Exhibit 10
LOAN AND SECURITY AGREEMENT
Among
▇▇▇▇▇▇ HOLDINGS, LTD.,
▇▇▇▇▇▇ FINANCIAL CORP.,
▇▇▇▇▇▇ BROS COMPANY,
COPPER CRAFT, INC.,
▇▇▇▇▇▇ METAL PRODUCTS, INC.,
as Borrowers
and
WACHOVIA BANK, NATIONAL ASSOCIATION
as Bank
Dated as of: June 13, 2002
TABLE OF CONTENTS
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Page No.
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1. DEFINITIONS AND CONSTRUCTION................................................... -1-
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1.1 Definitions........................................................... -16-
1.2 Accounting Terms and Determinations................................... -16-
1.3 UCC................................................................... -17-
1.4 Construction.......................................................... -17-
1.5 Schedules and Exhibits................................................ -17-
1.6 Borrower's Knowledge.................................................. -17-
1.7 Designation of Agent Borrower and Agent Borrower Account.............. -17-
2. THE REVOLVING CREDIT FACILITY.................................................. -17-
2.1 The Facility.......................................................... -17-
2.2 Revolver Note......................................................... -17-
2.3 Letter of Credit Sublimit............................................. -18-
3. ADVANCES UNDER THE REVOLVING CREDIT FACILITY................................... -18-
3.1 General............................................................... -18-
3.2 Borrowing Procedures.................................................. -18-
3.3 Funding Procedure..................................................... -18-
4. TERM LOAN A.................................................................... -19-
4.1 Term Loan A........................................................... -19-
4.2 Term Note A........................................................... -19-
4.3 Advance of Term Loan A................................................ -19-
5. TERM LOAN B.................................................................... -19-
5.1 Term Loan B........................................................... -19-
5.2 Term Note B........................................................... -19-
5.3 Advance of Term Loan B................................................ -19-
6. USE OF LOAN PROCEEDS........................................................... -19-
7. LETTERS OF CREDIT.............................................................. -20-
7.1 General............................................................... -20-
7.2 Conditions to Issuance................................................ -20-
7.3 Tenor................................................................. -20-
7.4 Sublimits............................................................. -20-
7.5 Procedure and Documentation........................................... -20-
7.6 Reduction of Availability............................................. -21-
7.7 Draws................................................................. -21-
7.8 Cash Collateral....................................................... -21-
7.9 Indemnification....................................................... -21-
7.10 Obligations Irrevocable............................................... -21-
7.11 Risk Under Letters of Credit.......................................... -23-
8. INTEREST RATE.................................................................. -23-
8.1 Interest Rate Options for the Revolving Credit Facility............... -23-
8.2 Interest Rate Options for Term Loan A................................. -24-
8.3 Interest Rate Options for Term Loan B................................. -24-
8.4 Certain Provisions Regarding Interest Rates........................... -24-
8.5 Continuation of LIBOR Rate Loans...................................... -25-
8.6 LMIR Rate or LIBOR Rate Unascertainable or Unavailable................ -25-
8.7 LIBOR or LMIR Unlawful................................................ -25-
8.8 Indemnification....................................................... -26-
8.9 Determinations........................................................ -26-
8.10 Default Rate.......................................................... -26-
8.11 Post Judgment Interest................................................ -26-
8.12 Calculations.......................................................... -26-
8.13 Limitation of Interest to Maximum Lawful Rate......................... -27-
9. PAYMENTS AND FEES.............................................................. -27-
9.1 Interest Payments on the Revolving Credit Facility.................... -27-
9.2 Principal Payments on the Revolving Credit Facility................... -27-
9.3 Interest Payments on Term Loan A...................................... -27-
9.4 Principal Payments on Term Loan A..................................... -27-
9.5 Interest Payments on Term Loan B...................................... -27-
9.6 Principal Payments on Term Loan B..................................... -28-
9.7 Letter of Credit Fees................................................. -28-
9.8 Origination Fee....................................................... -28-
9.9 Unused Facility Fee................................................... -28-
9.10 Termination of Revolving Credit Facility.............................. -28-
9.11 Prepayment of Term Loans.............................................. -28-
9.12 Payment Method and Application........................................ -29-
9.13 Reinstatement of Obligations.......................................... -29-
9.14 Maintenance of Loan Account; Statements of Obligations................ -30-
9.15 Indemnity............................................................. -30-
9.16 Loss of Margin........................................................ -30-
9.17 Savings Clause........................................................ -31-
10. TAXES.......................................................................... -31-
11. SECURITY; COLLECTION OF RECEIVABLES AND PROCEEDS OF COLLATERAL ................... -32-
11.1 Personal Property........................................................ -32-
11.2 Negotiable Collateral.................................................... -34-
11.3 Real Property Collateral................................................. -34-
11.4 General.................................................................. -34-
11.5 Collection of Accounts; Proceeds of Collateral........................... -35-
12. REPRESENTATIONS AND WARRANTIES.................................................... -36-
12.1 Valid Organization, Good Standing and Qualification...................... -36-
12.2 Licenses................................................................. -36-
12.3 Ownership Interests...................................................... -36-
12.4 Subsidiaries............................................................. -36-
12.5 Financial Statements..................................................... -36-
12.6 No Material Adverse Change in Financial Condition........................ -37-
12.7 Pending Litigation or Proceedings........................................ -37-
12.8 Due Authorization; No Legal Restrictions................................. -37-
12.9 Enforceability........................................................... -37-
12.10 No Default Under Other Obligations, Orders or Governmental Regulations... -37-
12.11 Governmental Consents.................................................... -38-
12.12 Taxes.................................................................... -38-
12.13 Title to Collateral...................................................... -38-
12.14 Names and Addresses...................................................... -38-
12.15 Current Compliance....................................................... -38-
12.16 United States Pension and Benefit Plans.................................. -38-
12.17 Leases and Contracts..................................................... -39-
12.18 Intellectual Property.................................................... -39-
12.19 Business Interruptions................................................... -39-
12.20 Business................................................................. -39-
12.21 Affiliate Transactions................................................... -39-
12.22 Property of Borrowers.................................................... -40-
12.23 Inventory Records........................................................ -40-
12.24 FEIN..................................................................... -41-
12.25 Solvency................................................................. -41-
12.26 Subordinated Indebtedness................................................ -41-
12.27 Inventory Locations...................................................... -41-
12.28 Investment Company Act; Public Utility Holding Company Act............... -41-
12.29 Employee Relations....................................................... -41-
12.30 Investment Property...................................................... -41-
12.31 Common Enterprise........................................................ -42-
12.32 Insurance................................................................ -42-
12.33 Commercial Tort Claims.................................................. -42-
12.34 Accuracy of Representations and Warranties.............................. -42-
13. AFFIRMATIVE COVENANTS............................................................ -42-
13.1 Payment of Principal, Interest and Other Amounts Due.................... -42-
13.2 Claims for Labor and Materials.......................................... -42-
13.3 Existence; Approvals; Qualification; Compliance with Laws............... -43-
13.4 Maintenance of Properties............................................... -43-
13.5 Intellectual Property................................................... -43-
13.6 Insurance............................................................... -43-
13.7 Inspections; Examinations............................................... -45-
13.8 Pension Plans........................................................... -46-
13.9 Bank Accounts........................................................... -46-
13.10 Maintenance of Management............................................... -46-
13.11 Transactions with Affiliates............................................ -46-
13.12 Additional Documents and Future Actions................................. -46-
13.13 Title to Equipment...................................................... -47-
13.14 Taxes................................................................... -47-
13.15 Leases.................................................................. -48-
13.16 Notices................................................................. -48-
13.17 Assignment of Claims Act................................................ -48-
13.19 Instruments; Promissory Notes........................................... -49-
13.20 Future Leases........................................................... -49-
14. NEGATIVE COVENANTS............................................................... -49-
14.1 Limitation on Sale and Leaseback........................................ -49-
14.2 Limitation on Indebtedness.............................................. -49-
14.3 Loans................................................................... -49-
14.4 Investments............................................................. -50-
14.5 Guaranties.............................................................. -50-
14.6 Disposition of Assets................................................... -50-
14.7 Merger; Consolidation; Business Acquisitions; Subsidiaries.............. -50-
14.8 Liens................................................................... -50-
14.9 Letters of Credit....................................................... -51-
14.10 Insurance............................................................... -51-
14.11 Default Under Other Indebtedness........................................ -51-
14.12 Transactions with Affiliates............................................ -51-
14.13 Name or Chief Executive Address Change.................................. -52-
14.14 Change in Location of Collateral........................................ -52-
14.15 Material Adverse Contracts.............................................. -52-
14.16 Restrictions on Use of Proceeds......................................... -52-
14.17 Subordinated Indebtedness............................................... -53-
14.18 Prepayments; Amendments and License Agreements.......................... -53-
14.19 Prohibited Transactions Under ERISA..................................... -53-
14.20 Licenses................................................................ -54-
14.21 Trademark and Tradename Licenses........................................ -54-
14.22 Equipment Becoming Fixture.............................................. -54-
15. FINANCIAL COVENANTS.............................................................. -54-
15.1 Current Ratio........................................................... -54-
15.2 Funded Debt to EBITDA Ratio............................................. -54-
15.3 Fixed Charge Coverage Ratio............................................. -55-
15.4 Changes to Financial Covenants.......................................... -55-
15.5 Most Favored Lender..................................................... -55-
16. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS............................. -55-
16.1 Annual Statements....................................................... -55-
16.2 Projections and Cash Flow............................................... -56-
16.3 Quarterly Statements.................................................... -56-
16.4 Collateral Reporting.................................................... -57-
16.5 Tax Returns............................................................. -57-
16.6 Audit Reports........................................................... -57-
16.7 Reports to Governmental Agencies and Other Creditors.................... -57-
16.8 SEC Reporting........................................................... -57-
16.9 Requested Information................................................... -58-
16.10 Compliance Certificates................................................. -58-
16.11 Accountant's Certificate................................................ -58-
17. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR LETTER OF CREDIT.................. -58-
17.1 Searches................................................................ -58-
17.2 UCC-1 Filings........................................................... -58-
17.3 Executed Loan Documents................................................. -59-
17.4 Request for Advance..................................................... -59-
17.5 Authorizing Resolutions................................................. -59-
17.6 Governing Documents..................................................... -59-
17.7 Material Agreements..................................................... -59-
17.8 Good Standing Certificates.............................................. -59-
17.9 Insurance............................................................... -59-
17.10 Opinions of Counsel..................................................... -59-
17.11 Interest Rate Protection Agreement...................................... -60-
17.12 Tax Returns............................................................. -60-
17.13 Licenses, Approvals, Etc................................................ -60-
17.14 No Material Adverse Change.............................................. -60-
17.15 Fees.................................................................... -60-
17.16 Subordination........................................................... -60-
17.17 Machinery and Equipment Appraisal....................................... -60-
17.18 Real Estate Appraisal................................................... -60-
17.19 Audit................................................................... -60-
17.20 Releases................................................................ -60-
17.21 Other Documents......................................................... -61-
18. CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT....................... -61-
18.1 Representations and Warranties.......................................... -61-
18.2 No Default or Event of Default.......................................... -61-
18.3 No Injunction or Order.................................................. -61-
18.4 No Bankruptcy........................................................... -61-
18.5 Request for Advance..................................................... -61-
19. DEFAULT AND REMEDIES............................................................. -61-
19.1 Events of Default....................................................... -61-
19.2 Remedies................................................................ -64-
19.3 Application of Proceeds................................................. -65-
19.4 Sale or Other Disposition of Collateral................................. -65-
19.5 Actions With Respect to Accounts........................................ -67-
19.6 Set-Off................................................................. -69-
19.7 Turnover of Property Held by Bank....................................... -69-
19.8 Delay or Omission Not Waiver............................................ -69-
19.9 Remedies Cumulative..................................................... -69-
19.10 Consents, Approvals and Discretion...................................... -70-
19.11 Certain Fees, Costs, Expense Expenditures............................... -70-
20. INDEMNIFICATION.................................................................. -71-
21. COMMUNICATIONS AND NOTICES....................................................... -72-
22. WAIVERS.......................................................................... -72-
22.1 Waivers................................................................. -72-
22.2 Forbearance............................................................. -73-
22.3 Limitation on Liability................................................. -73-
22.4 Subordination of Subrogation Rights..................................... -74-
23. SUBMISSION TO JURISDICTION....................................................... -74-
24. MISCELLANEOUS.................................................................... -74-
24.1 Brokers................................................................. -74-
24.2 Use of Bank's Name...................................................... -75-
24.3 No Joint Venture........................................................ -75-
24.4 Survival................................................................ -75-
24.5 No Assignment........................................................... -75-
24.6 Assignment or Sale by Bank ............................................. -75-
24.7 Publicity............................................................... -75-
24.8 Injunctive Relief....................................................... -76-
24.9 Time is of the Essence.................................................. -76-
24.10 All Powers Coupled With Interest........................................ -76-
24.11 Disclosure and Disclaimer Regarding Power of Attorney................... -76-
24.12 Binding Effect.......................................................... -77-
24.13 Severability............................................................ -77-
24.14 No Third Party Beneficiaries............................................ -77-
24.15 Modifications........................................................... -77-
24.16 Holidays................................................................ -77-
24.17 Law Governing........................................................... -77-
24.18 Integration............................................................. -77-
24.19 Exhibits and Schedules.................................................. -77-
24.20 Headings................................................................ -78-
24.21 Counterparts; Facsimile Signatures...................................... -78-
24.22 Joint and Several....................................................... -78-
24.23 Limitation on Damages................................................... -78-
24.24 Waiver of Right to Trial by Jury........................................ -78-
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made effective as of June 13,
2002 by and among ▇▇▇▇▇▇ HOLDINGS, LTD., a Pennsylvania corporation ("BHL"),
▇▇▇▇▇▇ FINANCIAL CORP., a Delaware corporation ("BFC"), ▇▇▇▇▇▇ BROS COMPANY., a
Pennsylvania corporation ("BBC"), COPPER CRAFT, INC., a Texas corporation
("CCI"), ▇▇▇▇▇▇ METAL PRODUCTS, INC., a Georgia corporation ("WMPI")(BHL, BFC,
BBC, CCI and WMPI being each individually referred to as a "Borrower" and
collectively as the "Borrowers") and WACHOVIA BANK, NATIONAL
ASSOCIATION("Bank").
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any extensions of credit now or hereafter made to or
for the benefit of Borrowers under this Agreement, the parties hereto, intending
to be legally bound hereby, agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. The following words and phrases as used in
capitalized form in this Agreement, whether in the singular or plural, shall
have the meanings indicated:
Account Debtor means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.
Accounts means, with respect to a Person, all of such Person's
now owned and hereinafter acquired rights to payment for goods sold or leased or
for services rendered which is not evidenced by any instrument or chattel paper,
whether or not it has been earned by performance, and any other property or
interest in property that is classified as an account pursuant to the UCC.
Advances means an advance by Bank under the Revolving Credit
Facility, the Term Loans or this Agreement, including without limitation, LMIR
Rate Loans, LIBOR Rate Loans, advances under Letters of Credit, or advances to
pay Bank Expenses.
Affiliate means, with respect to any Person, (a) any officer,
director or managing member of such Person, (b) any Subsidiary of such Person,
(c) any other Person (other than a Subsidiary) that, (i) directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person, (ii) directly or indirectly beneficially owns
or holds fifteen percent (15%) or more of any class of Voting Stock of such
Person or any Subsidiary of such Person, or (iii) fifteen percent (15%) or more
of the Voting Stock of which is directly or indirectly beneficially owned or
held by such Person or a Subsidiary of such Person, and (d) without limiting the
foregoing, with respect to any Borrower, each other Borrower. The term "control"
means the possession directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of the Voting Stock, by contract or otherwise.
Agent Borrower means BFC in its capacity as agent for the
Borrowers as further described in Section 1.7.
Agreement means this Loan and Security Agreement.
Applicable Law means, with respect to any Person, all provisions
of constitutions, statutes, regulations and orders of any Governmental Authority
applicable to such Person or its property, including, without limitation, all
orders and decrees of all courts and arbitrators in proceedings or actions to
which such Person is a party. In respect of contracts relating to interest or
finance charges that are made or performed in the Commonwealth of Pennsylvania,
"Applicable Law" shall mean the laws of the U.S., including without limitation
12 U.S.C.(S)(S) 85 and 86(a), as amended from time to time, and any other
statute of the U.S. now or at any time hereinafter prescribing the maximum rates
of interest on loans and extensions of credit, and the laws of the Commonwealth
of Pennsylvania.
Applicable Margin is equal to the percent per annum in excess of
the LMIR Rate or the LIBOR Rate, as applicable, as set forth in the following
pricing matrix:
Loans Applicable Margin
----- -----------------
Revolving Credit Facility 2.75%
Term Loan A 2.60%
Term Loan B 2.25%
Availability means, as of the date of determination, the result
(so long as such result is a positive number) of (a) the Maximum Revolving
Credit Facility Amount; less (b) the Revolving Credit Facility Usage.
Average Unused Portion of Maximum Revolving Credit Facility
Amount means, as of any date of determination, (a) the Maximum Revolving Credit
Facility Amount, less (b) the sum of (i) the average Daily Balance of Advances
that were outstanding under the Revolving Credit Facility during the immediately
preceding quarter, plus (ii) the average Daily Balance of the undrawn principal
amount of Letters of Credit that were outstanding during the immediately
preceding quarter.
Bank means Wachovia Bank, National Association, a national
banking association, its successors and assigns.
Bank Expenses has the meaning set forth in Section 19.11.
Bankruptcy Code means the United States Bankruptcy Code (11
U.S.C.(S) 101 et seq.), as amended, and any successor statute.
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Benefit Plan means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower, any Subsidiary of any Borrower, or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
Books means all of a Person's books and records, including without
limitation, ledgers; records indicating, summarizing, or evidencing such
Person's properties or assets (including the Collateral) or liabilities; all
information relating to such Person's business operations or financial
condition; and all computer programs, disk or tape files, printouts, runs or
other computer prepared information.
Borrowers means BHL, BFC, BBC, CCI and WMPI collectively, and their
successors and assigns. Borrower means BHL, BFC, BBC, CCI and WMPI,
individually, and their individual successors and assigns.
Business means, for the Borrowers collectively, the manufacturing
of roof drainage systems, residential and commercial snow guards and specialty
metal architectural products relating to roofing.
Business Day means any day that is not a Saturday, Sunday, or other
day on which commercial banks in Pennsylvania are authorized or required to
close.
Capital Expenditures means any expenditure that would be classified
as a capital expenditure in accordance with GAAP.
Capital Stock means corporate stock and any and all shares,
partnership interests, limited partnership interests, membership interests,
equity interests, rights, securities or other equivalent evidences of ownership
(however designated) issued by any entity (whether a corporation, partnership,
limited liability company, limited partnership, business trust or other type of
entity).
Capitalized Lease means any lease of Property, the obligations for
the rental of which are required to be capitalized in accordance with GAAP.
Capitalized Lease Obligations means all amounts payable with
respect to a Capitalized Lease.
Change of Control shall be deemed to have occurred at such time as
a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934), other than one or more of the members of the
Management Group, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934), directly or indirectly, of more than 50%
of the total Voting Stock then outstanding of any Borrower or of more than 50%
of the total Capital Stock then outstanding of any Borrower.
Closing Date means the date of this Agreement.
Collateral has the meaning set forth in Section 11.4.
-3-
Collateral Access Agreement means a landlord waiver, mortgagee
waiver, bailee letter, or acknowledgment agreement of any warehouseman,
processor, lessor, consignee, or other Person in possession of, having a Lien
upon, or having rights or interests in any Borrower's Equipment, Inventory or
Books, in each case, in form and substance reasonably satisfactory to Bank.
Commercial Tort Claims shall have the meaning given to such term
in the UCC.
Compliance Certificate means a certificate substantially in the
form of Exhibit A and delivered by a Responsible Officer to Bank, as required
under Section 16.9.
Contract Period means the period of time commencing on the date
of this Agreement and expiring on May 31, 2005.
Current Ratio means the ratio of (i) the sum of (a) Eligible
Accounts, plus (b) Eligible Inventory, to (ii) the sum of (a) the Daily Balance
of Advances that were outstanding under the Revolving Credit Facility on the
last Business Day of the immediately preceding month, plus (b) the Daily Balance
of the undrawn principal amount of Letters of Credit that were outstanding on
the last Business Day of the immediately preceding month.
Daily Balance means the amount of an Obligation owed at the end
of a given day.
Default means an event, condition or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
Default Rate has the meaning set forth in Section 8.8.
Disbursement Letter means an instructional letter executed and
delivered by Agent Borrower to Bank regarding the extensions of credit to be
made on the Closing Date, the form and substance of which shall be reasonably
satisfactory to Bank.
Dollars or $ means freely transferable U.S. Dollars.
Draw Amount has the meaning set forth in Section 7.7.
EBITDA means, for any period, without duplication, the
consolidated Net Income of Borrowers (exclusive of extraordinary gains or
losses) for such period, plus the aggregate amounts deducted in determining such
consolidated Net Income in respect of (i) Interest Expense, (ii) Tax Expense,
and (iii) depreciation and amortization expenses for such period, each
determined on a consolidated basis in accordance with GAAP.
