1
Exhibit 7.1
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FOURTH AMENDED AND RESTATED LOAN AGREEMENT
dated as of August __, 1996,
by and among
SIRROM INVESTMENTS, INC.,
as Borrower,
SIRROM CAPITAL CORPORATION,
as Guarantor,
the Lenders referred to herein,
and
FIRST UNION NATIONAL BANK OF TENNESSEE,
as Agent
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
SECTION 1.2. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
SECTION 1.3. Other Definitions and Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
ARTICLE II
REVOLVING CREDIT FACILITY . . . . . . . . . . . . . . . . . . . - 16 -
SECTION 2.1. Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
SECTION 2.2. Swingline Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
SECTION 2.3. Procedure for Advances of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
SECTION 2.4. Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
SECTION 2.5. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
SECTION 2.6. Permanent Reduction of the Aggregate Commitment . . . . . . . . . . . . . . . . . . . . . - 20 -
SECTION 2.7. Termination of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
SECTION 2.8. Optional Increase in Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
SECTION 2.9. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
ARTICLE III
GENERAL LOAN PROVISIONS . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 3.1. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
SECTION 3.2. Notice and Manner of Conversion or Continuation of Loans . . . . . . . . . . . . . . . . . - 27 -
SECTION 3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
SECTION 3.4. Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
SECTION 3.5. Crediting of Payments and Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
SECTION 3.6. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
SECTION 3.7. Nature of Obligations of Lenders Regarding Loans; Assumption by the Agent . . . . . . . . - 30 -
SECTION 3.8. Changed Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
SECTION 3.9. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
SECTION 3.10. Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
SECTION 3.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
SECTION 3.12. Claims for Increased Costs and Taxes . . . . . . . . . . . . . . . . . . . . . - 35 -
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . . . . . . . . . . . . . - 35 -
SECTION 4.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
SECTION 4.2. Conditions to Closing and Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
SECTION 4.3. Conditions to All Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES . . . . . . . . . . . . . - 40 -
SECTION 5.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
SECTION 5.2. Survival of Representations and Warranties, Etc . . . . . . . . . . . . . . . . . . . . . - 46 -
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES . . . . . . . . . . . . . . . . . - 46 -
SECTION 6.1. Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . - 46 -
SECTION 6.2. Officer's Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
SECTION 6.3. Accountants' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
SECTION 6.4. Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -
SECTION 6.5. Notice of Litigation and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -
SECTION 6.6. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 49 -
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . - 50 -
SECTION 7.1. Preservation of Corporate Existence and Related Matters . . . . . . . . . . . . . . . . . - 50 -
SECTION 7.2. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -
SECTION 7.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -
SECTION 7.4. Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
SECTION 7.5. Payment and Performance of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
SECTION 7.6. Compliance With Laws and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
SECTION 7.7. Environmental Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
SECTION 7.8. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
SECTION 7.9. Compliance With Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
SECTION 7.10. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
SECTION 7.11. Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
SECTION 7.12. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
SECTION 7.13. Additional Subsidiary Guarantors/Joinder. . . . . . . . . . . . . . . . . . . . - 53 -
SECTION 7.14. Ownership of Portfolio Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
SECTION 7.15. Contribution of Equity by the Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
SECTION 7.16. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
ARTICLE VIII
FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . - 54 -
SECTION 8.1. Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
SECTION 8.2. Debt to Total Adjusted Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
SECTION 8.3. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
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ARTICLE IX
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . - 55 -
SECTION 9.1. Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 55 -
SECTION 9.2. Limitations on Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . - 56 -
SECTION 9.3. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 56 -
SECTION 9.4. Limitations on Loans, Advances, Investments and Acquisitions . . . . . . . . . . . . . . . - 57 -
SECTION 9.5. Limitations on Mergers and Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . - 58 -
SECTION 9.6. Limitations on Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 58 -
SECTION 9.7. Limitations on Dividends and Distributions. . . . . . . . . . . . . . . . . . . . . . . . - 59 -
SECTION 9.8. Limitations on Exchange and Issuance of Capital Stock . . . . . . . . . . . . . . . . . . - 59 -
SECTION 9.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 59 -
SECTION 9.10. Certain Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 60 -
SECTION 9.11. Amendments; Payments and Prepayments of Debt . . . . . . . . . . . . . . . . . . . . . . - 60 -
SECTION 9.12. Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 60 -
ARTICLE X
UNCONDITIONAL GUARANTY . . . . . . . . . . . . . . . . . . . . - 61 -
SECTION 10.1. Guaranty of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 61 -
SECTION 10.2. Nature of Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 61 -
SECTION 10.3. Demand by the Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 62 -
SECTION 10.4. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 62 -
SECTION 10.5. Modification of Loan Documents etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 63 -
SECTION 10.6. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 63 -
SECTION 10.7. No Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 64 -
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . - 64 -
SECTION 11.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 64 -
SECTION 11.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 67 -
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; etc. . . . . . . . . . . . . . . . . . . . . - 67 -
ARTICLE XII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . - 68 -
SECTION 12.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
SECTION 12.2. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
SECTION 12.3. Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
SECTION 12.4. Reliance by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 68 -
SECTION 12.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 69 -
SECTION 12.6. Non-Reliance on the Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . - 69 -
SECTION 12.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 70 -
SECTION 12.8. The Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . - 70 -
SECTION 12.9. Resignation of the Agent; Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . - 70 -
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ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . - 71 -
SECTION 13.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 71 -
SECTION 13.2. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 73 -
SECTION 13.3. Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 73 -
SECTION 13.4. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 73 -
SECTION 13.5. Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 74 -
SECTION 13.6. Binding Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 74 -
SECTION 13.7. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 75 -
SECTION 13.8. Reversal of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 75 -
SECTION 13.9. Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 75 -
SECTION 13.10. Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 75 -
SECTION 13.11. Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . - 76 -
SECTION 13.12. Amendments, Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 79 -
SECTION 13.13. Performance of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.14. All Powers Coupled with Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.15. Survival of Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.16. Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.17. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 80 -
SECTION 13.19. Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 81 -
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Exhibits and Schedules
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/ Continuation
Exhibit D - Form of Borrowing Base Certificate
Exhibit E-1 - Description of Rating System and Valuation Method
Exhibit E-2 - Portfolio Reports
Exhibit E-3 - Form of Portfolio Certificate
Exhibit F - Form of Officer's Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Security Agreement
Exhibit I-1 - Form of Borrower Pledge Agreement
Exhibit I-2 - Form of Parent Pledge Agreement
Exhibit J - Form of Bailment Agreement
Exhibit K - Form of Intercreditor Agreement
Exhibit L - Form of Subsidiary Guaranty Agreement
Exhibit M-1 - Form of Collateral Assignment of Certificates of Deposit
Exhibit M-2 - Form of Collateral Assignment of Deposit Accounts
Exhibit M-3 - Form of Cash Collateral Coverage Certificate
Exhibit N - Lender Addition and Acknowledgement Agreement
SCHEDULES
Schedule 1 - Lenders and Commitments
Schedule 5.1(c) - Subsidiaries
Schedule 5.1(j) - ERISA Plans
Schedule 5.1(m) - Material Contracts
Schedule 5.1(t) - Debt and Contingent Obligations
Schedule 5.1(u) - Litigation
Schedule 9.1 - Existing Debt
Schedule 9.3 - Existing Liens
Schedule 9.4 - Existing Loans, Advances and Investments
Schedule 9.9 - Transactions with Affiliates
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FOURTH AMENDED AND RESTATED LOAN AGREEMENT
FOURTH AMENDED AND RESTATED LOAN AGREEMENT, dated as of the ____ day
of August, 1996 by and among SIRROM INVESTMENTS, INC., a corporation organized
under the laws of Tennessee (the "Borrower"), SIRROM CAPITAL CORPORATION, a
corporation organized under the laws of Tennessee (the "Parent"), the Lenders
who are or may become a party to this Agreement, and FIRST UNION NATIONAL BANK
OF TENNESSEE ("First Union"), as Agent for the Lenders.
STATEMENT OF PURPOSE
First Union agreed to extend certain credit facilities to the Parent
in the aggregate principal amount of $50,000,000 (the "Existing Loans")
pursuant to the terms and conditions of the Loan Agreement dated December 23,
1994, as amended and restated pursuant to the Amended and Restated Loan
Agreement dated February 1, 1995, the Second Amended and Restated Loan
Agreement dated June 13, 1995, the Third Amended and Restated Loan Agreement
dated December 27, 1995, the First Amendment to the Third Amended and Restated
Loan Agreement dated June 28, 1996 by and among the Parent, the Lenders party
thereto, and First Union, and the Second Amendment to the Third Amended and
Restated Loan Agreement dated August 1, 1996 by and among the Parent, the
Lenders party thereto, and First Union (the "Existing Loan Agreement"). The
Existing Loans were evidenced by the Third Amended and Restated Revolving
Credit Note dated July 1, 1996 executed by the Parent in favor of First Union
in the original principal amount of $27,500,000 (replacing the Third Amended
and Restated Revolving Credit Note dated January 16, 1996 executed by the
Parent in favor of First Union and the Third Amended and Restated Revolving
Credit Note dated December 27, 1995 executed by the Parent in favor of First
Union), the Third Amended and Restated Revolving Credit Note dated July 1, 1996
executed by the Parent in favor of AmSouth Bank of Tennessee in the original
principal amount of $10,000,000 (replacing the Third Amended and Restated
Revolving Credit Note dated December 27, 1995 executed by the Parent in favor
of AmSouth Bank of Tennessee), the Third Amended and Restated Revolving Credit
Note dated December 27, 1995 executed by the Parent in favor of First American
National Bank in the original principal amount of $7,500,000, the Third Amended
and Restated Revolving Credit Note dated January 16, 1996 executed by the
Parent in favor of First Tennessee National Bank in the original principal
amount of $5,000,000, and the Swingline Note dated December 27, 1995 executed
by the Parent in favor of First Union in the original principal amount of
$5,000,000 (the "Existing Notes") and was secured by the Security Agreement
dated December 23, 1994, as amended and restated pursuant to the Amended and
Restated Security Agreement dated February 1, 1995, the First Amendment to
Amended and Restated Security Agreement dated June 13, 1995, and the Second
Amended and Restated Security Agreement dated December 27, 1995 by and among
the Parent and First Union, for the benefit of itself and the Lenders (the
"Existing Security Agreement"), and the Pledge Agreement dated December 27,
1995 made by the Parent in favor of First Union, for the benefit of itself and
the Lenders (the "Pledge Agreement", and together with the
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Existing Loan Agreement, the Existing Notes, and the Security Agreement, the
"Existing Loan Documents").
The Parent has received an order from the Securities and Exchange
Commission issued under the Investment Company Act of 1940, as amended,
permitting the reorganization of the Parent, pursuant to which the Parent has
transferred its small business investment company license, a majority of its
assets and all of its liabilities to the Borrower (the "Restructuring").
Pursuant to the Assignment and Assumption Agreement dated as of August
__, 1996 by and among the Parent and the Borrower, the Parent has transferred
all of its rights and obligations under the Existing Loan Documents and each
other document executed in connection therewith to the Borrower and the
Borrower has assumed all of such rights and obligations (the "Assignment").
