuance of an Event of Default, in
addition to the rights and remedies set forth in Section 11.1
hereof, Agent: (a) may at any time take such steps as Agent
reasonably deems necessary to protect Agent's interest in and to
preserve the Collateral, including the hiring of such security
guards or the placing of other security protection measures as
Agent may deem appropriate; (b) may employ and maintain at any of
Borrower's premises a custodian who shall have full authority to
do all acts necessary to protect Agent's interests in the
Collateral; (c) may lease warehouse facilities to which Agent may
move all or part of the Collateral; (d) may use Borrower's owned
or leased lifts, hoists, trucks and other facilities or equipment
for handling or removing the Collateral; and (e) shall have, and
is hereby granted, a right of ingress and egress to the places
where the Collateral is located, and may proceed over and through
any of Borrower's owned or leased property. Borrower shall
cooperate fully with all of Agent's efforts to preserve the
Collateral and will take such actions to preserve the Collateral
as Agent may direct. All of Agent's expenses of preserving the
Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrower's Account as a Revolving
Advance of a Domestic Rate Loan and added to the Obligations.
4.28. Ownership of Collateral. With respect to the
Collateral, at the time the Collateral becomes subject to Agent's
security interest: (a) Borrower shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant
a first priority (subject to Permitted Encumbrances) security
interest in each and every item of the Collateral to Agent; and,
except for Permitted Encumbrances the Collateral shall be free
and clear of all Liens whatsoever; (b) each document and
agreement executed by Borrower or delivered to Agent or any
Lender in connection with this Agreement shall be true and
correct in all material respects; (c) all signatures and
endorsements of Borrower that appear on such documents and
agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall
be located as set forth on Schedule 4.5 hereto and shall not be
removed from such location(s) (other than another location listed
on Schedule 4.5 hereto) without the prior written consent of
Agent except to the extent permitted in Section 4.3 hereof.
4.29. Defense of Agent's and Lenders' Interests. Until
(a) payment and performance in full of all of the Obligations and
(b) termination of this Agreement, Agent's interests in the
Collateral shall continue in full force and effect. During such
period Borrower shall not, without Agent's prior written consent,
pledge, sell (except Inventory in the ordinary course of business
and Equipment to the extent permitted in Section 4.3 hereof),
assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any way except
for Permitted Encumbrances, any part of the Collateral. Borrower
shall defend Agent's interests in the Collateral against any and
all Persons whatsoever. At any time following demand by Agent
for payment of all Obligations pursuant to Section 11.1 hereof,
Agent shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form
contained, including without limitation: labels, stationery,
documents, instruments and advertising materials. If Agent
exercises this right to take possession of the Collateral,
Borrower shall, upon demand, assemble it in the best manner
possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies set forth herein and further provided by the
Uniform Commercial Code or other applicable law. Borrower shall,
and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Agent holds
a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into Borrower's possession,
they, and each of them, shall be held by Borrower in trust as
Agent's trustee, and Borrower will immediately deliver them to
Agent in their original form together with any necessary
endorsement.
4.30. Books and Records. Borrower shall (a) keep proper
books of record and account in which full, true and correct
entries will be made of all dealings or transactions of or in
relation to its business and affairs; (b) set up on its books
accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its
books, from its earnings, allowances against doubtful
Receivables, advances and investments and all other proper
accruals (including, without limitation by reason of enumeration,
accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of
properties), which should be set aside from such earnings in
connection with its business; in each instance in accordance with
GAAP. All determinations pursuant to this Section 4.7 shall be
made in accordance with, or as required by, GAAP consistently
applied.
4.31. Financial Disclosure. Borrower hereby irrevocably
authorizes and directs all accountants and auditors employed by
Borrower at any time during the Term to exhibit and deliver to
Agent and each Lender copies of any of Borrower's financial
statements, trial balances or other accounting records of any
sort in the accountant's or auditor's possession, and to disclose
to Agent and each Lender any information such accountants may
have concerning Borrower's financial status and business
operations.
4.32. Compliance with Laws. Borrower shall comply in
all material respects with all acts, rules, regulations and
orders of any legislative, administrative or judicial body or
official applicable to the Collateral or any part thereof or to
the operation of Borrower's business the non-compliance with
which could reasonably be expected to have a Material Adverse
Effect. Borrower may, however, contest or dispute any such acts,
rules, regulations, orders and directions of those bodies or
officials in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are
established to the reasonable satisfaction of Agent to protect
Agent's Lien on or security interest in the Collateral. The
Collateral at all times shall be maintained in accordance with
the requirements of all insurance carriers which provide
insurance with respect to the Collateral so that such insurance
shall remain in full force and effect.
4.33. Inspection of Premises. At all reasonable times
and, provided that no Event of Default has occurred and is
continuing, upon reasonable advance notice, Agent and each Lender
shall have full access to and the right to audit, check, inspect
and make abstracts and copies from Borrower's books, records,
audits, correspondence and all other papers relating to the
Collateral and the operation of Borrower's business. Agent, any
Lender and their agents may enter upon any of Borrower's premises
at any time during business hours and at any other reasonable
time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the
operation of Borrower's business.
4.34. Insurance. Borrower shall bear the full risk of
any loss of any nature whatsoever with respect to the Collateral.
At Borrower's own cost and expense in amounts and with carriers
reasonably acceptable to Agent, Borrower shall (a) keep all its
insurable properties and properties in which Borrower has an
interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and
such other hazards, and for such amounts, as is customary in the
case of companies engaged in businesses similar to Borrower's
including, without limitation, business interruption insurance;,
(b) maintain a bond in such amounts as is customary in the case
of companies engaged in businesses similar to Borrower insuring
against larceny, embezzlement or other criminal misappropriation
of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or
funds of Borrower either directly or through authority to draw
upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance
against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation
or similar insurance as may be required under the laws of any
state or jurisdiction in which Borrower is engaged in business;
(e) furnish Agent with (i) copies of all policies (if requested)
and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance
reasonably satisfactory to Agent, naming Agent as a co-insured
and loss payee as its interests may appear with respect to all
insurance coverage referred to in clauses (a) and (b) above, and
providing (1) that all proceeds thereunder shall be payable to
Agent, (2) no such insurance shall be affected by any act or
neglect of the insured or owner of the property described in such
policy, and (3) that such policy and loss payable clauses may not
be canceled, amended or terminated unless at least thirty (30)
days' prior written notice is given to Agent. In the event of
any loss thereunder, the carriers named therein hereby are
directed by Agent and Borrower to make payment for such loss to
Agent and not to Borrower and Agent jointly. If any such
insurance losses are paid by check, draft or other instrument
payable to Borrower and Agent jointly, Agent may endorse
Borrower's name thereon and do such other things as Agent may
deem advisable to reduce the same to cash. Agent is hereby
authorized, after the occurrence and during the continuance of an
Event of Default, to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. All loss
recoveries received by Agent upon any such insurance may be
applied to the Obligations, in such order as Agent in its sole
discretion shall determine. Any surplus shall be paid by Agent
to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Agent, on demand.
Anything hereinabove to the contrary notwithstanding, and subject
to the fulfillment of the conditions set forth below, Agent shall
remit to Borrower insurance proceeds received by Agent during any
calendar year under insurance policies procured and maintained by
Borrower which insure (1) Borrowers' insurable properties which
do not constitute Collateral, and (2) Borrowers' insurable
properties, whether or not they constitute Collateral, to the
extent such insurance proceeds do not exceed five hundred
thousand dollars ($500,000) in the aggregate during such calendar
year or two hundred fifty thousand dollars ($250,000) per
occurrence. In the event the amount of insurance proceeds
received by Agent for any occurrence exceeds such amounts, then
Agent may, in its sole discretion, either remit the insurance
proceeds to Borrower upon Borrower providing Agent with evidence
reasonably satisfactory to Agent that the insurance proceeds will
be used by Borrower to repair, replace or restore the insured
property which was the subject of the insurable loss, or apply
the proceeds to the Obligations. The agreement of Agent to remit
insurance proceeds in the manner above provided shall be subject
in each instance to satisfaction of each of the following
conditions: (x) no Event of Default shall then have occurred and
be continuing, and (y) Borrower shall use such insurance proceeds
to repair, replace or restore the insurable property which was
the subject of the insurable loss (to the extent not already
repaired, replaced or restored).
4.35. Failure to Pay Insurance. If Borrower fails to
obtain insurance as hereinabove provided, or to keep the same in
force, Agent, if Agent so elects, may obtain such insurance and
pay the premium therefor on behalf of Borrower, and charge
Borrower's Account therefor as a Revolving Advance of a Domestic
Rate Loan and such expenses so paid shall be part of the
Obligations.
4.36. Payment of Taxes. Borrower will pay, when due,
all taxes, assessments and other Charges lawfully levied or
assessed upon Borrower or any of the Collateral including,
without limitation, real and personal property taxes, assessments
and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes, in each case
except to the extent being contested in good faith and by
appropriate proceedings and with respect to which proper reserves
have been taken by Borrower in accordance with GAAP.
4.37. Payment of Leasehold Obligations. Borrower shall
at all times pay, when and as due, its rental obligations under
all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such
leases and keep them in full force and effect (and, at Agent's
reasonable request will provide evidence of having done so),
except, in any such case where the failure to pay such
obligations or comply with such terms or to keep such leases in
full force and effect would not reasonably be expected to have a
Material Adverse Effect.
4.38. Receivables.
(a) Nature of Receivables. Each of the Receivables
shall be a bona fide and valid account representing a bona fide
indebtedness incurred by the Customer therein named, for a fixed
sum as set forth in the invoice or other documentary evidence
relating thereto (provided immaterial or unintentional errors in
any invoice or other documentary evidence shall not be deemed to
be a breach hereof) with respect to the sale or lease and
delivery of goods upon stated terms of Borrower, or work, labor
or services theretofore rendered by Borrower as of the date each
Receivable is created. Same shall be due and owing in accordance
with Borrower's customary terms of sale without asserted dispute,
setoff or counterclaim except as may be stated in the books and
records of Borrower.
(b) Solvency of Customers. Each Customer, to the best
of Borrower's knowledge, as of the date each Receivable is
created, is and will be solvent and able to pay all Receivables
on which the Customer is obligated in full when due or with
respect to such Customers of Borrower who are not solvent
Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Borrower. Borrower's chief executive
office is located at the addresses set forth on Schedule 4.15(c)
hereto. Until written notice is given to Agent by Borrower of
any other office at which Borrower keeps its records pertaining
to Receivables, all such records shall be kept at such executive
office.
(d) Collection of Receivables. Until Borrower's
authority to do so is terminated by Agent (which notice Agent may
give at any time following the occurrence and during the
continuance of an Event of Default), Borrower will, at Borrower's
sole cost and expense, but on Agent's behalf and for Agent's
account, collect as Agent's property and in trust for Agent all
amounts received on Receivables, and shall not commingle such
collections with Borrower's funds or use the same except to pay
Obligations. Subject to Section 4.15(h) hereof, Borrower shall,
upon request, deliver to Agent, instruct its Customers to deliver
to Agent, or deposit in a Blocked Account maintained with Agent
or another bank, in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances,
cash and other evidences of Indebtedness received by Borrower.