Eligible Accounts means Accounts owed to Borrowers in which Bank
has a prior, perfected first priority lien, which have been due no more than
ninety (90) days from the original invoice date, are not subject to offsets,
deductions, counterclaim, discount, credit, charge back, freight claim,
allowance or adjustment. Eligible Accounts shall not include:
-4-
(a) Accounts which have been due more than 90 days from the
original invoice date;
(b) Accounts which are evidenced by a note, chattel paper or
instrument, unless Bank has a valid perfected first priority security interest
in such note, chattel paper or instrument;
(c) Accounts which are evidenced by judgments;
(d) Accounts with respect to which Borrowers do not have
absolute title;
(e) the portion of any Account which is subject to an
unresolved dispute with the Account Debtor;
(f) Accounts with respect to which the Account Debtors are not
Solvent or are subject to a bankruptcy or similar proceeding;
(g) Accounts with respect to which the Account Debtor is an
Affiliate of any Borrower or an Affiliate of any member, officer or director of
Borrowers;
(h) Accounts arising with respect to goods which have not been
shipped or services not performed, conditional sales, sale on approval, sales
subject to repurchase or return, consignment sales, or similar transactions in
which the sale to or the obligation of the Account Debtor to pay is contingent;
(i) non-trade receivables;
(j) contra-accounts;
(k) Accounts subject to the Assignment of Claims Act of 1940,
as amended from time to time, or any Applicable Law now or hereafter existing
similar in effect thereto, or to any other prohibition (under Applicable Law, by
contract or otherwise) against its assignment or requiring notice of or consent
to such assignment, unless all such required notices have been given, all such
required consents have been received and all other procedures have been complied
with that such receivable shall have been duly and validly assigned to Bank, in
form and content satisfactory to Bank;
(l) Accounts which are not subject to a valid and perfected
first priority security interest in favor of Bank;
-5-
(m) finance charges;
(n) lease receivables;
(o) Accounts owed by a Person if fifty percent (50%) or more
of such Person's Accounts owed to Borrowers have been due more than ninety (90)
days past the original invoice date or would be deemed ineligible as a result of
subsections (a) or (b) above;
(p) Accounts subject to a Lien in favor of any Person (other
than Bank);
(q) Accounts concentrated in individual Account Debtors which
exceed fifteen percent (15%) of all then Eligible Accounts;
(r) an Account not evidenced by an invoice;
(s) Accounts with respect to which any Borrower is in breach
of any express or implied representation or warranty with respect to the goods
or services the sale of which gave rise to such Account or in breach of any
representation or warranty, covenant or other agreement contained in the Loan
Documents with respect to such Account;
(t) Accounts arising with respect to ▇▇▇▇-and-hold sales;
(u) Accounts with respect to which the Account Debtor is
located outside the United States or Canada, or which are payable in a currency
other than U.S. Dollars, unless payment of such Accounts is fully secured by a
letter of credit in form and content and issued by a commercial bank acceptable
to Bank;
(v) Accounts arising with respect to sales made in any state
or jurisdiction in which Borrowers are not properly licensed to conduct
business; and
(w) Accounts with respect to which the Account Debtor is
determined by Bank in its reasonable discretion to be ineligible for any other
reason.
Eligible Inventory means FIFO Inventory of Borrowers consisting of
first quality finished goods and raw materials held for sale in the ordinary
course of Borrowers' business, which are and at all times continue to be
acceptable to Bank in all respects. An item of Inventory shall not be included
in Eligible Inventory if:
(a) it is not of good and merchantable quality, free from any
material defects or damage;
-6-
(b) it is subject to any licensing, patent, royalty, trademark,
tradename, copyright or other agreement with any third parties which restricts
Bank's right as a secured party to sell such Inventory after an Event of
Default;
(c) it consists of goods held on consignment by Borrowers or
delivered by Borrowers to a third Person for sale by such third Person on
consignment for Borrowers;
(d) Borrowers do not have good, valid and marketable title thereto;
(e) it is not located at a premises owned or leased (provided that
Bank has received a satisfactory landlord's waiver and release) by Borrowers;
(f) if the Inventory is not located on premises owned by Borrowers,
it is not segregated or otherwise separately identifiable from goods of others,
if any, stored on such premises;
(g) it is not subject to a valid and perfected first priority
security interest in favor of the Bank;
(h) it consists of goods returned or rejected by Borrowers'
customers, unless such goods are resaleable in the ordinary course of business;
(i) it is obsolete or custom item which is not saleable in the
ordinary course of business, or constitutes repair or replacement machine parts,
packaging and shipping materials or supplies used or consumed in Borrowers'
business;
(j) it is subject to a Lien in favor of any Person (other than
Bank);
(k) it consists of ▇▇▇▇-and-hold goods;
(l) it has been held in Inventory by Borrowers for a period in
excess of 12 months;
(m) it consists of goods used as promotional items;
(n) it consists of finished goods which do not meet the
specifications of the applicable purchase order and cannot be easily resold in
the ordinary course of business;
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(o) it consists of goods produced in violation of the Fair
Labor Standards Act and subject to the so-called "hot goods" provision in Title
29 U.S.C. Section 215(a); or
(p) it consists of goods for which Bank would need a
registration, license, permit or consent of another Person to sell or dispose
of.
Environmental Agreement means that certain Environmental Agreement
executed of even date with this Agreement by the Borrowers in favor of Bank.
Equipment means all of a Person's present and hereafter acquired
cars, trucks, vehicles, machinery, machine tools, motors, equipment, furniture,
furnishings, fixtures, trailers, tools, dies, jigs, molds, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including,
without limitation (a) any interest of such Person in any of the foregoing, and
(b) all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
ERISA means the Employee Retirement Income Security Act of 1974,
29 U.S.C. (S)(S) 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA Affiliate means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of any
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
any Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any Person subject to ERISA that is a member
of an affiliated service group of which any Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with any Borrower and whose employees are aggregated with the employees of any
Borrower under IRC Section 414(o).
ERISA Event means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of any Borrower, any of
its Subsidiaries or ERISA Affiliates from a Benefit Plan during, a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (or the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of any Borrower, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by any Borrower
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or any of its Subsidiaries or any of their ERISA Affiliates.
Event of Default has the meaning set forth in Section 19.1.
FEIN means Federal Employer Identification Number.
Financial Asset means any financial asset, now owned or
hereafter acquired that is classified as a "financial asset" pursuant to Chapter
8 (or Article 8) of the UCC.
Fixed Charge Coverage Ratio means the ratio calculated on a
cumulative four quarter basis of (i) the sum of (a) net operating profit for
such period, plus (b) depreciation and amortization expenses for such period, to
(ii) the sum of (a) Interest Expense for such period, plus (b) current
maturities of long term debt (for the next four quarters), plus (c) estimated
cash taxes to be paid by Borrowers (for the next four quarters), plus (d)
Unfunded Capital Expenditures for such period, plus (e) dividends or
distributions paid to shareholders of any Borrower for such period, plus (f) any
cash paid in connection with any purchase, acquisition, redemption of retirement
of any capital stock of any Borrower for such period.
Funded Debt shall mean, without duplication, all Indebtedness
of Borrowers for borrowed money, and all guaranties of Borrowers of any or all
of the foregoing. Funded Debt shall include, without limitation, all
Subordinated Indebtedness for borrowed money of Borrowers and Capitalized Lease
Obligations of Borrowers.
Funding Date means the date, which must be a Business Day, on
which the funding of an Advance occurs.
GAAP means generally accepted accounting principles in the
United States of America, in effect from time to time, consistently applied and
maintained.
General Intangibles means all of a Person's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, licenses, lease
rights, permits, approvals, choses or things in action, goodwill, trade secrets,
methods, processes, know-how, formulas, label designs, domain names, domain name
registrations, patents, patent rights and applications, trade names, brand
names, logos, inventions, trademarks and registrations or applications therefor,
servicemarks and registrations or applications therefor, copyrights and
registrations or applications therefor, blueprints, plans, patterns, drawings,
specifications, designs, manufacturing or processing rights, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringement claims, software and computer programs, information contained on
computer disks or tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, tax refund claims, government subsidy
payments, databases, all notes and records with respect to any research and
development and all physical embodiments of the foregoing), other than
Inventory, Accounts, Equipment and Negotiable Collateral.
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Governing Documents means the certificate or articles of
incorporation, by-laws, partnership agreement, joint venture agreement,
operating agreement or other organizational or governing documents of any
Person.
Governmental Authority means any nation or government, any
federal, state, county, municipal, parish, provincial or other political
subdivision thereof and any department, commission, board, court, agency or
other instrumentality or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
Indebtedness, as applied to a Person, means, without
duplication:
(a) all items (except items of capital stock or of
surplus) which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is subject,
whether or not the indebtedness, obligations or liabilities secured thereby
shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or in
respect of which such Person has agreed to supply or advance funds (whether by
way of loan, stock purchase, capital contribution or otherwise) or otherwise to
become directly or indirectly liable.
Indemnified Parties has the meaning set forth in Section 20.
Interest Expense as applied to Borrowers means for any period,
the amount of interest expense on Indebtedness of Borrowers for such period,
determined in accordance with GAAP.
Inventory means all present and future inventory in which a
Person has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of such Person's present and
future raw materials, work in process, finished goods, packaging, packing and
shipping materials, goods used or consumed in the Person's business, component
parts, supplies and returned, rejected or repossessed goods, wherever located.
Inventory Locations means each of the locations described on
Schedule 12.27, as such Schedule 12.27 may be amended from time to time pursuant
to Section 14.14.
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Investment Property means any investment property, now owned or
hereafter acquired, that is classified as "investment property" pursuant to the
UCC.
IRC means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
Lease means any lease of real estate under which any Borrower is the
lessee.
Leasehold Property means any real estate owned by Borrowers which is
the subject of a Lease.
Letter of Credit Sublimit has the meaning set forth in Section 7.4.
Letters of Credit means the Standby Letters of Credit and the
Merchandise Letters of Credit issued by Bank pursuant to this Agreement.
LIBOR means with respect to any LIBOR Rate Loan, the rate for U.S.
Dollar deposits with a maturity equal to the then current Rate Period as
reported on Telerate page 3750 as of 11:00 a.m., London time, on the second
London business day before the relevant Rate Period begins (or if not so
reported, then as determined by Bank from another recognized source or interbank
quotation).
LIBOR Market Index-Based Rate means with respect to any LMIR Rate Loan,
for any day, the rate per annum (rounded to the next higher 1/100 of 1%) for one
(1) month Dollar deposits as reported on Telerate page 3750 as of 11:00 a.m.,
London time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as
determined by Bank from another recognized source or interbank quotation).
LIBOR Rate means a rate of interest equal to LIBOR.
LIBOR Rate Loan means any Advance under the Loans bearing interest at
the LIBOR Rate plus Applicable Margin.
Licenses means all licenses, permits, consents, approvals and
authorizations issued by a Governmental Authority with respect to or in
connection with the operation of any Borrower's Business.
Lien means any interest in property securing an obligation owed to, or
a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded, published, registered or perfected, and whether such
interest shall be contingent upon the occurrence of some future event or events
or the existence of some future circumstance or circumstances, including the
lien or security interest arising, from a mortgage, debenture, charge, deed of
trust, encumbrance, pledge, assignment, deposit arrangement, security agreement,
adverse claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
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conditions, restrictions, leases, and other title exceptions and encumbrances
affecting any real property.
LMIR Rate means a rate of interest equal to LIBOR Market Index-Based
Rate.
LMIR Rate Loan means any Advance under the Loans bearing interest at
the LMIR Rate plus Applicable Margin.
Loan Account has the meaning set forth in Section 9.14.
Loan Documents means this Agreement, the Notes, the Environmental
Agreement, the Disbursement Letter, the Letters of Credit, the Subordination
Agreements and any other assignment or other agreement entered into, now or in
the future, in connection with this Agreement, the Obligations or any of the
transactions contemplated hereunder.
Loan Request has the meaning set forth in Section 3.2(a).
Loans means all Advances outstanding under the Revolving Credit
Facility and the Term Loans.
Management Group means collectively ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Material Adverse Change means (a) a material adverse change, as
determined by Bank in good faith, in the business, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of
Borrowers (taken as a whole), (b) the material impairment, as determined by Bank
in good faith, of Borrowers' (taken as a whole) ability to perform their
obligations under the Loan Documents to which they are a party or of the Bank's
ability to enforce the Obligations of the Loan Documents or to realize upon the
Collateral, (c) a Material Adverse Effect, or (d) a material impairment, as
determined by Bank in good faith, of the priority of the Liens in favor of Bank
with respect to the Collateral.
Material Adverse Effect means a material adverse effect, as determined
by Bank in good faith, with respect to (a) the business, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of
Borrowers (taken as a whole), (b) Borrowers' (taken as a whole) ability to pay
the Obligations in accordance with the terms of this Agreement, (c) the value of
the Collateral or the amount that Bank would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral, or (d) the practical realization of the benefits of Bank's
rights and remedies under this Agreement or the other Loan Documents.
Maximum Revolving Credit Facility Amount means $9,500,000.00.
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Merchandise Letter of Credit means a documentary Letter of Credit
issued by Bank to support the purchase by a Borrower of Inventory prior to
transit to an Inventory Location, that provides that all draws thereunder must
require presentation of customary documentation (including, if applicable,
commercial invoices, packing list, certificate of origin, ▇▇▇▇ of lading or
airway ▇▇▇▇, customs clearance documents, quota statement, inspection
certificate, beneficiaries statement, and ▇▇▇▇ of exchange, bills of lading,
dock warrants, dock receipts, warehouse receipts, or other documents of title)
in form and substance satisfactory to Bank and reflecting the passage to such
Borrower of title to first quality Inventory conforming to such Borrower's
contract with the seller thereof.
Multiemployer Plan means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which any Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.
Negotiable Collateral means all of a Person's present and future
letters of credit, notes, drafts, instruments, Investment Property, Financial
Assets, Capital Stock of direct and indirect Subsidiaries of Borrowers,
documents, personal property leases (wherein such Person is the lessor), chattel
paper, and such Person's Books relating to any of the foregoing.
Net Income means income (or loss) of Borrowers after Tax Expense and
shall have the meaning given such term by GAAP, provided that there shall be
specifically excluded therefrom (a) gains from the sale of capital assets, (b)
net income of any other Person in which any Borrower or any of its Subsidiaries
has an ownership interest, unless received by such Borrower or any of its
Subsidiaries in a cash distribution, and (c) any gains arising from
extraordinary items, as defined by GAAP.
Non-Assignable Contracts has the meaning set forth in Section 11.1(e).
Notes means collectively the Revolver Note and Term Notes executed and
delivered pursuant to Sections 2.2, 4.2 and 5.2.
Obligations means all Loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations under any outstanding
Letters of Credit, indebtedness arising from any derivative transactions,
obligations arising under any swap agreement (as defined in 11 U.S.C. Section
101), liabilities (including all amounts charged to the Loan Account pursuant
hereto), obligations, fees, charges, costs, or Bank Expenses (including any fees
or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by any
Borrower to Bank of any kind and description (whether pursuant to or evidenced
by the Loan Documents or pursuant to any other agreement between Bank and any
Borrower, and irrespective of whether for the payment of money), whether as
principal or surety, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and further including all
interest not paid when due and all Bank Expenses that any Borrower is required
to pay or reimburse by the Loan Documents, by law, or otherwise.
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Operating Agreement means any equipment lease, advertising contract,
supply agreement, employment agreement, collective bargaining agreement or other
similar agreement or contract relating to the operation of the Businesses.
PBGC means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto.
Person means and includes natural persons, legal persons, corporations,
limited liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and any
governments and agencies and political subdivisions thereof.
Plan means any employee benefit plan, program, or arrangement
maintained or contributed to by any Borrower or with respect to which it may
incur liability.
Prime Rate means the annual interest rate announced from time to time
by Bank and generally known by Bank as its "prime rate", whether published by it
publicly or only for the internal guidance of its loan officers. The Prime Rate
is used merely as a pricing index and is not and should not be considered to
represent the lowest or best rate available to a borrower.
Property shall mean all types of real, personal or mixed property and
all types of tangible or intangible property.
Rate Period means for any LIBOR Rate Loan, the period commencing on the
date such LIBOR Rate Loan is made and ending on the date which is one, two,
three or six months later, as may be requested by Agent Borrower, provided
however,
(i) any Rate Period which would otherwise end on a day which is
not a Business Day shall end on the next preceding or succeeding
Business Day as is Bank's custom generally in the market to which such
LIBOR Rate Loan relates; and
(ii) each Rate Period which commences before, and would otherwise
end after (a) the last day of the Contract Period, shall end on the
last day of the Contract Period (in the case of the Revolving Credit
Facility) or (b) after the maturity date of the applicable Term Loan,
shall end on the maturity date of the applicable Term Loan.
Rent Expense as applied to Borrowers means for any period, the
amount of rent expense of Borrowers for such period, determined in accordance
with GAAP.
Reportable Event means any of the events described in Section
4043(c) of ERISA or the regulations thereunder.
Responsible Officer means the President, Vice President, Treasurer
or
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Chief Financial Officer of Agent Borrower.
Revolver Note has the meaning set forth in Section 2.2.
Revolving Credit Facility means the revolving credit facility
established for Borrowers under this Agreement.
Revolving Credit Facility Usage means as of the date of
determination, the aggregate amount of (a) all outstanding Advances under the
Revolving Credit Facility, and (b) the outstanding undrawn amount of all
outstanding Letters of Credit.
Solvent means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature or fall due, and (e) such Person is
not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
Standby Letters of Credit means the standby letters of credit (not
Merchandise Letters of Credit) issued by Bank pursuant to this Agreement.
Subordinated Indebtedness means Indebtedness of any Borrower which
has maturities and terms, and which is subordinated to payment of the
Obligations in a manner, approved in writing by Bank, and in each such case any
renewals, modifications or amendments thereof which are approved in writing by
Bank.
Subordination Agreements shall mean the subordination agreement from
any Borrower in favor of Bank.
Subsidiary of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Capital Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
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Tax Expense as applied to Borrowers means for any period, the amount
of tax expense of Borrowers for such period, determined in accordance with GAAP.
Term Loan A has the meaning set forth in Section 4.1.
Term Loan B has the meaning set forth in Section 5.1.
Term Loans means collectively Term Loan A and Term Loan B.
Term Loan A Maturity Date means June 1, 2009.
Term Loan B Maturity Date means June 1, 2004.
Term Note A has the meaning set forth in Section 4.2.
Term Note B has the meaning set forth in Section 5.2.
Term Notes means collectively Term Note A and Term Note B.
U.S. means the United States of America.
UCC means (i) the Uniform Commercial Code as adopted in the
Commonwealth of Pennsylvania, as it may be amended, revised or replaced from
time to time, and (ii) the Uniform Commercial Code as in effect from time to
time in such other states as any Collateral may be located, as and to the extent
applicable.
Unfunded Capital Expenditures means for any period, the Capital
Expenditures of Borrowers on a consolidated basis incurred during such period
and not financed by seller or institutional financing or by Capitalized Lease
Obligations.
Voting Stock means Capital Stock of a Person having ordinary voting
power for the election of the members of its board of directors or other
governing body of such Person.
1.2 Accounting Terms and Determinations. Except as otherwise
provided in this Agreement, all computations and determinations as to accounting
or financial matters shall be made in accordance with GAAP, and all accounting
or financial terms shall have the meanings ascribed to such terms by GAAP as in
effect on the date of determination. All financial statements to be delivered
pursuant to this Agreement shall be prepared in accordance with GAAP.
1.3 UCC. Any terms used in this Agreement that are defined in the
UCC shall be construed and defined as set forth in the UCC unless otherwise
defined herein. To the extent that the definitions of any categories or types of
collateral are expanded in any revision to, amendment of or new version of the
UCC, such changed or expanded definitions will apply to this Agreement as of the
effective date of such revision, amendment or new statute.
-16-
1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall "continue" or be "continuing" until such Event of Default has been cured
or waived in writing by Bank. Section, subsection, clause, schedule, and exhibit
references are to sections, subsections, clauses, schedules and exhibits in this
Agreement unless otherwise specified. Any reference in this Agreement or in the
Loan Documents to this Agreement, any of the Loan Documents or any other
document or agreement shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, supplements,
and restatements thereto and thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement, as they may from time to time be amended or
restated, shall be deemed incorporated herein by reference.
1.6 Borrower's Knowledge. Any statements, representations or
warranties that are based upon the best knowledge of an officer of any Borrower
or an officer thereof shall be limited to the actual knowledge of any president,
chief financial officer or treasurer, as applicable, with respect to the matter
in question.
1.7 Designation of Agent Borrower and Agent Borrower Account.
Borrowers agree that BFC shall be designated to be the agent for Borrowers (the
"Agent Borrower") for purposes of (i) requesting an Advance under this
Agreement, (ii) certifying any collateral or financial reporting, (iii)
executing any loan request forms, and (iv) undertaking of general business
matters with Bank in connection with this Agreement. In addition, Borrowers
agree that any sums to be advanced to Borrowers shall be advanced by Bank to the
account indicated in the loan request.