In connection with the Restructuring and the Assignment, the Parent
and the Borrower have requested First Union and the Lenders, and First Union
and the Lenders have agreed, to (i) amend and restate the Existing Loan
Documents in order to transfer the rights and obligations of the Parent under
the Existing Loan Documents and the documents executed in connection therewith
to the Borrower, (ii) permit an increase in the aggregate principal amount of
the Existing Loans, (iii) amend certain provisions of the Existing Loan
Documents, and (iv) add certain of the Lenders as parties hereto, subject to
and in accordance with the terms and conditions set forth herein.
The Parent and the Borrower are and will be members of the same
affiliated group and, subject to the regulations promulgated by the SBA, will
conduct their operations for their mutual benefit as one integrated financial
enterprise, with each of the Parent and the Borrower benefitting from the
business operations of the other members of the affiliated group. All
extensions of credit to the Borrower will inure to the benefit of the Parent,
directly or indirectly, through increased borrowing capacity and availability
of funding and other strategic business advantages.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree to amend and restate the Existing Loan Agreement in its
entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its
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Subsidiaries. The term "control" means (a) the power to vote five percent (5%)
or more of the securities or other equity interests of a Person having ordinary
voting power, or (b) the possession, directly or indirectly, of any other power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, none of the portfolio companies of any Credit
Party shall be considered an Affiliate of such Credit Party.
"Agent" means First Union in its capacity as Agent hereunder, and any
successor thereto appointed pursuant to Section 12.9.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced at any time or from time
to time pursuant to Section 2.6 or increased from time to time pursuant to
Section 2.8. On the Closing Date, the Aggregate Commitment shall be Fifty
Million Dollars ($50,000,000). At no time shall the Aggregate Commitment
exceed Seventy-Five Million Dollars ($75,000,000).
"Agreement" means this Fourth Amended and Restated Credit Agreement,
as amended or modified from time to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.11.
"Bailment Agreement" means the Amended and Restated Agreement for
Bailment of Collateral and Remittance of Collateral Funds of even date by and
among the Borrower, the Agent, for the benefit of itself and the Lenders, and
First American Trust Company (or such other financial institution acceptable to
the Borrower and the Required Lenders), as Custodian, substantially in the form
of Exhibit J hereto, as amended or modified from time to time.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or
(b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the
Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon
the Base Rate as provided in Section 3.1(a).
"Base Rate Margin" shall have the meaning assigned thereto in Section
3.1(f).
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10
"Borrower" means Sirrom Investments, Inc. in its capacity as borrower
hereunder.
"Borrower Pledge Agreement" means the First Amended and Restated
Pledge Agreement executed by the Borrower, as pledgor, in favor of the Agent,
for the ratable benefit of itself and the Lenders, substantially in the form of
Exhibit I-1 hereto, as amended or modified from time to time.
"Borrower's Rating System" means the internal credit rating system of
Borrower as described on Exhibit E-1 hereto, as the same may be amended from
time to time with the prior written consent of the Required Lenders.
"Borrower's Valuation Method" means the internal securities valuation
method of Borrower as described on Exhibit E-1 hereto, as the same may be
amended from time to time with the prior written consent of the Required
Lenders.
"Borrowing Base" means, as of any date of determination, an amount
equal to (a) seventy percent (70%) of Eligible Loans plus (b) the lesser of (i)
eighty percent (80%) of Eligible Securities and (ii) Twenty Million Dollars
($20,000,000) minus (c) the aggregate amount of SBA Debt outstanding at such
date and minus (d) any liability of the Borrower under Hedging Agreements under
this Agreement calculated on a marked to market basis. For the purposes of
this definition, "Eligible Loans" means all loans in the Borrower's portfolio
payable to the Borrower or one or more of its Subsidiaries excluding the
following: (A) loans classified as credit rating #5 or #6 in the Borrower's
Rating System, (B) all loans with any interest or principal more than thirty
(30) days past due and (C) loans classified as credit rating #4 and credit
rating #3 in the Borrower's Rating System and determined to be non-eligible by
the Agent, in the Agent's sole discretion; and "Eligible Securities" means all
publicly traded equity securities (regardless of whether such securities are
restricted in the hands of the Borrower), valued in accordance with the
Borrower's Valuation Method.
"Borrowing Base Certificate" means a certificate appropriately
completed and in the form of Exhibit D hereto.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Nashville, Tennessee and Charlotte, North Carolina, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"Capital Lease" means, with respect to each Credit Party and its
Subsidiaries, any lease of any property that should, in accordance with GAAP,
be classified and accounted for as a capital
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11
lease on a Consolidated balance sheet of such Credit Party and its
Subsidiaries.
"Cash Collateral Coverage Certificate" shall have the meaning assigned
thereto in Section 3.1(f).
"Cash Collateral Coverage Ratio" shall have the meaning assigned
thereto in Section 3.1(f).
"Change in Control" shall have the meaning assigned thereto in Section
11.1(h).
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Collateral" means the assets, property and interests in property of
the Credit Parties and their Subsidiaries, as applicable, whether now owned or
hereafter acquired, that shall, from time to time, as provided in the Security
Documents, secure the Obligations and any property or interest provided in
addition to or in substitution for any of the foregoing.
"Collateral Assignment of Certificates of Deposit" shall have the
meaning assigned thereto in Section 3.1(f).
"Collateral Assignment of Deposit Accounts" shall have the meaning
assigned thereto in Section 3.1(f).
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to the Borrower hereunder in an aggregate principal amount at any
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 1 hereto, as the same may be reduced or modified at any time or
from time to time pursuant to Sections 2.6 and 13.11 or increased from time to
time pursuant to Section 2.8.
"Commitment Percentage" means, as to any Lender at any time, the ratio
of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all of the Lenders.
"Consolidated" means, when used with reference to financial statements
or financial statement items of the Borrower and its Subsidiaries or the Credit
Parties and their Subsidiaries, as applicable, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP.
"Contingent Obligation" means, with respect to each Credit Party and
its Subsidiaries, without duplication, any obligation, contingent or otherwise,
of any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or
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12
otherwise, of any such Person (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement condition or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided that the term Contingent Obligation shall not
include endorsements for collection or deposit in the ordinary course of
business.
"Controlled Cash Flow Plus Agreement" means the First Union National
Bank Master Agreement dated as of __________, 1996 between the Borrower, First
Union and First Union Corporation.
"Credit Facility" means the revolving credit facility established
pursuant to Article II hereof.
"Credit Parties" means the collective reference to the Borrower and
the Guarantor.
"Debt" means, with respect to the Borrower and its Subsidiaries or the
Credit Parties and their Subsidiaries, as applicable, at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person, except trade
payables arising in the ordinary course of business not more than ninety (90)
days past due, (c) all obligations of any such Person as lessee under Capital
Leases, (d) all Debt of any other Person secured by a Lien on any asset of any
Credit Party or its Subsidiaries, (e) all Contingent Obligations of any such
Person, (f) all obligations, contingent or otherwise, of any such Person
relative to the face amount of letters of credit, whether or not drawn, and
banker's acceptances issued for the account of any such Person, (g) all
obligations to redeem, repurchase, exchange, defease or otherwise make payments
in respect of capital stock or other securities of such Person and (h) all
termination payments which would be due and payable by any such Person pursuant
to Hedging Agreements.
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBIT" means, with respect to the Borrower and its Subsidiaries for
any period, (a) Net Investment Income for such period, plus (b) the sum of the
following to the extent deducted in the determination of Net Investment Income:
(i) income and
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13
franchise taxes and (ii) Interest Expense and plus (c) realized gains (or
losses) on investments.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having combined capital and surplus in
excess of $500,000,000, (b) a finance company, insurance company or other
financial institution which in the ordinary course of business extends credit
of the type extended hereunder and that has total assets in excess of
$1,000,000,000, (c) already a Lender hereunder (whether as an original party to
this Agreement or as the assignee of another Lender), (d) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially
all of the commercial lending business of the assigning Lender, or (e) any
other Person that has been approved in writing as an Eligible Assignee by the
Borrower and the Agent.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Credit Party or any ERISA Affiliate or (b) has at any time within the preceding
six years been maintained for the employees of any Credit Party or any current
or former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et. seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 331 et. seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the
Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et. seq.), the Safe Drinking Water Act (42 U.S.C.
Section 300, et. seq.), the Environmental Protection Agency's regulations
relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et. seq.), analogous
state statutes, and the rules and regulations promulgated under the foregoing
as such statutes amended or modified from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with any Credit Party
is treated as a single employer within the meaning of
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14
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve
requirement (including, without limitation, any basic, supplemental or
emergency reserves) in respect of Eurocurrency liabilities or any similar
category of liabilities for a member bank of the Federal Reserve System in New
York City.
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Agent and confirmed in Federal Reserve
Board Statistical Release H.15 (519) or any successor or substitute publication
selected by the Agent. If, for any reason, such rate is not available, then
"Federal Funds Rate" shall mean a daily rate which is determined, in the
opinion of the Agent, to be the rate at which federal funds are being offered
for sale in the national federal funds market at 10:00 a.m. (Charlotte time).
Rates for weekends or holidays shall be the same as the rate for the most
immediate preceding Business Day.
"First Union" means First Union National Bank of Tennessee, a national
banking association, and its successors.
"Fiscal Year" means the fiscal year of each Credit Party and its
Subsidiaries ending on December 31.
"GAAP" means generally accepted accounting principles, as recognized
by the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Credit Parties and their Subsidiaries throughout the period
indicated and consistent with the prior financial practice of the Credit
Parties and their Subsidiaries.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or
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15
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guarantor" means the Parent in its capacity as a guarantor hereunder.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release
of which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a
trespass or pose a health or safety hazard to persons or neighboring
properties, (f) which are materials consisting of underground or aboveground
storage tanks, whether empty, filled or partially filled with any substance, or
(g) which contain, without limitation, asbestos, polychlorinated biphenyls,
urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection
with hedging the interest rate exposure of the Borrower under this Agreement,
and any confirming letter executed pursuant to such hedging agreement, all as
amended or modified.
"Intercreditor Agreement" means the Intercreditor Agreement of even
date between the SBA and the Agent, for the benefit of itself and the Lenders,
substantially in the form of Exhibit K hereto, as amended or modified from time
to time.
"Interest Expense" means, with respect to the Borrower and its
Subsidiaries for any period, the gross interest expense (including, without
limitation, interest expense attributable to Capital Leases of the Borrower and
its Subsidiaries and all net obligations pursuant to Hedging Agreements) of the
Borrower and its Subsidiaries, all determined for such period on a Consolidated
basis in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
3.1(b).
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
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16
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.11.