(e) Notification of Assignment of Receivables. At any
time following the occurrence and during the continuance of an
Event of Default, Agent shall have the right to send notice of
the assignment of, and Agent's security interest in, the
Receivables to any and all Customers. Thereafter, Agent shall
have the sole right to collect the Receivables. Agent's actual
collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower's Account and added to
the Obligations.
(f) Power of Agent to Act on Borrower's Behalf. Agent
shall have the right to receive, endorse, assign and/or deliver
in the name of Agent or Borrower any and all checks, drafts and
other instruments for the payment of money relating to the
Receivables, and Borrower hereby waives notice of presentment,
protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or Agent's designee as Borrower's
attorney with power, following the occurrence and during the
continuance of an Event of Default, (i) to endorse Borrower's
name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral; (ii) to sign Borrower's
name on any invoice or ▇▇▇▇ of lading relating to any of the
Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) without limiting the
generality of Section 9.2 hereof, to send verifications of
Receivables to any Customer; (iv) to sign Borrower's name on all
financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v)
to demand payment of the Receivables; (vi) to enforce payment of
the Receivables by legal proceedings or otherwise; (vii) to
exercise all of Borrower' rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) to
settle, adjust, compromise, extend or renew the Receivables; (ix)
to settle, adjust or compromise any legal proceedings brought to
collect Receivables; (x) to prepare, file and sign Borrower's
name on a proof of claim in bankruptcy or similar document
against any Customer; (xi) to prepare, file and sign Borrower's
name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (xii) to
do all other acts and things reasonably necessary to carry out
this Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be
liable for any acts of omission or commission nor for any error
of judgment or mistake of fact or of law, unless done maliciously
or with gross (not mere) negligence; this power being coupled
with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following
the occurrence and during the continuance of an Event of Default
or Default, to change the address for delivery of mail addressed
to Borrower to such address as Agent may designate and to
receive, open and dispose of all mail addressed to Borrower.
(g) No Liability. Neither Agent nor any Lender shall,
under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom, except to the extent resulting
from the gross (not mere) negligence or willful misconduct of
Agent or any Lender. Following the occurrence and during the
continuance of an Event of Default, Agent may, without notice or
consent from Borrower, ▇▇▇ upon or otherwise collect, extend the
time of payment of, compromise or settle for cash, credit or upon
any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept,
following the occurrence and during the continuance of an Event
of Default, the return of the goods represented by any of the
Receivables, without notice to or consent by Borrower, all
without discharging or in any way affecting Borrower's liability
hereunder.
(h) Establishment of a Lockbox Account, Dominion
Account. All proceeds of Collateral shall be deposited by
Borrower into a lockbox account, dominion account or such other
"blocked account" ("Blocked Accounts") as Agent may require
pursuant to an arrangement with such banks as may be selected by
Borrower and be acceptable to Agent; provided, however, Borrower
shall not be obligated to cause cash receipts from retail store
locations to be deposited to any Blocked Account more frequently
than on Thursday of each week so long as there is no Event of
Default which has occurred and is continuing and the aggregate
amount of such cash receipts (which amounts, except for cash
receipts not exceeding $75,000 in the aggregate at any time
outstanding that Borrower shall maintain at its retail store
locations in the ordinary course of business, shall be deposited
in local bank accounts) shall not exceed $250,000 at any time or
from time to time. In the event the aggregate amount of such
cash receipts exceeds $250,000, amounts in excess of $250,000
shall be remitted to a Blocked Account on each day such
condition exists. Borrower shall issue to any such bank at which
a Blocked Account is maintained, an irrevocable letter of
instruction directing said bank to transfer such funds so
deposited to Agent, either to any account maintained by Agent at
said bank or by wire transfer to appropriate account(s) of
Agent. All funds deposited in such "blocked accounts" shall
immediately become the property of Agent and Borrower shall
obtain the agreement by such bank to waive any offset rights
against the funds so deposited. Agent assumes no responsibility
for such "blocked account" arrangements, including without
limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
Alternatively, Agent may establish depository accounts
("Depository Accounts") in the name of Agent at a bank or banks
for the deposit of such funds and Borrower shall deposit all
proceeds of Collateral or cause same to be deposited, in kind, in
such Depository Accounts of Agent in lieu of depositing same to
the Blocked Accounts.
(i) Adjustments. Borrower will not, without Agent's
consent, compromise or adjust any Receivables (or extend the time
for payment thereof) or accept any returns of merchandise or
grant any additional discounts, allowances or credits thereon
except for those compromises, adjustments, returns, discounts,
credits and allowances as have been heretofore customary in the
business of Borrower.
4.39. Inventory. To the extent Inventory held for sale
or lease has been produced by Borrower, it has been and will be
produced by Borrower in all material respects in accordance with
the Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations and orders thereunder.
4.40. Maintenance of Equipment. The Equipment shall be
maintained in good operating condition and repair (reasonable
wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating
efficiency of the Equipment shall be maintained and preserved.
Borrower shall not use or operate the Equipment in violation of
any law, statute, ordinance, code, rule or regulation, except for
violations which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, Borrower shall have the right to
dispose of or transfer Equipment to the extent set forth in
Section 4.3 hereof.
4.41. Exculpation of Liability. Nothing herein
contained shall be construed to constitute Agent or any Lender as
Borrower's agent for any purpose whatsoever, nor shall Agent or
any Lender be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the
cause thereof, except to the extent resulting from the gross (not
mere) negligence or willful misconduct of Agent or any Lender.
Neither Agent nor any Lender, whether by anything herein or in
any assignment or otherwise, assumes any of Borrower's
obligations under any contract or agreement assigned to Agent or
such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of
the terms and conditions thereof.
4.42. Environmental Matters.
(a) Borrower will operate the Real Property in
compliance with all Environmental Laws, except for such non-
compliance which would not reasonably be expected to have a
Material Adverse Effect.
(b) Borrower will maintain its current procedures
pursuant to which Borrower represents, assures and monitors
continued compliance with all Environmental Laws.
(c) Borrower shall dispose of any and all Hazardous
Waste generated at the Real Property in compliance with all
Environmental Laws, except for such non-compliance which would
not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, Borrower shall
use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport,
storage or disposal facilities or operators employed by Borrower
in connection with the transport or disposal of any Hazardous
Waste generated at the Real Property.
(d) In the event Borrower obtains, gives or receives
notice of any Release or threat of Release of a reportable
quantity of any Hazardous Substances at the Real Property (each
such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation or notification
that it is potentially responsible for investigation or cleanup
of environmental conditions at the Real Property, demand letter
or complaint, order, citation, or other written notice with
regard to any Hazardous Discharge or violation of Environmental
Laws affecting the Real Property or Borrower's interest therein
(each of the foregoing is referred to herein as an "Environmental
Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the
state in which the Real Property is located or the United States
Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then Borrower shall, within five
(5) Business Days, give written notice of same to Agent, and
within thirty (30) days thereafter give a further written notice
of same to Agent, in each case detailing facts and circumstances
of which Borrower is aware giving rise to the Hazardous Discharge
or Environmental Complaint. Such information is to be provided
to allow Agent to protect its security interest in the Collateral
and is not intended to create nor shall it create any obligation
upon Agent or any Lender with respect thereto.
(e) Borrower shall promptly forward to Agent copies of
any notification of potential liability, demand letter relating
to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated
or used by Borrower to dispose of Hazardous Substances and shall
continue to forward copies of correspondence between Borrower and
the Authority regarding such claims to Agent until the claim is
settled. Borrower shall promptly forward to Agent copies of all
documents and reports concerning a Hazardous Discharge at the
Real Property that Borrower is required to file under any
Environmental Laws. Such information is to be provided solely to
allow Agent to protect Agent's security interest in the
Collateral.
(f) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary
action in order to safeguard the health of any Person, including,
without limitation, undertaking, at its expense, any clean up,
removal, remedial or other action required under applicable
Environmental Laws to remove and clean up any Hazardous
Discharge.
(g) Borrower shall defend and indemnify Agent and
Lenders and hold Agent, Lenders and their respective employees,
agents, directors and officers harmless from and against all
loss, liability, damage and expense, claims, costs, fines and
penalties, including attorney's fees, suffered or incurred by
Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence
of any Hazardous Substances affecting the Real Property, whether
or not the same originates or emerges from the Real Property or
any contiguous real estate, except to the extent such loss,
liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of Agent or any
Lender. Borrower' obligations under this Section 4.19 shall
arise upon the discovery of the presence of any Hazardous
Substances at the Real Property, whether or not any federal,
state, or local environmental agency has taken or threatened any
action in connection with the presence of any Hazardous
Substances. Borrower' obligation and the indemnifications
hereunder shall survive the termination of this Agreement.
4.43. Financing Statements. Except as respects the
financing statements filed by Agent and the financing statements
described on Schedule 1.2(a) hereto, to the knowledge of Borrower
after due inquiry, no financing statement covering any of the
Collateral or any proceeds thereof is on file in any public
office.
V. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1. Authority. Borrower has full power, authority and
legal right to enter into this Agreement and the Other Documents
and to perform all its Obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and of the
Other Documents (a) are within Borrower's corporate powers, have
been duly authorized, are not in contravention of law or the
terms of Borrower's by-laws, certificate of incorporation or
other applicable documents relating to Borrower's formation or to
the conduct of Borrower's business or of any material agreement
or undertaking to which Borrower is a party or by which Borrower
is bound, and (b) will not conflict with nor result in any breach
in any of the provisions of or constitute a default under or
result in the creation of any Lien except Permitted Encumbrances
upon any asset of Borrower under the provisions of any agreement,
charter document, instrument, by-law, or other instrument to
which Borrower or its property is a party or by which it may be
bound.
5.2. Formation and Qualification.
(a) Borrower is duly incorporated and in good standing
under the laws of the state listed on Schedule 5.2(a) and is
qualified to do business and is in good standing in the states
listed on Schedule 5.2(a) which constitute all states in which
qualification and good standing are necessary for Borrower to
conduct its business and own its property and where the failure
to so qualify could reasonably be expected to have a Material
Adverse Effect. Borrower has delivered to Agent true and
complete copies of its certificate of incorporation and by-laws
and will promptly notify Agent of any amendment or changes
thereto.
(b) The only Subsidiaries of Borrower are listed on
Schedule 5.2(b) hereto.
5.3. Survival of Representations and Warranties. All
representations and warranties of Borrower contained in this
Agreement and the Other Documents shall be true at the time of
Borrower's execution of this Agreement and the Other Documents,
and shall survive the execution, delivery and acceptance thereof
by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. Tax Returns. Borrower's federal tax identification
number is ▇▇-▇▇▇▇▇▇▇. Borrower has filed all federal, state and
local tax returns and other reports it is required by law to file
and has paid all taxes, assessments, fees and other governmental
charges that are due and payable and that are not being contested
in good faith by appropriate proceedings in connection with which
Borrower shall have provided appropriate reserves in accordance
with GAAP. Federal income tax returns of Borrower have been
examined and reported upon by the Internal Revenue Service or
closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending December 31, 1993.
The provision for taxes on the books of Borrower is adequate for
all years not closed by applicable statutes, and for its current
fiscal year, and Borrower does not have any knowledge of any
deficiency or additional assessment in connection therewith not
provided for on its books.
5.5. Financial Statements.
(a) The twelve-month cash flow projections of Borrower
on a consolidated basis and the projected balance sheet of
Borrower on a consolidated basis as of the Closing Date, copies
of which are annexed hereto as Exhibit 5.5(a) (the "Projections")
were prepared by the Chief Financial Officer of Borrower, are
based on underlying assumptions which provide a reasonable basis
for the projections contained therein and reflect Borrower'
judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period.