2. THE REVOLVING CREDIT FACILITY.
2.1 The Facility. Subject to the terms and conditions of this
Agreement and the Loan Documents, Bank agrees to establish for Borrowers a
revolving credit facility (the "Revolving Credit Facility") pursuant to which
during the Contract Period, Bank agrees to extend to Borrowers Advances under
the Revolving Credit Facility and pursuant to which Bank agrees to issue Letters
of Credit for the account of Borrowers, provided that, the Revolving Credit
Facility Usage shall not exceed at any time the Maximum Revolving Credit
Facility Amount.
2.2 Revolver Note. Borrowers' obligation to repay Advances and
other extensions of credit under the Revolving Credit Facility shall be further
evidenced by a
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promissory note executed and delivered by Borrowers in the face amount of the
Maximum Revolving Credit Facility Amount payable to the order of Bank (the
"Revolver Note"), which shall be in a form acceptable to Bank.
2.3 Letter of Credit Sublimit. Notwithstanding anything herein or
elsewhere to the contrary, the issuance of Letters of Credit under the Revolving
Credit Facility by the Bank is subject to the limitations set forth in Section 7
below.
3. ADVANCES UNDER THE REVOLVING CREDIT FACILITY.
3.1 General. Advances under the Revolving Credit Facility shall
be made by Bank to Agent Borrower, for the benefit of Borrowers, in accordance
with the procedures set forth below. Within the limitations set forth in this
Agreement, Borrowers may borrow, repay and reborrow under the Revolving Credit
Facility.
3.2 Borrowing Procedures.
(a) Form of Request. Agent Borrower, on behalf of Borrowers,
may request an Advance under the Revolving Credit Facility by delivering to the
officer of Bank designated from time to time by Bank, a written Loan Request.
Such written request for an Advance shall be in the form of Exhibit "B" attached
hereto (a "Loan Request"). Such Loan Request may be in such other form as Bank
may reasonably require from time to time upon written notice to Agent Borrower.
Each Loan Request received by Bank shall be conclusively presumed to be executed
and delivered by a duly authorized officer or employee of Agent Borrower. Once
received by Bank, each Loan Request shall be deemed irrevocable. Notwithstanding
the foregoing, Agent Borrower may request a Loan by a telephone, e-mail or fax
request to the offices of Bank designated from time to time by Bank. Each
telephone, e-mail or fax request received by Bank shall be conclusively presumed
to be made by a duly authorized officer or employee of Agent Borrower. Once
received by Bank, each telephone, e-mail or fax Loan Request shall be deemed
irrevocable. Bank, at its discretion, may require that each telephone, e-mail or
fax Loan Request be confirmed promptly by Agent Borrower in writing.
(b) Timing of Request. Each Loan Request for a LMIR Rate Loan
must be received by Bank no later than 2:00 p.m. Eastern time on the requested
Funding Date. Each Loan Request for a LIBOR Rate Loan must be received by Bank
no later than 11:00 A.M. Philadelphia time on the second (2nd) Business Day
prior to the requested Funding Date.
3.3 Funding Procedure. Subject to the conditions set forth in
this Agreement, Bank shall disburse Advances under the Revolving Credit Facility
to Borrowers by transferring into any account of Borrowers as directed by the
Agent Borrower immediately available funds in the amount of such Advances, or
otherwise in accordance with procedures acceptable to Bank.
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4. TERM LOAN A.
4.1 Term Loan A. Subject to the terms and conditions of this
Agreement and the Loan Documents, Bank agrees to extend to Borrowers a term loan
in the original principal amount of Two Million Four Hundred Thousand Dollars
($2,400,000.00) ("Term Loan A").
4.2 Term Note A. Borrowers' obligation to repay Term Loan A shall
be further evidenced by a promissory note executed and delivered by Borrowers to
Bank in the face amount of Two Million Four Hundred Thousand Dollars
($2,400,000.00) ("Term Note A") which shall be in a form acceptable to Bank.
4.3 Advance of Term Loan A. The proceeds of Term Loan A shall be
advanced at closing hereunder in accordance with such procedures as Bank may
reasonably require.
5. TERM LOAN B.
5.1 Term Loan B. Subject to the terms and conditions of this
Agreement and the Loan Documents, Bank agrees to extend to Borrowers a term loan
in the original principal amount of Two Million Four Hundred Thousand Dollars
($2,400,000.00) ("Term Loan B").
5.2 Term Note B. Borrowers' obligation to repay Term Loan B shall
be further evidenced by a promissory note executed and delivered by Borrowers to
Bank in the face amount of Two Million Four Hundred Thousand Dollars
($2,400,000.00) ("Term Note B") which shall be in a form acceptable to Bank.
5.3 Advance of Term Loan B. The proceeds of Term Loan B shall be
advanced at closing hereunder in accordance with such procedures as Bank may
reasonably require.
6. USE OF LOAN PROCEEDS. Borrowers agree to use Advances under the
Revolving Credit Facility and the proceeds of the Term Loans solely (a) to repay
existing Indebtedness of Borrowers to Fleet National Bank and FINOVA Mezzanine
Capital, Inc., (b) to pay closing costs and expenses incurred by the Borrowers
in connection with the transactions contemplated hereunder, and (c) to provide
for future working capital requirements and for other general corporate purposes
of Borrowers consistent with the terms and conditions of this Agreement.
-19-
7. LETTERS OF CREDIT.
7.1 General. Subject to the terms and conditions of this
Agreement, Bank agrees to issue from time to time until the expiration of the
Contract Period, upon the written request of Agent Borrower, Letters of Credit
for the account of any or all of the Borrowers. Such Letters of Credit shall be
in form and content acceptable to Bank.
7.2 Conditions to Issuance. Bank shall have no obligation to
issue any Letter of Credit if:
(a) the conditions set forth in Sections 17 and 18 have not
been satisfied;
(b) issuance of such Letter of Credit would violate the terms
of any contract, agreement or other document binding upon Bank or any Borrower;
(c) any order, judgment or decree of any court, arbitrator or
other governmental authority shall purport by its terms to enjoin or restrain
issuance of the Letter of Credit;
(d) any law, rule, regulation or directive shall prohibit
issuance of the Letter of Credit or result in any liability of Bank as a result
of such issuance; or
(e) Bank shall not have received the required issuance fee
set forth in Section 9.7.
7.3 Tenor. Each Standby Letter of Credit shall have a term not to
exceed the earlier to occur of: (a) twelve (12) months or (b) the expiration
date of the Contract Period. Each Merchandise Letter of Credit shall have a term
not to exceed the earlier to occur of: (a) twelve (12) months or (b) the
expiration date of the Contract Period.
7.4 Sublimits. Bank shall have no obligation (a) to issue any
Letters of Credit, if the aggregate outstanding undrawn amount of all Letters of
Credit would exceed $1,000,000; (b) to issue any Letter of Credit, if an Event
of Default has occurred and is continuing; or (c) to issue any Letter of Credit
if the Revolving Credit Facility Usage plus the amount of such new Letter of
Credit to be issued exceeds the Maximum Revolving Credit Facility Amount (the
"Letter of Credit Sublimit").
7.5 Procedure and Documentation. Each request for issuance of a
Letter of Credit must be received at least three (3) Business Days prior to the
requested issuance and shall be accompanied by a duly executed letter of credit
application in the form required by Bank. Each application shall have noted
therein that the application is entered into in accordance
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with the terms of this Agreement. Borrowers will execute and deliver to Bank
such other documents and agreements as may be reasonably required by Bank in
connection with the issuance of any Letter of Credit.
7.6 Reduction of Availability. Availability under the Revolving
Credit Facility will be reduced by the total outstanding undrawn amount of all
Letters of Credit.
7.7 Draws. If Bank receives a request for a draw under any Letter
of Credit, Bank shall advise Agent Borrower of such draw request and Borrowers
agree to pay to Bank on the day on which Bank shall honor such draw request, the
amount of such draw request (the "Draw Amount") in immediately available funds.
Unless Bank receives the Draw Amount in immediately available funds on or before
the day on which Bank honors such draw request, the amount advanced by Bank to
pay such draw shall be deemed to be a LMIR Rate Loan under the Revolving Credit
Facility, without any requirement that Agent Borrower request such Loan or
otherwise comply with the Loan Request provisions set forth in this Agreement.
7.8 Cash Collateral. In the event that the Revolving Credit
Facility is terminated for any reason, the Contract Period expires or an Event
of Default occurs, Borrowers agree to deposit with Bank immediately available
funds in an amount equal to 102% of the outstanding undrawn amount of all
Letters of Credit. Such funds and any proceeds of Collateral or other payments
received by Bank with respect to the Obligations after any such Event of
Default, may be held by Bank as cash collateral for the Obligations, including
without limitation, the Obligations of Borrowers to Bank related to the Letters
of Credit. Funds posted as cash collateral for a Letter of Credit will be
returned to Borrowers upon the earlier to occur of: (a) expiration of such
Letter of Credit with no outstanding draw thereunder, or (b) the return to Bank
of the original of such Letter of Credit together with a letter from the
beneficiary thereunder addressed to Bank requesting a cancellation of such
Letter of Credit.
7.9 Indemnification. Borrowers hereby agree to indemnify, save,
defend, and hold Bank harmless from any loss, cost, expense, or liability,
including payments made by Bank, expenses, and reasonable attorney's fees
incurred by Bank arising out of or in connection with any Letter of Credit,
provided that, Borrowers shall not be obligated to indemnify Bank for any loss,
cost, expense or liability resulting from Bank's gross negligence or wilful
misconduct. Borrowers understand and agree that Bank shall not be liable for any
error, negligence, or mistake, whether of omission or commission, in following
any Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto.
7.10 Obligations Irrevocable. The obligations of Borrowers to make
payments to Bank of each Draw Amount shall be irrevocable and shall not be
subject to any qualification or exception whatsoever, including, without
limitation, any of the following circumstances:
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(a) any lack of validity or enforceability of any Letter of Credit,
any documents collateral to any Letter of Credit, this Agreement or any of the
other Loan Documents;
(b) the existence of any claim, set-off, defense, or other right
which any Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom any
such beneficiary or transferee may be acting), Bank, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transactions between any Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(c) any draft, certificate, or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(d) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents;
(e) the occurrence of any Default or Event of Default;
(f) any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to or under any Letter of Credit or any
documents collateral thereto;
(g) payment by Bank to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of such
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit;
(h) any failure, omission, delay or lack on the part of Bank to
enforce, assert or exercise any right, power or remedy conferred upon Bank under
this Agreement, any of the other Loan Documents, any of the Letters of Credit or
any documents collateral thereto or any other acts or omissions on the part of
Bank; or
(i) any other event or circumstance that would, in the absence of
this Section 7.10, result in the release or discharge by operation of law or
otherwise of any Borrower or any Person from the performance or observance of
any obligation, covenant or agreement contained herein.
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No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which any Borrower has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to any Borrower
against Bank.
7.11 Risk Under Letters of Credit.
(a) In the administration and handling of Letters of Credit and
any security therefor, or any documents or instruments given in connection
therewith, Bank shall have the sole right, in its discretion following
commercially reasonable standards, to take or refrain from taking any and all
actions under or upon the Letters of Credit.
(b) Subject to other terms and conditions of this Agreement,
Bank shall issue the Letters of Credit and shall hold the documents related
thereto in its own name and shall make all collections thereunder and otherwise
administer the Letters of Credit in accordance with Bank's regularly established
practices and procedures and Bank will have no further obligation with respect
thereto. In the administration of Letters of Credit, Bank shall not be liable
for any action taken or omitted in good faith reliance on the advice of counsel,
accountants, appraisers or other experts selected by Bank and Bank may rely upon
any notice, communication, certificate or other statement from any Borrower,
beneficiaries of Letters of Credit, or any other Person which Bank reasonably
believes to be authentic.
(c) In connection with the issuance and administration of
Letters of Credit and the assignments hereunder, Bank makes no representation
and shall have no responsibility with respect to (i) the obligations of any
Borrower or any other Person (other than Bank) or the validity, sufficiency or
enforceability of any document or instrument given in connection therewith, or
the taking of any action with respect to same, (ii) the financial condition of,
any representations made by, or any act or omission of, any Borrower, or any
other Person (other than Bank), or (iii) any failure or delay in exercising any
rights or powers possessed by Bank in its capacity as issuer of Letters of
Credit in the absence of its gross negligence or willful misconduct.
8. INTEREST RATE.
8.1 Interest Rate Options for the Revolving Credit Facility. The
principal balance of the Revolving Credit Facility will accrue interest at the
Agent Borrower's option at (i) the LMIR Rate plus Applicable Margin, or (ii) the
LIBOR Rate plus the Applicable Margin, provided however, at no time shall the
applicable rate of interest charged to sums outstanding and accruing interest
under Revolving Credit Facility at the LMIR Rate plus Applicable Margin exceed
the Prime Rate.
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8.2 Interest Rate Options for Term Loan A. The entire outstanding
principal balance of Term Loan A will accrue interest at the Agent Borrower's
option at (i) the LMIR Rate plus Applicable Margin, or (ii) the LIBOR Rate plus
the Applicable Margin, provided however, at no time shall the applicable rate of
interest charged to sums outstanding and accruing interest under Term Loan A at
the LMIR Rate plus Applicable Margin exceed the Prime Rate plus two tenths
percent (2/10%).
8.3 Interest Rate Options for Term Loan B. The entire outstanding
principal balance of Term Loan B will accrue interest at the Agent Borrower's
option at (i) the LMIR Rate plus Applicable Margin, or (ii) the LIBOR Rate plus
the Applicable Margin, provided however, at no time shall the applicable rate of
interest charged to sums outstanding and accruing interest under Term Loan B at
the LMIR Rate plus Applicable Margin exceed the Prime Rate.
8.4 Certain Provisions Regarding Interest Rates. Notwithstanding
anything to the contrary contained herein:
(a) Borrowers understand and agree that subject to the
provisions of this Agreement, the LIBOR Rate plus Applicable Percentage may
apply simultaneously to different parts of the outstanding principal balance of
the Revolving Credit Facility; provided that, in no event shall Borrowers be
permitted to have outstanding at any one time more than four (4) LIBOR Rate
Loans under the Revolving Credit Facility.
(b) Borrowers understand and agree that subject to the
provisions of this Agreement, the LIBOR Rate plus Applicable Percentage or the
LMIR Rate plus Applicable Margin, as applicable, which applies to the
outstanding principal balance of Term Loan A shall apply to the entire
outstanding principal balance of the Term Loan A.
(c) Borrowers understand and agree that subject to the
provisions of this Agreement, the LIBOR Rate plus Applicable Percentage or the
LMIR Rate plus Applicable Margin, as applicable, which applies to the
outstanding principal balance of Term Loan B shall apply to the entire
outstanding principal balance of the Term Loan B.
(d) Coincident with any request for a LMIR Rate Loan, Borrowing
Agent shall give Bank prior written irrevocable notice no later than 11:00 A.M.
Philadelphia time on the requested Funding Date specifying (i) a Borrower's
election to obtain a LMIR Rate Loan, (ii) the date of the proposed borrowing
(which shall be a Business Day), (iii) the amount to be borrowed.
(e) Coincident with any request for a LIBOR Rate Loan,
Borrowing Agent shall give Bank prior written irrevocable notice no later than
11:00 A.M. Philadelphia time on the 2nd Business Day prior to the requested
Funding Date specifying (i) a
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Borrower's election to obtain a LIBOR Rate Loan, (ii) the date of the proposed
borrowing (which shall be a Business Day), (iii) the amount to be borrowed, and
(iv) the applicable Rate Period selected by Borrowing Agent.
8.5 Continuation of LIBOR Rate Loans. Borrowers shall have the
right on two (2) Business Days' prior irrevocable written notice given to Bank
by Borrowing Agent to continue any LIBOR Rate Loan into a subsequent Rate Period
of the same or a different permitted duration, in each case subject to the
satisfaction of the following conditions:
(a) in the case of a continuation of less than all LIBOR Rate
Loans under the Revolving Credit Facility, the LIBOR Rate Loans continued shall
each be in a minimum principal amount of $500,000 and may increase in integral
multiples of $100,000;
(b) accrued interest on a LIBOR Rate Loan (or portion thereof)
being continued shall be paid by Borrowers at the time of continuation; and
(c) no LIBOR Rate Loan (or portion thereof) may be continued
under the Revolving Credit Facility if, after giving effect to such
continuation, Borrowers shall have outstanding more than four (4) separate LIBOR
Rate Loans in the aggregate under the Revolving Credit Facility.
If any Borrower or Borrowing Agent on behalf of a Borrower shall fail
to give timely notice of its election to continue any LIBOR Rate Loan or portion
thereof as provided above, or if such continuation shall not be permitted
hereunder, such LIBOR Rate Loan or portion thereof, unless such LIBOR Rate Loan
shall be repaid, shall automatically be continued as a LIBOR Rate Loan at the
same Rate Period then in effect with respect to such LIBOR Rate Loan.
8.6 LMIR Rate or LIBOR Rate Unascertainable or Unavailable. If, at
any time, Bank shall determine (which determination shall be conclusive) that
the LMIR Rate or the LIBOR Rate, as applicable, is unavailable or adequate means
for ascertaining the LMIR Rate or the LIBOR Rate does not exist, Bank shall
promptly notify Borrowers of such determination. Upon such determination, the
right of Agent Borrower to select and/or maintain Advances based upon the LMIR
Rate plus Applicable Margin or the LIBOR Rate plus Applicable Margin, as
applicable, shall be suspended until notice from Bank to Agent Borrower that the
LMIR Rate or the LIBOR Rate, as applicable, is again available or ascertainable
and, until such time, the outstanding balance of the Revolving Credit Facility
and the Term Loans shall accrue interest at the Prime Rate.
8.7 LIBOR or LMIR Unlawful. In the event that, as a result of any
change in any applicable law or regulation or the interpretation thereof, it
becomes unlawful for Bank to maintain any advance under the Revolving Credit
Facility or the Term Loans at the LMIR Rate plus Applicable Margin or the LIBOR
Rate plus Applicable Margin, then Bank shall notify
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Agent Borrower thereof and Bank's obligation to make or maintain any Advance
under the Revolving Credit Facility or the Term Loans at the LMIR Rate plus
Applicable Margin or the LIBOR Rate plus Applicable Margin shall be suspended
until such time as Bank may again cause the LMIR Rate plus Applicable Margin or
the LIBOR Rate plus Applicable Margin to be applicable and, until such time,
such Advances under the Revolving Credit Facility and the Term Loans shall
accrue interest at the Prime Rate. Promptly after becoming aware that it is no
longer unlawful for Bank to maintain Advances under the Revolving Credit
Facility and the Term Loans at the LMIR Rate plus Applicable Margin or the LIBOR
Rate plus Applicable Margin, Bank shall notify Agent Borrower and such
suspension shall cease to exist.
8.8 Indemnification. Borrowers shall indemnify Bank and hold Bank
harmless from and against any and all losses or expenses that Bank may sustain
or incur as a consequence of any prepayment on any date other than the last
Business Day of the then current Rate Period or any default by Borrowers in the
payment of the principal of or interest on any LIBOR Rate Loan or failure by
Borrowers to complete a borrowing of, a prepayment of or conversion of or to a
LIBOR Rate Loan after notice thereof has been given, including (but not limited
to) any interest payable by Bank to lenders of funds obtained by it in order to
make or maintain its LIBOR Rate Loans hereunder, and any other loss or expense
incurred by Bank by reason of the liquidation or reemployment of deposits or
other funds acquired by Bank to make, continue, convert into or maintain, a
LIBOR Rate Loan.
8.9 Determinations. In making the determinations contemplated by
Sections 8.6 and 8.7, Bank shall determine the applicability of such Sections
consistent with the manner in which it applies similar provisions in loan
agreements with other borrowers and the determinations made by the Bank on the
basis thereof, shall be final, binding and conclusive upon Borrowers, absent
manifest error.
8.10 Default Rate. At the option of Bank, interest will accrue on
the principal balance of the Revolving Credit Facility and the Term Loans after
the occurrence and during the continuance of an Event of Default or expiration
of the Contract Period at a rate of three percent (3%) in excess of the Prime
Rate (the "Default Rate"). Borrowers acknowledge and agree that the Default Rate
is reasonable in light of the increased risk of collection of the sums due under
the Loans after occurrence of an Event of Default and the costs and expenses of
Bank related thereto.
8.11 Post Judgment Interest. Any judgment obtained for sums due
hereunder or under the Loan Documents will accrue interest at the applicable
Default Rate set forth above until paid.
8.12 Calculations. Interest will be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed.
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8.13 Limitation of Interest to Maximum Lawful Rate. In no event
will the rate of interest payable hereunder exceed the maximum rate of interest
permitted to be charged by applicable law (including the choice of law rules)
and any interest paid in excess of the permitted rate will be refunded to
Borrowers. Such refund will be made by application of the excessive amount of
interest paid against any sums outstanding hereunder and will be applied in such
order as Bank may determine. If the excessive amount of interest paid exceeds
the sums outstanding, the portion exceeding the sums outstanding will be
refunded in cash by Bank. Any such crediting or refunding will not cure or waive
any Event of Default. Borrowers agree that in determining whether or not any
interest payable hereunder exceeds the highest rate permitted by law, any
nonprincipal payment, including without limitation prepayment fees and late
charges, will be deemed to the extent permitted by law to be an expense, fee,
premium or penalty rather than interest.
9. PAYMENTS AND FEES.
9.1 Interest Payments on the Revolving Credit Facility. Borrowers
agree to pay to Bank interest on the principal balance of any LMIR Rate Loan and
any LIBOR Rate Loan under the Revolving Credit Facility on the first day of each
calendar month, commencing on the first day of the first calendar month
following the date hereof, and on the expiration of the Contract Period.