"Lender Addition and Acknowledgment Agreement" means each agreement
executed pursuant to Section 2.8 hereof by the Borrower and an existing Lender
or a lender not theretofore a Lender, as applicable, and acknowledged by the
Agent, in the form attached hereto as Exhibit N, providing for an increase in
the Aggregate Commitment hereunder, acknowledging that any lender not
theretofore a Lender shall be a party hereto and have the rights and
obligations of a Lender hereunder, and setting forth the Commitment of each
Lender.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"LIBOR" means the rate for deposits in Dollars for a period equal to
the Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 a.m. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period. If, for any reason, such rate
is not available, then "LIBOR" shall mean the rate per annum at which, as
determined by the Agent, Dollars in the amount of $5,000,000 are being offered
to leading banks at approximately 11:00 a.m. London time, two (2) Business Days
prior to the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank market for
a period equal to the Interest Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Agent pursuant to the
following formula:
LIBOR Rate = LIBOR
----------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in Section 3.1(a).
"LIBOR Rate Margin" shall have the meaning assigned thereto in Section
3.1(f).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
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17
"Loan" means any Revolving Credit Loan or Swingline Loan made to the
Borrower hereunder, and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Security Agreement, the Guaranties, the Borrower Pledge Agreement, the Parent
Pledge Agreement, the Bailment Agreement, the Intercreditor Agreement, any
Hedging Agreement executed with any Lender, the Collateral Assignment of
Certificates of Deposit, the Collateral Assignment of Deposit Accounts, and
each other document, instrument and agreement executed and delivered by any
Credit Party, its Subsidiaries or their counsel in connection with this
Agreement or otherwise referred to herein or contemplated hereby, all as may be
amended or modified from time to time.
"Material Adverse Effect" means, with respect to any Credit Party and
its Subsidiaries, a material adverse effect on (a) the properties, business,
operations or financial condition of such Credit Party and its Subsidiaries,
taken as a whole or (b) the ability of such Credit Party and its Subsidiaries,
taken as a whole, to perform their obligations under the Loan Documents.
"Material Contract" means (a) any contract or other agreement, written
or oral, of any Credit Party or any of its Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $100,000 per
annum, or (b) any other contract or agreement, written or oral, of any Credit
Party or any of its Subsidiaries the failure to comply with which could
reasonably be expected to have a Material Adverse Effect.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Credit Party or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions within the
preceding six years.
"Net Investment Income" means, with respect to the Borrower and its
Subsidiaries for any period, the Consolidated net investment income (or loss)
of the Borrower and its Subsidiaries for such period determined in accordance
with GAAP.
"Notes" means the Revolving Credit Notes or the Swingline Note, or any
combination thereof, and "Note" means any of such Notes.
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.3(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 3.2.
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
all payment and other obligations owing by the Borrower to any Lender or the
Agent under any Hedging
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18
Agreement, and (c) all other fees and commissions (including attorney's fees),
charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Credit Parties to the Lenders or
the Agent, of every kind, nature and description, direct or indirect, absolute
or contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any note, and whether or not for
the payment of money under or in respect of this Agreement, any Note or any of
the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 6.2.
"Other Taxes" shall have the meaning assigned thereto in Section
3.11(b).
"Parent" means Sirrom Capital Corporation in its capacity as a
guarantor hereunder.
"Parent Pledge Agreement" means the Pledge Agreement executed by the
Parent, as pledgor, in favor of the Agent, for the ratable benefit of itself
and the Lenders, substantially in the form of Exhibit I-2 hereto, as amended or
modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of any Credit
Party or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of any Credit Party or any of their
current or former ERISA Affiliates.
"Person" means an individual, corporation, partnership, association,
trust, business trust, joint venture, joint stock company, pool, syndicate,
sole proprietorship, unincorporated organization, Governmental Authority or any
other form of entity or group thereof specifically listed herein.
"Portfolio Certificate" means a certificate appropriately completed
and in the form of Exhibit E-3 hereto confirming the ownership by the Credit
Parties and their Subsidiaries of all of the investments in their respective
issuers and obligors and confirming that (i) no such investment by any Credit
Party or any Subsidiary thereof in an issuer or obligor is owned collectively
by any other Credit Party or any Subsidiary thereof and (ii) neither Credit
Party nor any Subsidiary thereof shall have any investment in any issuer or
obligor in which the other Credit Party or any Subsidiary thereof has any
investment.
"Portfolio Reports" means credit watch reports, past-due reports,
investment valuation change reports, loans made and paid reports and any other
written reports of the Borrower and its
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Subsidiaries with respect to its loans and marketable securities in form
acceptable to the Agent.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on
the day such change in the Prime Rate occurs. The parties hereto acknowledge
that the rate announced publicly by First Union as its Prime Rate is an index
or base rate and shall not necessarily be its lowest or best rate charged to
its customers or other banks.
"Register" shall have the meaning assigned thereto in Section
13.11(d).
"Required Lenders" means, at any date, any combination of holders of
at least sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid
principal amount of the Notes, or if no amounts are outstanding under the
Notes, any combination of Lenders whose Commitment Percentages aggregate at
least sixty-six and two-thirds percent (66-2/3%); provided that "Required
Lenders" shall at all times be comprised of at least two Lenders; and provided
further that if "Required Lenders" is comprised solely of the Agent, as Lender,
and any other Lenders, the other Lenders shall have an aggregate Commitment of
not less than $5,000,000.
"Restructuring" shall have the meaning assigned thereto in the
Statement of Purpose.
"Revolving Credit Loan" means any revolving loan made to the Borrower
pursuant to Section 2.1, and all such Revolving Credit Loans collectively as
the context requires.
"Revolving Credit Notes" means the separate Revolving Credit Notes
made by the Borrower payable to the order of each Lender, substantially in the
form of Exhibit A-1 hereto, evidencing the Revolving Credit Loans, and any
amendments and modifications thereto, any substitutes therefor, and any
replacements, restatements, renewals or extension thereof, in whole or in part;
"Revolving Credit Note" means any of such Notes.
"SBA" means the Small Business Administration.
"SBA Debt" means any Debt owed by the Borrower or any Subsidiary of
the Borrower to the SBA pursuant to the SBA debenture program in the ordinary
course of business.
"SBIC Regulations" means the Small Business Investment Company Act of
1958, as amended, and the regulations issued by the SBA thereunder, 13 CFR 107
and 121, as amended.
"SEC" means the Securities and Exchange Commission.
"Security Agreement" means the Third Amended and Restated Security
Agreement of even date by and among the Borrower and the
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20
Agent, for the benefit itself and the Lenders, substantially in the form of
Exhibit H hereto, as amended or modified from time to time.
"Security Documents" means the collective reference to the Security
Agreement, the Guaranties, the Borrower Pledge Agreement, the Parent Pledge
Agreement, the Bailment Agreement, the Intercreditor Agreement, the Collateral
Assignment of Certificates of Deposit, the Collateral Assignment of Deposit
Accounts, and each other agreement or writing pursuant to which any Credit
Party or any of its Subsidiaries pledges or grants a security interest in the
Collateral securing the Obligations or such Person guaranties the payment or
performance of the Obligations.
"Solvent" means, as to each Credit Party and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.
"Subsidiary" means as to any Person, any corporation, partnership or
other entity of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity is at the time, directly or indirectly, owned by or
the management is otherwise controlled by such Person (irrespective of whether,
at the time, capital stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency). Unless otherwise qualified references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of the Credit Parties.
Notwithstanding the foregoing, none of the portfolio companies of any Credit
Party shall be considered a Subsidiary of such Credit Party.
"Subsidiary Guarantor" means each Subsidiary of the Borrower in its
capacity as a guarantor under a Subsidiary Guaranty.
"Subsidiary Guaranty" means each Unconditional Guaranty Agreement of a
Subsidiary Guarantor executed on the Closing Date or pursuant to Section 7.13
hereof and in the form attached hereto as Exhibit L.
"Swingline Commitment" means Five Million Dollars ($5,000,000).
"Swingline Lender" means First Union in its capacity as swingline
lender hereunder.
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21
"Swingline Loan" means any swingline loan made by the Swingline Lender
to the Borrower pursuant to Section 2.2 and all such Swingline Loans
collectively as the context requires.
"Swingline Note" means the Swingline Note made by the Borrower payable
to the order of the Swingline Lender, substantially in the form of Exhibit A-2
hereto, evidencing the Swingline Loans, and any amendments and supplements
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extensions thereof, in whole or in part.
"Swingline Rate Margin" shall have the meaning assigned thereto in
Section 3.1(f).
"Swingline Termination Date" means the Termination Date.
"Tangible Net Worth" means, with respect to the Borrower and its
Subsidiaries at any date, Consolidated stockholders' equity minus Consolidated
intangible assets including, without limitation, good will, determined in
accordance with GAAP.
"Taxes" shall have the meaning assigned thereto in Section 3.11(a).
"Termination Date" means the earliest of the dates referred to in
Section 2.7.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of any Credit Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of
a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan, or (f) the partial or complete withdrawal of any
Credit Party or any ERISA Affiliate from a Multiemployer Plan, or (g) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA, or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Adjusted Capitalization" means, with respect to the Borrower
and its Subsidiaries at any date of determination, the sum of (a) the
Consolidated Debt of the Borrower and its Subsidiaries plus (b) the Tangible
Net Worth of the Borrower and its Subsidiaries, all as determined in accordance
with GAAP ;provided that the value of any stock, warrants or other options
owned by the
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22
Borrower and its Subsidiaries which are not traded on a public market shall be
deemed to be the lesser of the (a) the purchase price paid by the Borrower and
its Subsidiaries for such securities and (b) the Borrower's discounted market
valuation of such securities as calculated pursuant to the Borrower's Valuation
Method.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all
of the shares of capital stock or other ownership interests of which are,
directly or indirectly, owned or controlled by a Credit Party and/or one or
more of its Wholly-Owned Subsidiaries.
SECTION 1.2. General. Unless otherwise specified, a reference in
this Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter. Any reference herein to "Charlotte time" shall
refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3. Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein,
all capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date through
the Termination Date as requested by the Borrower in accordance with the terms
of Section 2.3; provided that (a) the aggregate principal amount of all
outstanding Loans (after giving effect to any amount requested) shall not
exceed the lesser of (i) the Aggregate Commitment or (ii) the Borrowing Base
and (b) the principal amount of outstanding Loans from any Lender to the
Borrower shall not at any time exceed such Lender's Commitment. Each Loan by a
Lender shall be in a principal amount equal to such Lender's Commitment
Percentage of the aggregate principal amount of
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Loans requested on such occasion. Subject to the terms and conditions hereof,
the Borrower may borrow, repay and reborrow Loans hereunder until the
Termination Date.
SECTION 2.2. Swingline Loans.
(a) Availability. Subject to the terms and conditions of this
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrower
from time to time from the Closing Date through but not including the Swingline
Termination Date; provided that (i) the aggregate principal amount of all
outstanding Swingline Loans (after giving effect to any amount requested),
shall not exceed the Swingline Commitment and (ii) the aggregate principal
amount of all outstanding Loans (after giving effect to any amount requested)
shall not exceed the lesser of (A) the Aggregate Commitment or (B) the
Borrowing Base.