(b) The consolidated balance sheet of Borrower and
its consolidated Subsidiaries as of December 31, 1997, and the
related statements of income, changes in stockholder's equity,
and changes in cash flow for the period ended on such date, all
accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies
of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in
application in which such accountants concur) and present fairly
the financial position of Borrower and its consolidated
Subsidiaries at such date and the results of their operations for
such period. The consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of May 31, 1998, and the related
statements of income, changes in stockholder's equity, and
changes in cash flow for the period ended on such date, copies of
which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (subject to normal
year end adjustments and the absence of financial statement
footnotes and similar disclosures) and present fairly the
financial position of Borrower and its consolidated Subsidiaries
at such date and the results of their operations for such period.
Since May 31, 1998, there has been no material adverse change in
the condition, operations, assets, business or prospects of
Borrower or any of its consolidated Subsidiaries.
5.6. Corporate Name. Borrower has not been known by any
other corporate name in the past five (5) years and does not sell
Inventory under any other name except as set forth on Schedule
5.6, nor has Borrower been the surviving corporation of a merger
or consolidation or acquired all or substantially all of the
assets of any Person during the preceding five (5) years.
5.7. OSHA and Environmental Compliance. Except as set forth
on Schedule 5.7 hereto:
(a) Borrower has duly complied with, and its
facilities, business, assets, property, leaseholds and Equipment
are in compliance in all material respects with, the provisions
of the Federal Occupational Safety and Health Act, the
Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders
of non-compliance issued to Borrower or relating to its business,
assets, property, leaseholds or Equipment under any such laws,
rules or regulations.
(b) Borrower has been issued all required federal,
state and local licenses, certificates or permits relating to all
applicable Environmental Laws.
(c) (i) To the knowledge of Borrower, there are no
visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as "Releases") of Hazardous Substances
at, upon, under or within any Real Property; (ii) there are no
underground storage tanks or polychlorinated biphenyls on the
Real Property; (iii) to the knowledge of Borrower, the Real
Property has never been used as a treatment, storage or disposal
facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property, excepting such quantities as are
handled in accordance with all applicable governmental
regulations and as are necessary for the operation of the
commercial business of Borrower or of its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or
Default.
(a) After giving effect to the transactions
contemplated under this Agreement (the "Transactions"), Borrower
is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which
it is about to engage, and (i) as of the Closing Date, the fair
present saleable value of its assets, calculated on a going
concern basis, is in excess of the amount of its liabilities and
(ii) subsequent to the Closing Date, the fair saleable value of
its assets (calculated on a going concern basis) will be in
excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b) hereto,
Borrower does not have (i) any pending or threatened litigation,
arbitration, action or proceeding which could reasonably be
expected to have a Material Adverse Effect, and (ii) any Indebt
edness for borrowed money other than the Obligations.
(c) Borrower is not in violation of any applicable
statute, regulation or ordinance in any respect which could
reasonably be expected to have a Material Adverse Effect, nor is
Borrower in violation of any order of any court, governmental
authority or arbitration board or tribunal.
(d) Neither Borrower nor any member of the Controlled
Group maintains or contributes to any Plan other than those
listed on Schedule 5.8(d) hereto. Except as set forth in
Schedule 5.8(d) hereto, (i) no Plan has incurred any "accumulated
funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and Borrower
and each member of the Controlled Group has met all applicable
minimum funding requirements under Section 302 of ERISA in
respect of each Plan, (ii) each Plan which is intended to be a
qualified plan under Section 401(a) of the Code as currently in
effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related
thereto is exempt from federal income tax under Section 501(a) of
the Code, (iii) neither Borrower nor any member of the Controlled
Group has incurred any liability to the PBGC other than for the
payment of premiums, and there are no premium payments which have
become due which are unpaid, (iv) no Plan has been terminated by
the plan administrator thereof nor by the PBGC, and there is no
occurrence which would cause the PBGC to institute proceedings
under Title IV of ERISA to terminate any Plan, (v) at this time,
the current value of the assets of each Plan that is subject to
Title IV of ERISA equals or exceeds the present value of the
accrued benefits and other liabilities of such Plan and neither
Borrower nor any member of the Controlled Group knows of any
facts or circumstances which would materially change the value of
such assets and accrued benefits and other liabilities, (vi)
neither Borrower nor any member of the Controlled Group has
breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan, (vii) neither
Borrower nor any member of a Controlled Group has incurred any
liability for any excise tax arising under Section 4972 or 4980B
of the Code, and, to Borrower's knowledge, no fact exists which
could give rise to any such liability, (viii) neither Borrower
nor any member of the Controlled Group nor any fiduciary of, nor
any trustee to, any Plan, has engaged in a non-exempt "prohibited
transaction" described in Section 406 of the ERISA or Section
4975 of the Code nor taken any action which would constitute or
result in a Termination Event with respect to any such Plan which
is subject to ERISA, (ix) Borrower and each member of the
Controlled Group has made all contributions due and payable with
respect to each Plan, (x) no Reportable Event has occurred and is
continuing with respect to any Plan, (xi) neither Borrower nor
any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing
for the benefit of persons other than employees or former
employees of Borrower and any member of the Controlled Group, and
(xii) neither Borrower nor any member of the Controlled Group has
withdrawn, completely or partially, from any Multiemployer Plan
so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses. All
patents, patent applications, trademarks, trademark applications,
service marks, service ▇▇▇▇ applications, copyrights, copyright
applications, design rights, tradenames, assumed names, trade
secrets and licenses owned or utilized by Borrower are set forth
on Schedule 5.9 hereto and constitute all of the intellectual
property rights which are necessary for the operation of its
business; all such patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications,
copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses which are owned by
Borrower are valid and have been duly registered or filed with
all appropriate governmental authorities set forth on Schedule
5.9 hereto; there is no objection to or pending challenge to the
validity of any such material owned (or, to the knowledge of
Borrower, licensed) patent, trademark, copyright, design right,
tradename, trade secret or license and Borrower is not aware of
any grounds for any challenge, except as set forth in Schedule
5.9 hereto.
5.10. Licenses and Permits. Except as set forth in
Schedule 5.10 hereto, Borrower (a) is in compliance with and (b)
has procured and is now in possession of, all material licenses
or permits required by any applicable federal, state or local law
or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct
business and where the failure to procure such licenses or
permits could not reasonably be expected to have a Material
Adverse Effect.
5.11. Default of Indebtedness. Borrower is not in
default in the payment of the principal of or interest on any
Indebtedness or under any instrument or agreement under or
subject to which any Indebtedness has been issued, which default
could reasonably be expected to have a Material Adverse Effect,
and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time
or the giving of notice, or both, constitutes or would constitute
an event of default thereunder, which event of default could
reasonably be expected to have a Material Adverse Effect.
5.12. No Default. Borrower is not in default in the
payment or performance of any of its contractual obligations,
which default could reasonably be expected to have a Material
Adverse Effect, and no Default or Event of Default has occurred
and is continuing.
5.13. No Burdensome Restrictions. Borrower is not a
party to any contract or agreement the performance of which could
reasonably be expected to have a Material Adverse Effect.
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 which is not a Permitted Encumbrance.
5.14. No Labor Disputes. Borrower is not involved in
any labor dispute; there are no strikes or walkouts or union
organization of Borrower's employees threatened or in existence
and no labor contract is scheduled to expire during the Term
other than as set forth on Schedule 5.14 hereto.
5.15. Margin Regulations. Borrower is not engaged, nor
will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation
U or Regulation G of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.
No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. Investment Company Act. Borrower is not an
"investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
5.17. Disclosure. No representation or warranty made by
Borrower in this Agreement or in any financial statement, report,
certificate or any other document furnished in connection
herewith contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements
herein or therein not misleading. There is no fact known to
Borrower which Borrower has not disclosed to Agent in writing
with respect to the transactions contemplated by this Agreement
which could reasonably be expected to have a Material Adverse
Effect.
5.18. Swaps. Borrower is not a party to, nor will it be
a party to, any swap agreement whereby Borrower has agreed or
will agree to swap interest rates or currencies unless same
provides that damages upon termination following an event of
default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.19. Conflicting Agreements. No provision of any
mortgage, indenture, contract, agreement, judgment, decree or
order binding on Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained
to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other
Documents, other than those which could not reasonably be
expected to have a Material Adverse Effect.
5.20. Application of Certain Laws and Regulations.
Borrower is not subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or
interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
5.21. Business and Property of Borrower. Upon and after
the Closing Date, Borrower does not propose to engage in any
materially different business than presently conducted. On the
Closing Date, Borrower will own all the property and possess all
of the rights and Consents necessary for the conduct of the
business of Borrower.
5.22. Year 2000. Borrower and its Subsidiaries have
reviewed the areas within their business and operations which
could be adversely affected by, and have developed or are
developing a course of action to address on a timely basis, the
risk that certain computer applications used by Borrower or its
Subsidiaries may be unable to recognize and perform properly date-
sensitive functions involving dates prior to and after December
31, 1999 (the "Year 2000 Problem". Borrower has no reason to
believe that any of its or its Subsidiaries' material suppliers,
customers or vendors will not address the Year 2000 Problem on a
timely basis. The Year 2000 Problem is not reasonably expected
to result in any Material Adverse Effect.
5.23. License Agreements. Borrower has delivered to
Agent true, complete and correct copies of (i) the ▇▇▇▇▇▇ License
Agreement and (ii) all License Agreements to which Borrower is a
party as of the Closing Date.
VI. AFFIRMATIVE COVENANTS.
Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and
customary fees and expenses which Agent incurs in connection with
(a) the forwarding of Advance proceeds and (b) the establishment
and maintenance of any Blocked Accounts as provided for in
Section 4.15(h) hereof. Agent may, without making demand, charge
Borrower's Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and
Assets. (a) Conduct continuously and operate actively its
business according to good business practices and maintain all of
its properties necessary in its business in good working order
and condition (reasonable wear and tear excepted and except as
may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents,
copyrights, design rights, tradenames, trade secrets and
trademarks (except to the extent that Borrower reasonably
determines that such licenses, patents, copyrights, design
rights, tradenames, trade secrets and trademarks are no longer
used or useful in the conduct of its business) and take all
actions necessary to enforce and protect the validity of any
necessary intellectual property right or other right included in
the Collateral (except to the extent that Borrower reasonably
determines that such intellectual property right is no longer
used or useful in the conduct of its business) ; (b) keep in full
force and effect its existence and comply in all material
respects with the laws and regulations governing the conduct of
its business where the failure to do so could reasonably be
expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license
fees and do all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political
subdivision thereof where the failure to do so could reasonably
be expected to have a Material Adverse Effect.
6.3. Violations. Promptly notify Agent in writing of any
violation of any law, statute, regulation or ordinance of any
Governmental Body, or of any agency thereof, applicable to
Borrower which could reasonably be expected to have a Material
Adverse Effect.
6.4. Government Receivables. Take all steps requested by
Agent which are necessary to protect Agent's interest in the
Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances relating to
Receivables arising out of contracts between Borrower and the
United States, any state or any department, agency or
instrumentality of any of them, and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected
with any Receivable arising out of contracts between Borrower and
the United States, any state or any department, agency or
instrumentality of any of them.