9.2 Principal Payments on the Revolving Credit Facility.
Borrowers agree to pay the outstanding principal balance of the Revolving Credit
Facility, together with any accrued and unpaid interest thereon, and any other
sums due pursuant to the terms hereof on the earlier to occur of (a) the
expiration of the Contract Period, or (b) ON DEMAND after the occurrence and
during the continuance of an Event of Default.
9.3 Interest Payments on Term Loan A. Borrowers agree to pay to
Bank interest on the principal balance of any LMIR Rate Loan and any LIBOR Rate
Loan under Term Loan A on the first day of each calendar month, commencing on
the first day of the first calendar month following the date hereof and on the
Term Loan A Maturity Date.
9.4 Principal Payments on Term Loan A. Borrowers agree to pay to
Bank the principal balance of Term Loan B in eighty-three (83) equal and
consecutive monthly installments of $28,572.20 each, on the first day of each
calendar month, commencing on July 1, 2002, and in one (1) final payment of the
remaining principal balance of Term Loan A plus all accrued and unpaid interest
thereon on the Term Loan A Maturity Date.
9.5 Interest Payments on Term Loan B. Borrowers agree to pay to
Bank interest on the principal balance of any LMIR Rate Loan and any LIBOR Rate
Loan under Term Loan B on the first day of each calendar month, commencing on
the first day of the first calendar month following the date hereof and on the
Term Loan B Maturity Date.
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9.6 Principal Payments on Term Loan B. Borrowers agree to pay to
Bank the principal balance of Term Loan B in twenty-three (23) equal and
consecutive monthly installments of $100,000 each, on the first day of each
calendar month, commencing on July 1, 2002, and in one (1) final payment of the
remaining principal balance of Term Loan B plus all accrued and unpaid interest
thereon on the Term Loan B Maturity Date.
9.7 Letter of Credit Fees. For each issuance or renewal of a
Merchandise Letter of Credit, Borrowers agree to pay to Bank an issuance or
renewal fee in an amount equal to such amount as may be customarily charged by
Bank, payable coincident with and as a condition of the issuance or renewal of
such Merchandise Letter of Credit. For each issuance or renewal of a Standby
Letter of Credit hereunder, Borrowers agree to pay to Bank an issuance or
renewal fee in an amount equal to one and one-half percent (1 1/2%) per annum of
the face amount of such Standby Letter of Credit, payable coincident with and as
a condition of the issuance or renewal of such Standby Letter of Credit. In
addition, Borrowers agree to pay to Bank such other fees and charges in
connection with the issuance, amendment, negotiation or cancellation of each
Merchandise Letter of Credit and Standby Letter of Credit as may be customarily
charged by Bank. Upon the occurrence and during the continuance of an Event of
Default, at Bank's option, the fees provided for in this Section shall be
increased by an additional two percent (2%) for each Merchandise Letter of
Credit and each Standby Letter of Credit, as applicable. All of such fees shall
be computed on the basis of a year of 360 days.
9.8 Origination Fee. Borrowers agree to pay to Bank a loan
origination fee of $12,000 (the "Origination Fee"), which Origination Fee has
been fully earned and is non-refundable in whole or in part. Bank acknowledges
receipt of an initial installment payment of the Origination Fee in the amount
of $6,000. The remaining balance of the Origination Fee in the amount of $6,000
is payable in full on the date hereof.
9.9 Unused Facility Fee. Borrowers agree to pay to Bank an unused
facility fee in an amount equal to 0.15% per annum times the Average Unused
Portion of Maximum Revolving Credit Facility Amount. Such fee will be payable
quarterly in arrears on the first day of each calendar quarter, pro-rated for
the actual number of days in any partial quarter, commencing on the calendar
quarter beginning July 1, 2002.
9.10 Termination of Revolving Credit Facility. Borrowers may
terminate the Revolving Credit Facility upon fifteen (15) days written notice to
Bank, which notice, once given shall be irrevocable. In the event the Revolving
Credit Facility is terminated as a result of an Event of Default, expiration of
the Contract Period, or otherwise, the outstanding balance of the Revolving
Credit Facility and the Term Loans, together with any accrued and unpaid
interest thereon and any other sums due pursuant to the terms hereof shall be
due and payable immediately.
9.11 Prepayment of Term Loans. Borrowers may prepay all or any
part of the principal balance of the Term Loans at any time, following delivery
of not less than
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fifteen (15) days prior written notice to Bank. All prepayments will be applied
to the regularly scheduled payments in the inverse order in which they are due;
provided that if a LIBOR Rate Loan is prepaid, continued or converted on a day
other than the last Business Day of the then current Rate Period with respect
thereto such prepayment shall be subject to Section 8.8 above.
9.12 Payment Method and Application.
(a) Payment Method. Borrowers irrevocably authorize Bank to
debit all payments required to be made by Borrowers hereunder, under the
Revolving Credit Facility, the Term Loan or under any of the Loan Documents, on
the date due, first from any deposit account of BFC maintained with Bank and
then from any other deposit accounts maintained by Borrowers with Bank. If there
are insufficient funds in such accounts or Bank for any reason does not debit
such accounts, Borrowers will make such payments directly to Bank.
(b) Application of Payments. All payments shall be remitted
to Bank and all such payments not relating to principal or interest on the Loans
or of specific Advances, or not constituting payment of specific fees and all
proceeds of Collateral received by Bank, shall be applied first, to pay any
fees, indemnities or expense reimbursements then due to Bank from Borrowers;
second, to pay interest due and payable in respect of all Advances, including
Loans; third, to pay principal of the Advances accruing interest at the LMIR
Rate, then to Advances accruing interest at the LIBOR Rate and to unreimbursed
obligations in respect of Letters of Credit; and fourth, to pay any other
Obligations due to Bank by Borrowers.
(c) Immediately Available Funds. All payments are to be made
in immediately available funds. If Bank accepts payment in any other form, such
payment shall not be deemed to have been made until the funds comprising such
payment have actually been received by or made available to Bank.
(d) Event of Default. Notwithstanding anything herein or
elsewhere to the contrary, upon the occurrence and during the continuance of an
Event of Default, any and all payments received by Bank on account of any of the
Obligations may be applied to costs, indemnities, fees, interest and principal
constituting Obligations in such order as Bank, in its discretion, elects.
9.13 Reinstatement of Obligations. If any Borrower makes a payment
or payments and such payment or payments, or any part thereof, are subsequently
invalidated, declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other person under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or payments, the obligations or part thereof hereunder
intended to be satisfied shall be revived and continued in full force and effect
as if said payment or payments had not been made.
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9.14 Maintenance of Loan Account; Statements of Obligations. Bank
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Advances and Loans made by
Bank to Borrowers or for Borrowers' account, including, accrued interest, the
Bank Expenses, and any other payment Obligations of Borrowers. Bank shall render
monthly statements regarding the Loan Account to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting the Bank Expenses owing, and such statements shall absent manifest
error be presumed to be correct and accurate, and shall constitute an account
stated between Borrowers and Bank unless, within thirty (30) days after receipt
thereof by Borrowers, Borrowers shall deliver to Bank written objection thereto
describing the error or errors contained in any such statements.
9.15 Indemnity. Borrowers agree to indemnify Bank against any
loss or expense which Bank sustains or incurs as a consequence of an Event of
Default, including, without limitation, any failure of Borrowers to pay when due
(at maturity, by acceleration or otherwise) any principal, interest, fee or any
other amount due under this Agreement or the other Loan Documents. If Bank
sustains or incurs any such direct, non-consequential loss or expense it will
notify Borrowers in writing of the amount determined in good faith by Bank to be
necessary to indemnify it for the loss or expense. Bank shall determine the
applicability and amount due under this Section consistent with the manner in
which it applies similar provisions and calculates similar amounts payable to it
by other borrowers having comparable provisions in their loan agreements. Such
amount will be due and payable by Borrowers to Bank within ten (10) days after
presentation by Bank of a statement setting forth a brief explanation of and its
calculation of such amount, which statement shall be conclusively deemed correct
absent manifest error. Any amount payable by Borrowers under this Section will
bear interest at the Default Rate from the due date until paid, both before and
after judgment.
9.16 Loss of Margin. In the event that any present or future law,
rule, regulation, treaty or official directive or the interpretation or
application thereof by any central bank, monetary authority or governmental
authority, or the compliance with any guideline or request of any central bank,
monetary authority or governmental authority (whether or not having the force of
law):
(a) subjects Bank to any tax with respect to any amounts
payable under this Agreement or the other Loan Documents by Borrowers or
otherwise with respect to the transactions contemplated under this Agreement or
the other Loan Documents (except for taxes on the overall net income of Bank
imposed by the U.S. or any political subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit, capital maintenance, capital adequacy, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or advances or commitment to
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make loans or advances by, or letters of credit issued or commitment to issue
letters of credit by Bank; or
(c) imposes upon Bank any other condition with respect to
advances or extensions of credit or the commitment to make advances or
extensions of credit under this Agreement,
and the result of any of the foregoing is to increase the costs of Bank, reduce
the income receivable by or return on equity of Bank or impose any expense upon
Bank in each case related to any Advances or extensions of credit made by Bank
or commitments by Bank to make Advances or extensions of credit under this
Agreement, Bank shall so notify Borrowers in writing. Borrowers agree to pay
Bank the amount of such increase in cost, reduction in income, reduced return on
equity or capital, or additional expense within thirty (30) days after
presentation by Bank of a statement concerning such increase in cost, reduction
in income, reduced return on equity or capital, or additional expense. Such
statement shall set forth a reasonable explanation of the amount and Bank's
calculation of the amount (in determining such amount Bank may use any
reasonable averaging and attribution methods), which statement shall be
conclusively deemed correct absent manifest error. If the amount set forth in
such statement is not paid within thirty (30) days after such presentation of
such statement, interest will be payable on the unpaid amount at the Default
Rate from the due date until paid, both before and after judgment.
9.17 Savings Clause. Anything contained in this Agreement or any
other Loan Documents to the contrary notwithstanding, the obligations of each
Borrower with respect to the repayment of the outstanding principal balance of
the Loans shall be limited to a maximum aggregate amount equal to the greater of
(a) the loan proceeds and the value of all other consideration and benefits
received by or for the benefit of such Borrower in connection with the financing
transactions contemplated hereunder, or (b) the largest amount that would not
render its obligations with respect thereto subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any applicable provisions of comparable state, federal, provincial or other
applicable law of any jurisdiction (collectively, the "Fraudulent Transfer
Laws"), if and to the extent such Borrower (or trustee on its behalf) has
properly invoked the protections of the Fraudulent Transfer Laws. In making such
determination, all rights of subrogation and contribution of any Borrower with
respect to such obligations shall be deemed to be an asset of such Borrower.
10. TAXES.
10.1 Any and all payments by Borrowers to or for the account of
Bank hereunder or under any other Loan Document shall be made free and clear of,
and without deduction for, any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which Bank
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is organized or any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable under this Agreement or
any other Loan Document to Bank, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 10.1) Bank receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrowers shall make such deductions, (iii) Borrowers shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with Applicable Law, and (iv) Borrowers shall furnish to Bank the
original or a certified copy of the receipt evidencing payment thereof.
10.2 In addition, Borrowers agree to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes"), provided that Bank shall determine the applicability of
this Section consistent with the manner in which it applies similar provisions
and calculates similar amounts payable to it by other borrowers having
comparable provisions in their loan agreements.
10.3 BORROWERS AGREE TO INDEMNIFY BANK FOR THE FULL AMOUNT OF
TAXES AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES
IMPOSED OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION
10) PAID BY BANK AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES)
ARISING THEREFROM OR WITH RESPECT THERETO. For purposes of this Section 10.3,
Taxes and Other Taxes shall not include taxes or franchise taxes imposed on the
income of Bank resulting from payments made to Bank under the Loan Documents or
otherwise.
10.4 Within thirty (30) days after the date of any payment of
Taxes or Other Taxes, Borrowers shall furnish to Bank the original or a
certified copy of the receipt evidencing such payment.
10.5 Without prejudice to the survival of any other agreement of
Borrowers hereunder, the agreements and obligations of Borrowers contained in
this Section 10 shall survive the termination of this Agreement and the payment
in full of the Obligations.
11. SECURITY; COLLECTION OF RECEIVABLES AND PROCEEDS OF COLLATERAL.
11.1 Personal Property. As security for the full and timely
payment and performance of all Obligations, each Borrower hereby grants to Bank
a first priority
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perfected security interest in all personal property of such Borrower, wherever
located, now owned or hereafter acquired, including without limitation the
following:
(a) All present and future Accounts, contract rights,
chattel paper, instruments and documents and all other rights to the payment of
money whether or not yet earned, for services rendered or goods sold, consigned,
leased or furnished or otherwise, in all cases together with (i) all goods
(including any returned, rejected, repossessed or consigned goods), the sale,
consignment, lease or other furnishings of which shall give or may give rise to
any of the foregoing, (ii) all rights as a consignor, consignee, unpaid vendor
or other lien or in connection therewith, including stoppage in transit,
set-off, detinue, replevin and reclamation, (iii) all General Intangibles
related thereto, (iv) all credit insurance, guaranties, mortgages, security
interests, assignments, and other encumbrances on real or personal property,
leases and other agreements or property securing or relating to any of the
foregoing, (v) choses-in-action, claims and judgments related to or arising out
of any of the foregoing, and (vi) any returned or unearned premiums, which may
be due upon cancellation of any insurance policies.
(b) All present and future Inventory (including but not
limited to goods held for sale or lease or furnished or to be furnished under
contracts for service), and all documents of title covering any of such goods or
Inventory.
(c) All present and future General Intangibles.
(d) All present and future Equipment, all documents of
title covering any of such Equipment and all manuals of operation, maintenance
or repair.
(e) All present and future rights in all proceeds of all
licenses, permits, approvals, license rights, agreements and General Intangibles
with respect to which there are valid and enforceable legal or contractual
restrictions prohibiting the collateral assignment or granting of a security
interest (the "Non-Assignable Contracts"), including without limitation all
proceeds from the sale, transfer or liquidation of such Non-Assignable Contracts
and the value allocable to such Non-Assignable Contracts in any sale of business
or assets.
(f) All present and future general ledger sheets, files,
records, customer lists, books of account, invoices, bills, certificates or
documents of ownership, bills of sale, business papers, correspondence, credit
files, tapes, cards, computer runs and all other data and data storage systems
whether in the possession of any party to this Agreement or any service bureau.
(g) All letters of credit and letter of credit rights,
including the right to receive payment thereunder and all documentation related
thereto, and all documents of title, negotiable and non-negotiable bills of
lading, electronic bills of lading, shipper's rights, rights
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accruing under the law of agency or estoppel, warranties, claims and insurance
proceeds related thereto or associated therewith.
(h) All documents of title, negotiable and non-negotiable
bills of lading, electronic bills of lading, shipper's rights, rights accruing
under the law of agency or estoppel, documents, agreements, instruments,
warranties and claims now existing or hereafter issued or arising in connection
with any Merchandise Letter of Credit now or hereafter issued under this
Agreement, and all insurance claims or proceeds related thereto.
(i) All deposits, funds, notes, drafts, instruments
(including promissory notes), documents, policies, evidences and certificates of
insurance, securities, personal property leases and chattel paper and other
assets, now or at any time hereafter on deposit with or in the possession or
control of Bank or owing by Bank or in transit by mail or carrier to Bank or in
the possession of any other Person acting on Bank's behalf, without regard to
whether Bank received the same in pledge, for safekeeping, as agent for
collection or otherwise, or whether Bank has conditionally released the same,
and in all assets in which Bank now has or may at any time hereafter obtain a
lien, mortgage, or security interest for any reason.
(j) All deposit accounts maintained by such Borrower with
any depository institution.
(k) All Investment Property.
(l) All Financial Assets.
(m) All products and proceeds of the foregoing.
11.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, the
applicable Borrower shall immediately endorse and deliver physical possession of
such Negotiable Collateral to Bank, together with any stock powers executed in
blank as may be required by Bank.
11.3 Real Property Collateral. As further security for the
Obligations, BBC shall grant to Bank a second mortgage lien encumbering the
premises situate at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and all
improvements thereon and all rights, licenses, permits and approvals related
thereto, together with an assignment of all rents and leases related thereto
(collectively, the "Mortgaged Property"), subject only to a first mortgage lien
encumbering such premises in favor of UNUM Life Insurance Company of America in
an amount not to exceed $2,550,000.00.
11.4 General. The collateral described above in Sections 11.1,
11.2 and 11.3 is collectively referred to herein as the "Collateral". The
above-described security
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interests, assignments, Liens and guarantees shall not be rendered void by the
fact that no Obligations exist as of any particular date, but shall continue in
full force and effect until the Obligations have been repaid, Bank has no
agreement or commitment outstanding under the Loan Documents pursuant to which
Bank may extend credit to or on behalf of any Borrower and Bank has executed
termination statements or releases with respect thereto. Bank agrees to execute
and deliver to Agent Borrower, at Borrowers' expense, termination statements and
releases with respect to all Liens in favor of Bank encumbering the Collateral
with reasonable promptness after all Obligations have been fully and finally
paid and Bank has no agreement or commitment outstanding to extend credit to or
on behalf of any Borrower. IT IS THE EXPRESS INTENT OF THE BORROWER THAT ALL OF
THE COLLATERAL SHALL SECURE NOT ONLY THE OBLIGATIONS UNDER THE LOAN DOCUMENTS,
BUT ALSO ALL OTHER PRESENT AND FUTURE OBLIGATIONS OF ANY BORROWER TO BANK.
11.5 Collection of Accounts; Proceeds of Collateral.
(a) General. Borrowers will collect their Accounts only in
the ordinary course of their business.
(b) Lockbox. Upon the request by Bank to Agent Borrower at
any time after the date hereof, Borrowers will notify all of their account
debtors to forward all accounts receivable collections owed to Borrowers to a
lockbox maintained by Bank and will forward all other checks, drafts and monies
received by Borrowers which are proceeds of the Collateral to such lockbox.
Borrowers will execute such lockbox agreements as may be required by Bank and
will pay to Bank all customary fees in connection with any lockbox arrangement.
(c) Items Held in Trust. Upon the occurrence and during the
continuance of an Event of Default, Borrowers agree that all monies, checks,
notes, instruments, drafts or other payments relating to or constituting
proceeds of any accounts receivable or other Collateral of Borrowers which come
into the possession or under the control of Borrowers of any employees, agents
or other persons acting for or in concert with Borrowers, shall be received and
held in trust for Bank and such items shall be the sole and exclusive property
of Bank. Upon the occurrence and during the continuance of an Event of Default,
at the request by Bank, immediately upon receipt thereof, Borrowers and such
other persons shall remit the same or cause the same to be remitted, in kind, to
Bank. Borrowers shall deliver or cause to be delivered to Bank, with appropriate
endorsement and assignment to Bank with full recourse to Borrowers, all
instruments, notes and chattel paper constituting an account receivable or
proceeds thereof or other Collateral. Bank is granted a power of attorney by
Borrowers with full power of substitution upon the occurrence and during the
continuance of an Event of Default to execute on behalf of any Borrower and in
such Borrower's name or to endorse such Borrower's name on any check, draft,
instrument, note or other item of payment or to take any other action or sign
any document in order to effectuate the foregoing. Such power of attorney being
coupled with an interest is irrevocable.
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12. REPRESENTATIONS AND WARRANTIES. In order to induce Bank to enter
into this Agreement, the Borrowers, jointly and severally, make the following
representations and warranties which shall be true, correct, and complete in all
respects as of the date hereof, and shall be true, correct, and complete in all
respects as of the Closing Date, and at and as of the date of the making or
entering into each Advance or Letter of Credit thereafter, as though made on and
as of the date of such Advance or Letter of Credit (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement.
12.1 Valid Organization, Good Standing and Qualification. Each
Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the applicable state described on Schedule 12.1, has
full power and authority to execute, deliver and comply with the Loan Documents,
and to carry on its business as it is now being conducted and is duly licensed
or qualified as a foreign corporation in good standing under the laws of each
other jurisdiction described on Schedule 12.1 and in each other jurisdiction in
which the failure to so qualify could have a Material Adverse Effect on such
Borrower.
12.2 Licenses. Each Borrower and its employees, servants and
agents, as applicable, have obtained all licenses, registrations, approvals,
security clearances and other authority as is necessary to enable such Borrower
to own and operate its Business, except such licenses, registrations, approvals
and other authority which the failure to maintain would not result in a Material
Adverse Effect on such Borrower.
12.3 Ownership Interests. The ownership of all Capital Stock
(held by Persons having an ownership interest greater than five percent (5%) of
the outstanding Capital Stock), debentures, options (as of December 31, 2001),
warrants (as of December 31, 2001), bonds and other securities (debt and equity)
(as of March 31, 2002) of the Borrowers and all pledges, proxies, voting trusts,
powers of attorney and other agreements affecting the ownership or voting rights
of said interests is as set forth on Schedule 12.3.
12.4 Subsidiaries. Except as set forth on Schedule 12.4, the
Borrowers do not own any Capital Stock in any Person, directly or indirectly (by
any Subsidiary or otherwise). All of the outstanding Capital Stock of each
Borrower has been validly issued and is fully paid and non-assessable.