(b) Refunding.
(i) Swingline Loans shall be refunded pursuant to the
terms and conditions of the Controlled Cash Flow Plus Agreement.
(ii) The Lenders shall pay to the Swingline Lender on
demand the amount of such Swingline Loans to the extent amounts applied
pursuant to the Controlled Cash Flow Plus Agreement are not sufficient to repay
in full the outstanding Swingline Loans requested or required to be refunded.
Such refundings shall be made by the Lenders in accordance with their
respective Commitment Percentages and shall thereafter be reflected on the
books and records of the Agent as Revolving Credit Loans of the Lenders bearing
interest at the Base Rate. Each Lender shall fund its respective Commitment
Percentage of Revolving Credit Loans as required to repay Swingline Loans
outstanding to the Swingline Lender upon demand by the Swingline Lender but in
no event later than 2:00 p.m. (Charlotte time) on the Business Day such demand
is made if made on or before 12:00 noon (Charlotte time) on such date and no
later than 1:00 p.m. (Charlotte time) on the next succeeding Business Day if
demand therefor is made after 12:00 noon (Charlotte time).
(iii) The Borrower shall pay to the Swingline Lender on
demand the amount of such Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, the Borrower hereby
authorizes the Agent to charge any account maintained by it with the Swingline
Lender (up to the amount available therein) in order to immediately pay the
Swingline Lender the amount of such Swingline Loans to the extent amounts
received from the Lenders are not sufficient to repay in full the outstanding
Swingline Loans requested or required to be refunded. If any portion of any
such amount paid to the Swingline Lender shall be recovered by or on behalf of
the Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of
the amount so recovered shall be ratably shared among all the Lenders in
accordance with their respective Commitment Percentages.
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(iv) Each Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section 2.2(b) is absolute and unconditional and shall not be affected by any
circumstance whatsoever; provided that if prior to the refunding of any
outstanding Swingline Loans pursuant to this Section 2.2(b), one of the events
described in Section 11.1(i) or (j) shall have occurred, each Lender will, on
the Business Day the applicable Revolving Credit Loan would have been made,
purchase an undivided participating interest in the Swingline Loan to be
refunded in an amount equal to its Commitment Percentage of the aggregate
amount of such Swingline Loan. Each Lender will immediately transfer to the
Swingline Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swingline Lender will deliver to
such Lender a certificate evidencing such participation dated the date of
receipt of such funds and for such amount. Whenever, at any time after the
Swingline Lender has received from any Lender such Lender's participating
interest in a Swingline Loan, the Swingline Lender receives any payment on
account thereof, the Swingline Lender will distribute to such Lender its
participating interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded).
SECTION 2.3. Procedure for Advances of Loans.
(a) Requests for Borrowing. The Borrower shall give the Agent
irrevocable prior written notice in the form attached hereto as Exhibit B (a
"Notice of Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the
same Business Day as each Swingline Loan or Base Rate Loan and (ii) at least
three (3) Business Days before each LIBOR Rate Loan, of its intention to
borrow, specifying (A) the date of such borrowing, which shall be a Business
Day, (B) the amount of such borrowing, which shall be (1) with respect to Base
Rate Loans in an aggregate principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof and (2) with respect to LIBOR Rate Loans in an
aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof, (C) whether the Loans are to be LIBOR Rate Loans, Base Rate
Loans, or Swingline Loans, and (D) in the case of a LIBOR Rate Loan, the
duration of the Interest Period applicable thereto. Notices received after
11:00 a.m. (Charlotte time) shall be deemed received on the next Business Day.
The Agent shall promptly notify the Lenders of each Notice of Borrowing.
Notwithstanding the foregoing, Swingline Loans may be disbursed pursuant to the
Controlled Cash Flow Plus Agreement without a Notice of Borrowing.
(b) Disbursement of Loans. Not later than 3:00 p.m. (Charlotte
time) on the proposed borrowing date, (i) each Lender will make available to
the Agent, for the account of the Borrower, at the office of the Agent in funds
immediately available to the Agent, such Lender's Commitment Percentage of the
Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline
Lender will make available to the Agent, for the account of the Borrower, at
the office of the Agent in funds immediately available
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to the Agent, the Swingline Loans to be made to the Borrower on such borrowing
date. The Borrower hereby irrevocably authorizes the Agent to disburse the
proceeds of each borrowing requested pursuant to this Section 2.3 in
immediately available funds by crediting such proceeds to a deposit account of
the Borrower maintained with the Agent or by wire transfer to such account as
may be agreed upon by the Borrower and the Agent from time to time. Subject to
Section 3.7 hereof, the Agent shall not be obligated to disburse the proceeds
of any Loan requested pursuant to this Section 2.3 until each Lender (or, in
the case of a Swingline Loan, the Swingline Lender) shall have made available
to the Agent its Commitment Percentage of such Loan.
SECTION 2.4. Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay the
outstanding principal amount of (i) all Revolving Credit Loans in full on the
Termination Date and (ii) all Swingline Loans in accordance with Section
2.2(b), together, in each such case, with all accrued but unpaid interest
thereon.
(b) Mandatory Repayment of Excess Loans. If at any time the
outstanding principal amount of all Loans exceeds the lesser of (i) the
Aggregate Commitment or (ii) the Borrowing Base, the Borrower shall repay
immediately upon notice from the Agent, by payment to the Agent for the account
of the Lenders, the Loans in an amount equal to such excess. Each such
repayment shall be accompanied by accrued interest on the amount repaid and any
amount required to be paid pursuant to Section 3.9 hereof.
(c) Optional Repayments. The Borrower may at any time and from
time to time repay the LIBOR Rate Loans or Base Rate Loans, in whole or in
part, upon at least three (3) Business Days' irrevocable notice to the Agent
with respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice
with respect to Base Rate Loans, specifying the date and amount of repayment
and whether the repayment is of LIBOR Rate Loans or Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Agent shall promptly notify each
Lender. If any such notice is given, the amount specified in such notice shall
be due and payable on the date set forth in such notice. Partial repayments
shall be in an aggregate amount of the entire principal balance outstanding or
$500,000 or a whole multiple of $100,000 in excess thereof with respect to Base
Rate Loans and $1,000,000 or a whole multiple of $500,000 in excess thereof
with respect to LIBOR Rate Loans. The Borrower may at any time and from time
to time repay the Swingline Loans, in whole or in part, without notice.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may
not repay any LIBOR Rate Loan on any day other than on the last day of the
Interest Period applicable thereto unless such repayment is accompanied by any
amount required to be paid pursuant to Section 3.9 hereof.
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SECTION 2.5. Notes.
(a) Revolving Credit Notes. Each Lender's Revolving Credit Loans
and the obligation of the Borrower to repay such Loans shall be evidenced by a
Revolving Credit Note executed by the Borrower payable to the order of such
Lender representing the Borrower's obligation to pay such Lender's Commitment
or, if less, the aggregate unpaid principal amount of all Revolving Credit
Loans made and to be made by such Lender to the Borrower hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each
Revolving Credit Note shall be dated the date hereof and shall bear interest on
the unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 3.1.
(b) Swingline Note. The Swingline Loans and the obligation of the
Borrower to repay such Swingline Loans shall be evidenced by a Swingline Note
executed by the Borrower payable to the order of the Swingline Lender
representing the Borrower's obligation to pay the Swingline Lender's Swingline
Commitment or, if less, the aggregate unpaid principal amount of all Swingline
Loans made by the Swingline Lender to the Borrower hereunder, plus interest on
such principal amounts and all other fees, charges and other amounts due
thereon. The Swingline Note shall be dated the Closing Date and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 3.1.
SECTION 2.6. Permanent Reduction of the Aggregate Commitment. The
Borrower shall have the right at any time and from time to time, upon at least
five (5) Business Days prior written notice to the Agent, to permanently
reduce, in whole at any time or in part from time to time, without premium or
penalty, the Aggregate Commitment in an aggregate principal amount not less
than $5,000,000 or any whole multiple of $1,000,000 in excess thereof. Each
permanent reduction permitted pursuant to this Section 2.6 shall be accompanied
by a payment of principal sufficient to reduce the aggregate outstanding Loans
of the Lenders after such reduction to the lesser of (a) the Aggregate
Commitment as so reduced or (b) the Borrowing Base and by payment of accrued
interest on the amount of such repaid principal. Any reduction of the
Aggregate Commitment to zero shall be accompanied by payment of all outstanding
Obligations and, if such reduction is permanent, termination of the Commitments
and the Credit Facility. If the reduction of the Aggregate Commitment requires
the repayment of any LIBOR Rate Loan, such reduction may be made only on the
last day of the then current Interest Period applicable thereto unless such
repayment is accompanied by any amount required to be paid pursuant to Section
3.9 hereof.
SECTION 2.7. Termination of Credit Facility. The Credit Facility
shall terminate on the earliest of (a) December 28, 1998, (b) the date of
termination by the Borrower pursuant to Section 2.6, and (c) the date of
termination by the Agent on behalf of the Lenders pursuant to Section 11.2(a);
provided that the Borrower may request up to three (3) one year extensions of
the date set forth in clause (a) above by providing the Agent and each of the
Lenders
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with a written request for such extensions not more than one hundred twenty
(120) days and not fewer than ninety (90) days prior to each of the first three
(3) anniversaries of the Closing Date (each, an "Extension Date"). Each of the
Lenders shall provide written notice to the Agent on or prior to the
forty-fifth (45th) day before such Extension Date of its desire to extend or
not to so extend such date. No Lender shall be under any obligation or
commitment to extend such date and no such obligation or commitment on the part
of any Lender shall be inferred from the provisions of this Section 2.7.
Failure on the part of any Lender to respond to such request by the required
date set forth above shall be deemed to be a denial of such request by such
Lender. The requested extension shall not be granted unless Lenders holding
Commitments aggregating at least 80% of the Aggregate Commitment on the Closing
Date shall have consented in writing to such extension. If Lenders holding
Commitments aggregating less than 100% but equal to or greater than 80% of such
Aggregate Commitment consent to such extension, the Borrower may elect by
written notice to the Agent and Lenders to (i) continue the Credit Facility for
such additional period with an Aggregate Commitment equal to the then effective
Aggregate Commitment less the total Commitments of Lenders who have not
consented to such an extension ("Non- Consenting Lenders") or (ii) require any
such Non-Consenting Lender to transfer and assign without recourse (in
accordance with the provisions of Section 13.11) its Commitment and other
interests, rights and obligations under this Agreement to an Eligible Assignee,
which shall assume such obligations; provided that (A) no such assignment shall
conflict with any Applicable Law and (B) such assignment shall be at the
expense of the Borrower. The Agent shall provide prompt notice to the Borrower
and the Lenders in writing as to whether the requested extension has been
granted and, if applicable, the list of Non-Consenting Lenders. If the
extension is granted, upon such Extension Date, the date set forth in clause
(a) above shall be extended to the date which is one (1) year from the then
current date set forth therein.
SECTION 2.8. Optional Increase in Commitments.