6.5. Fixed Charge Coverage Ratio. Maintain a Fixed Charge
Coverage Ratio of not less than 1.10 to 1.00 at the end of each
fiscal quarter of Borrower for the period of twelve (12)
consecutive calendar months then ending.
6.6. Execution of Supplemental Instruments. Execute and
deliver to Agent from time to time, upon demand, such
supplemental agreements, statements, assignments and transfers,
or instructions or documents relating to the Collateral, and such
other instruments as Agent may request, in order that the full
intent of this Agreement may be carried into effect.
6.7. Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity (subject, where applicable, to
specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities
of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when
the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and Borrower shall have
provided adequate reserves therefor in accordance with GAAP,
subject at all times to any applicable subordination arrangement
in favor of Lenders.
6.8. Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8, 9.9, 9.10 and 9.11
hereof as to which GAAP is applicable to be complete and correct
in all material respects (subject, in the case of interim
financial statements, to normal year-end audit adjustments and,
other than with respect to financial statements referred to in
Section 9.7 hereof, the absence of financial statement footnotes
and similar disclosures) and to be prepared in reasonable detail
and in accordance with GAAP applied consistently throughout the
periods reflected therein (except as concurred in by such
reporting accountants or officer, as the case may be, and
disclosed therein).
6.9. Swank Sales. Cause Swank Sales to declare and pay
dividends to Borrower as frequently as is reasonably practicable
in amounts equal to the amounts received by Swank Sales from time
to time on account of all accounts and general intangibles of
Swank Sales resulting from the sale or lease of inventory by
Swank Sales, the rendition of services by Swank Sales, or
otherwise.
VII. NEGATIVE COVENANTS.
Borrower shall not, until satisfaction in full of the
Obligations and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person (other than a merger
of a wholly-owned Subsidiary of Borrower with and into Borrower)
or acquire all or a substantial portion of the assets or stock of
any Person (other than the Costa Rican Joint Venture) or permit
any other Person to consolidate with or merge with it (other than
a merger of a wholly-owned Subsidiary of Borrower with and into
Borrower) .
(b) Sell, lease, transfer or otherwise dispose of any
Collateral (except (i) as permitted under Section 4.3 hereof,
(ii) in connection with a capital contribution to the Costa Rican
Joint Venture which is permitted under Section 7.4 hereof and
(iii) provided no Default or Event of Default has occurred and is
continuing or will occur after giving effect thereto,
contributions to the Swank ESOP in accordance with the terms
thereof ) or all or substantially all of its properties or
assets.
7.2. Creation of Liens. Create or suffer to exist any Lien
or transfer upon or against any Collateral now owned or hereafter
acquired (except for Permitted Encumbrances).
7.3. Guarantees. Become liable upon the obligations of any
Person by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders) except the endorsement of
checks in the ordinary course of business.
7.4. Investments. Purchase or acquire obligations or stock
of, or any other interest in, any Person, except (a) obligations
issued or guaranteed by the United States of America or any
agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1
(or the equivalent rating), (c) certificates of time deposit and
bankers' acceptances having maturities of not more than 180 days
and repurchase agreements backed by United States government
securities of a commercial bank if (i) such bank has a combined
capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, (d) U.S.
money market funds that invest solely in obligations issued or
guaranteed by the United States of America or an agency thereof,
(e) obligations of, or stock or any other interests in, any
supplier or Customer received by Borrower in connection with the
bankruptcy or reorganization of such supplier or Customer, as the
case may be, and in settlement of delinquent obligations of such
supplier or Customer, as the case may be, arising in the ordinary
course of business, (f) stock dividends or stock distributions
with respect to any stock held on the date hereof of acquired
after the date hereof in accordance with this Section 7.4, (f)
the purchase by Borrower of outstanding shares of its common
stock, provided (1) the purchase price for such shares is no
greater than the price quoted for such shares on the NASDAQ
SmallCap Market at the time of such purchase, and (2) the
aggregate purchase price for such shares paid in any fiscal year
of Borrower does not exceed two hundred fifty thousand dollars
($250,000), (h) deposits and other commercial banking accounts
with commercial banks maintained by Borrower in the ordinary
course of its business, (i) promissory notes or other similar
instruments issued by Customers to Borrower with respect to
outstanding Receivables; provided, that Borrower has delivered
all such promissory notes or other similar instruments to Agent
and has taken all other actions reasonably requested by Agent to
provide to Agent, for the ratable benefit of Lenders, a perfected
first priority security interest in such promissory notes or
other similar instruments (subject only to Permitted
Encumbrances), (j) miscellaneous investments in an aggregate
amount not to exceed two hundred thousand dollars ($200,000) at
any one time; provided, that Borrower shall not make cash
expenditures in excess of seventy-five thousand dollars ($75,000)
to purchase the stock or other interests in any Person, and (k)
provided no Default or Event of Default has occurred and is
continuing or will occur after giving effect thereto, the
acquisition of shares of capital stock or other ownership
interests of the Costa Rican Joint Venture which, when taken
together (without duplication) with loans and advances to the
Costa Rican Joint Venture permitted by Section 7.5 hereof shall
have a value not exceeding (i) prior to the Postcapitalization
Period, one million nine hundred thousand dollars ($1,900,000),
and (ii) during the Postcapitalization Period, the difference
between (A) one million nine hundred thousand dollars
($1,900,000) and (B) the amount actually contributed, loaned or
advanced (without duplication and to the extent that such loans
and advances have not been repaid by the Costa Rican Joint
Venture) prior to the Postcapitalization Period. For purposes of
clause (g) above, the value of any property (other than cash)
contributed by Borrower to the Costa Rican Joint Venture shall be
its fair market value on the date of contribution.
7.5. Loans. Make advances, loans or extensions of credit to
any Person, including without limitation, any Subsidiary or
Affiliate except with respect to (a) the extension of commercial
trade credit in connection with the sale of Inventory in the
ordinary course of its business, (b) prepayments of amounts to be
due from Borrower to vendors of goods in connection with
outstanding purchase orders issued by Borrower in an aggregate
amount at any time not to exceed five hundred thousand dollars
($500,000), provided, that up to twenty five thousand dollars
($25,000) of such prepayments are not outstanding for more than
ninety (90) days prior to the delivery of the goods relating
thereto and the remaining portion of such prepayments are not
outstanding for more than thirty (30) days prior to the delivery
of the goods relating thereto, (c) loans to its employees with
respect to travel/entertainment expenses in the ordinary course
of business not to exceed five hundred thousand dollars
($500,000) at any time outstanding, (d) provided no Default or
Event of Default has occurred and is continuing or will occur
after giving effect thereto, loans and advances to the Costa
Rican Joint Venture which, when taken together (without
duplication) with capital contributions to the Costa Rican Joint
Venture permitted by Section 7.4 hereof shall have a value not
exceeding (i) prior to the Postcapitalization Period, one million
nine hundred thousand dollars ($1,900,000), and (ii) during the
Postcapitalization Period, the difference between (A) one million
nine hundred thousand dollars ($1,900,000) and (B) the amount
actually contributed, loaned or advanced (without duplication and
to the extent that such loans and advances have not been repaid
by the Costa Rican Joint Venture) prior to the Postcapitalization
Period, and (e) loans and advances to the Swank ESOP (to enable
the Swank ESOP to, among other things, fund payments of
retirement benefits) during any fiscal year, calculated as at the
end of such fiscal year, in an aggregate amount not to exceed the
sum of (1) the amount of contributions to the Swank ESOP approved
for such fiscal year by the Board of Directors of Borrower in
accordance with the terms thereof (the AApproved Contribution@),
and (2) the difference between (x) two hundred fifty thousand
dollars ($250,000) and (y) the aggregate amount by which loans
and advances to the Swank ESOP during each prior fiscal year
exceeded the amount of the Approved Contribution for such prior
fiscal year.
7.6. Capital Expenditures. Contract for, purchase or make
any expenditure or commitments for fixed or capital assets
(including capitalized leases other than the capitalized leases
reflected in Item II of Schedule 1.2(a) hereto) in any fiscal
year in an amount in excess of two million dollars ($2,000,000).
7.7. Dividends. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred stock
of Borrower (other than dividends or distributions payable in its
stock, or split-ups or reclassifications of its stock) or apply
any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any
options to purchase or acquire any such shares of common or
preferred stock of Borrower.
7.8. Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness for borrowed money (exclusive of trade debt) and
capitalized leases, except in respect of (a) Indebtedness to
Lenders, (b) Indebtedness for borrowed money incurred for capital
expenditures permitted under Section 7.6 hereof, (c) Indebtedness
for borrowed money secured by any Real Property in an aggregate
principal amount not exceeding the fair market value of such
Real Property at such time, and (d) Indebtedness for money
borrowed against the cash surrender value of life insurance
contracts, including, without limitation, those listed on
Schedule 1.2(b) hereto, purchased by Borrower on the lives of
certain of its employees to fund death benefits for active
employees and postretirement death benefits, Borrower's 1987
Deferred Compensation Plan and Borrower's 1993 Deferred
Compensation Plan, as well as any life insurance contracts
subsequently purchased by Borrower in the ordinary course of
business pursuant to Borrower's existing benefit programs.
7.9. Nature of Business. Substantially change the nature of
the business in which it is presently engaged, nor except as
specifically permitted hereby purchase or invest, directly or
indirectly, in any assets or property other than in the ordinary
course of business for assets or property which are necessary for
and are to be used in its business as presently conducted.
7.10. Transactions with Affiliates. Directly or
indirectly, purchase, acquire or lease any property from, or
sell, transfer or lease any property to, or otherwise deal with,
any Affiliate, except transactions disclosed in the ordinary
course of business, on an arm's-length basis on terms no less
favorable to Borrower than terms which would have been obtainable
from a Person other than an Affiliate.
7.11. Leases. Enter as lessee into any lease
arrangement for real or personal property (unless capitalized and
permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property
would exceed five million dollars ($5,000,000) in any one fiscal
year.
7.12. Subsidiaries.
(a) Form any Subsidiary (other than the Costa Rican
Joint Venture).
(b) Enter into any partnership, joint venture or
similar arrangement (other than the Costa Rican Joint Venture).
7.13. Fiscal Year and Accounting Changes. Change its
fiscal year from December 31 or make any significant change
(i) in accounting treatment and reporting practices except as
required by GAAP or (ii) in tax reporting treatment except as
required by law.
7.14. Pledge of Credit. Now or hereafter pledge Agent's
or any Lender's credit on any purchases or for any purpose
whatsoever or use any portion of any Advance in or for any
business other than Borrower's business as conducted on the date
of this Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws.
Amend, modify or waive any term or material provision of its
Articles of Incorporation or By-Laws unless at least five (5)
Business Days prior written notice thereof is provided to Agent.
7.16. Compliance with ERISA. (i) engage, or permit any
member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in Section 406
of ERISA and Section 4975 of the Code, (ii) incur, or permit any
member of the Controlled Group to incur, any "accumulated funding
deficiency", as that term is defined in Section 302 of ERISA or
Section 412 of the Code, (iii) terminate, or permit any member of
the Controlled Group to terminate, any Plan where such event
could result in any liability of Borrower or any member of the
Controlled Group or the imposition of a lien on the property of
Borrower or any member of the Controlled Group pursuant to
Section 4068 of ERISA, (iv) assume, or permit any member of the
Controlled Group to assume, any material obligation to contribute
to any Multiemployer Plan not disclosed on Schedule 5.8(d), (v)
incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan; (vi) fail
promptly to notify Agent of the occurrence of any Termination
Event, (vii) fail to comply, or permit a member of the Controlled
Group to fail to comply, in all material respects with the
requirements of ERISA or the Code or other applicable laws in
respect of any Plan, or (viii) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or
allow any member of the Controlled Group to postpone or delay any
funding requirement with respect of any Plan.