12.5 Financial Statements. Borrowers have furnished to Bank the
audited financial statements of Borrowers and their Subsidiaries certified
without qualification by independent public accountants as of December 31, 2001
and all management and comment letters from such accountants in connection
therewith. Borrowers have furnished to Bank the internally prepared interim
financial statements of Borrowers as of March 31, 2002. Such financial
statements of Borrowers (together with the related notes and comments), are
correct and complete, fairly present in all material respects the financial
condition and the assets and liabilities of Borrowers at such
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dates, and have been prepared in accordance with GAAP. With respect to the
interim statements, such statements are subject to year-end adjustment and any
accompanying footnotes.
12.6 No Material Adverse Change in Financial Condition. There
has been no Material Adverse Change in the financial condition of any Borrower
since March 31, 2002.
12.7 Pending Litigation or Proceedings. Except as set forth on
Schedule 12.7, there are no judgments outstanding or actions, suits or
proceedings pending or, to the best of each Borrower's knowledge, threatened
against or affecting any Borrower, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
12.8 Due Authorization; No Legal Restrictions. The execution and
delivery by the Borrowers of the Loan Documents, the consummation of the
transactions contemplated by the Loan Documents and the fulfillment and
compliance with the respective terms, conditions and provisions of the Loan
Documents: (a) have been duly authorized by all requisite corporate action of
each of the Borrowers, (b) will not conflict with or result in a breach of, or
constitute a default (or are not reasonably likely, upon the passage of time or
the giving of notice or both to constitute a default) under, any of the terms,
conditions or provisions, to the best of their knowledge, under any Applicable
Law or any Borrower's Governing Documents or any material lease, indenture,
mortgage, loan or credit agreement or instrument to which any Borrower is a
party or by which any of them are reasonably likely to be bound or affected, or
any judgment or order of any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (c) will not
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property or assets of any Borrower under the terms or provisions of
any such agreement or instrument, except Liens in favor of Bank, and (d) do not
require any consent or approval of the stockholders of any Borrower or any other
Person, except such consents and approvals which have been properly obtained and
are in full force and effect or such consents or approvals which the failure to
obtain would not have a Material Adverse Effect.
12.9 Enforceability. The Loan Documents have been duly executed
by the Borrowers and delivered to Bank and constitute legal, valid and binding
obligations of the Borrowers, enforceable in accordance with their terms, except
as enforceability may be limited by any bankruptcy, insolvency, reorganization,
moratorium or other laws or equitable principles affecting creditors rights
generally.
12.10 No Default Under Other Obligations, Orders or Governmental
Regulations. The Borrowers are not in violation of their Governing Documents and
the Borrowers are not in default in the performance or observance of any of
their obligations, covenants or conditions contained in any indenture or other
agreement creating, evidencing or securing any Indebtedness in excess of $50,000
in the aggregate or pursuant to which any such
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Indebtedness is issued. The Borrowers are not in violation of or in default
under any other material agreement or instrument or any judgment or, to the best
of their knowledge, under any Applicable Law.
12.11 Governmental Consents. Other than the filing of appropriate
financing statements, no consent, approval or authorization of or designation,
declaration or filing with or notice to any Governmental Authority on the part
of any Borrower is required in connection with the execution, delivery or
performance by the Borrowers of the Loan Documents or the consummation of the
transactions contemplated thereby, except consents, approvals, authorizations or
filings which the failure to obtain would not have a Material Adverse Effect.
12.12 Taxes. The Borrowers have filed all tax returns which they
are required to file and have paid, or made provision for the payment of, all
taxes which have become due pursuant to such returns or pursuant to any
assessment received by them. Such tax returns are complete and accurate in all
material respects. The Borrowers do not know of any proposed additional
assessment or basis for any assessment of additional material taxes.
12.13 Title to Collateral. The Borrowers have rights in and the
power to transfer the Collateral. The Collateral is and will be owned by the
Borrowers free and clear of all Liens of any kind, excepting only Liens in favor
of Bank and those Liens permitted under the Loan Documents. The Borrowers will
use commercially reasonable efforts to defend the Collateral against any claims
of all Persons or entities other than Bank.
12.14 Names and Addresses. During the past five (5) years, the
Borrowers have not been known by any names (including trade names) other than
those set forth in Schedule 12.14 and have not been located at any addresses
other than those set forth on Schedule 12.22(d). The portions of the Collateral
which are tangible property and the Borrowers' Books will at all times be
located at the addresses set forth on Schedule 12.22(d); or such other location
determined by the Borrowers after prior notice to Bank and delivery to Bank of
any items reasonably requested by Bank to maintain perfection and priority of
Bank's Lien against and access to the Borrowers' Books and records. Schedule
12.22(d) identifies the chief executive offices of the Borrowers.
12.15 Current Compliance. The Borrowers are currently in
compliance with all of the terms and conditions of the Loan Documents, and to
the best of their knowledge, under all Applicable Laws.
12.16 United States Pension and Benefit Plans. Except as
disclosed on Schedule 12.16, (a) the Borrowers have no obligations with respect
to any Plan, (b) no ERISA Events, including, without limitation, any "Reportable
Event" or "Prohibited Transaction" (as those terms are defined under ERISA),
have occurred in connection with any Plan of any Borrower which would be
reasonably likely to constitute grounds for the termination of any such
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Plan by the PBGC or for the appointment by any U.S. District Court of a trustee
to administer any such Plan, (c) all of the Borrowers' Plans meet with the
minimum funding standards of Section 302 of ERISA, and (d) the Borrowers have no
existing liability to the PBGC. The Borrowers are not subject to or bound to
make contributions to any Multi-Employer Plan.
12.17 Leases and Contracts. The Borrowers have complied in all
material respects with the provisions of all material leases, contracts or
commitments of any kind (such as employment agreements, collective bargaining
agreements, powers of attorney, distribution agreements, license agreements,
contracts for future purchase or delivery of goods or rendering of services,
bonus, pension and retirement plans or accrued vacation pay, insurance and
welfare agreements) to which any Borrower is a party and are not in default
thereunder. To the best of each Borrower's knowledge, no other party is in
default under any such leases, contracts, licenses or other commitments and no
event has occurred which, but for the giving of notice or the passage of time or
both, would constitute an event of default thereunder. Schedule 12.17 sets forth
an accurate list of all material leases, contracts and commitments to which any
Borrower is a party or by which any of them are bound, including, without
limitation, any real or personal property leases to which any Borrower is a
party.
12.18 Intellectual Property. Except as set forth on Schedule
12.18, each Borrower owns or possesses the irrevocable right to use all of the
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises and permits and rights with respect to the foregoing necessary to own
and operate such Borrower's business and to carry on its business as presently
conducted and presently planned to be conducted without conflict with the rights
of others. Schedule 12.18 sets forth an accurate list and description of each
such patent, trademark, service ▇▇▇▇, trade name, copyright, license, franchise
and permit and right with respect to the foregoing, together with all
registration or application numbers or information with respect thereto.
12.19 Business Interruptions. Within five (5) years prior to the
date hereof, neither the Business, Collateral nor operations of any Borrower has
been materially and adversely affected in any way by any casualty, strike,
lockout, combination of workers, order of the United States, or any state or
local government, or any political subdivision or agency thereof, directed
against any Borrower. There are no pending or, to the Responsible Officer's
knowledge, any threatened material labor disputes, strikes, lockouts or similar
occurrences or grievances against the business being operated by any Borrower.
12.20 Business. The Borrowers are engaged solely in their
respective Businesses.
12.21 Affiliate Transactions. Schedule 12.21 sets forth an
accurate list of all transactions of any Borrower, with each other and with any
Affiliate of any Borrower.
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12.22 Property of Borrowers.
(a) Property. Each Borrower is the owner or lessee of all
Property and holds all Licenses, in each case necessary to conduct operations of
the Business, in each case in conformity in all respects with, to the best of
its knowledge, all Applicable Laws.
(b) Licenses. There is set forth in Schedule 12.22(b) a
description of all Licenses which have been issued or assigned to any Borrower.
All of such Licenses are in full force and effect and have been duly issued in
the name of, or validly assigned to, the applicable Borrower, and no material
default or breach exists thereunder.
(c) Operating Agreements. There is set forth in Schedule
12.22(c) a description of all material Operating Agreements relating to the
operation of the business of each Borrower. Each such Operating Agreement is in
full force and effect and no event has occurred which is reasonably likely to
result in the cancellation or termination of any such Operating Agreement or the
imposition thereunder of any material liability upon any Borrower.
(d) Facility Sites. There is set forth in Schedule 12.22(d)
locations of the chief executive office of each Borrower, the locations of all
of each Borrower's Property, the places where each Borrower's Books are kept and
the locations of all Equipment and offices used in the operation of each
Borrower's business.
(e) Leases. There is set forth in Schedule 12.22(e) a list
of all material Leases, together with a complete and accurate address of each
parcel of Leasehold Property subject to such Leases and the name and address of
the landlord under each such Lease. Each Lease is in full force and effect,
there has been no default in the performance of any of its material terms or
conditions by any Borrower, and to the best of each Borrower's knowledge, any
other party thereto, and to each Borrower's knowledge, no claims of default have
been asserted with respect thereto. To the best of each Borrower's knowledge,
the present and contemplated use of all Leasehold Property is in compliance with
all applicable zoning ordinances and regulations and other Applicable Laws.
(f) Operation and Maintenance of Equipment. All of the
Equipment and other tangible personal property owned by each Borrower which is
used in the ordinary course of such Borrower's business is in good operating
condition and repair (subject to normal wear and tear) and, to the best of
Borrowers' knowledge, has been used, operated and maintained in compliance in
all material respects with all Applicable Laws.
12.23 Inventory Records. The Borrowers keep correct and accurate
Inventory records itemizing and describing the kind, type, quality, and quantity
of the Inventory, and each Borrower's cost therefor.
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12.24 FEIN. The FEIN and state organizational number of each
Borrower is:
STATE
ORGANIZATIONAL
FEIN NUMBER
---- ------
BHL - ▇▇-▇▇▇▇▇▇▇ 2413500
BFC - ▇▇-▇▇▇▇▇▇▇ 8293-656
BBC - ▇▇-▇▇▇▇▇▇▇ 0148-030
CCI - ▇▇-▇▇▇▇▇▇▇ 122909900
WMPI - ▇▇-▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇▇
12.25 Solvency. Each Borrower is Solvent. No transfer of property
is being made by any Borrower and no obligation is being incurred by any
Borrower in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of any Borrower.
12.26 Subordinated Indebtedness. Schedule 12.26 sets forth an
accurate list of all Subordinated Indebtedness currently owed by any Borrower,
identifying the payor, the payee, the outstanding principal balance, the
applicable interest rate, the payment terms and all collateral or guaranties
securing such Subordinated Indebtedness.
12.27 Inventory Locations. All of each Borrower's Inventory is
currently located at one of the locations set forth on Schedule 12.27. Schedule
12.27 sets forth the street address and the name of the
owner/lessor/warehouseman, as applicable, for such location.
12.28 Investment Company Act; Public Utility Holding Company Act.
No Borrower is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). No Borrower is a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
12.29 Employee Relations. Each Borrower has an adequate workforce
in place for the customary operations of its Business and is not, except as set
forth on Schedule 12.29, party to any collective bargaining agreement nor has
any labor union been recognized as the representative of any Borrower's
employees.
12.30 Investment Property. Schedule 12.30 sets forth a correct
and complete list of all Investment Property, including any Financial Assets,
owned by each Borrower. Each Borrower is the legal and beneficial owner of such
Investment Property, including any
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Financial Assets, as so reflected, free and clear of any Lien (except for Liens
in favor of Bank), and has not sold, granted any option with respect to,
assigned or transferred or otherwise disposed of any of its rights or interest
therein.
12.31 Common Enterprise. The successful operation and condition
of Borrowers is dependent on the continued successful performance of the
functions of the Borrowers as a whole and the successful operation of each
Borrower is dependent on the successful performance and operation of the other
Borrower. Each Borrower expects to derive benefit (and its board of directors
has determined that it may reasonably be expected to derive benefit), directly
and indirectly, from successful operations of its Subsidiaries and Affiliates.
Each Borrower has determined that execution, delivery and performance of this
Agreement and any other Loan Documents to be executed by such Borrower is within
its corporate purpose, will be of direct and indirect benefit to such Borrower
and is in its best interest.
12.32 Insurance. No notice of cancellation has been received with
respect to any insurance policies required pursuant to Section 13.6 and each
Borrower is in material compliance with all conditions contained in such
policies.
12.33 Commercial Tort Claims. No Borrower is the claimant under
or with respect to any Commercial Tort Claim.
12.34 Accuracy of Representations and Warranties. No
representation or warranty by any Borrower contained herein or in any
certificate or other document furnished by any Borrower pursuant hereto or in
connection herewith fails to contain any statement of material fact necessary to
make such representation or warranty not misleading in light of the
circumstances under which it was made. There is no fact which any Borrower knows
or should know and has not disclosed to Bank, which does or is reasonably likely
to materially and adversely affect any Borrower or any of their operations.
13. AFFIRMATIVE COVENANTS. The Borrowers, jointly and severally,
covenant and agree that, so long as this Agreement has not been terminated and
until full and final payment of the Obligations, and unless Bank shall otherwise
consent in writing, each Borrower shall comply with the following:
13.1 Payment of Principal, Interest and Other Amounts Due. The
Borrowers will pay when due all Obligations without setoff, deduction or
counterclaim and without deduction or withholding for or on account of any
federal, state or local taxes.
13.2 Claims for Labor and Materials. The Borrowers will pay or
cause to be paid when due all claims for labor, materials and supplies which, if
unpaid, are reasonably likely to become a Lien upon any of their properties or
assets.
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13.3 Existence; Approvals; Qualification; Compliance with Laws.
Each of the Borrowers (a) will obtain, preserve and keep in full force and
effect its separate corporate existence and all rights, licenses, registrations
and franchises necessary to the proper conduct of its Business or affairs; (b)
will qualify and remain qualified as a foreign corporation in each jurisdiction
in which the character or location of the properties owned by it or the business
transacted by it requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect; (c) will comply in all
material respects with the requirements of all Applicable Laws.
13.4 Maintenance of Properties. The Borrowers will maintain,
preserve, protect and keep or cause to be maintained, preserved, protected and
kept their Property customarily used or useful in the ordinary course of their
Business in good working order and condition, reasonable wear and tear excepted,
and will pay and discharge when due the cost of repairs to and maintenance of
the same.
13.5 Intellectual Property. With respect to any and all
tradenames, domain names, trademarks, registrations, copyrights, patents, patent
rights and applications for any of the foregoing, the Borrowers shall maintain
and protect the same to the extent reasonably required for the operation of the
Borrowers' Business and shall take and assert any and all remedies reasonably
available to any Borrower to prevent any other Person from infringing upon or
claiming any interest in any such material trademarks, registrations,
copyrights, patents, patent rights or application for any of the foregoing.
The Borrowers will notify Bank promptly of (a) the filing of any
patent or trademark application by any Borrower; (b) the grant of any patent or
trademark to any Borrower; or (c) any Borrower's intent to abandon a patent or
trademark.
The Borrowers will, if requested by Bank, (i) execute and deliver to
Bank assignments, security agreements, financing statements, patent mortgages or
such other documents, in form and substance reasonably acceptable to Bank,
necessary to perfect and maintain Bank's security interest in all existing and
future patents, patent applications, trademarks, trademark applications, and
other General Intangibles owned by any Borrower; and (ii) furnish Bank with
evidence satisfactory to Bank that all actions necessary to maintain and protect
each trademark and patent owned by any Borrower or its employees have been taken
in a timely manner.
13.6 Insurance.
(a) Collateral. The Borrowers, at their expense, shall keep
the Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, as are ordinarily insured against
by other owners in similar businesses, in amounts acceptable to Bank, but in any
event in amounts sufficient to cover the value of all of each Borrower's
Equipment and Inventory and in amounts sufficient to prevent any Borrower from
becoming a co-insurer under such policies. The Borrowers also shall maintain
business interruption, public liability, product liability, and property damage
insurance relating to any Borrower's ownership and use of the Collateral, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
(b) Endorsements, Cancellation or Modification. The
Borrowers shall cause Bank to be named as loss payee (with a lender's loss
payable endorsement) with respect to all Collateral, and additional insured with
respect to all liability insurance, as its interests may appear. Every policy of
insurance referred to in this Section shall contain an agreement by the insurer
that thirty (30) days' written notice will be given Bank by the insurer prior to
cancellation or material modification of such insurance coverage. Any
modification of any insurance policy or coverage involving any decrease in the
amount or scope of coverage, must be approved by Bank in writing prior to the
effective date of such modification.
(c) General. All such policies of insurance shall be in
such form, with such companies, and in such amounts as may be reasonably
satisfactory to Bank. Every policy of insurance referred to in this Section
shall contain an agreement by the insurer that any loss payable thereunder shall
be payable notwithstanding any act or negligence of any Borrower or the Bank
which might, absent such agreement, result in a forfeiture of all or a part of
such insurance payment.
(d) Policies and Evidence of Insurance. The Borrowers shall
cause to be delivered to Bank evidence of insurance utilizing a current ▇▇▇▇▇ 27
Evidence of Property Insurance and at least thirty (30) days prior to the
expiration of any such insurance, additional policies or duplicates thereof and
evidence of insurance utilizing a current ▇▇▇▇▇ 27 Evidence of Property
Insurance confirming the renewal of such insurance and payment of the premiums
therefor.
(e) Losses; Payments. The Borrowers shall direct all
insurers that in the event of any loss thereunder or the cancellation of any
insurance policy, the insurers shall make payments for such loss and pay all
returned or unearned premiums directly to Bank and not to Borrowers and Bank
jointly. In the event of any loss, the Borrowers will give Bank prompt notice
thereof and Bank may make proof of loss whether the same is done by Borrowers.
Bank is hereby granted a power of attorney by the Borrowers with full power of
substitution to file any proof of loss in any Borrower's or Bank's name, to
endorse any Borrower's name on any check, draft or other instrument evidencing
insurance proceeds, and to take any action or sign any document to pursue any
insurance loss claim.
In the event of any loss, Bank, at its option, may (a) retain and
apply all or any part of the insurance proceeds to repay or secure the
Obligations, in such order and amounts as Bank may elect, or (b) disburse all or
any part of such insurance proceeds to or for the benefit of the applicable
Borrower for the purpose of repairing or replacing Collateral after receiving
proof
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satisfactory to Bank of such repair or replacement, in either case without
waiving or impairing the Obligations or any provision of this Agreement. Any
deficiency thereon shall be paid by Borrowers to Bank upon demand. Borrowers
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral.
Notwithstanding the foregoing, in the event that Borrowers suffer a
casualty loss in an amount not to exceed $1,250,000 and desire to use the
proceeds of their casualty loss insurance to repair or replace the damaged
Property, Bank will permit Borrowers to utilize the proceeds of such insurance
to reduce the outstanding principal amount of the Revolving Credit Facility or
to repair or replace such damaged Property provided that if such proceeds are to
be used to repair or replace such damaged Property: (a) Borrowers confirm to
Bank in writing that Borrowers intend to continue their business operations and,
if business operations are interrupted, have business interruption insurance in
effect providing for the payment of proceeds in amounts acceptable to Bank, (b)
Borrowers submit to Bank their business plan for operations after such casualty
loss, which plan must be in form and content satisfactory to Bank, and (c) no
Default or Event of Default has occurred and is continuing.
13.7 Inspections; Examinations. The Borrowers hereby irrevocably
authorize all accountants and auditors employed by any Borrower at any time to
exhibit and deliver to Bank copies of any and all of such Borrower's financial
statements, trial balances or other accounting records of any sort in the
accountant's or auditor's possession and copies of all reports submitted to the
Borrowers by such accountants or auditors, including management letters,
"comment" letters and audit reports, and to disclose to Bank any information
they may have concerning any Borrower's financial status and business
operations. The Borrowers further authorize all federal, state and municipal
authorities to furnish to Bank copies of reports or examinations relating to any
Borrower, whether made by any Borrower or otherwise.
The officers or employees of Bank, or such Persons as Bank may
designate, may visit and inspect any of the properties of any Borrower, examine
(either by Bank's employees or by independent accountants) any of the Collateral
or other assets of the Borrowers, including the Books of the Borrowers, and
discuss the affairs, finances and accounts of the Borrowers with their officers
and with their independent accountants, at such times as Bank may desire,
provided that such visits and inspections shall be conducted during normal
business hours and upon reasonable notice prior to the occurrence of a Default
or an Event of Default. During normal business hours and upon reasonable notice,
Bank may conduct and the Borrowers will fully cooperate with, field examinations
of the Inventory, Accounts and business affairs of the Borrowers; provided
however, after the occurrence of a Default or an Event of Default, such field
examinations may occur at any time and from time to time with or without prior
notice.
Borrowers agree to pay all costs and expenses of Bank related to any
such visits, inspections and field examinations.