(a) Subject to the conditions set forth below, the Borrower may,
upon at least thirty (30) days prior written notice to the Agent and the
Lenders, increase the Aggregate Commitment, either by designating a lender not
theretofore a Lender to become a Lender (such designation to be effective only
with the prior written consent of the Agent, which consent shall not be
unreasonably withheld) or by agreeing with an existing Lender that such
Lender's Commitment shall be increased (thus increasing the Aggregate
Commitment); provided that:
(i) no Default or Event of Default shall have occurred
and be continuing hereunder as of effective date;
(ii) any lender not theretofore a Lender shall meet the
criteria set forth in the definition of Eligible Assignee;
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(iii) the representations and warranties made by the Credit
Parties and contained in Article V shall be true and correct on and as
of the effective date with the same effect as if made on and as of
such date (other than those representations and warranties that by
their terms speak as of a particular date, which representations and
warranties shall be true and correct as of such particular date);
(iv) the Agent may request any other documents or
information in its reasonable discretion;
(v) the amount of such increase, together with all other
increases in the Aggregate Commitment pursuant to this Section 2.8
since the date of this Agreement, shall not cause the Aggregate
Commitment to exceed $75,000,000;
(vi) the increase in the Commitment of any existing Lender
shall be in a minimum amount of $2,500,000 and the Commitment of any
Lender (whether an existing Lender or a lender not theretofore a
Lender) after such increase shall not be less than $5,000,000;
(vii) without the consent of the Credit Parties, which
consent shall not be unreasonably withheld, there shall be no more
than nine (9) Lenders at any one time;
(viii) the SBA shall have consented to the increase in the
Aggregate Commitment;
(ix) the Borrower and the Lender or lender not theretofore
a Lender, shall execute and deliver to the Agent, for its acceptance
and recording in the Register, a Lender Addition and Acknowledgement
Agreement, in form and substance satisfactory to the Agent and
acknowledged by the Agent and substantially in the form of Exhibit N
attached hereto; and
(x) the Borrower shall ensure that all filings and
recordations that are necessary to perfect the security interests of
the Lenders in the Collateral shall have been filed or recorded in all
appropriate locations and the Agent shall have received evidence
satisfactory to the Agent that such security interests constitute
valid and perfected first priority Liens therein (including evidence
satisfactory that the amount of indebtedness secured reflects the
increase in the Aggregate Commitment and that all necessary tax or
other indebtedness has been paid).
(b) Upon the execution, delivery, acceptance and recording of the
Lender Addition and Acknowledgement Agreement, from and after the effective
date specified in such Lender Addition and Acknowledgement Agreement, which
effective date shall be five (5) Business Days after the execution thereof,
such existing Lender shall have a Commitment as therein set forth or such other
lender shall become a Lender with a Commitment as therein set forth and
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shall have all the rights and obligations of a Lender with such a Commitment
hereunder.
(c) The Agent shall maintain a copy of each Lender Addition and
Acknowledgement Agreement delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Loans with respect
to each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and the Credit Parties,
the Agent and the Lenders may treat each person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Credit Parties or Lender at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a Lender Addition and Acknowledgement
Agreement together with any Note or Notes subject to such addition and
assumption and the written consent to such addition and assumption, the Agent
shall, if such Lender Addition and Acknowledgement has been completed and is
substantially in the form of Exhibit N:
(i) accept such Lender Addition and Acknowledgement
Agreement;
(ii) record the information contained therein in the
Register; and
(iii) give prompt notice thereof to the Lenders and the
Credit Parties.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Agent, in exchange for the surrendered Note or Notes
of any existing Lender or with respect to any Lender not theretofore a Lender,
a new Note or Notes to the order of the applicable Lenders in amounts equal to
the Commitment of such Lenders pursuant to Lender Assignment and Assumption
Agreement. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such Commitments, shall be dated the
effective date of such Lender Assignment and Assumption Agreement and shall
otherwise be in substantially the form of the existing Notes. Each surrendered
Note or Notes shall be canceled and returned to the Borrower.
SECTION 2.9. Use of Proceeds. The Borrower shall use the proceeds of
the Loans (a) to continue the Existing Loans, (b) to finance asset growth, and
(c) for working capital and general corporate requirements of the Borrower and
its Subsidiaries.
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ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1. Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 3.1, (a) at the election of the Borrower, the aggregate principal
balance of the Revolving Credit Notes or any portion thereof shall bear
interest at the Base Rate plus .50% (the "Base Rate Margin") or the LIBOR Rate
plus 1.75% (the "LIBOR Rate Margin") and (b) the aggregate principal balance of
the Swingline Note or any portion thereof shall bear interest at the Base Rate
plus .50% (the "Swingline Rate Margin"). The Borrower shall select the rate of
interest and Interest Period, if any, applicable to any Revolving Credit Loan
at the time a Notice of Borrowing is given pursuant to Section 2.3 or at the
time a Notice of Conversion/Continuation is given pursuant to Section 3.2.
Each Revolving Loan or portion thereof bearing interest based on the Base Rate
shall be a "Base Rate Loan" and each Revolving Loan or portion thereof bearing
interest based on the LIBOR Rate shall be a "LIBOR Rate Loan". Any Revolving
Loan or any portion thereof as to which the Borrower has not duly specified an
interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
the Borrower, by giving notice at the times described in Section 3.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
Loan, which Interest Period shall be a period of one (1), two (2), three (3),
or six (6) months (or a longer period if acceptable to each of the Lenders);
provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month at the end of
such Interest Period;
(iv) no Interest Period shall extend beyond the
Termination Date; and
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(v) there shall be no more than five (5) Interest Periods
outstanding at any time.
(c) Default Rate. Upon the occurrence and during the continuance
of an Event of Default, (i) the Borrower shall no longer have the option to
request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear
interest at a rate per annum two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans until the end of the applicable Interest Period
and thereafter at a rate equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans, (iii) all outstanding Base Rate Loans and
Swingline Loans shall bear interest at a rate per annum equal to two percent
(2%) in excess of the rate then applicable to Base Rate Loans. Interest shall
continue to accrue on the Notes after the filing by or against the Borrower of
any petition seeking any relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign.
(d) Interest Payment and Computation. Interest on each Base Rate
Loan shall be payable in arrears on the last Business Day of each fiscal
quarter commencing December 29, 1995 and interest on each LIBOR Rate Loan shall
be payable on the last day of each Interest Period applicable thereto, and if
such Interest Period extends over three (3) months, at the end of each three
(3) month interval during such Interest Period. All interest rates, fees and
commissions provided hereunder shall be computed on the basis of a 360-day year
and assessed for the actual number of days elapsed, except that interest with
respect to each Base Rate Loan shall be computed on the basis of a 365/366-day
year.
(e) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall at the Agent's
option promptly refund to the Borrower any interest received by Lenders in
excess of the maximum lawful rate or shall apply such excess to the principal
balance of the Obligations. It is the intent hereof that the Borrower not pay
or contract to pay, and that neither the Agent nor any Lender receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Borrower under Applicable Law.
(f) Cash Collateralization.
(i) Notwithstanding the provisions of subsection (a) of
this Section 3.1, during the period from the Closing Date to June 27,
1997, the Base Rate Margin and the LIBOR Rate Margin
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provided for in such subsection shall be determined by reference to
the Cash Collateral Coverage Ratio (as hereinafter defined) as of the
date of the delivery of the applicable Cash Collateral Coverage
Certificate (as hereinafter defined) as follows:
Cash Collateral Base Rate LIBOR Rate
Coverage Ratio Margin Margin
-------------- ------ ------
Equal to or greater 0.00% 0.60%
than 1.0 to 1.0
Less than 1.0 to 1.0 0.13% 0.89%
but greater than
.75 to 1.0
Equal to or less than 0.25% 1.18%
.75 to 1.0 but great-
er than .50 to 1.0
Equal to or less than 0.38% 1.46%
.50 to 1.0 but great-
er than .25 to 1.0
Equal to or less than 0.50% 1.75%
.25 to 1.0
Adjustments, if any, in the Base Rate Margin or the LIBOR Rate
Margin shall be made by the Agent on the first Business Day
following the date of receipt by the Agent of (i) the weekly
Cash Collateral Coverage Certificate of the Parent and its
Subsidiaries setting forth the Cash Collateral Coverage Ratio
of the Parent and its Subsidiaries as of the most recent week
end and (ii) any written notice of termination of the
Collateral Assignment of Certificate of Deposits, the
Collateral Assignment of Deposit Accounts, or any collateral
pledged therein. Subject to Section 3.1(d), in the event the
Parent fails to deliver such certificate within the time
required herein, the Base Rate Margin and the LIBOR Rate
Margin shall be the highest Base Rate Margin and LIBOR Rate
Margin set forth above until the delivery of such certificate.
As used herein, the "Cash Collateral Coverage Ratio" shall
mean the ratio of (a) the aggregate principal amount of
collateral pledged pursuant to the Collateral Assignment of
Certificates of Deposit and the Collateral Assignment of
Deposit Accounts (excluding any such collateral released
pursuant to such agreements) to (b) the aggregate principal
amount of all Loans then outstanding. As used herein, the
"Collateral Assignment of Certificates of Deposit" shall mean
the Collateral Assignment of Certificates of Deposit executed
by the Parent, as pledgor, in favor of the Agent, for the
ratable benefit of itself and the Lenders, substantially in
the form of Exhibit M-1 hereto, as amended or modified
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from time to time. As used herein, the "Collateral Assignment
of Deposit Accounts" shall mean the Collateral Assignment of
Deposit Accounts executed by the Parent, as pledgor, in favor
of the Agent, for the ratable benefit of itself and the
Lenders, substantially in the form of Exhibit M-2 hereto, as
amended or modified from time to time.
(ii) The Parent will furnish or cause to be furnished to
the Agent at the Agent's Office (with copies for each Lender) and the
Agent at its address set forth in Section 13.1 hereof, or such other
office as may be designated by the Agent from time to time, not later
than 11:00 a.m. (Charlotte time) on Thursday of each week and at such
other times as the Agent shall reasonably request, a certificate of
the chief financial officer or the treasurer of the Parent in the form
of Exhibit M-3 attached hereto setting forth the Cash Collateral
Coverage Ratio of the Parent and its Subsidiaries (the "Cash
Collateral Coverage Certificate"). Certificates received after 11:00
a.m. (Charlotte time) shall be deemed received on the next Business
Day.
(iii) The Agent shall notify each Lender of any adjustment
in the Base Rate Margin or the LIBOR Rate Margin not later than 11:00
a.m. (Charlotte time) on the date of any such adjustment.
SECTION 3.2. Notice and Manner of Conversion or Continuation of
Loans. Provided that no Event of Default has occurred and is then continuing,
the Borrower shall have the option to (a) convert at any time all or any
portion of its outstanding Base Rate Loans in a principal amount equal to
$1,000,000 or any whole multiple of $500,000 in excess thereof into one or more
LIBOR Rate Loans or (b) upon the expiration of any Interest Period, (i) convert
all or any part of its outstanding LIBOR Rate Loans in a principal amount equal
to $500,000 or a whole multiple of $100,000 in excess thereof into Base Rate
Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the
Borrower desires to convert or continue Loans as provided above, the Borrower
shall give the Agent irrevocable prior written notice in the form attached as
Exhibit C (a "Notice of Conversion/ Continuation") not later than 12:00 a.m.