7.17. Prepayment of Indebtedness. At any time, directly
or indirectly, prepay any Indebtedness for borrowed money (other
than (a) to Lenders, (b) provided that no Event of Default has
occurred and is continuing, to the holders of the Indebtedness
referred to in clause (c) of Section 7.8 hereof, and (c)
Indebtedness for money borrowed against the cash surrender value
of life insurance contracts, including, without limitation, those
listed on Schedule 1.2(b) hereto, purchased by Borrower on the
lives of certain of its employees to fund death benefits for
active employees and postretirement death benefits, Borrower's
1987 Deferred Compensation Plan and Borrower's 1993 Deferred
Compensation Plan, as well as any life insurance contracts
subsequently purchased by Borrower in the ordinary course of
business pursuant to Borrower's existing benefit programs), or
repurchase, redeem, retire or otherwise acquire any Indebtedness
of borrowed money of Borrower.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The agreement of
Lenders to make the initial Advances requested to be made on the
Closing Date is subject to the satisfaction, or waiver by
Lenders, immediately prior to or concurrently with the making of
such Advances, of the following conditions precedent:
(a) Revolving Credit Note. Agent shall have received
the Revolving Credit Note duly executed and delivered by an
authorized officer of Borrower;
(b) Filings, Registrations and Recordings. Each
document (including, without limitation, any Uniform Commercial
Code financing statement) required by this Agreement, any Other
Document or under law or reasonably requested by the Agent to be
filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded
in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall
have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrower. Agent shall
have received a copy of the resolutions in form and substance
reasonably satisfactory to Agent, of the Board of Directors of
Borrower authorizing (i) the execution, delivery and performance
of this Agreement and the Other Documents to which Borrower is a
party, including, without limitation, the Revolving Credit Note
(collectively the "Documents") and (ii) the granting by Borrower
of the security interests in and liens upon the Collateral in
each case certified by the Secretary or an Assistant Secretary of
Borrower as of the Closing Date; and, such certificate shall
state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such
certificate;
(d) Incumbency Certificate of Borrower. Agent shall
have received a certificate of the Secretary or an Assistant
Secretary of Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of Borrower executing
this Agreement, or any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Certificates. Agent shall have received a copy of
the Articles or Certificate of Incorporation of Borrower, and all
amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation
together with copies of the By-Laws of Borrower certified as
accurate and complete by the Secretary of Borrower;
(f) Good Standing Certificates. Agent shall have
received good standing certificates for Borrower dated not more
than thirty (30) days prior to the Closing Date, issued by the
Secretary of State or other appropriate official of Borrower's
jurisdiction of incorporation and each jurisdiction where the
conduct of Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) Legal Opinion. Agent shall have received the
executed legal opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP
and Posternak, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, in form and substance
satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement and the Other
Documents as Agent may reasonably require and Borrower hereby
authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;
(h) No Litigation. (i) No litigation, investigation
or proceeding before or by any arbitrator or Governmental Body
shall be continuing or threatened against Borrower or against the
officers or directors of Borrower (A) in connection with the
Documents or any of the transactions contemplated thereby and
which, in the reasonable opinion of Agent, is deemed material or
(B) which could, in the reasonable opinion of Agent, have a
Material Adverse Effect; and (ii) no injunction, writ, restrain
ing order or other order of any nature materially adverse to
Borrower or the conduct of its business or inconsistent with the
due consummation of the Transactions shall have been issued by
any Governmental Body;
(i) Financial Condition Certificates. Agent shall
have received an executed Financial Condition Certificate in the
form of Exhibit 8.1(i) hereto.
(j) Collateral Examination. Agent shall have
completed Collateral examinations and received appraisals, the
results of which shall be satisfactory in form and substance to
Lenders, of the Receivables, Inventory, General Intangibles and
Equipment of Borrower and all books and records in connection
therewith;
(k) Fees. Agent shall have received all fees payable
to Agent and Lenders on or prior to the Closing Date pursuant to
Article III hereof;
(l) Projections. Agent shall have received a copy of
the Projections which shall be satisfactory in all respects to
Lenders;
(m) Insurance. Agent shall have received in form and
substance satisfactory to Agent, evidence (including, without
limitation, certificates of insurance) showing compliance with
the provisions of Section 4.11 hereof;
(n) Payment Instructions. Agent shall have received
written instructions from Borrower directing the application of
proceeds of the initial Advances made pursuant to this Agreement;
(o) Blocked Accounts. Agent shall have received duly
executed agreements establishing (i) a Blocked Account with IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company, and (ii) the Blocked Accounts with
other financial institutions acceptable to Agent as provided for
in Section 4.15(h) hereof, in each case for the collection or
servicing of the Receivables and proceeds of the Collateral;
(p) Consents. Agent shall have received any and all
Consents necessary to permit the effectuation of the transactions
contemplated by this Agreement and the Other Documents; and,
Agent shall have received such Consents and waivers of such third
parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(q) No Adverse Material Change. (i) Since May 31,
1998, there shall not have occurred any event, condition or state
of facts which could reasonably be expected to have a Material
Adverse Effect and (ii) no representations made or information
supplied to Agent shall have been proven to be inaccurate or
misleading in any material respect;
(r) Leasehold Agreements. Agent shall have received
landlord, mortgagee or warehouseman agreements satisfactory to
Agent with respect to all premises leased by Borrower at which
Inventory is located;
(s) Other Documents. Agent shall have received final
executed copies of all Other Documents, all in form and
substance satisfactory to Agent;
(t) Contract Review. Agent shall have reviewed all
material contracts of Borrower including, without limitation,
leases, union contracts, labor contracts, vendor supply
contracts, license agreements and distributorship agreements and
such contracts and agreements shall be satisfactory in all
respects to Agent;
(u) Closing Certificate. Agent shall have received a
closing certificate signed by the Chief Financial Officer of
Borrower dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and
the Other Documents are true and correct on and as of such date,
(ii) Borrower is on such date in compliance with all the terms
and provisions set forth in this Agreement and the Other
Documents and (iii) on such date no Default or Event of Default
has occurred or is continuing;
(v) Borrowing Base. Agent shall have received
evidence satisfactory to Agent that the aggregate amount of
Eligible Receivables and Eligible Inventory as of the Closing
Date is sufficient in value and amount to support Advances in the
amount requested by Borrower on the Closing Date;
(w) Undrawn Availability. After giving effect to the
initial Advances hereunder, Borrower shall have Undrawn
Availability of at least three million dollars ($3,000,000), as
evidenced by a Borrowing Base Certificate executed by Borrower;
and
(x) Other. All corporate and other proceedings, and
all documents, instruments and other legal matters in connection
with the Transactions shall be satisfactory in form and substance
to Agent and its counsel.
8.2. Conditions to Each Advance. The agreement of Lenders
to make any Advance requested to be made on any date (including,
without limitation, the initial Advance), is subject to the
satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by Borrower in or pursuant to
this Agreement and any Other Documents to which it is a party,
and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished
at any time under or in connection with this Agreement or any
Other Document shall be true and correct in all material respects
on and as of such date as if made on and as of such date (except
for representations and warranties to the extent they relate to
an earlier date or time, which representations and warranties
shall be true and correct on and as of the specific dates or
times referred to therein);
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date, or would exist
after giving effect to the Advances requested to be made, on such
date; provided, however that Lenders, in their sole discretion,
may continue to make Advances notwithstanding the existence of a
Default or an Event of Default and that any Advances so made
shall not be deemed a waiver of any such Default or Event of
Default; and
(c) Maximum Advances. In the case of any Advances
requested to be made, after giving effect thereto, the aggregate
Advances shall not exceed the maximum amount of Advances
permitted under Section 2.1 hereof.
Each request for an Advance by Borrower hereunder shall
constitute a representation and warranty by Borrower as of the
date of such Advance that the conditions contained in this
Section 8.2 shall have been satisfied.
IX. INFORMATION AS TO BORROWER.
Borrower shall, until satisfaction in full of the
Obligations and the termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon
learning thereof, report to Agent all matters materially
affecting the value, enforceability or collectibility of any
portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to
Borrower of, a material amount of goods or claims or disputes
asserted by any Customer or other obligor.
9.2. Schedules. Deliver to Agent on or before the fifteenth
(15th) day of each month as and for the prior month (a) accounts
receivable ageings, (b) accounts payable schedules and (c)
Inventory reports. In addition, Borrower will deliver to Agent
at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices,
(iii) evidence of shipment or delivery, and (iv) such further
schedules, documents and/or information regarding the Collateral
as Agent may reasonably require including, without limitation,
trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and
through any medium it considers advisable and do whatever it may
deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section 9.2 are to be in form
reasonably satisfactory to Agent and executed by Borrower and
delivered to Agent from time to time solely for Agent's
convenience in maintaining records of the Collateral, and
Borrower's failure to deliver any of such items to Agent shall
not affect, terminate, modify or otherwise limit Agent's Lien
with respect to the Collateral.
9.3. Environmental Reports. Furnish Agent, promptly after
receipt, with copies of any environmental reports or audits
performed by or on behalf of Borrower with regard to any Real
Property.
9.4. Litigation. Promptly notify Agent in writing of any
litigation, suit or administrative proceeding affecting Borrower,
whether or not the claim is covered by insurance, and of any suit
or administrative proceeding, which in any such case could
reasonably be expected to have a Material Adverse Effect.
9.5. Material Occurrences. Promptly notify Agent in writing
upon the occurrence of (a) any Default or Event of Default; (b)
any event, development or circumstance whereby any financial
statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating
results of Borrower as of the date of such statements; (c) any
accumulated retirement plan funding deficiency which, if such
deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject Borrower to a
tax imposed by Section 4971 of the Code; (f) each and every
default by Borrower which might result in the acceleration of the
maturity of any Indebtedness in excess of one million
($1,000,000), including the names and addresses of the holders of
such Indebtedness with respect to which there is a default
existing or with respect to which the maturity has been or could
be accelerated, and the amount of such Indebtedness; and (g) any
other development in the business or affairs of Borrower which
could reasonably be expected to have a Material Adverse Effect;
in each case describing the nature thereof and the action
Borrower proposes to take with respect thereto.
9.6. Government Receivables. Notify Agent immediately if
any of its Receivables arise out of contracts between Borrower
and the United States, any state, or any department, agency or
instrumentality of any of them.