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13.8 Pension Plans. The Borrowers will (a) keep in full force and
effect any and all Plans which are presently in existence or may, from time to
time, come into existence under ERISA, unless such Plans can be terminated
without material liability to any Borrower in connection with such termination
(as distinguished from any continuing funding obligation); (b) make
contributions to all of their Plans in a timely manner and in a sufficient
amount to comply with the requirements of ERISA or other applicable pension
laws; (c) comply with all material requirements of ERISA or other applicable
pension laws which relate to such Plans so as to preclude the occurrence of any
Reportable Event, Prohibited Transaction or material "accumulated funding
deficiency" as such term is defined in ERISA; and (d) notify Bank promptly upon
receipt by any Borrower of any notice of the institution of any proceeding or
other action which is likely to result in the termination of any Plan.
13.9 Bank Accounts. Borrowers will maintain their operating
accounts, main disbursement accounts, investment accounts, cash management
accounts and deposit accounts with Bank, unless otherwise agreed by Bank in
writing. The Borrowers will notify Bank in writing and on a continuing basis, of
all deposit accounts, investment accounts and certificates of deposit (including
the numbers thereof) maintained with or purchased from any other depository
institutions.
13.10 Maintenance of Management. The Borrowers will cause their
business to be managed by the following persons in the positions described below
or such other persons (serving in such positions) as may be reasonably
satisfactory to the Bank:
Person Position
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Chairman
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Chief Financial Officer
13.11 Transactions with Affiliates. Borrowers will cause all of
their Indebtedness at any time owed to any Subsidiary, Affiliate, shareholder,
director and officer to be subordinated in all respects to all Obligations and
will not make any payments thereon, except as approved by Bank in writing.
13.12 Additional Documents and Future Actions. The Borrowers
will, at their sole cost, (i) take such actions and provide Bank from time to
time with such agreements, financing statements and additional instruments,
documents or information as the Bank may in its reasonable discretion deem
necessary or advisable to perfect, protect, maintain or enforce its Lien in the
Collateral, to permit Bank to protect or enforce its Lien in the Collateral, or
to carry out the terms of the Loan Document, and (ii) execute on each Borrower's
behalf and expense (x) all
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such security agreements (or amendments to this Agreement) as shall be necessary
to evidence the grant to Bank of a security interest in and to all Commercial
Tort Claims if, and to the extent, they arise hereafter, and (y) all pleadings
and other documents as Bank may reasonably deem necessary or advisable in
connection with any Commercial Tort Claim. The Borrowers hereby authorize and
appoint Bank as their attorney-in-fact, with full power of substitution, to take
such actions as Bank may reasonably deem advisable to protect the Collateral and
its interests thereon and its rights hereunder, to execute on any Borrower's
behalf (if necessary) and to file at the Borrowers' expense financing statements
or applications for registration and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected or published Lien in the Collateral, and to execute on
any Borrower's behalf such other documents and notices as Bank may reasonably
deem advisable to protect the Collateral and its interests therein and its
rights hereunder. Such power being coupled with an interest is irrevocable, the
Borrowers irrevocably authorize the filing of financing statements or
applications for registration by Bank describing the Collateral, the filing of
initial financing statements in the jurisdiction of any Borrower's legal
formation and existence, the filing of a carbon, photographic or other copy of
this Agreement, or of a financing statement, as a financing statement and agree
that such filing is sufficient as a financing statement.
13.13 Title to Equipment. The Borrowers will promptly have Bank's
Lien noted on any and all evidences of ownership of, certificates of title, or
applications for title to any items of Equipment, and will promptly deliver to
Bank the originals thereof.
13.14 Taxes. The Borrowers will cause all assessments and taxes,
whether real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against any Borrower or any of their property to be paid in full,
before delinquency or before the expiration of any extension period. The
Borrowers shall make due and timely payment or deposit of all such federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Bank, on demand, appropriate certificates attesting
to the payment thereof or deposit with respect thereto. The Borrowers will make
timely payment or deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Bank with proof reasonably satisfactory to Bank indicating that
the Borrowers have made such payments or deposits. Notwithstanding the
foregoing, Borrowers may protest a tax payment (other than payroll taxes or
taxes that are subject of a United States tax Lien), provided that (i) a reserve
with respect to such obligation is established under the Revolving Credit
Facility in an amount that is reasonably satisfactory to Bank, (ii) any such
protest is instituted and diligently prosecuted by such Borrower in good faith,
and (iii) Bank has determined in good faith that while any such protest is
pending, there would be no impairment of the enforceability, validity, or
priority of any of the Liens in favor of Bank in and to the Collateral or the
rights of Bank under the Loan Documents.
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13.15 Leases. The Borrowers will pay when due all rents and other
amounts payable under any leases to which any Borrower is a party or by which
any Borrower's properties and assets are bound.
13.16 Notices. Borrowers will promptly notify Bank of (a) any
action or proceeding brought against any Borrower wherein such action or
proceeding would, if determined adversely to such Borrower result in liability
of any Borrower in excess of $50,000 in the aggregate, (b) the occurrence of any
Default or Event of Default, (c) the failure of the Borrowers to observe any of
their undertakings under the Loan Documents, (d) the occurrence of any Material
Adverse Change, (e) any new locations to be added as an additional Inventory
Location; (f) the creation of any new material inventions or other events
related to the intellectual property of any Borrower; (g) the occurrence of any
casualty loss related to the Collateral: (h) the receipt of any notice of the
institution or proceeding or other action which may result in the termination of
any Plan; and (i) any material change in the management roles of ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. as described in Section
13.10 or any material change in any other senior management employees of
Borrowers.
13.17 Assignment of Claims Act. At the request of Bank, each
Borrower will immediately execute any documents or instruments and take such
steps or actions as required by Bank in its sole discretion so that all monies
due or to become due under any contract with the U.S., the District of Columbia
or any other Governmental Authority, will be assigned to Bank and notice given
thereof in accordance with the requirements of the Assignment of Claims Act of
1940, as amended, or any other laws, rules or regulations or relating to the
assignment of any such contract that monies due to or to become due thereunder.
Each Borrower hereby irrevocably makes, constitutes, and appoints Bank (and any
of Bank's designated officers, employees or agents) as its true and lawful
attorney-in-fact, with full power of substitution, with power to sign its name
and to take such actions necessary to execute the assignment documentation, in
its name or the name of Bank, as Bank may determine, without notice to such
Borrower and at the Borrowers' expense.
13.18 Commercial Tort Claims. In the event any Borrower becomes
the plaintiff (or any other claimant) with respect to any Commercial Tort Claim,
such Borrower shall promptly (but in any event within fifteen (15) days after
the Borrower initiates steps to pursue such claim) notify Bank as to the
existence of all such Commercial Tort Claims, detailing to the best of
Borrowers' knowledge or best estimation (a) the parties to the claim, (b) the
amount in controversy, (c) the location and caption of all litigation filed with
respect to the claim, (d) the status of the claim, and (e) all such other
information relating thereto as Bank may reasonably require. Upon the request of
Bank, the applicable Borrower shall promptly execute all such documents,
agreements, instruments and financing statements as shall be reasonably required
by Bank to grant to Bank a perfected, first priority security interest in each
such Commercial Tort Claim.
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13.19 Instruments; Promissory Notes. The Borrowers will cause any
instruments or notes received by or payable to such Borrower to be delivered to
Bank appropriately endorsed to the order of Bank.
13.20 Future Leases. The Borrowers will deliver to Bank, promptly
after the execution by a Borrower, as lessee, of any Lease, an executed copy
thereof.
14. NEGATIVE COVENANTS. The Borrowers, jointly and severally,
covenant and agree that, so long as this Agreement has not been terminated and
until full and final payment of the Obligations, and unless Bank shall otherwise
consent in writing, each Borrower shall comply with the following:
14.1 Limitation on Sale and Leaseback. The Borrowers will not
enter into any arrangement whereby any of them will sell or transfer any real
property or improvements thereon or other fixed assets owned by any of them and
then or thereafter rent or lease as lessee such property, improvements or assets
or any part thereof which any of them shall intend to use for substantially the
same purposes as the property sold or transferred.
14.2 Limitation on Indebtedness. The Borrowers will not have at
any time outstanding to any Person other than Bank, any Indebtedness for
borrowed money, Capitalized Lease Obligations, or any outstanding letters of
credit, except
(a) existing Indebtedness for borrowed money and
Capitalized Lease Obligations described on Schedule 14.2;
(b) future purchase money Indebtedness and Capitalized
Lease Obligations not to exceed $750,000 in the aggregate principal amount on a
non-cumulative basis during any fiscal year; and
(c) intercompany loans, provided that any loans made by a
Borrower to another Borrower must be subordinated to the Obligations on terms
and conditions acceptable to the Bank.
Except as otherwise expressly provided under this Agreement, no
Borrower may make any loans to any other Borrower or to any Affiliate of any
Borrower.
14.3 Loans. The Borrowers will not make or have outstanding any
loans or advances in the nature of loans to any Person including, without
limitation, any officer, shareholder, director, employee or Affiliate of such
Borrower, except (i) loans made by Borrowers in the ordinary course of their
Businesses for business expense advances and other related items, (ii) loans by
Borrowers to another Borrower, and (iii) loans made to employees of Borrowers
not to
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exceed $300,000 in the aggregate at any time. Any loans made by Borrowers to
another Borrower must be subordinated to the Obligations on terms and conditions
acceptable to the Bank.
14.4 Investments. The Borrowers will not have or make any
investments in all or any portion of the capital stock or securities of any
Person, or any loans, advances or extensions of credit to any Person, except
investments listed on Schedule 14.4 attached hereto.
14.5 Guaranties. The Borrowers will not directly or indirectly
guarantee, endorse (other than for collection or deposit in the ordinary course
of business), discount, sell with recourse or for less than the face value or
agree (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or otherwise become directly or indirectly liable for, or agree
(contingently or otherwise) to supply or advance funds (whether by loan, stock
purchase, capital contribution or otherwise) in respect of, any Indebtedness,
obligations or liabilities of any Person, except as Borrowers may agree to
allocate liability for the Obligations among themselves and guaranty each
others' obligations.
14.6 Disposition of Assets. The Borrowers will not sell, lease,
transfer, or otherwise dispose any of their Property, except certain Property of
Borrowers with an aggregate book value not to exceed $100,000 in any fiscal
year.
14.7 Merger; Consolidation; Business Acquisitions; Subsidiaries.
The Borrowers will not (a) merge into or consolidate with any Person (other than
another Borrower), (b) acquire any portion of the Capital Stock of any Person
(other than BHL) or a material portion of assets or business of any Person, or
the operating business or division of any Person, or any Property not used or
useful in the operation of their Businesses, (c) permit any Person to merge into
any of them (other than another Borrower), (d) form any Subsidiaries, (e) change
any of their respective states of formation or incorporation, (f) materially
change the principal nature of their business or engage in any business other
than the Business, (g) permit any Subsidiary to engage in any business activity,
acquire any assets or, acquire any ownership or investment interests in any
Person, without the prior written consent of Bank and (h) change any of their
respective fiscal year ends.
14.8 Liens. The Borrowers will not create, incur or permit to
exist any Lien of any kind on their property or assets, whether now owned or
hereafter acquired, or upon any income, profits or proceeds therefrom, except:
(a) Liens held by Bank;
(b) Deposits made in the ordinary course of business (i) in
connection with worker's compensation, unemployment insurance, social security
and other like
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laws or (ii) to secure the performance of statutory obligations, not incurred in
connection with either (A) the borrowing of money or (B) the deferred purchase
price of goods or Inventory;
(c) Encumbrances consisting of zoning restrictions,
easements, reservations, servitudes, restrictions on the use of real property or
minor irregularities of title thereto, none of which impairs the use of such
property by any Borrower in the operation of its business;
(d) Liens listed on Schedule 14.8 attached hereto.
The Borrowers shall not enter into any agreement with any other Person
which shall prohibit the Borrowers from granting, creating or suffering to
exist, or otherwise restrict in any way (whether by covenant, by identifying
such event as a default under such agreement or otherwise) the ability of the
Borrowers to grant, create or suffer to exist, any lien, security interest or
other charge or encumbrance upon or with respect to any of their assets in favor
of the Bank.
14.9 Letters of Credit. The Borrowers will not apply for or
obtain any letters of credit, except Merchandise Letters of Credit or Standby
Letters of Credit issued by Bank.
14.10 Insurance. The Borrowers shall not take out separate
insurance concurrent in form or contributing in the event of casualty loss with
that required to be maintained under Section 13.6 unless Bank is named as loss
payee (with a lender's loss payable endorsement). The Borrowers shall promptly
notify Bank whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and originals of such policies shall be provided promptly to Bank.
14.11 Default Under Other Indebtedness. The Borrowers will not
permit any of their Indebtedness in excess of $100,000 to be in default. If any
Indebtedness of the Borrowers is declared or becomes due and payable before its
expressed maturity by reason of default or otherwise or to the knowledge of any
Borrower, the holder of any such Indebtedness shall have the right (or upon the
giving of notice or the passage of time, or both, shall have the right) to
declare such Indebtedness to be so due and payable, the Borrowers will promptly
give Bank written notice of such declaration, acceleration or right of
declaration.
14.12 Transactions with Affiliates. Except for the transactions
described on Schedule 12.21, the Borrowers will not enter into or conduct any
transaction with any Affiliate (other than another Borrower) without the prior
written consent of Bank. Borrowers will only enter into or conduct transactions
with Affiliates on terms which are reasonable and customary for arms-length
transactions between parties who are not affiliated.
-51-
14.13 Name or Chief Executive Address Change. The Borrowers will
not change their names, FEIN numbers, state of organization or chief executive
addresses except upon thirty (30) days prior written notice to Bank and delivery
to Bank of any items reasonably requested by Bank to maintain perfection and
priority of Bank's first priority Lien in the Collateral and access to the
Borrowers' Books, including without limitation, new UCC-1 financing statements
and Collateral Access Agreements.
14.14 Change in Location of Collateral. Borrowers will not change
the location at which any of their Inventory, Equipment or other personal
property is located except with coincident written notice to Bank and, provided
that Borrowers comply with all of the following conditions:
(a) The applicable Borrower executes and delivers to Bank
such UCC-1 financing statements covering all Inventory and related assets of the
applicable Borrower to be located at such new location(s) as may be reasonably
required by Bank to perfect Bank's Lien in such Inventory and related assets.
(b) Bank receives written confirmation that such new UCC-1
financing statements have been filed in the appropriate offices required to
perfect Bank's Lien at such new location(s).
(c) Bank receives a search report from a reputable search
company confirming that there are no other Liens encumbering any of such
applicable Borrower's assets at such new location(s), except the Lien in favor
of Bank.
(d) Bank receives a copy of the lease, sub-lease, warehouse
agreement or similar agreement entered into by the applicable Borrower with the
owner, lessor or operator of the new location(s).
(e) Bank receives evidence reasonably satisfactory to Bank
that all assets of the applicable Borrower at such new location(s) are covered
by the insurance coverage required under Section 13.6.
(f) Bank receives a Collateral Access Agreement from the
owner/lessor of the new location in form and content reasonably acceptable to
Bank.
14.15 Material Adverse Contracts. The Borrowers will not become
or be a party to any contract or agreement which has a materially adverse impact
on any Borrower's ability to perform under this Agreement or any other Loan
Document.
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14.16 Restrictions on Use of Proceeds. Borrowers will not carry
or purchase with the proceeds of the Loans any "margin security" within the
meaning of Regulations U, T or X of the Board of Governors of the Federal
Reserve System.
14.17 Subordinated Indebtedness. Borrowers (a) will not make any
payments on the Subordinated Indebtedness except as permitted under the
Subordination Agreements, and (b) will not breach any of the terms of any
Subordination Agreements.
14.18 Prepayments; Amendments and License Agreements. The
Borrowers will not:
(a) Prepay, redeem, retire, defease, purchase, or otherwise
acquire any Indebtedness for borrowed money owing to any third Person, other
than the Obligations in accordance with this Agreement and debt retired or
repaid as of the Closing Date;
(b) Directly or indirectly, amend, modify, alter, increase,
or change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning any Indebtedness for
borrowed money to make such terms or conditions more onerous or expensive for
the Borrowers;
(c) Amend, modify or waive any material term or provision
of their respective Governing Documents in a manner materially adverse to the
Borrowers or Bank; or
(d) Amend, modify or waive any term or provision of any of
Licenses.
14.19 Prohibited Transactions Under ERISA. The Borrowers will not
directly or indirectly:
(a) engage in any prohibited transaction which is
reasonably likely to result in a civil penalty or excise tax described in
Section 406 of ERISA or 4975 of the IRC for which a statutory or class exemption
is not available or a private exemption has not been previously obtained from
the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the IRC), whether or not waived;
(c) fail to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any Benefit
Plan;
-53-
(d) terminate any Benefit Plan where such event would
result in any liability of any Borrower, any Subsidiary of Borrower or any ERISA
Affiliate under Title IV of ERISA;
(e) fail to make any required contribution or payment to
any Multiemployer Plan;
(f) fail to pay any required installment or any other
payment required under Section 412 of the IRC on or before the due date for such
installment or other payment;
(g) amend a Plan resulting in an increase in current
liability for the plan year such that any Borrower, any Subsidiary of Borrower
or any ERISA Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the IRC; or
(h) withdraw from any Multiemployer Plan where such
withdrawal is reasonably likely to result in any liability of any such entity
under Title IV of ERISA.
14.20 Licenses. No Borrower will enter into any license, royalty
or similar agreements regarding any patents, trademarks, tradenames, copyrights
or other General Intangibles owned by such Borrower, which grants any exclusive
rights to use such General Intangibles to any Person.
14.21 Trademark and Tradename Licenses. No Borrower will enter
into any license or similar right to use or royalty agreement with respect to
any trademark or tradename owned by such Borrower (other than with another
Borrower) without the prior written consent of Bank.
14.22 Equipment Becoming Fixture. Borrowers will use their best
efforts to prevent any item of equipment owned by such Borrower to become a
fixture to real estate or an accession to other property, except for equipment
which may become a trade fixture to premises leased by such Borrower but with
respect to which the landlord has waived any right of ownership or security
interest.
15. FINANCIAL COVENANTS. Except with the prior written consent of
Bank, Borrowers will comply with the following:
15.1 Current Ratio. Borrowers will maintain a Current Ratio of
not less than 1.55 to 1.0 for the month ending June 30, 2002 and for each fiscal
month end thereafter.
15.2 Funded Debt to EBITDA Ratio. Borrowers will maintain a
ratio of consolidated Funded Debt to consolidated EBITDA of not more than (a)
2.85 to 1.0 for the
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fiscal quarter ending March 31, 2002 and for each fiscal quarter end thereafter
through and including September 30, 2002, and (b) 2.35 to 1.0 for the fiscal
quarter ending December 31, 2002 and for each fiscal quarter end thereafter.
15.3 Fixed Charge Coverage Ratio. Borrowers will maintain a Fixed
Charge Coverage Ratio of not less than 1.15 to 1.0 for the fiscal quarter ending
March 31, 2002 and for each fiscal quarter end thereafter. In addition, if
Borrowers fail to maintain a Fixed Charge Coverage Ratio of more than 1.25 to
1.0 for any fiscal quarter, Borrowers agree to pay to Bank a fee in the amount
of $7,500 for such fiscal quarter, which fee will be due and payable at the end
of the applicable fiscal quarter.
15.4 Changes to Financial Covenants. Bank may condition extension
of the Revolving Credit Facility after the Contract Period upon revision of the
foregoing financial covenants, as Bank in its sole discretion may require.
15.5 Most Favored Lender. Borrowers agree promptly to notify Bank
of any agreement for Indebtedness for borrowed money to which any Borrower is a
party or under which it is obligated and to provide Bank with a copy of such
agreement. If such agreement contains or at any time is amended to contain
financial covenants more restrictive than those contained in this Section 15,
upon Bank's request, Borrowers agree to amend this Agreement accordingly so that
the covenants contained herein are substantially the same as those contained in
such other agreements for Indebtedness for borrowed money.
16. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS. The
Borrowers will maintain books of record and account in which full, correct and
current entries in accordance with GAAP will be made of all of their dealings,
business and affairs, and the Borrowers will deliver to Bank the following:
16.1 Annual Statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of Borrowers and their
Subsidiaries:
(a) the audited, consolidated and consolidating income and
retained earnings statements of Borrowers and their Subsidiaries for such fiscal
year,
(b) the audited, consolidated and consolidating balance
sheet of Borrowers and their Subsidiaries as at the end of such fiscal year, and
(c) the audited, consolidated and consolidating statement of
cash flow of Borrowers and their Subsidiaries for such fiscal year,
setting forth in comparative form the corresponding figures as at the end of the
previous fiscal year, all in reasonable detail. The foregoing statements and
balance sheets shall be prepared in accordance
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with GAAP and shall be audited by independent certified public accountants of
recognized standing acceptable to Bank in the reasonable exercise of its
discretion with respect to which such accountants shall deliver their
unqualified opinion which shall not include any "going-concern" opinion.