(Charlotte time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Loan is to be effective specifying (A) the
Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to
be converted or continued, the last day of the Interest Period therefor, (B)
the effective date of such conversion or continuation (which shall be a
Business Day), (C) the principal amount of such Loans to be converted or
continued, and (D) the Interest Period to be applicable to such converted or
continued LIBOR Rate Loan. The Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
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SECTION 3.3. Fees.
(a) Facility Fee. The Borrower shall pay to the Agent, for the
account of the Lenders, a non-refundable facility fee on the Aggregate
Commitment (regardless of usage) at a rate per annum equal to .25%. The
facility fee shall be payable in arrears on the last Business Day of each
fiscal quarter during the term of this Agreement commencing __________, 199__,
and on the Termination Date. Such facility fee shall be distributed by the
Agent to the Lenders pro rata in accordance with each Lenders' respective
Commitment Percentages.
(b) Upfront Fees. In order to compensate each Lender party to
this Agreement on the Closing Date for its Commitment, the Borrower agrees to
pay to the Agent, for the account of each such Lender, an up-front fee at a
rate per annum equal to .125% on a pro-rata basis on the Aggregate Commitment.
The upfront fees shall be payable on or before the Closing Date.
(b) Agent's and Other Fees. In order to compensate the Agent for
restructuring the Loans and amending and restating the Existing Loan Agreement
and for its obligations hereunder, the Borrower agrees to pay to the Agent, for
its account, the fees set forth in the separate fee letter agreement executed
by the Borrower and the Agent dated July 12, 1996.
SECTION 3.4. Manner of Payment. Each payment (including repayments
described in Article II) by the Borrower on account of the principal of or
interest on the Revolving Credit Loans or of any fee, commission or other
amounts payable to the Lenders under this Agreement or any Revolving Credit
Note shall be made not later than 2:00 p.m. (Charlotte time) on the date
specified for payment under this Agreement to the Agent for the account of the
Lenders pro rata in accordance with their respective Commitment Percentages at
the Agent's Office, in Dollars, in immediately available funds and shall be
made without any set-off, counterclaim or deduction whatsoever. Any payment
received after such time but before 3:00 p.m. (Charlotte time) on such day
shall be deemed a payment on such date for the purposes of Section 11.1, but
for all other purposes shall be deemed to have been made on the next succeeding
Business Day. Any payment received after 3:00 p.m. (Charlotte time) shall be
deemed to have been made on the next succeeding Business Day for all purposes.
Upon receipt by the Agent of each such payment, the Agent shall credit each
Lender's account with its pro rata share of such payment in accordance with
such Lender's Commitment Percentage and shall wire advice of the amount of such
credit to each Lender. Each payment to the Agent on account of the principal
of or interest on the Swingline Loans or of any fee, commission or other
amounts payable to the Swingline Lender under this Agreement or the Swingline
Note shall be made in like manner, but for the account of the Swingline Lender.
Subject to Section 3.1(b)(ii), if any payment under this Agreement or any Note
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day and such extension
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of time shall in such case be included in computing any interest if payable
along with such payment.
SECTION 3.5. Crediting of Payments and Proceeds. In the event that
the Borrower shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 11.2, all payments
received by the Lenders upon the Revolving Credit Notes and the other
Obligations and all net proceeds from the enforcement of the Obligations shall
be applied first to all expenses then due and payable by the Borrower
hereunder, then to all indemnity obligations then due and payable by the
Borrower hereunder, then to all Agent's fees then due and payable, then to all
commitment and other fees and commissions then due and payable, then to accrued
and unpaid interest on the Notes and any termination payments due in respect of
a Hedging Agreement with any Lender (pro rata in accordance with all such
amounts due), then to the principal amount of the Swingline Note, then to the
principal amount of the Notes, in that order.
SECTION 3.6. Adjustments.
(a) If any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Revolving Credit Loans, or interest
thereon, or if any Lender shall at any time receive any collateral in respect
to its Revolving Credit Loans (whether voluntarily or involuntarily, by set-off
or otherwise) in a greater proportion than any such payment to and collateral
received by any other Lender, if any, in respect of such other Lender's
Revolving Credit Loans, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Revolving Credit Loans, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender's Revolving Credit Loans may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) If, pursuant to proviso (C) of Section 3(a) of the
Intercreditor Agreement, an Event of Default noted in subsections (ii) and
(iii) of such Section 3(a) is not waived by the applicable Creditor (as defined
in the Intercreditor Agreement) within the applicable time period noted therein
or cured by the Borrower within the applicable time period noted therein, then
(i) any payment received in connection with the Obligations of the Borrower
after the occurrence of such Event of Default but prior to the passage of the
applicable time period noted therein shall be deemed to have been received for
the benefit of both Creditors (as defined in the Intercreditor Agreement), (ii)
each Lender shall provide the
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SBA with such amount of such payment as shall be necessary to cause the Lenders
to share such payment or benefits of such payment in accordance with the Pro
Rata Shares (as defined in the Intercreditor Agreement), and (iii) the
liability of the Borrower with regard to the payment of the Obligations
hereunder shall remain in full force and effect as fully as if such payment
shared with the SBA had never been made to the Lenders.
SECTION 3.7. Nature of Obligations of Lenders Regarding Loans;
Assumption by the Agent. The obligations of the Lenders under this Agreement
to make the Loans are several and are not joint or joint and several. Unless
the Agent shall have received notice from a Lender prior to a proposed
borrowing date that such Lender will not make available to the Agent such
Lender's ratable portion of the amount to be borrowed on such date (which
notice shall not release such Lender of its obligations hereunder), the Agent
may assume that such Lender has made such portion available to the Agent on the
proposed borrowing date in accordance with Section 2.3(b) and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Agent on a date
after such borrowing date, such Lender shall pay to the Agent on demand an
amount, until paid, equal to the product of (a) the amount of such Lender's
Commitment Percentage of such borrowing, times (b) the daily average Federal
Funds Rate during such period as determined by the Agent, times (c) a fraction
the numerator of which is the number of days that elapse from and including
such borrowing date to the date on which such Lender's Commitment Percentage of
such borrowing shall have become immediately available to the Agent and the
denominator of which is 360. A certificate of the Agent with respect to any
amounts owing under this Section shall be conclusive, absent manifest error.
If such Lender's Commitment Percentage of such borrowing is not made available
to the Agent by such Lender within three (3) Business Days of such borrowing
date, the Agent shall be entitled to recover such amount made available by the
Agent with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrower. The failure of any Lender to make its
Commitment Percentage of any Loan available shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its Commitment Percentage
of such Loan available on such borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Commitment
Percentage of such Loan available on the borrowing date.
SECTION 3.8. Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with
respect to any Interest Period the Agent or any Lender (after consultation with
Agent) shall determine that, by reason of circumstances affecting the foreign
exchange and interbank markets generally, deposits in eurodollars, in the
applicable amounts are not being quoted via Telerate Page 3750 or offered to
the Agent or such Lender for such Interest Period, then the Agent shall
forthwith give notice thereof to the Borrower. Thereafter, until the Agent
notifies the Borrower that such circumstances no longer
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exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of
the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan
shall be suspended, and the Borrower shall repay in full (or cause to be repaid
in full) the then outstanding principal amount of each such LIBOR Rate Loan
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan
as of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of their respective
Lending Offices) with any request or directive (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
shall make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Agent and the Agent shall promptly give notice to the Borrower and the
other Lenders. Thereafter, until the Agent notifies the Borrower that such
circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR
Rate Loans and the right of the Borrower to convert any Loan or continue any
Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR
Rate Loan shall immediately be converted to a Base Rate Loan for the remainder
of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction
of, or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any of the Lenders (or any of their respective Lending Offices)
with any request or directive (whether or not having the force of law) of such
Governmental Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to
any Note or shall change the basis of taxation of payments to any of the
Lenders (or any of their respective Lending Offices) of the principal of or
interest on any Note or any other amounts due under this Agreement in respect
thereof (except for changes in the rate of tax on the overall net income of any
of the Lenders or any of their respective Lending Offices imposed by the
jurisdiction in which such Lender is organized or is or should be qualified to
do business or such Lending Office is located); or
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(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or to reduce the yield or amount of
any sum received or receivable by any of the Lenders under this Agreement or
under the Notes in respect of a LIBOR Rate Loan, then such Lender shall
promptly notify the Agent, and the Agent shall promptly notify the Borrower of
such fact and demand compensation therefor and, within fifteen (15) days after
such notice by the Agent, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or Lenders for such increased
cost or reduction. The Agent will promptly notify the Borrower of any event of
which it has knowledge which will entitle such Lender to compensation pursuant
to this Section 3.8(c); provided that the Agent shall incur no liability
whatsoever to the Lenders or the Borrower in the event it fails to do so. The
amount of such compensation shall be determined, in the applicable Lender's
sole discretion, based upon the assumption that such Lender funded its
Commitment Percentage of the LIBOR Rate Loans in the London interbank market
and using any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender setting forth
the basis for determining such amount or amounts necessary to compensate such
Lender shall be forwarded to the Borrower through the Agent and shall
constitute prima facie evidence that such amounts are due.
SECTION 3.9. Indemnity. The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired
to effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion or (c) due to any payment, prepayment or conversion of
any LIBOR Rate Loan on a date other than the last day of the Interest Period
therefor. The amount of such loss or expense shall be determined, in the
applicable Lender's sole discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market and using any reasonable attribution or averaging methods
which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts necessary
to compensate such Lender shall be forwarded to the Borrower through the Agent
and shall constitute prima facie evidence that such amounts are due.
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SECTION 3.10. Capital Requirements. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of
law), has or would have the effect of reducing the rate of return on the
capital of, or has affected or would affect the amount of capital required to
be maintained by, any Lender or any corporation controlling such Lender as a
consequence of, or with reference to the Commitments and other commitments of
this type, below the rate which the Lender or such other corporation could have
achieved but for such introduction, change or compliance, then within five (5)
Business Days after written demand by any such Lender, the Borrower shall pay
to such Lender from time to time as specified by such Lender additional amounts
sufficient to compensate such Lender or other corporation for such reduction.
A certificate as to such amounts shall be submitted to the Borrower and the
Agent by such Lender and shall constitute prima facie evidence that such
amounts are due.