9.7. Annual Financial Statements. Furnish Agent within
ninety (90) days after the end of each fiscal year of Borrower,
(a) the consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of such fiscal year, and
the related statements of income, change in stockholder's equity
and cash flow for the period ended on such date, all prepared in
accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm
selected by Borrower and satisfactory to Agent (the
"Accountants"), and (b) the consolidating balance sheet of
Borrower and its consolidated Subsidiaries as of the end of such
fiscal year, and the related year to date consolidating statement
of income, all prepared by Borrower in accordance with GAAP
applied on a basis consistent with prior practices, subject to
the absence of financial statement footnotes and similar
disclosures. The report of the Accountants shall be accompanied
by a statement of the Accountants certifying that in making the
examination upon which such report was based either no
information came to their attention which to their knowledge
constituted a Default or an Event of Default under this Agreement
or any Other Document or, if such information came to their
attention, specifying any such Event of Default, its nature, when
it occurred and whether it is continuing, and such report shall
contain or have appended thereto calculations which set forth
Borrower's compliance with the requirements or restrictions
imposed by Sections 6.5, 7.6 and 7.11 hereof. In addition, the
reports shall be accompanied by a certificate of Borrower's Chief
Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by
Borrower with respect to such event, and such certificate shall
have appended thereto calculations which set forth Borrower'
compliance with the requirements or restrictions imposed by
Sections 6.5, 7.6 and 7.11 hereof.
9.8. Quarterly Financial Statements. Furnish Agent within
forty-five (45) days after the end of each fiscal quarter other
than the last fiscal quarter, (a) the consolidated balance sheet
of Borrower and its consolidated Subsidiaries as of the end of
such fiscal quarter, and the related statements of income, change
in stockholder's equity and cash flow for the year-to-date period
ended on such date, and (b) the consolidating balance sheet of
Borrower and its consolidated Subsidiaries as of the end of such
fiscal quarter, and the related year to date consolidating
statement of income, in each case prepared in accordance with
GAAP applied on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal
year end adjustments and the absence of financial statement
footnotes and similar disclosures (except to the extent required
to be included in Borrower's Form 10-Q) . The reports shall be
accompanied by a certificate signed by the Chief Financial
Officer of Borrower, which shall state that, based on an
examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is
not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such default and, such
certificate shall have appended thereto calculations which set
forth Borrower' compliance with the requirements or restrictions
imposed by Sections 6.5, 7.6 and 7.11 hereof.
9.9. Monthly Financial Statements. Furnish Agent as soon as
completed, but in no event later than thirty (30) days after the
end of each month, (a) the consolidated balance sheet of Borrower
and its consolidated Subsidiaries as of the end of such month,
and the related statements of income, change in stockholder's
equity and cash flow for the year-to-date period ended on such
date, and (b) the consolidating balance sheet of Borrower and its
consolidated Subsidiaries as of the end of such month, and the
related year to date consolidating statement of income, in each
case prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal
year end adjustments and the absence of financial statement
footnotes and similar disclosures. The reports shall be
accompanied by a certificate of Borrower's Chief Financial
Officer of Borrower, which shall state that, based on an
examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or, if such is
not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such event.
9.10. Other Reports. Furnish Agent as soon as
available, but in any event within ten (10) days after the
issuance thereof, (i) with copies of such financial statements,
reports and returns as Borrower shall send to its stockholders,
(ii) copies of all notices or reports which Borrower may now or
hereafter be required to file with the Securities and Exchange
Commission, or any other Governmental Body succeeding to the
functions thereof, and (iii) all reports submitted to Borrower by
the Accountants in connection with each audit of the books and
records of Borrower and its consolidated Subsidiaries conducted
by the Accountants, including, without limitation, any management
letter commenting on the internal controls of Borrower and its
consolidated Subsidiaries.
9.11. Additional Information. Furnish Agent, without
the necessity of any request by Agent, (a) at least thirty (30)
days prior thereto, notice of Borrower's opening of any new
office or place of business or Borrower's closing of any existing
office or place of business, and (b) promptly upon Borrower's
learning thereof, notice of any labor dispute to which Borrower
may become a party, any strikes or walkouts relating to any of
its plants or other facilities, and the expiration of any labor
contract to which Borrower is a party or by which Borrower is
bound. Furnish Agent, within ten (10) days of the date requested
(or as soon as such information may be furnished in the event
that such information cannot be furnished with the exercise of
diligent efforts within ten (10) days), with such additional
information as Agent shall reasonably request in order to enable
Agent to determine whether the terms, covenants, provisions and
conditions of this Agreement and the Other Documents have been
complied with by Borrower.
9.12. Projected Operating Budget. Furnish Agent, no
later than thirty (30) days prior to the beginning of Borrower's
fiscal year commencing with fiscal year 1999, (i) a month by
month projected operating budget and cash flow of Borrower on a
consolidated basis for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the
last month in each fiscal quarter), (ii) a month by month
projected operating budget and cash flow of the Costa Rican Joint
Venture for such fiscal year (including an income statement for
each month and a balance sheet as at the end of the last month in
each fiscal quarter), and (iii) a projected operating budget and
cash flow of Borrower on a consolidating basis for such fiscal
year (including an income statement for such fiscal year and a
balance sheet as at the end of such fiscal year), such
projections to be accompanied by a certificate signed by the
President or Chief Financial Officer of Borrower to the effect
that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and
financial statements and that such officer has no reason to
question the reasonableness of any material assumptions on which
such projections were prepared.
9.13. Variances From Operating Budget. Furnish Agent,
concurrently with the delivery of the financial statements
referred to in Section 9.7 hereof and each monthly report, a
written report summarizing all variances which are material to
Borrower as a whole from budgets submitted by Borrower pursuant
to Section 9.12 hereof, and a discussion and analysis by
management with respect to such variances.
9.14. Notice of Suits, Adverse Events. Furnish Agent
with prompt notice of (i) any lapse or other termination of any
Consent issued to Borrower by any Governmental Body or any other
Person that is material to the operation of Borrower's business,
(ii) any refusal by any Governmental Body or any other Person to
renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by Borrower with any
Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or condition
of Borrower, or if copies thereof are requested by Agent, and
(iv) copies of any material notices and other communications from
any Governmental Body or Person which specifically relate to
Borrower.
9.15. ERISA Notices and Requests. Furnish Agent with
immediate written notice in the event that (i) Borrower or any
member of the Controlled Group knows or has reason to know that a
Termination Event has occurred, together with a written statement
describing such Termination Event and the action, if any, which
Borrower or member of the Controlled Group has taken, is taking,
or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service,
Department of Labor or PBGC with respect thereto, (ii) Borrower
or any member of the Controlled Group knows or has reason to know
that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written
statement describing such transaction and the action which
Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding
waiver request has been filed with respect to any Plan together
with all communications received by Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase
in the benefits of any existing Plan or the establishment of any
new Plan or the commencement of contributions to any Plan to
which Borrower or any member of the Controlled Group was not
previously contributing shall occur, (v) Borrower or any member
of the Controlled Group shall receive from the PBGC a notice of
intention to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such notice, (vi)
Borrower or any member of the Controlled Group shall receive any
favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such
letter; (vii) Borrower or any member of the Controlled Group
shall receive a notice regarding the imposition of withdrawal
liability, together with copies of each such notice; (viii)
Borrower or any member of the Controlled Group shall fail to make
a required installment or any other required payment under
Section 412 of the Code on or before the due date for such
installment or payment; (ix) Borrower or any member of the
Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16. Additional Documents. Execute and deliver to
Agent, upon request, such documents and agreements as Agent may,
from time to time, reasonably request to carry out the purposes,
terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
10.1. failure by Borrower to pay any principal or
interest on the Obligations when due, whether at maturity or by
reason of acceleration pursuant to the terms of this Agreement or
by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment,
fee or charge provided for herein when due or in any Other
Document;
10.2. any representation or warranty made or deemed made
by Borrower in this Agreement or any related agreement or in any
certificate, document or financial or other statement furnished
at any time in connection herewith or therewith shall prove to
have been misleading in any material respect on the date when
made or deemed to have been made;
10.3. failure by Borrower to (i) furnish financial
information when due which is unremedied for a period of five (5)
days, or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien (other than with
respect to a Permitted Encumbrance), levy, assessment, injunction
or attachment against a material portion of Borrower's property
which is not stayed or lifted within forty-five (45) days;
10.5. except as otherwise provided for in Sections 10.1
and 10.3 hereof, failure or neglect of Borrower to perform, keep
or observe any term, provision, condition, covenant herein
contained or in any Other Document, except for a failure or
neglect of Borrower to perform, keep or observe any term,
provision, condition or covenant, contained in Sections 4.6, 4.7,
4.9, 4.11, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within
thirty (30) days from the date that Borrower knew or reasonably
should have known of such failure or neglect;
10.6. any judgment or judgments are rendered or judgment
liens filed against Borrower for an aggregate amount in excess of
five hundred thousand dollars ($500,000) which within forty (40)
days of such rendering or filing is not either satisfied, stayed
or discharged of record;
10.7. Borrower shall (i) apply for, consent to or suffer
the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or
of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to,
or fail to have dismissed, within thirty (30) days, any petition
filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any
of the foregoing;
10.8. Borrower shall admit in writing its inability, or
be generally unable, to pay its debts as they become due or cease
operations of its present business;
10.9. any Subsidiary of Borrower shall (i) apply for,
consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of
its property, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the purpose of
effecting any of the foregoing; provided, that any such action
shall have a Material Adverse Effect;
10.10. any change in Borrower's condition or affairs
(financial or otherwise) which has a Material Adverse Effect;
10.11. any Lien created hereunder or provided for hereby
or under any related agreement for any reason ceases to be or is
not a valid and perfected Lien having a first priority interest
(subject to Permitted Encumbrances);
10.12. a default of the obligations of Borrower under any
other agreement to which it is a party shall occur which
materially adversely affects its condition, affairs or prospects
(financial or otherwise) which default is not cured within any
applicable grace period;
10.13. any Change of Control shall occur;
10.14. any material provision of this Agreement shall,
for any reason, cease to be valid and binding on Borrower, or
Borrower shall so claim in writing to Agent;
10.15. any Governmental Body shall (A) revoke, terminate,
suspend or adversely modify any license, permit, patent trademark
or tradename of Borrower, the continuation of which is material
to the continuation of Borrower's business, or (B) commence
proceedings to suspend, revoke, terminate or adversely modify any
such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty
(60) days, or (C) schedule or conduct a hearing on the renewal of
any license, permit, trademark, tradename or patent material to
Borrower's business and the staff of such Governmental Body
issues a report recommending the termination, revocation,
suspension or material, adverse modification of such license,
permit, trademark, tradename or patent;
10.16. any material portion of the Collateral shall be
seized or taken by a Governmental Body, or the title and rights
of Borrower in or to any material portion of the Collateral shall
have become the subject matter of litigation which, in the
reasonable judgment of Agent would have a Material Adverse Effect
if adversely determined;
10.17. an event or condition specified in Sections 7.16
or 9.15 hereof shall occur or exist with respect to any Plan and,
as a result of such event or condition, together with all other
such events or conditions, Borrower or any member of the
Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or
both) which, in the reasonable judgment of Agent, would have a
Material Adverse Effect.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. Upon the occurrence of (i)
an Event of Default pursuant to Section 10.7 hereof all
Obligations shall be immediately due and payable and this
Agreement and the obligation of Lenders to make Advances shall be
deemed terminated; (ii) any of the other Events of Default and at
any time thereafter (such default not having previously been
cured), at the option of Required Lenders all Obligations shall
be immediately due and payable and Lenders shall have the right
to terminate this Agreement and to terminate the obligation of
Lenders to make Advances; and (iii) a filing of a petition
against Borrower in any involuntary case under any state or
federal bankruptcy laws, the obligation of Lenders to make
Advances hereunder shall be terminated other than as may be
required by an appropriate order of the bankruptcy court having
jurisdiction over Borrower. Upon the occurrence and during the
continuance of any Event of Default, Agent shall have the right
to (x) direct Borrower to pay (and Borrower agrees to pay upon
the receipt of such notice, or upon the occurrence of any Event
of Default specified in Section 10.7 hereof, Borrower agrees to
pay without receipt of any notice) to Agent such additional
amount of cash equal to the maximum aggregate amount available to
be drawn under all Letters of Credit then outstanding, which
amount shall be held as security for Borrower's reimbursement
obligations in respect of Letters of Credit then outstanding, and
(y) exercise any and all other rights and remedies provided for
herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose
the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or
without judicial process. Agent may enter any of Borrower's
premises or other premises without legal process and without
incurring liability to Borrower therefor, and Agent may
thereupon, or at any time thereafter, in its discretion without
notice or demand, take the Collateral and remove the same to such
place as Agent may deem advisable and Agent may require Borrower
to make the Collateral available to Agent at a convenient place.