16.2 Projections and Cash Flow. Within forty-five (45) following
the end of each calendar year, projections of profit and loss statements, cash
flows and balance sheets of Borrowers and their Subsidiaries prepared on a
month-by-month basis for the next succeeding twelve (12) months, prepared by the
Responsible Officer. Borrowers have furnished to Bank initial projections
containing the information required by this Section. Borrowers represent and
covenant that (a) the initial projections required by this Section have been
prepared by the Responsible Officer and represent the best available good faith
estimate of Borrowers regarding the course of Borrowers' businesses for the
periods covered thereby; (b) all future projections required by this Section
shall be prepared by or under the direction of the Responsible Officer and shall
represent the best available good faith estimate of Borrowers regarding the
course of Borrowers' business for the periods covered thereby; (c) the
assumptions set forth in the initial projections are and the assumptions set
forth in the future projections delivered hereafter shall be in the Responsible
Officer's good faith belief reasonable and realistic based on then current
economic conditions; (d) Borrowers know of no reason why Borrowers should not be
able to achieve the performance levels set forth in the initial projections and
Borrowers shall have no knowledge at the time of delivery of future projections
of any reason why Borrowers are not likely to be able to meet the performance
levels set forth in said projections; and (e) Borrowers have sufficient capital
as may be required for their ongoing business and to pay their existing and
anticipated debts as they mature.
16.3 Quarterly Statements. As soon as available and in any event
within forty-five (45) days after the close of each calendar quarter;
(a) the consolidated and consolidating income and retained
earnings statements of Borrowers and their Subsidiaries for such quarter,
(b) the consolidated and consolidating balance sheet of
Borrowers and their Subsidiaries as of the end of such quarter, and
(c) the consolidated and consolidating statement of cash
flow of Borrowers and their Subsidiaries for such quarter,
setting forth in comparative form the corresponding figures as of the end of the
corresponding quarter of the previous fiscal year (if applicable) and the
projected figures based upon the projections required under Section 16.2, all in
reasonable detail, subject to year end adjustments and certified by the
Responsible Officer to be, to the best of his knowledge, accurate in all
material respects and to have been prepared in accordance with GAAP.
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16.4 Collateral Reporting. Agent Borrower, for each Borrower,
shall provide the Bank with the following documents at the following times in
form satisfactory to the Bank:
(a) by the 20/th/ day of each month (with respect to the
previous month), or more frequently if requested by Bank:
(i) an aging of the Borrower's accounts receivable.
(ii) an aging of the Borrower's accounts payable.
(iii) a reconciliation to the previous month's aging of
the Borrower's accounts and to the Borrower's general ledger.
(b) upon request, a statement of the balance of each of the
intercompany Accounts.
(c) other reports as to the Collateral of the Borrowers as
the Bank shall reasonably request from time to time.
(d) with the delivery of each of the foregoing, a
certificate of the Agent Borrower executed by an officer thereof certifying as
to the accuracy and completeness of the foregoing. If any of the Borrowers'
records or reports of the Collateral are prepared by an accounting service or
other agent, the Borrowers hereby authorize such service or agent to deliver
such records, reports, and related documents to the Bank.
16.5 Tax Returns. If requested by Bank, copies of each Borrower's
federal income tax returns, and any amendments thereto.
16.6 Audit Reports. Promptly upon receipt thereof, one copy of
each other report submitted to any Borrower, by independent accountants,
including management letters, "comment" letters, in connection with any annual,
interim or special audit report made by them of the Books of any Borrower.
16.7 Reports to Governmental Agencies and Other Creditors. With
reasonable promptness, copies of all such financial reports, statements and
returns which any Borrower shall file with any federal or state department,
commission, board, bureau, agency or instrumentality and any report or statement
delivered by any Borrower to any supplier or other creditor in connection with
any payment restructuring.
16.8 SEC Reporting. With reasonable promptness, all 10-Q
Quarterly Reports, 10-K Annual Reports, 8-K Current Reports, any other filings
made by Borrowers
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with the Securities and Exchange Commission, as soon as the same are filed, or
any other information that is provided by Borrowers to their shareholders.
16.9 Requested Information. With reasonable promptness, all such
other data and information in respect of the condition, operation and affairs of
any Borrower as Bank may reasonably request from time to time.
16.10 Compliance Certificates. Within the periods provided in
Sections 16.1 and 16.3 above, a certificate from the Responsible Officer (a)
stating that Borrowers have observed, performed and complied with each and every
undertaking contained herein, (b) setting forth the information and computations
(in sufficient detail) required in order to establish whether Borrowers were
operating in compliance with the financial covenants in Section 15 of this
Agreement, (c) certifying that as of the date of such certification, there does
not exist any Default or Event of Default, and (d) certifying as to the state of
organization of each Borrower. Such certificate will be in the form of Exhibit A
attached hereto.
16.11 Accountant's Certificate. Simultaneously with the delivery
of the certified financial statements required by Section 16.1, copies of a
certificate of the accountants who audited such statements stating that (a) they
have checked the computations delivered by the Borrowers in compliance with
Section 16.1, and (b) in making the examination necessary for their audit or
review of such financial statements for such year, nothing came to their
attention of a financial or accounting nature that caused them to believe that
(i) any Borrower was not in compliance with the terms, covenants, provisions or
conditions of any of the Loan Documents, or (ii) there shall have occurred any
condition or event which would constitute an Event of Default, or, if so,
specifying in such certificate all such instances of non-compliance and the
nature and status thereof. Such certificate shall not include any
"going-concern" opinion of the accountants.
17. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR LETTER OF CREDIT.
The obligation of (a) Bank to make the initial Advance or (b) Bank to issue the
initial Letter of Credit is subject to the fulfillment, to the reasonable
satisfaction of Bank, of each of the following conditions on or before the
Closing Date. All of such agreements, documents and other items must be in form,
content and all other respects reasonably satisfactory to Bank.
17.1 Searches. Bank shall have received copies of record
searches (including UCC searches, patent searches, trademark searches, copyright
searches and judgments, suits, bankruptcy, litigation, tax and other lien
searches) against each Borrower.
17.2 UCC-1 Filings. Bank shall have received confirmation from a
service organization retained by Bank to file financing statements that such
filings have been made in all relevant jurisdictions.
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17.3 Executed Loan Documents. Bank shall have received each of
the following documents, duly executed, and each such document shall be in full
force and effect:
(a) the Notes;
(b) the Disbursement Letter;
(c) each of the Subordination Agreements;
(d) the Environmental Agreement; and
(e) any and all other Loan Documents.
17.4 Request for Advance. Bank shall have received a request for
advance from the Agent Borrower.
17.5 Authorizing Resolutions. Bank shall have received a
certificate from the Secretary of each Borrower attesting to the resolutions of
each Borrower's Board of Directors authorizing its execution, delivery, and
performance of this Agreement and the other Loan Documents to which each
Borrower, respectively, is a party and authorizing specific officers of such
Borrower to execute the same.
17.6 Governing Documents. Bank shall have received copies of
each Borrower's Governing Documents, as amended, modified, or supplemented to
the Closing Date, certified by the Secretary of such Borrower.
17.7 Material Agreements. Bank shall have received copies of all
material agreements, leases and other documents related to the Borrowers as
reasonably requested by Bank.
17.8 Good Standing Certificates. Bank shall have received
certificates of status with respect to each Borrower, each dated within 45 days
of the Closing Date, such certificates to be issued by the appropriate officer
of each jurisdiction in which such Borrower is required to be qualified or
licensed which certificates shall indicate that such Borrower is in good
standing or subsisting, as applicable, in such jurisdictions.
17.9 Insurance. Bank shall have received loss payee endorsements
and evidence of insurance, together with the endorsements thereto, as are
required by Section 13.6.
17.10 Opinions of Counsel. Bank shall have received opinions of
the Borrowers' general counsel.
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17.11 Interest Rate Protection Agreement. Bank shall have
received a fully executed interest rate protection agreement.
17.12 Tax Returns. Bank shall have received satisfactory evidence
that all tax returns required to be filed by Borrowers have been timely filed
and all taxes upon Borrowers or their properties, assets, income, and franchises
(including real property taxes and payroll taxes) have been paid prior to
delinquency.
17.13 Licenses, Approvals, Etc. Bank shall have received copies
of all licenses, approvals, consents, authorizations and filings of Borrowers
required or necessary for the operation of their Business as reasonably
requested by Bank.
17.14 No Material Adverse Change. No Material Adverse Change
shall have occurred from the date of financial information and projections
originally provided to Bank;
17.15 Fees. All fees and expenses payable under the Loan
Documents on the Closing Date and as of the funding of the Loans or issuing such
Letter of Credit shall have been paid.
17.16 Subordination. Bank shall have received evidence that all
shareholder and Affiliate debt owed by Borrowers is subordinated to all
Obligations on terms and conditions acceptable to the Bank.
17.17 Machinery and Equipment Appraisal. Bank shall have received
an appraisal of Borrowers' machinery and equipment prepared by an independent
appraiser, satisfactory to Bank, and stating an ordinary liquidation value of
not less than $2,708,000 and otherwise in form and content acceptable to the
Bank.
17.18 Real Estate Appraisal. Bank shall have received an
appraisal of Borrowers' Mortgaged Property prepared by an independent appraiser,
satisfactory to Bank, and stating a fair market value of not less than
$3,500,000 and otherwise in form and content acceptable to the Bank.
17.19 Audit. Bank shall have received the results of an audit of
Borrowers' accounts receivables and inventory in form, content and amount
acceptable to the Bank.
17.20 Releases. UCC-3 terminations and such other releases of all
prior Liens, as have been requested by Bank, shall be delivered to Bank on the
Closing Date in appropriate form with all signatures and other information
needed for recordation.
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17.21 Other Documents. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded.
By completing the closing hereunder, or by making advances hereunder,
Bank does not thereby waive a breach of any warranty or representation made by
the Borrowers hereunder or any agreement, document, or instrument delivered to
Bank or otherwise referred to herein (except if specifically waived by Bank in
writing), and any claims and rights of Bank resulting from any breach or
misrepresentation by any Borrower are specifically reserved by Bank.
18. CONDITIONS PRECEDENT TO ALL ADVANCES AND LETTERS OF CREDIT. In
addition to, but not in limitation of, any other conditions set forth in this
Agreement, the obligation of (a) Bank to make any Advance, or (b) Bank to issue
any Letter of Credit is subject to the fulfillment, to the satisfaction of Bank,
of each of the following conditions:
18.1 Representations and Warranties. The representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date).
18.2 No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on the date of such extension of
credit, nor shall either result from the making thereof.
18.3 No Injunction or Order. No injunction, writ, restraining
order, or other order of any nature prohibiting, directly or indirectly, the
extending of such credit shall have been issued and remain in force by any
governmental authority against any Borrower or any of their Affiliates.
18.4 No Bankruptcy. No proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt, or
receivership law shall have been filed by or against any Borrower.
18.5 Request for Advance. Bank shall have received a request for
advance from the Agent Borrower.
19. DEFAULT AND REMEDIES.
19.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event or Events of Default hereunder:
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(a) The failure of Borrowers to pay when due and payable or when
declared due and payable, any portion of the Obligations, whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees, costs, indemnities, or other
amounts constituting Obligations and with respect to payments of fees, costs or
indemnities such failure continues unremedied for a period of three (3) days
after the date such payment is first due;
(b) The failure of any Borrower to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between any Borrower and Bank which does not otherwise specifically constitute
an Event of Default under another subsection of this Section 18.1 and such
failure continues unremedied for a period of fifteen (15) days after the earlier
of (i) notice from Bank to Agent Borrower of the existence of such failure, or
(ii) any Responsible Officer knows of the existence of such failure, provided
that, in the event that such failure is incapable of remedy or consists of a
default of any of the covenants in Sections 13.3, 13.6 or 13.7, the negative
covenants set forth in Article 14 or any of the financial covenants set forth in
Article 15, or was willfully caused or permitted by any Borrower, the Borrowers
shall not be entitled to any notice or grace hereunder;
(c) The failure of any Borrower to pay any Indebtedness for
borrowed money due to any third Person or Capitalized Lease Obligations or the
existence of any other event of default under any loan, security agreement,
mortgage, Capitalized Lease or other agreement pertaining thereto binding any
Borrower, after the expiration of any notice and/or grace periods permitted in
such documents;
(d) The adjudication of any Borrower as a bankrupt or insolvent,
or the entry of an Order for Relief against any Borrower or the entry of an
order appointing a receiver or trustee for any Borrower of any of their property
or approving a petition seeking reorganization or other similar relief under the
Bankruptcy Code or other similar laws of the U.S. or any state or any other
competent jurisdiction;
(e) A proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt, debt moratorium or
receivership law is filed by or (unless dismissed within 60 days) against any
Borrower, or any Borrower makes an assignment for the benefit of creditors, or
any Borrower takes any action to authorize any of the foregoing;
(f) The suspension of the operation of any Borrower's Business
for a period of thirty (30) consecutive days which results in a Material Adverse
Effect;
(g) Any Borrower becomes unable to meet its debts as they mature
or fall due, or the admission in writing by any Borrower to such effect, or any
Borrower
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calling any meeting of all or any material portion of their creditors for the
purpose of debt restructure or moratorium;
(h) All, or any part of the Collateral or the assets of any
Borrower are attached, seized, subjected to a writ or distress warrant, or
levied upon, or come within the possession or control of any, receiver, trustee,
custodian or assignee for the benefit of creditors or become subject to any Lien
which is not otherwise permitted under Section 14.8;
(i) The entry of a final judgment for the payment of money
against any Borrower in excess of $100,000 which, within ten (10) days after
such entry, shall not have been discharged or execution thereof stayed pending
appeal or shall not have been discharged within five (5) days after the
expiration of any such stay;
(j) Any representation or warranty of in any of the Loan
Documents is discovered to be untrue in any material respect or any statement,
certificate or data furnished by any Borrower pursuant hereto is discovered to
be untrue in any material respect as of the date as of which the facts therein
set forth are stated or certified;
(k) Any Borrower voluntarily or involuntarily dissolves or is
dissolved, terminates or is terminated;
(l) Any Borrower is enjoined, restrained, or in any way prevented
by the order of any court or any administrative or regulatory agency, the effect
of which order restricts any Borrower from conducting all or any material part
of its Business for a period of thirty (30) consecutive days which results in a
Material Adverse Effect;
(m) A breach by any Borrower occurs under any material agreement,
document or instrument, whether heretofore, now or hereafter existing between
any Borrower and any other Person and such Person accelerates or otherwise
exercises its rights and remedies against any Borrower which results in a
Material Adverse Effect.
(n) A Material Adverse Change occurs;
(o) A Change of Control occurs;
(p) Any material uninsured damage to, or loss, theft, or
destruction of, any of the Collateral occurs;
(q) Any strike, lockout, labor dispute, embargo, condemnation,
act of God or public enemy, or other casualty loss occurs resulting in the
cessation or substantial curtailment of production or other revenue producing
activities at any facility of any Borrower for more than thirty (30) consecutive
days which results in a Material Adverse Effect;
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(r) The loss, suspension, revocation or failure to renew any
license or permit now held or hereafter acquired by any Borrower, which loss,
suspension, revocation or failure to renew is likely to result in a Material
Adverse Change;
(s) Any breach by any Borrower under any of the
Subordination Agreements;
(t) The validity or enforceability of this Agreement, or any
of the Loan Documents, is contested by any Borrower, or any Borrower denies that
they have any or any further liability or obligation hereunder or thereunder; or
(u) The indictment or threatened indictment of any Borrower
under any criminal statute, or the commencement or threatened commencement of
criminal or civil proceedings against any Borrower pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
any property of any Borrower, or any Borrower engages or participates in any
"check kiting" activity regardless of whether a criminal investigation has been
commenced.
19.2 Remedies. Upon the occurrence and during the continuance of
an Event of Default, or at any time thereafter, Bank may, at its election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by the Borrowers:
(a) Declare the entire unpaid principal of the Loans, all
other Obligations (including without limitations all contingent reimbursement
obligations under any Letters of Credit, or any part thereof), all interest
accrued thereon, all fees due hereunder and all other obligations of Borrowers
to Bank hereunder or under any other Loan Document otherwise arising immediately
due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between any Borrower and Bank;
(c) Cease issuing Letters of Credit;
(d) Convert any Loans earning interest at LIBOR Rate plus
Applicable Margin to Loans earning interest at the LMIR Rate;
(e) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Bank, but without
affecting the Bank's rights and security interests in the Collateral and without
affecting the Obligations;
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(f) Reduce the amount of the Revolving Credit Facility;
(g) Increase the applicable interest rates up to the Default
Rate;
(h) Hold, as cash collateral, any and all balances and
deposits of the Borrowers held by Bank to secure the full and final repayment of
all of the Obligations;
(i) Enter the premises occupied by any of the Borrowers and
take possession of the Collateral and any records relating thereto; and/or
(j) Exercise each and every right and remedy granted to it
under the Loan Documents, under the Uniform Commercial Code and under any other
applicable law or at equity.
If an Event of Default occurs under Sections 19.1(d) or 19.1(e), all
of the Obligations shall become immediately due and payable.
19.3 Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event of
Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including attorneys' fees;
and
(b) Second: to the payment of the Obligations (with the
Borrowers remaining liable for any deficiency) as Bank may elect; and
(c) Third: the balance (if any) of such proceeds shall be
paid, subject to any duty imposed by law, or otherwise to whomsoever shall be
entitled thereto.
19.4 Sale or Other Disposition of Collateral. After the
occurrence of an Event of Default, (a) the sale, lease or other disposition of
the Collateral, or any part thereof, by Bank may be for cash, credit or any
combination thereof, and Bank may purchase all or any part of the Collateral at
public or, if permitted by law, private sale, and in lieu of actual payment of
such purchase price, may set-off the amount of such purchase price against the
Obligations then owing; (b) any sales of the Collateral may be adjourned from
time to time with or without notice; (c) Bank may cause the Collateral to remain
on any Borrower's premises or otherwise or to be removed and stored at premises
owned by other persons, at Borrowers' expense, pending sale or other disposition
of the Collateral; (d) any Borrower at Bank's request, shall assemble the
Collateral consisting of
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Inventory and tangible assets and make such assets available to Bank at a place
to be designated by Bank; and (e) Bank shall have the right to conduct such
sales on any Borrower's premises, at the Borrowers' expense, or elsewhere, on
such occasion or occasions as Bank may see fit. With respect to any Borrowers'
owned or leased premises, the Borrowers hereby grant Bank a license, effective
upon the occurrence and during the continuance of an Event of Default, and to
the extent not prohibited by the terms of any applicable lease, to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Bank's rights or remedies provided herein, at law, in equity, or
otherwise.
Any notice required to be given by Bank of a sale, lease or other
disposition or other intended action by Bank with respect to any of the
Collateral which is given pursuant to Section 21 below, at least five (5)
Business Days prior to such proposed action, shall constitute fair and
reasonable notice to the Borrowers of any such action.
The net proceeds realized by Bank upon any such sale or other
disposition, after deduction for the expenses of retaking, holding, storing,
transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by Bank in connection therewith and all other costs and
expenses related thereto including reasonable attorney fees, shall be applied in
such order as Bank, in its discretion, elects, toward satisfaction of the
Obligations. Bank shall account to the Agent Borrower for any surplus realized
upon such sale or other disposition, and the Borrowers shall remain liable for
any deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect Bank's
Lien in the Collateral. The Borrowers agree that Bank has no obligation to
preserve rights to the Collateral against any other parties or to clean-up or
otherwise prepare any of the Collateral for sale.
If Bank sells any of the Collateral upon credit, the Borrowers will be
credited only with payments actually made by or on behalf of the purchaser,
received by Bank and applied to the indebtedness owed by such purchaser to Bank.
If the purchaser fails to pay for any of the Collateral, Bank may resell the
Collateral and shall credit Borrowers with such sales proceeds as provided in
this Agreement.
Bank will not be considered to have offered to retain the Collateral
in satisfaction of the Obligations, unless Bank has entered into a written
agreement with the Borrowers to that effect.
Bank is hereby granted a license or other right to use, after the
occurrence and during the continuance of an Event of Default, without charge,
any Borrower's labels, General Intangibles, intellectual property, Equipment,
real estate, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks and advertising matter, or any property
of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale and selling any Inventory or other Collateral and any
Borrower's rights under all contracts, licenses, approvals, permits, leases and
franchise agreements, to the extent assignable, shall inure to Bank's
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benefit; provided however, such license shall not extend to any property of
Borrowers which any Borrower is prohibited by the terms of such agreements
regarding such property from licensing to Bank.
Bank shall be under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of
any Borrower or any other party or against or in payment of any or all of the
Obligations.