SECTION 3.11. Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholding, and all liabilities with respect thereto excluding, (i)
in the case of each Lender and the Agent, income and franchise taxes imposed by
the jurisdiction under the laws of which such Lender or the Agent (as the case
may be) is organized or is or should be qualified to do business or any
political subdivision thereof and (ii) in the case of each Lender, income and
franchise taxes imposed by the jurisdiction of such Lender's Lending Office or
any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Lender or the Agent, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.11) such Lender or
the Agent (as the case may be) receives an amount equal to the amount such
party would have received had no such deductions been made, (B) the Borrower
shall make such deductions, (C) the Borrower shall pay the full amount deducted
to the relevant taxing authority or other authority in accordance with
applicable law, and (D) the Borrower shall deliver to the Agent evidence of
such payment to the relevant taxing authority or other authority in the manner
provided in Section 3.11(d).
(b) Stamp and Other Taxes. In addition, the Borrower shall pay
any present or future stamp, registration, recordation or documentary taxes or
any other similar fees or charges or excise or property taxes, levies of the
United States or any state or political subdivision thereof or any applicable
foreign jurisdiction which arise from any payment made hereunder or from
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the execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Loans, the other Loan Documents, or the perfection of any rights
or security interest in respect thereto (hereinafter referred to as "Other
Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 3.11) paid by such Lender or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Such indemnification shall be made within
thirty (30) days from the date such Lender or the Agent (as the case may be)
makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date
of any payment of Taxes or Other Taxes, the Borrower shall furnish to the
Agent, at its address referred to in Section 13.1, the original or a certified
copy of a receipt evidencing payment thereof or other evidence of payment
satisfactory to the Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws
of a jurisdiction other than the United States or any state thereof shall
deliver to the Borrower, with a copy to the Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to the Borrower,
with a copy to the Agent, a Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms or manner of certification, as the case may be, on or before
the date that any such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form previously delivered by
it to the Borrower, certifying in the case of a Form 1001 or 4224 that such
Lender is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes (unless in any such
case an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders such forms inapplicable or the exemption to
which such forms relate unavailable and such Lender notifies the Borrower and
the Agent that it is not entitled to receive payments without deduction or
withholding of United States federal income taxes) and, in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding
tax.
(f) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations
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41
of the Borrower contained in this Section 3.11 shall survive the payment in
full of the Obligations and the termination of the Commitments.
SECTION 3.12. Claims for Increased Costs and Taxes. In the event
that any Lender shall decline to make LIBOR Rate Loans pursuant to Section
3.8(a) or (b) hereof or shall have notified the Borrower that it is entitled to
claim compensation pursuant to Section 3.8(c), 3.9, 3.10 or 3.11 hereof or is
unable to complete the form required or subject to withholding as provided in
Section 3.11 hereof (each such lender being an "Affected Lender"), the Borrower
at its own cost and expense may designate a replacement bank (a "Replacement
Lender") to assume the Commitment and the obligations of any such Affected
Lender hereunder, and to purchase the outstanding Note of such Affected Lender
and such Affected Lender's rights hereunder and with respect thereto, without
recourse upon, or warranty by, or expense to, such Affected Lender, for a
purchase price equal to the outstanding principal amount of the Loans of such
Affected Lender plus all interest accrued and unpaid thereon and all other
amounts owing to such Affected Lender hereunder, including, without limitation,
any amount which would be payable to such Affected Lender pursuant to Section
3.8(c), and upon such assumption and purchase by the Replacement Lender, such
Replacement Lender shall be deemed to be a "Lender" for purposes of this
Agreement and such Affected Lender shall cease to be a "Lender" for purposes of
this Agreement and shall no longer have any obligations or rights hereunder
(other than any obligations or rights which according to this Agreement shall
survive the termination of the Commitment).
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1. Closing. The closing shall take place at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on August __, 1996 or on such
other date as the parties hereto shall mutually agree.
SECTION 4.2. Conditions to Closing and Initial Loan. The obligation
of the Lenders to close this Agreement and to make the initial Loan is subject
to the satisfaction of each of the following conditions:
(a) Executed Loan Documents. This Agreement, the Notes, the
Security Agreement, the Borrower Pledge Agreement, the Parent Pledge Agreement,
the Bailment Agreement, the Intercreditor Agreement, the Collateral Assignment
of Certificates of Deposit and the Collateral Assignment of Deposit Accounts
shall have been duly authorized, executed and delivered to the Agent by the
parties thereto, shall be in full force and effect and no default shall exist
thereunder, and the Borrower and the Parent shall have delivered original
counterparts thereof to the Agent.
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(b) Collateral
(i) Filings and Recordings. All filings and recordations
that are necessary to perfect the security interests of the Lenders in the
Collateral shall have been filed or recorded in all appropriate locations and
the Agent shall have received evidence satisfactory to the Agent that such
security interests constitute valid and perfected first priority Liens therein,
subject only to Liens permitted pursuant to in Section 9.3.
(ii) Pledged Securities. The Custodian, pursuant to the
terms and conditions of the Borrower Pledge Agreement and the Bailment
Agreement, shall have received the original notes (endorsed in blank), stock
certificates and warrants pledged pursuant to the Borrower Pledge Agreement,
together with an appropriate undated transfer power and irrevocable proxy for
each stock certificate and warrant, duly executed in blank by the registered
owner thereof.
(iii) Pledged Stock. The Agent shall have received
original stock certificates evidencing the capital stock of the Borrower
pledged pursuant to the Parent Pledge Agreement, together with an appropriate
undated stock power for each certificate duly executed in blank by the
registered owner thereof.
(iv) Lien Search. The Borrower shall have delivered the
results of a Lien search of all filings made against the Borrower under the
Uniform Commercial Code as in effect in any state in which its chief executive
office or Collateral is located, indicating among other things that its assets
are free and clear of any Lien except for the Liens permitted by Section 9.3.
(v) Insurance. The Agent shall have received
certificates of insurance and certified copies of insurance policies in the
form required under Section 7.3 and the Security Documents and otherwise in
form and substance reasonably satisfactory to the Agent.
(c) Closing Certificates; etc.
(i) Officers's Certificate of each Credit Party. The
Agent shall have received a certificate from the chief executive officer or
chief financial officer of each Credit Party, in form and substance
satisfactory to the Agent, to the effect that all representations and
warranties of such Credit Party contained in this Agreement and the other Loan
Documents are true, correct and complete; that such Credit Party is not in
violation of any of the covenants contained in this Agreement and the other
Loan Documents; that, after giving effect to the transactions contemplated by
this Agreement, no Default or Event of Default has occurred and is continuing;
and that such Credit Party has satisfied each of the closing conditions.
(ii) Certificate of Secretary of each Credit Party. The
Agent shall have received a certificate of the secretary or
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assistant secretary of each Credit Party certifying that attached thereto is a
true and complete copy of the charter of such Credit Party, and all amendments
thereto, certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of incorporation; that attached thereto is a true
and complete copy of the bylaws of such Credit Party, as in effect on the date
of such certification; that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Credit Party
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party and the borrowings contemplated
hereunder; and as to the incumbency and genuineness of the signature of each
officer of such Credit Party executing Loan Documents to which it is a party.
(iii) Certificates of Good Standing. The Agent shall have
received long-form certificates as of a recent date of the good standing of
each Credit Party under the laws of its jurisdiction of organization and each
other jurisdiction where each Credit Party is qualified to do business and a
certificate of the relevant taxing authorities of such jurisdictions certifying
that such Person has filed required tax returns and owes no delinquent taxes.
(iv) Borrowing Base Certificate. The Agent shall have
received a completed Borrowing Base Certificate in the form of Exhibit D
attached hereto.
(v) Portfolio Certificate/Portfolio Reports. The Agent
shall have received a completed Portfolio Certificate in the form of Exhibit
E-3 attached hereto together with a copy of the Portfolio Reports in form
acceptable to the Agent, each dated no earlier than thirty (30) days prior to
the Closing Date.
(vi) Opinions of Counsel. The Agent shall have received
favorable opinions of counsel to the Credit Parties addressed to the Agent and
the Lenders with respect to the Credit Parties, the Loan Documents and such
other matters as the Lenders shall request.
(vii) Tax Forms. The Agent shall have received copies of
the United States Internal Revenue Service forms required by Section 3.11(e)
hereof.
(viii) SBIC Compliance. The Agent shall have received
written evidence in form reasonably acceptable to the Agent that the Borrower
is a duly licensed small business investment company authorized by the SBA
under the SBIC Regulations and that the Borrower is in good standing with the
SBA and is not subject to any restriction, letter agreement, probation or other
special condition respecting Borrower's eligibility, qualification or operation
as a small business investment company.
(ix) Purpose Statement. The Agent shall have received a
Form FR U-1 duly authorized, executed and delivered by the Borrower.
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(d) Consents; Defaults.
(i) Governmental and Third Party Approvals. All
necessary approvals, authorizations and consents, if any be required, of any
Person and of all Governmental Authorities and courts having jurisdiction with
respect to the transactions contemplated by this Agreement, the other Loan
Documents and the Restructuring shall have been obtained, including, without
limitation, the written approval of the SBA and the SEC, a copy of which shall
have been delivered to the Agent.
(ii) Permits and Licenses. All permits and licenses,
including permits and licenses required under Applicable Laws, necessary to the
conduct of business by the Credit Parties shall have been obtained and remain
in full force and effect.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any Governmental Authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which is related to or
arises out of this Agreement, the other Loan Documents or the Restructuring or
the consummation of the transactions contemplated hereby or thereby, or which,
in the Agent's discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement and such other Loan Documents.
(iv) No Material Adverse Change. Since December 31, 1994,
there shall not have occurred any event, condition or state of facts that is
reasonably likely to have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The Agent shall have received
the most recent audited and unaudited Consolidated financial statements of the
Credit Parties and their Subsidiaries, all in form and substance satisfactory
to the Agent.
(ii) Financial Condition Certificate. The Borrower shall
have delivered to the Agent a certificate, in form and substance satisfactory
to the Agent, and certified as accurate by the chief executive officer or chief
financial officer of each Credit Party, that (A) each Credit Party and each of
its Subsidiaries are each Solvent, (B) the payables of each Credit Party are
current and not past due, (C) attached thereto is a pro forma balance sheet of
the Credit Parties and their Subsidiaries setting forth on a pro forma basis
the financial condition of the Credit Parties and their Subsidiaries on a
Consolidated basis as of that date, reflecting on a pro forma basis the effect
of the transactions contemplated herein, including all fees and expenses in
connection therewith, and evidencing compliance on a pro forma basis with the
covenants
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contained in Articles VIII and IX hereof and (D) attached thereto are the
financial projections previously delivered to the Agent representing the good
faith opinions of each Credit Party and senior management thereof as to the
projected results contained therein.
(iii) Payment at Closing; Fee Letters. There shall have
been paid by the Credit Parties to the Agent and the Lenders the fees set forth
or referenced in Section 3.3 and any other accrued and unpaid fees or
commissions due hereunder (including, without limitation, legal fees and
expenses in connection with the transactions contemplated hereby and the
Restructuring), and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes, fees
and other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents.
(iv) Equity Proceeds. The Agent shall have received
evidence of the receipt by the Borrower from the Parent of proceeds in the form
of equity capital in an amount not less than fifty percent (50%) of the amount
by which the Lenders' Commitments hereunder on the Closing Date exceed
$50,000,000.