With or without having the Collateral at the time or place of
sale, Agent may sell the Collateral, or any part thereof, at
public or private sale, at any time or place, in one or more
sales, at such price or prices, and upon such terms, either for
cash, credit or future delivery, as Agent may elect. Except as
to that part of the Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on
a recognized market, Agent shall give Borrower reasonable
notification of such sale or sales, it being agreed that in all
events written notice mailed to Borrower at least five (5) days
prior to such sale or sales is reasonable notification. At any
public sale Agent or any Lender may bid for and become the
purchaser, and Agent, any Lender or any other purchaser at any
such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any
equity of redemption and such right and equity are hereby
expressly waived and released by Borrower. In connection with
the exercise of the foregoing remedies, and subject to the rights
of the licensee under the ▇▇▇▇▇▇ License Agreement, Agent is
granted permission to use all of Borrower's owned and licensed
(to the extent that such use is permitted under any applicable
license agreements) trademarks, trade styles, trade names,
patents, patent applications, licenses, franchises and other
proprietary rights and, which are used in connection with (a)
Inventory for the purpose of disposing of such Inventory and (b)
Equipment for the purpose of completing the manufacture of
unfinished goods. The proceeds realized from the sale of any
Collateral shall be applied as follows: first, to the reasonable
costs, expenses and attorneys' fees and expenses incurred by
Agent for collection and for acquisition, completion, protection,
removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations and any fees payable
under this Agreement; and, third, to the principal of the
Obligations. If any deficiency shall arise, Borrower shall
remain liable to Agent and Lenders therefor.
11.2. Agent's Discretion. Agent shall have the right in
its sole discretion to determine which rights, Liens, security
interests or remedies Agent may at any time pursue, relinquish,
subordinate, or modify or to take any other action with respect
thereto and such determination will not in any way modify or
affect any of Agent's or Lenders' rights hereunder.
11.3. Setoff. In addition to any other rights which
Agent or any Lender may have under applicable law, upon the
occurrence and during the continuance of an Event of Default
hereunder, Agent and such Lender shall have a right to apply
Borrower's property held by Agent and such Lender to reduce the
Obligations.
11.4. Rights and Remedies not Exclusive. The enumera
tion of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not
preclude the exercise of any other right or remedies provided for
herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Borrower hereby waives notice
of non-payment of any of the Receivables, demand, presentment,
protest and notice thereof with respect to any and all in
struments, notice of acceptance hereof, and all other demands and
notices of any description in connection with the transactions
contemplated hereby, except such as are expressly provided for
herein.
12.2. Delay. No delay or omission on Agent's or any
Lender's part in exercising any right, remedy or option shall
operate as a waiver of such or any other right, remedy or option
or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 12.3 WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the
benefit of and shall be binding upon the respective successors
and permitted assigns of Borrower, Agent and each Lender, shall
become effective on the date hereof and shall continue in full
force and effect until the fifth anniversary of the Closing Date
(the "Term") unless sooner terminated as herein provided.
Borrower may terminate this Agreement at any time upon thirty
(30) days' prior written notice upon payment in full of the
Obligations. In the event Borrower has so terminated this
Agreement and the Obligations are prepaid in full prior to the
last day of the Term (the date of such prepayment hereinafter
referred to as the "Early Termination Date"), Borrower shall pay
to Agent for the benefit of Lenders an early termination fee in
an amount equal to (x) six hundred thousand dollars ($600,000) if
the Early Termination Date occurs on or after the Closing Date to
and including the date immediately preceding the first
anniversary of the Closing Date, and (y) three hundred thousand
dollars ($300,000) if the Early Termination Date occurs on or
after the first anniversary of the Closing Date to and including
the date immediately preceding the second anniversary of the
Closing Date.
13.2. Termination. The termination of the Agreement
shall not affect Borrower's, Agent's or any Lender's rights, or
any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof
shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have
been fully disposed of, concluded or liquidated. The security
interests, Liens and rights granted to Agent and Lenders
hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's
Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of Borrower have been paid
or performed in full after the termination of this Agreement or
Borrower has furnished Agent and Lenders with an indemnification
satisfactory to Agent and Lenders with respect thereto.
Accordingly, Borrower waives any rights which it may have under
Section 9-404(1) of the Uniform Commercial Code to demand the
filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination
statements to Borrower, or to file them with any filing office,
unless and until this Agreement shall have been terminated and
all Obligations paid in full in immediately available funds. All
representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XIV. REGARDING AGENT.
14.1. Appointment. Each Lender hereby designates PNC to
act as Agent for such Lender under this Agreement and the Other
Documents. Each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this
Agreement and the Other Documents and to exercise such powers and
to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms
hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments
of principal and interest, fees (except the fees set forth in the
Fee Letter), charges and collections (without giving effect to
any collection days) received pursuant to this Agreement, for the
ratable benefit of Lenders. Agent may perform any of its duties
hereunder by or through its agents or employees. As to any
matters not expressly provided for by this Agreement (including
without limitation, collection of the Revolving Credit Note)
Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and
such instructions shall be binding; provided, however, that Agent
shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other
Documents or applicable law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect
thereto.
14.2. Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this
Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for
any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct, or (ii) responsible in any
manner for any recitals, statements, representations or
warranties made by Borrower or any officer thereof contained in
this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the
value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, or any of the Other Documents or
for any failure of Borrower to perform its obligations hereunder
or thereunder. Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or any of the Other Documents, or to inspect
the properties, books or records of Borrower. The duties of
Agent as respects the Advances to Borrower shall be mechanical
and administrative in nature; Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Lender;
and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set
forth herein.
14.3. Lack of Reliance on Agent and Resignation.
Independently and without reliance upon Agent or any other
Lender, each Lender has made and shall continue to make (i) its
own independent investigation of the financial condition and
affairs of Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not
taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of Borrower. Agent shall have
no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except
as shall be provided by Borrower pursuant to the terms hereof.
Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or
in any agreement, document, certificate or a statement delivered
in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Other Document, or of the
financial condition of Borrower, or be required to make any
inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement, the Other
Documents or the financial condition of Borrower, or the
existence of any Default or Event of Default.
Agent may resign on sixty (60) days' written notice to each
of Lenders and Borrower and upon such resignation, the Required
Lenders will promptly designate a successor Agent reasonably
satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers
and duties of Agent, and the term "Agent" shall mean such
successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the
provisions of this Article XIV shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request
instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or
any Other Document, Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall
not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, Lenders shall not have any right
of action whatsoever against Agent as a result of its acting or
refraining from acting hereunder in accordance with the
instructions of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity,
and, with respect to all legal matters pertaining to this
Agreement and the Other Documents and its duties hereunder, upon
advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by
Agent with reasonable care.
14.6. Notice of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Event of Default hereunder or under the Other Documents, unless
Agent has received notice from a Lender or Borrower referring to
this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent
shall give notice thereof to Lenders. Agent shall take such
action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided, that,
unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of
Lenders.
14.7. Indemnification. To the extent Agent is not
reimbursed and indemnified by Borrower, each Lender will
reimburse and indemnify Agent in proportion to its respective
portion of the Advances (or, if no Advances are outstanding,
according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder,
or in any way relating to or arising out of this Agreement or any
Other Document; provided that, Lenders shall not be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross (not mere) negligence
or willful misconduct.
14.8. Agent in its Individual Capacity. With respect to
the obligation of Agent to lend under this Agreement, the
Advances made by it shall have the same rights and powers
hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender.
Agent may engage in business with Borrower as if it were not
performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with
this Agreement or otherwise without having to account for the
same to Lenders.
14.9. Delivery of Documents. To the extent Agent
receives financial statements required under Sections 9.7, 9.8,
and 9.9 hereof from Borrower pursuant to the terms of this
Agreement, Agent will promptly furnish copies of such financial
statements to Lenders.
XV. MISCELLANEOUS.
15.1. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York applied to contracts to be performed wholly within the State
of New York. Any judicial proceeding brought by or against
Borrower with respect to any of the Obligations, this Agreement
or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America,
and, by execution and delivery of this Agreement, Borrower,
Agent and each Lender accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this
Agreement. Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process
may be made by registered mail (return receipt requested)
directed to Borrower at its address set forth in Section 15.6
hereof and service so made shall be deemed completed five (5)
days after the same shall have been so deposited in the mails of
the United States of America. Nothing herein shall affect the
right to serve process in any manner permitted by law or shall
limit the right of Agent or any Lender to bring proceedings
against Borrower in the courts of any other jurisdiction.
Borrower waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non
conveniens. Any judicial proceeding by Borrower against Agent or
any Lender involving, directly or indirectly, any matter or claim
in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a
federal or state court located in the County of New York, State
of New York.
15.2. Entire Understanding.
(a) This Agreement and the documents executed
concurrently herewith contain the entire understanding between
Borrower, Agent and each Lender and supersedes all prior
agreements and understandings, if any, relating to the subject
matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing and executed by the party
or parties making such promises, representations, warranties or
guarantees. Neither this Agreement nor any portion or provisions
hereof may be changed, modified, amended, waived, supplemented,
discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Borrower acknowledges that it
has been advised by counsel in connection with the execution of
this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and
provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in
writing of the Required Lenders, and Borrower may, subject to the
provisions of this Section 15.2(b), from time to time enter into
written supplemental agreements to this Agreement or the Other
Documents executed by Borrower, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrower thereunder
or the conditions, provisions or terms thereof of waiving any
Event of Default thereunder, but only to the extent specified in
such written agreements; provided, however, that no such
supplemental agreement shall, without the consent of all Lenders:
(i) increase the Commitment Percentage of any
Lender;
(ii) extend the maturity of any Revolving Credit
Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by
Borrower to Lenders pursuant to this Agreement;
(iii) alter the definition of the term
Required Lenders or alter, amend or modify this Section 15.2(b);
(iv) release any Collateral during any
calendar year (other than in accordance with the provisions of
this Agreement) having an aggregate value in excess of five
hundred thousand dollars ($500,000);
(v) change the rights and duties of Agent;
(vi) increase the Advance Rates above the Advance
Rates in effect on the Closing Date; or
(vii) increase the Maximum Revolving Advance Amount
or the Maximum Seasonal Advance Amount or permit any Revolving
Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (60) consecutive Business Days or
exceed one hundred ten percent (110%) of the Formula Amount.