19.5 Actions With Respect to Accounts. Each Borrower hereby
irrevocably makes, constitutes, and appoints Bank (and any of Bank's designated
officers, employees or agents) as its true and lawful attorney-in-fact, with
full power of substitution, with power to sign its name and to take any of the
following actions, in its name or the name of Bank, as Bank may determine,
without notice to such Borrower and at the Borrowers' expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) After the occurrence and during the continuance of an
Event of Default, notify all Account Debtors that the Borrowers' Accounts have
been assigned to Bank and that Bank has a Lien therein;
(c) After the occurrence and during the continuance of an
Event of Default, direct all Account Debtors to make payment of all the
Borrowers' Accounts directly to Bank and forward invoices directly to such
Account Debtors;
(d) After the occurrence and during the continuance of an
Event of Default, take control in any manner of any cash or non-cash items of
payment or proceeds of such Accounts;
(e) After the occurrence and during the continuance of an
Event of Default, notify the U.S. Postal Service to change the address for
delivery of mail addressed to any Borrower to such address as Bank may
designate:
(f) After the occurrence and during the continuance of an
Event of Default, have access to any lockbox or postal boxes into which any
Borrower's mail is deposited and receive, open and dispose of all mail addressed
to any Borrower;
(g) After the occurrence and during the continuance of an
Event of Default, take control in any manner of any rejected, returned, stopped
in transit or repossessed goods relating to any Accounts;
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(h) After the occurrence and during the continuance of an Event
of Default, enforce payment of and collect any Accounts, by legal proceedings or
otherwise, and for such purpose Bank may:
(i) Demand payment of any Accounts or direct any Account
Debtors to make payment of Accounts directly to Bank;
(ii) Receive and collect all monies due or to become due
to any Borrower;
(iii) Exercise all of any Borrower's rights and remedies
with respect to the collection of Accounts,
(iv) Settle, adjust, compromise, extend, renew, discharge
or release the Accounts;
(v) Sell or assign the Accounts on such terms, for such
amount and at such times as Bank deems advisable;
(vi) Prepare, file and sign any Borrower's name or names
on any Proof of Claim or similar document in any proceeding filed under federal
or state bankruptcy, insolvency, reorganization or other similar law as to any
Account Debtor;
(vii) Prepare, file and sign any Borrower's name or names
on any Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of
Lien or Mechanic's Lien or similar document in connection with the Collateral;
(viii) Endorse the name of any Borrower upon any chattel
papers, documents, instruments, invoices, freight bills, bills of lading or
similar documents or agreements relating to the Accounts or goods pertaining
thereto or upon any checks or other media of payment or evidences of a security
interest that may come into Bank's possession;
(ix) Sign the name of any Borrower to verifications of
Accounts and notices thereof sent by Account Debtors to such Borrower; or
(x) Take all other actions reasonably necessary or
desirable to protect any Borrower's or Bank's interest in the Accounts.
The Borrowers ratify and approve all acts of said attorneys and agree that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except such attorneys' gross
negligence or willful misconduct. The Borrowers agree to assist
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Bank in the collection and enforcement of their Accounts and not to hinder,
delay or impede Bank in its collection or enforcement of said Accounts.
19.6 Set-Off. Without limiting the rights of Bank under
Applicable Law, the Borrowers grant to Bank and agree that Bank may, unless
prohibited by applicable law, without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any Collateral in
satisfaction of any Obligations after the occurrence and during the continuance
of an Event of Default exercise a right of set-off, a lien against and a
security interest in all property of the Borrowers now or at any time in Bank's
possession in any capacity whatsoever, including but not limited to any balance
of any deposit, trust or agency account, or any other account with Bank as
security for the Obligations. At any time and from time to time following the
occurrence and during the continuance of an Event of Default, Bank may without
notice or demand, set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Bank to or for the credit of any Borrower against any or all
of the Obligations.
19.7 Turnover of Property Held by Bank. The Borrowers irrevocably
authorize any Affiliate of Bank, unless prohibited by Applicable Law, after the
occurrence and during the continuance of an Event of Default, at the request of
Bank and without further notice, to turn over to Bank any property of any
Borrower held by such Affiliate, including without limitation, funds and
securities for any Borrower's account and to debit, for the benefit of Bank, any
deposit account maintained by any Borrower with such Affiliate (even if such
deposit account is not then due or there results a loss or reduction of interest
or the imposition of a penalty in accordance with Applicable Law to the early
withdrawal of time deposits), in the amount requested by Bank up to the amount
of the Obligations, and to pay or transfer such amount or property to Bank for
application to the Obligations.
19.8 Delay or Omission Not Waiver. Neither the failure nor any
delay on the part of Bank to exercise any right, remedy, power or privilege
under the Loan Documents upon the occurrence of any Event of Default or
otherwise shall operate as a waiver thereof or impair any such right, remedy,
power or privilege. No waiver of any Event of Default shall affect any later
Event of Default or shall impair any rights of Bank. No single, partial or full
exercise of any rights, remedies, powers and privileges by the Bank shall
preclude further or other exercise thereof. No course of dealing between Bank
and any Borrower shall operate as or be deemed to constitute a waiver of Bank's
rights under the Loan Documents or affect the duties or obligations of the
Borrowers.
19.9 Remedies Cumulative. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity.
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19.10 Consents, Approvals and Discretion. Whenever the Bank's
consent or approval is required or permitted or any documents are required to be
acceptable to Bank, such consent, approval or acceptability shall be at the sole
and absolute discretion of Bank (except as otherwise specifically provided
herein or in the other Loan Documents). Except as otherwise specifically
provided herein, whenever any determination or act is at Bank's discretion, such
determination or act shall be at Bank's sole and absolute discretion.
19.11 Certain Fees, Costs, Expense Expenditures. The Borrowers
agree to pay on demand all cost and expenses of Bank (the "Bank Expenses"),
including without limitation:
(a) all costs, expenses and fees (including reasonable
attorneys' fees and other legal costs, expenses and charges) incurred or paid by
Bank in connection with (i) advising, structuring, drafting, preparing,
reviewing, negotiating, administering the Loan Documents or any waivers,
consents, amendments, extensions, modifications or restatements related thereto;
(ii) interpreting, enforcing, protecting, preserving, defending or terminating
any of the Loan Documents or any of Bank's rights and remedies related thereto,
irrespective of whether suit is brought (including without limitation, all costs
and expenses and attorneys' fees related to any "workout," "restructuring,"
insolvency or similar proceeding involving any Borrower); (iii) legal advice
relating to the rights and responsibilities of Bank with respect to the
transactions contemplated under this Agreement or the other Loan Documents; (iv)
the preparation for negotiations regarding, consultations concerning or the
defense or prosecution of any legal proceedings involving, any claim (including
third-party claims) made or threatened against Bank related to or involving the
Loan Documents, the transactions contemplated under the Loan Documents, Bank's
relationship with the Borrowers, or any actions taken pursuant to the Loan
Documents by Bank.
(b) all costs, expenses and fees incurred or paid by Bank
for photocopying; notarization; couriers; messengers; telecommunications; public
record searches (including without limitation, real estate, tax lien,
litigation, UCC, bankruptcy, patent, trademark or copyright searches); filing;
recording; publication; appraisals (including without limitation personal
property, real estate, trademark, tradename, and inventory appraisals or
reappraisals); real estate surveys or updates; real estate title insurance
reports or bring-downs, commitments, policies and endorsements; environmental
audits, surveys or updates; and accounting or other professional advisors;
(c) all costs, expenses and fees incurred or paid by Bank
in connection with the disbursement of funds under the Loan Documents (by wire
transfer or otherwise); the dishonoring of checks, drafts or other items of
payment; correction or cure of any Default or Event of Default or enforcement of
the Loan Documents; gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale or advertising to sell
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any of the Collateral (regardless of whether the sale is consummated); or
exercising any rights or remedies under the Loan Documents; and
(d) all costs, expenses and other payments incurred or made
by Bank to any warehouseman, landlord, lessor or owner of any property at which
any of the Collateral is located to enable Bank to obtain access, store,
warehouse, ship, sell or otherwise preserve, protect and dispose of such
Collateral (including without limitation all lease payments, access charges,
utility charges and safety and security charges).
In the event any Borrower shall fail to pay taxes, insurance,
assessments, fees, costs or expenses which it is required to pay hereunder, or
fails to keep the Collateral free from Liens (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
discretion, may make expenditures for such purposes and the amount so expended
(including reasonable attorney's fees and expenses, filing fees and other
charges) shall be payable by the Borrowers on demand and shall constitute part
of the Obligations.
With respect to any amount required to be paid by Borrowers under this
Section, in the event Borrowers fail to pay such amount within five (5) days
after demand, at Bank's option, all of said amounts required to be paid by
Borrowers, may be charged by Bank as a LIBOR Rate Loan under the Revolving
Credit Facility and Borrowers shall also pay to Bank interest thereon at the
Default Rate.
20. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless, Bank, its parents and Affiliates and their officers, directors,
shareholders, employees and agents (collectively, the "Indemnified Parties"),
from and against any and all claims, liabilities, losses, damages, costs and
expenses (whether or not such Indemnified Party is a party to any litigation),
including without limitation reasonable attorney's fees and costs and costs of
investigation, document production, attendance at depositions or other
discovery, incurred by any Indemnified Party with respect to, arising out of or
as a consequence of (a) this Agreement or any of the other Loan Documents,
including without limitation, any failure of any Borrower to pay when due (at
maturity, by acceleration or otherwise) any principal, interest, fee or any
other amount due under this Agreement or the other Loan Documents, or any other
Event of Default; (b) the use by any Borrower of any proceeds advanced
hereunder; (c) the transactions contemplated hereunder; or (d) any claim,
demand, action or cause of action being asserted against any Indemnified Party
by any other Person in connection with the transactions contemplated hereunder.
Notwithstanding anything herein or elsewhere to the contrary, the Borrowers
shall not be obligated to indemnify or hold harmless any Indemnified Party from
any liability, loss or damage resulting from the gross negligence, wilful
misconduct or unlawful actions of such Indemnified Party or any violations by
such Indemnified Party or Bank of any securities laws or other laws and
regulations concerning financial institutions. Any amount payable to Bank under
this Section will bear interest at the Default Rate from the due date until
paid.
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The Borrowers' obligations under this Section shall survive termination
of this Agreement and repayment of the Obligations.
21. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with the Loan Documents shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, or
by telecopy with the original forwarded by first-class mail or by e-mail, in all
cases, with charges prepaid, addressed as follows, until some other address (or
individual or division or department for attention) shall have been designated
by notice given by one party to the other:
To Borrowers:
▇▇▇▇▇▇ Financial Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
To Bank:
Wachovia Bank, National Association
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Senior Vice President
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
ALL "PAYMENT IN FULL" CHECKS OR OTHER MEDIA OF PAYMENT MUST BE SENT TO BANK ONLY
TO THE ABOVE ADDRESS.
22. WAIVERS.
22.1 Waivers. In connection with any proceedings under the Loan
Documents, including without limitation any action by Bank in replevin,
foreclosure or other court process or in connection with any other action
related to the Loan Documents or the transactions contemplated hereunder, the
Borrowers waive, to the extent permitted by applicable law:
(a) all errors, defects and imperfections of a procedural
nature in such proceedings;
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(b) all benefits under any present or future laws exempting
any property, real or personal, or any part of any proceeds thereof from
attachment, levy or sale under execution, or providing for any stay of execution
to be issued on any judgment recovered under any of the Loan Documents or in any
replevin or foreclosure proceeding, or otherwise providing for any valuation,
appraisal or exemption;
(c) presentment for payment, demand, notice of demand,
notice of nonpayment, protest and notice of protest of any of the Loan
Documents, including the Notes;
(d) any requirement for bonds, security or sureties required
by statute, court rule or otherwise;
(e) any demand for possession of Collateral prior to
commencement of any suit;
(f) all rights to claim or recover attorney's fees and costs
in the event that any Borrower is successful in any action to remove, suspend or
prevent the enforcement of a judgment entered by confession;
(g) all rights to notification of disposition of collateral
under Section 9-611 of the UCC, rights to require disposition of collateral
under Section 9- 620(e) of the UCC and any rights to redeem collateral under
Section 9-623 of the UCC; and
(h) any right to require Bank to pursue any third Person for
payment of the Obligations or payment with respect to any of the Collateral.
22.2 Forbearance. Bank may release, compromise, forbear with
respect to or waive any of the terms of the Loan Documents, without notice to or
consent of any Borrower.
22.3 Limitation on Liability. The Borrowers shall be responsible
for and Bank is hereby released from any claim or liability in connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
(c) Any diminution in value of the Collateral; or
(d) Any act or default of another Person.
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Bank shall only be liable for any act or omission on their
part constituting gross negligence or wilful misconduct. In the event any
Borrower brings suit against Bank in connection with the transactions
contemplated hereunder and Bank is found not to be liable, the Borrowers will
indemnify and hold Bank harmless from all costs and expenses, including
reasonable attorney's fees, incurred by Bank in connection with such suit. This
Agreement is not intended to obligate Bank to take any action with respect to
the Collateral or to incur expenses or perform any obligation or duty of any
Borrower. Borrowers' obligations under this Section shall survive termination of
this Agreement and repayment of the Obligations.
22.4 Subordination of Subrogation Rights. Any and all
rights of subrogation that any Borrower may have against any other Borrower or
against any collateral or security for any of the Obligations, and any and all
rights of reimbursement, contribution, indemnity and/or substitution that any
Borrower may have against any other Borrower or any other guarantor or surety,
shall be junior and subordinate to all of the Obligations, to any rights that
Bank may have against such Borrower, to all right, title and interest that Bank
may have in any such collateral or security for the Obligations, and to any
right Bank may have against such other guarantor or surety of the Obligations.
Bank may use, sell or dispose of any item of collateral or security for the
Obligations as it sees fit without regard to any subrogation rights Borrowers
may have, and upon any such disposition or sale of such collateral or security
any rights of subrogation that Borrowers may have with respect to such
collateral or security shall terminate.
23. SUBMISSION TO JURISDICTION. The Borrowers hereby consent
to the jurisdiction of any state or federal court located within the
Commonwealth of Pennsylvania, and irrevocably agree that, subject to the Bank's
election, all actions or proceedings relating to the Loan Documents or the
transactions contemplated hereunder shall be litigated in such courts, and the
Borrowers waive any objection which they may have based on lack of personal
jurisdiction, improper venue or forum non conveniens to the conduct of any
proceeding in any such court and waive personal service of any and all process
upon them and consent that all such service of process be made by mail or
messenger directed to them at the address set forth in Section 21. Nothing
contained in this Section shall affect the right of Bank to serve legal process
in any other manner permitted by law or affect the right of Bank to bring any
action or proceeding against any Borrower or their property in the courts of any
other jurisdiction.
24. MISCELLANEOUS.
24.1 Brokers. The transaction contemplated hereunder
was brought about and entered into by Bank and the Borrowers acting as
principals and without any brokers, agents or finders being the effective
procuring cause hereof. The Borrowers represent to Bank that the Borrowers have
not committed Bank to the payment of any brokerage fee or commission in
connection with this transaction. If any such claim is made against Bank by any
broker, finder or agent or any other Person, the Borrowers agree to indemnify,
defend and hold Bank harmless
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against any such claim, at the Borrowers' own cost and expense, including Bank's
reasonable attorneys' fees. The Borrowers further agree that until any such
claim or demand is adjudicated in Bank's favor, the amount claimed and/or
demanded shall be deemed part of the Obligations secured by the Collateral.
24.2 Use of Bank's Name. The Borrowers shall not use the name
of Bank or the name of any Affiliate of Bank in connection with any of their
business or activities (other than disclosure to their employees and other
professionals in the ordinary course of any Borrower's Business) except as may
otherwise be required by the rules and regulations of the Securities and
Exchange Commission or any like regulatory body and except as may be required in
their dealings with any governmental agency.
24.3 No Joint Venture. Nothing contained herein is intended
to permit or authorize any Borrower to make any contract on behalf of Bank, nor
shall this Agreement be construed as creating a partnership, joint venture or
making Bank an investor in any Borrower.
24.4 Survival. All covenants, agreements, representations and
warranties made by the Borrowers in the Loan Documents or made by or on their
behalf in connection with the transactions contemplated herein shall be true at
all times this Agreement is in effect and shall survive the execution and
delivery of the Loan Documents, any investigation at any time made by Bank or on
their behalf and the making by Bank of the loans or advances to Borrowers. All
statements contained in any certificate, statement or other document delivered
by or on behalf of the Borrowers pursuant hereto or in connection with the
transactions contemplated hereunder shall be deemed representations and
warranties by the Borrowers.
24.5 No Assignment. The Borrowers may not assign any of their
rights hereunder without the prior written consent of Bank and Bank shall not be
required to lend hereunder except to Borrowers as they presently exist.
24.6 Assignment or Sale by Bank. Bank may sell, assign or
participate all or a portion of its interest in the Loan Documents and in
connection therewith may make available to any prospective purchaser, assignee
or participant any information relative to Borrowers in its possession. In the
event that Bank sells or assigns any portion of the Loans, Borrowers shall (a)
execute and deliver to Bank and/or to the applicable purchaser or assignee, such
substitute or replacement Notes or other Loan Documents, and (b) execute and
deliver to Bank such amendments to the Loan Documents as Bank may request to
reflect such sale or assignment.
24.7 Publicity. Borrowers agree that Bank may disclose the
fact of the financing under this Agreement in the form of a "tombstone"
announcement in the print media, whether individually or part of a general
advertisement.
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24.8 Injunctive Relief. Each of the Borrowers expressly
acknowledges and agrees that an action for damages for any breach of the
requirements of Section 11.5 shall not be an adequate remedy at law. In the
event of any such breach, each of the Borrowers agrees to the fullest extent
allowed by law that Bank shall be entitled to injunctive relief to restrain such
breach and require compliance with such requirements.
24.9 Time is of the Essence. Time is of the essence in the
Borrowers' performance of their obligations under the Loan Documents.
24.10 All Powers Coupled With Interest. All powers of attorney
and other authorizations granted to Bank and any Persons designated by Bank
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid or unsatisfied.
24.11 Disclosure and Disclaimer Regarding Power of Attorney.
Borrowers acknowledge and certify as follows:
(a) The Loan Documents contain provisions authorizing
Bank to act as each Borrower's attorney-in-fact or agent (collectively such
powers are herein after referred to as the "Power of Attorney").
(b) The purpose of the Power of Attorney is to give
Bank broad powers to execute documents, handle or sell property and otherwise
act in the name of the Borrowers.
(c) The Power of Attorney is coupled with an interest
and, as such, Bank, in exercising any of its rights under the Power of Attorney
is not a fiduciary of the Borrowers. Bank may exercise any of its rights under
the Power of Attorney for the sole benefit of Bank, without regard to the
interests of the Borrowers.
(d) The Loan Agreement and the other Loan Documents
are being executed in connection with a commercial loan or other financial
transaction for business purposes and not primarily for personal, family or
household purposes.
(e) Any rights the Borrowers may have to the specific
provisions set forth in 20 Pa. C.S. 5601 et seq., as amended (specifically
including Act 39 of 1999) are hereby forever waived and relinquished.
(f) The Borrowers have read and understand the Power
of Attorney and this subsection regarding disclosure and disclaimer regarding
the Power of Attorney.
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(g) The Borrowers have consulted with legal counsel
regarding the Power of Attorney and this subsection regarding disclosure and
disclaimer regarding the Power of Attorney.
24.12 Binding Effect. This Agreement and all rights and powers
granted hereby will bind and inure to the benefit of the parties hereto and
their respective permitted successors and assigns and shall bind all Persons who
become bound as a borrower, guarantor or other Borrower under this Agreement.
24.13 Severability. The provisions of this Agreement and all
other Loan Documents are deemed to be severable, and the invalidity or
unenforceability of any provision shall not affect or impair the remaining
provisions which shall continue in full force and effect.
24.14 No Third Party Beneficiaries. The rights and benefits of
this Agreement and the Loan Documents shall not inure to the benefit of any
third party.
24.15 Modifications. Any modification or amendment of this
Agreement or any of the Loan Documents shall be in writing signed by the parties
hereto.
24.16 Holidays. If the day provided herein for the payment of
any amount or the taking of any action falls on a Saturday, Sunday or public
holiday at the place for payment or action, then the due date for such payment
or action will be the next succeeding Business Day.
24.17 Law Governing. This Agreement has been made, executed
and delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth, without regard to
any rules or principles regarding conflicts of law or any rule or canon of
construction which interprets agreements against the draftsman.
24.18 Integration. The Loan Documents shall be construed as
integrated and complementary of each other, and as augmenting and not
restricting Bank's rights, powers, remedies and security. The Loan Documents
contain the entire understanding of the parties thereto with respect to the
matters contained therein and supersede all prior agreements and understandings
between the parties with respect to the subject matter thereof and do not
require parol or extrinsic evidence in order to reflect the intent of the
parties. In the event of any inconsistency between the terms of this Agreement
and the terms of the other Loan Documents, the terms of this Agreement shall
prevail.
24.19 Exhibits and Schedules. All exhibits and schedules
attached hereto are hereby made a part of this Agreement.
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24.20 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
24.21 Counterparts; Facsimile Signatures. The Loan Documents and any
notice or communication under the Loan Documents may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument. Delivery of a photocopy
or telecopy of an executed counterpart of a signature page to any Loan Document
shall be effective as delivery of a manually executed counterpart of such Loan
Document.
24.22 Joint and Several. The obligations of the Borrowers to Bank under
this Agreement shall be joint and several obligations.
24.23 Limitation on Damages. The Borrowers and Bank agree that, in any
action, suit or proceeding, in respect of or arising out of this Agreement, the
Loan Documents or the transactions contemplated hereunder, each mutually waives
to the fullest extent permitted by law, any claim for consequential, punitive or
special damages.
24.24 Waiver of Right to Trial by Jury. THE BORROWERS AND BANK WAIVE
ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE BORROWERS OR BANK WITH RESPECT TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE BORROWERS AND BANK
AGREE AND CONSENT 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 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE BORROWERS AND BANK TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY. THE BORROWERS ACKNOWLEDGE THAT THEY HAVE HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY
UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND
KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
BORROWERS:
▇▇▇▇▇▇ HOLDINGS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
▇▇▇▇▇▇ FINANCIAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
▇▇▇▇▇▇ BROS COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
COPPER CRAFT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
▇▇▇▇▇▇ METAL PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., CFO
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BANK:
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇, Senior Vice President
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