Any such supplemental agreement shall apply equally to each
Lender and shall be binding upon Borrower, Lenders and Agent and
all future holders of the Obligations. In the case of any
waiver, Borrower, Agent and Lenders shall be restored to their
former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of
a specific Event of Default shall extend to any subsequent Event
of Default (whether or not the subsequent Event of Default is the
same as the Event of Default which was waived), or impair any
right consequent thereon.
In the event that Agent requests the consent of a Lender
pursuant to this Section 15.2 and such Lender shall not respond
or reply to Agent in writing within five (5) days of delivery of
such request, such Lender shall be deemed to have consented to
matter that was the subject of the request. In the event that
Agent requests the consent of a Lender pursuant to this Section
15.2 and such consent is denied, then PNC may, at its option,
require such Lender to assign its interest in the Advances to PNC
or to another Lender or to any other Person designated by the
Agent (the "Designated Lender"), for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid
interest and fees due such Lender, which interest and fees shall
be paid when collected from Borrower. In the event PNC elects to
require any Lender to assign its interest to PNC or to the
Designated Lender, PNC will so notify such Lender in writing
within forty five (45) days following such Lender's denial, and
such Lender will assign its interest to PNC or the Designated
Lender no later than five (5) days following receipt of such
notice pursuant to a Commitment Transfer Supplement executed by
such Lender, PNC or the Designated Lender, as appropriate, and
Agent.
15.3. Successors and Assigns; Participations; New
Lenders.
(a) This Agreement shall be binding upon and inure to
the benefit of Borrower, Agent, each Lender, all future holders
of the Obligations and their respective successors and assigns,
except that Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written
consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course
of commercial banking business one or more Lenders may at any
time and from time to time (and, if no Event of Default with
respect to which Agent has sent a notice of default to Borrower
has occurred and is continuing, with the consent of Borrower
which shall not be unreasonably withheld or delayed), sell
participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a
participating interest, a "Transferee"). Each Transferee may
exercise all rights of set-off with respect to the portion of
such Advances held by it or other Obligations payable hereunder
as fully as if such Transferee were the direct holder thereof
provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required
to pay to Lender which granted an interest in its Advances or
other Obligations payable hereunder to such Transferee had such
Lender retained such interest in the Advances hereunder or other
Obligations payable hereunder and in no event shall Borrower be
required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such
Transferee. In addition, each Transferee shall be entitled to
the benefits of Sections 2.2(f), 2.5(d), 2.10, 3.7 and 3.9 hereof
with respect to its participation in any Commitment Percentage,
Eurodollar Rate Loan and Letter of Credit. In no event shall a
Lender sell a participating interest to a Transferee under terms
which permit such Transferee to approve any amendment to or
waiver of this Agreement or any Other Document except to the
extent such amendment or waiver would (i) increase the Commitment
Percentage of the Lender from whom such Transferee purchased a
participation, (ii) extend the final scheduled maturity of any
Revolving Credit Note in which such Transferee is participating,
or extend the due date for any amount payable hereunder in which
such Transferee is participating, or decrease the rate of
interest or reduce any fee payable by Borrower to Lenders
pursuant to this Agreement in which such Transferee is
participating, or (iii) release any Collateral during any
calendar year (other than in accordance with the provisions of
this Agreement) having an aggregate value in excess of five
hundred thousand dollars ($500,000). Borrower hereby grants to
any Transferee a continuing security interest in any deposits,
moneys or other property actually or constructively held by such
Transferee as security for the Transferee's interest in the
Advances. Each Lender agrees to promptly notify Agent and
Borrower of any such participation; provided, that the failure to
give such notice shall not affect the validity of such
participation.
(c) Any Lender may, with the consent of Agent and, if
no Event of Default with respect to which Agent has sent a notice
of default to Borrower has occurred and is continuing, Borrower,
which in each case shall not be unreasonably withheld or delayed,
sell, assign or transfer all or any part of its rights under this
Agreement and the Other Documents to one or more additional banks
or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder
(each a "Purchasing Lender"), in minimum amounts of not less than
five million dollars ($5,000,000), pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the
transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and
recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent
provided in such Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender
thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation
for that purpose. Such Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the
extent, necessary to reflect the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents. Borrower hereby
consent to the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this
Agreement and the Other Documents. Borrower shall execute and
deliver such further documents and do such further acts and
things reasonably necessary to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register
(the "Register") for the recordation of the names and addresses
of the Advances owing to each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the
Advance recorded therein for the purposes of this Agreement. The
Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount
of two thousand five hundred dollars ($2,500) payable by the
applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or
Purchasing Lender any and all financial information in such
Lender's possession concerning Borrower which has been delivered
to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation
of Borrower; provided, that each Transferee and each Purchasing
Lender shall hold, and each prospective Transferee and
prospective Purchasing Lender shall be required to hold, as
confidential all non-public information in accordance with
Section 15.15 hereof.
15.4. Application of Payments. Agent shall have the
continuing and exclusive right to apply or reverse and re-apply
any payment and any and all proceeds of Collateral to any portion
of the Obligations. To the extent that Borrower makes a payment
or Agent or any Lender receives any payment or proceeds of the
Collateral for Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession,
receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been
received by Agent or such Lender.
15.5. Indemnity. Borrower shall indemnify Agent, each
Lender and each of their respective officers, directors,
Affiliates, employees and agents (each an "Indemnitee" from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may
be imposed on, incurred by, or asserted against Agent or any
Indemnitee in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or
instrumentality or any other Person with respect to any aspect
of, or any transaction contemplated by, or referred to in, or any
matter related to, this Agreement or the Other Documents, whether
or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the gross (not
mere) negligence or willful misconduct of an Indemnitee.
15.6. Notice. Any notice or request hereunder may be
given to Borrower or to Agent or any Lender at their respective
addresses set forth below or at such other address as may
hereafter be specified in a notice designated as a notice of
change of address under this Section 15.6. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight
courier, (c) registered or certified mail, return receipt
requested, (d) telex or telegram, subsequently confirmed by
registered or certified mail, or (e) telecopy to the number set
out below (or such other number as may hereafter be specified in
a notice designated as a notice of change of address) with
electronic confirmation of its receipt. Any notice or other
communication required or permitted pursuant to this Agreement
shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier
of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c)
upon actual receipt thereof when sent by a recognized overnight
delivery service or (d) upon actual receipt thereof when sent by
telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party
at its address set forth below or at such other address as has
been furnished in writing by a party to the other by like notice:
(A) If to Agent or PNC Bank, National Association
PNC at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Sills, Cummis, Zuckerman, Radin,
Tischman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to a Lender other than Agent, as specified on the
signature pages hereof.
(C) If to Borrower, at: Swank, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Swank, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
15.7. Survival. The obligations of Borrower under
Sections 2.2(f), 2.5(d), 3.7, 3.8, 3.9, 4.19(h), 14.7, 15.5 and
15.9 hereof shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
15.8. Severability. If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable
laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid,
but the remainder hereof shall not be invalidated thereby and
shall be given effect so far as possible.
15.9. Expenses. All costs and expenses including,
without limitation, reasonable attorneys' fees and disbursements
incurred by Agent, Agent on behalf of Lenders and, following the
occurrence and during the continuance of an Event of Default,
Lenders, (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in
connection with the entering into, modification, amendment,
administration and enforcement of this Agreement or any consents
or waivers hereunder and all related agreements, documents and
instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien
on any of the Collateral, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's
transactions with Borrower, or (e) in connection with any advice
given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements,
shall be paid by Borrower, may be charged to Borrower's Account
and shall be part of the Obligations.
15.10. Injunctive Relief. Borrower recognizes that, in
the event Borrower fails to perform, observe or discharge any of
its obligations or liabilities under this Agreement, any remedy
at law may prove to be inadequate relief to Lenders; therefore,
Agent, if Agent so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the
necessity of proving that actual damages are not an adequate
remedy.
15.11. Consequential Damages. Neither Agent nor any
Lender, nor any agent or attorney for any of them, shall be
liable to Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12. Captions. The captions at various places in this
Agreement are intended for convenience only and do not constitute
and shall not be interpreted as part of this Agreement.
15.13. Counterparts; Telecopier Signatures. This
Agreement may be executed in any number of and by different
parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.
15.14. Construction. The parties acknowledge that each
party and its counsel have reviewed this Agreement and that the
normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.
15.15. Confidentiality; Sharing Information. (a) Agent,
each Lender and each Transferee shall hold all non-public
information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with
Agent's, such Lender's and such Transferee's customary procedures
for handling confidential information of this nature; provided,
however, Agent, each Lender and each Transferee may disclose such
confidential information (i) to its examiners, affiliates,
outside auditors, counsel and other professional advisors, (ii)
to Agent, any Lender or to any prospective Transferees and
Purchasing Lenders, and (iii) as required or requested by any
Governmental Body or representative thereof or pursuant to legal
process; provided, further that (A) unless specifically
prohibited by applicable law or court order, Agent, each Lender
and each Transferee shall use its best efforts prior to
disclosure thereof, to notify Borrower of the applicable request
for disclosure of such non-public information (1) by a
Governmental Body or representative thereof (other than any such
request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body)
or (2) pursuant to legal process and (B) in no event shall Agent,
any Lender or any Transferee be obligated to return any materials
furnished by Borrower other than those documents and instruments
in possession of Agent or any Lender in order to perfect its Lien
on the Collateral once the Obligations have been paid in full and
this Agreement has been terminated.
(b) Borrower acknowledges that from time to time
financial advisory, investment banking and other services may be
offered or provided to Borrower or one or more of its Affiliates
(in connection with this Agreement or otherwise) by any Lender or
by one or more Subsidiaries or Affiliates of such Lender and
Borrower hereby authorizes each Lender to share any information
delivered to such Lender by Borrower and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary
or Affiliate of such Lender, it being understood that any such
Subsidiary or Affiliate of any Lender receiving such information
shall be bound by the provision of Section 15.15(a) as if it were
a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of the
Loan Agreement.
15.16. Publicity. With the prior written consent of
Borrower (which consent shall not be unreasonably withheld or
delayed), Borrower and each Lender hereby authorizes Agent to
make appropriate announcements of the financial arrangement
entered into among Borrower, Agent and Lenders, including,
without limitation, announcements which are commonly known as
tombstones, in such publications and to such selected parties as
Agent shall in its sole and absolute discretion deem appropriate.
Each of the parties has signed this Agreement as of the day
and year first above written.
WITNESS: SWANK, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________
By:____________________________
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Agent
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:_______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Commitment Percentage: 100%
STATE OF NEW JERSEY )
) ss.
COUNTY OF ESSEX )
On this 27th day of July, 1998, before me personally came
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, to me known, who, being by me duly sworn,
did depose and say that he is the Senior Vice President of
SWANK, INC., the corporation described in and which executed the
foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of
directors of said corporation, and that he signed his name
thereto by like order.
/s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Notary Public of New Jersey
My commission expires 01/10/2001
______________________________
STATE OF NEW JERSEY )
) ss.
COUNTY OF ESSEX )
On this 27th day of July, 1998, before me personally came
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, to me known, who, being by me duly sworn,
did depose and say that he is the Vice President of PNC BANK,
NATIONAL ASSOCIATION, the national banking association described
in and which executed the foregoing instrument and that he
signed his name thereto by on behalf of said national banking
association.
/s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Notary Public of New Jersey
My commission expires 01/10/2001
______________________________