(f) Miscellaneous.
(i) Notice of Borrowing. The Agent shall have received
written instructions from the Borrower to the Agent directing the payment of
any proceeds of Loans made under this Agreement that are to be paid on the
Closing Date.
(ii) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement and the Restructuring shall be
satisfactory in form and substance to the Lenders. The Lenders shall have
received copies of all other instruments and other evidence as the Lenders may
reasonably request, in form and substance satisfactory to the Lenders, with
respect to the transactions contemplated by this Agreement and the taking of
all actions in connection therewith.
(iii) Due Diligence and Other Documents. The Credit
Parties shall have delivered to the Agent such other documents, certificates
and opinions as the Agent reasonably requests, including, without limitation,
any documents, certificates and opinions relating the Restructuring.
SECTION 4.3. Conditions to All Loans. The obligations of the Lenders
to make any Loan is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(a) Continuation of Representations and Warranties. The
representations and warranties made by the Credit Parties and contained in
Article V shall be true and correct on and as of such borrowing date with the
same effect as if made on and as of such date (other than those representations
and warranties that by their
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terms speak as of a particular date, which representations and warranties shall
be true and correct as of such particular date).
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
SECTION 5.1. Representations and Warranties. To induce the Agent to
enter into this Agreement and the Lenders to make the Loans, each Credit Party
hereby represents and warrants to the Agent and Lenders that:
(a) Organization; Power; Qualification. Each Credit Party and
each Subsidiary of the Borrower is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation,
has the power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization.
(b) SBIC. The Borrower is a duly licensed small business
investment company authorized by the SBA under the SBIC Regulations. The
Borrower is in good standing with the SBA and is not subject to any
restriction, letter agreement, probation or other special condition respecting
Borrower's eligibility, qualification or operation as a small business
investment company.
(c) Subsidiaries. Each Subsidiary of each Credit Party as of the
Closing Date is listed on Schedule 5.1(c). On the Closing Date, the Borrower
does not have any Subsidiaries.
(d) Authorization of Agreement, Loan Documents and Borrowing. Each
Credit Party and each Subsidiary of the Borrower has the right, power and
authority and has taken all necessary corporate and other action to authorize
the execution, delivery and performance of this Agreement and each of the other
Loan Documents to which it is a party in accordance with their respective
terms. This Agreement and each of the other Loan Documents have been duly
executed and delivered by the duly authorized officers of each Credit Party and
each of their Subsidiaries party thereto, and each such document constitutes
the legal, valid and binding obligation of such Credit Party or its Subsidiary
party thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general and the
availability of equitable remedies.
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(e) Compliance of Agreement, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance by each Credit Party and
each Subsidiary of the Borrower of the Loan Documents to which each such Person
is a party, in accordance with their respective terms, the borrowings hereunder
and the transactions contemplated hereby do not and will not, by the passage of
time, the giving of notice or otherwise, (i) require any Governmental Approval
(other than the approval of the SBA which has been duly obtained and is in full
force and effect) or violate any Applicable Law relating to any Credit Party or
any Subsidiary of the Borrower (including, without limitation, the SBIC
Regulations or the Investment Company Act), (ii) conflict with, result in a
breach of or constitute a default under the charter, bylaws or other
organizational documents of any Credit Party or any Subsidiary of the Borrower
or any indenture, agreement or other instrument to which such Person is a party
or by which any of its properties may be bound or any Governmental Approval
relating to such Person, or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Person other than Liens arising under the Loan
Documents.
(f) Compliance with Law; Governmental Approvals. Each Credit
Party and each Subsidiary of the Borrower (i) has all Governmental Approvals
required by any Applicable Law (including, without limitation, the SBIC
Regulations and the Investment Company Act) for it to conduct its business,
each of which is in full force and effect, is final and not subject to review
on appeal and is not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceeding, and (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
with all other Applicable Laws (including, without limitation, the SBIC
Regulations and the Investment Company Act) relating to it or any of its
respective properties.
(g) Tax Returns and Payments. Each Credit Party and each
Subsidiary of the Borrower has duly filed or caused to be filed all federal,
state, local and other tax returns required by Applicable Law to be filed, and
has paid, or made adequate provision for the payment of, all federal, state,
local and other taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due and payable. No
Governmental Authority has asserted any Lien or other claim against any Credit
Party or any Subsidiary of the Borrower with respect to unpaid taxes which has
not been discharged or resolved. The charges, accruals and reserves on the
books of each Credit Party and any Subsidiary of the Borrower in respect of
federal, state, local and other taxes for all Fiscal Years and portions thereof
since the organization of each Credit Party and any Subsidiary of the Borrower
are in the judgment of each Credit Party adequate, and neither Credit Party
anticipates any additional taxes or assessments for any of such years.
(h) Intellectual Property Matters. Each Credit Party and each
Subsidiary of the Borrower owns or possesses rights to use all
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48
franchises, licenses, copyrights, copyright applications, patents, patent
rights or licenses, patent applications, trademarks, trademark rights, trade
names, trade name rights, copyrights and rights with respect to the foregoing
which are required to conduct its business. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such rights, and neither Credit Party nor any Subsidiary
of the Borrower is liable to any Person for infringement under Applicable Law
with respect to any such rights as a result of its business operations.
(i) Environmental Matters. The properties of each Credit Party
and each Subsidiary of the Borrower are in compliance in all material respects
with all applicable Environmental Laws, and there is no contamination at, under
or about such properties or such operations which could interfere in any
material respect with the continued operation of such properties or impair in
any material respect the fair saleable value thereof. Neither Credit Party nor
any Subsidiary of the Borrower has received any written notice of material
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of its properties or the operations conducted in connection
therewith, nor does any Credit Party or any Subsidiary of the Borrower have
knowledge or reason to believe that any such notice will be received or is
being threatened.
(j) ERISA.
(i) Neither Credit Party nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee Benefit
Plans other than those identified on Schedule 5.1(j);
(ii) Each Credit Party and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under Section
501(a) of the Code. No liability has been incurred by any Credit Party or any
ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has any Credit Party or any
ERISA Affiliate failed to make any contributions or to pay any amounts due and
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49
owing as required by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such contributions under Section
412 of the Code or Section 302 of ERISA, nor has there been any event requiring
any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to
any Pension Plan;
(iv) Neither Credit Party nor any ERISA Affiliate has:
(A) engaged in a nonexempt prohibited transaction described in Section 406 of
the ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid, (C) failed to make a required
contribution or payment to a Multiemployer Plan, or (D) failed to make a
required installment or other required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably
expected to occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of any Credit Party after due inquiry,
threatened concerning or involving any (A) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or contributed to by any
Credit Party or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer
Plan.
(k) Margin Stock. Neither Credit Party nor any Subsidiary of the
Borrower is engaged principally or as one of its activities in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" (as each such term is defined or used in Regulations G and U of the
Board of Governors of the Federal Reserve System). No part of the proceeds of
any of the Loans will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation G, T, U or X of such Board of Governors.
(l) Government Regulation. The Borrower is an "investment
company" under the Investment Company Act and the Parent has elected treatment
as a business development company under the Investment Company Act.
(m) Material Contracts. Schedule 5.1(m) sets forth a complete and
accurate list of all Material Contracts of the each Credit Party and each
Subsidiary of the Borrower in effect as of the Closing Date not listed on any
other Schedule hereto; other than as set forth in Schedule 5.1(m), each
Material Contract is, and after giving effect to the consummation of the
transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof.
(n) Burdensome Provisions. Neither Credit Party nor any
Subsidiary of the Borrower is a party to any indenture, agreement, lease or
other instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law
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which is so unusual or burdensome as in the foreseeable future could be
reasonably expected to have a Material Adverse Effect. Neither Credit Party
nor any Subsidiary of the Borrower presently anticipates that future
expenditures needed to meet the provisions of any statutes, orders, rules or
regulations of a Governmental Authority will be so burdensome as to have a
Material Adverse Effect.
(o) Financial Statements. The (i) Consolidated balance sheet of
the Credit Parties and their Subsidiaries as of December 31, 1995 and the
related statements of income and retained earnings and cash flows for the
Fiscal Year then ended and (ii) unaudited Consolidated balance sheet of the
Credit Parties and their Subsidiaries as of June 30, 1996 and related unaudited
interim statements of revenue and retained earnings, copies of which have been
furnished to the Agent and each Lender, are complete and correct and fairly
present the assets, liabilities and financial position of the Credit Parties
and their Subsidiaries as at such dates, and the results of the operations and
changes of financial position for the periods then ended (subject in the case
of unaudited statements, to year-end adjustments and the inclusion of
footnotes). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP. The Credit Parties
and their Subsidiaries have no Debt, obligation or other unusual forward or
long-term commitment which is not fairly reflected in the foregoing financial
statements or in the notes thereto.
(p) No Material Adverse Change. Since December 31, 1995, there
has been no material adverse change in the properties, business, operations,
prospects, or condition (financial or otherwise) of the Credit Parties and
their Subsidiaries and no event has occurred or condition arisen that could
reasonably be expected to have a Material Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to
each Loan made hereunder, each Credit Party and each Subsidiary of the Borrower
will be Solvent.
(r) Titles to Properties. Each Credit Party and each Subsidiary
of the Borrower has such title to the real property owned by it as is necessary
or desirable to the conduct of its business and valid and legal title to all of
its personal property and assets, including, but not limited to, those
reflected on the balance sheets of such Credit Party and such Subsidiaries
delivered pursuant to Section 5.1(o), except those which have been disposed of
by such Credit Party or such Subsidiaries subsequent to such date which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder.
(s) Liens. None of the properties and assets of any Credit Party
or any Subsidiary of the Borrower is subject to any Lien, except Liens
permitted pursuant to Section 9.3. No financing statement under the Uniform
Commercial Code of any state which names any Credit Party or any Subsidiary of
the Borrower or any of
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their respective trade names or divisions as debtor and which has not been
terminated, has been filed in any state or other jurisdiction and neither
Credit Party nor any Subsidiary of the Borrower has signed any such financing
statement or any security agreement authorizing any secured party thereunder to
file any such financing statement, except to perfect those Liens permitted by
Section 9.3 hereof.
(t) Debt and Contingent Obligations. Schedule 5.1(t) is a
complete and correct listing of all Debt and Contingent Obligations of each
Credit Party and each Subsidiary of the Borrower in excess of $250,000. Each
Credit Party and each Subsidiary of the Borrower has performed and is in
compliance with all of the terms of such Debt and Contingent Obligations and
all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of time or both would
constitute such a default or event of default on the part of such Credit Party
or such Subsidiary exists with respect to any such Debt or Contingent
Obligation.
(u) Litigation. Except as set forth on Schedule 5.1(u), there are
no actions, suits or proceedings pending nor, to the knowledge of any Credit
Party, threatened against or in any other way relating adversely to or
affecting any Credit Party or any Subsidiary of the Borrower or any of their
respective properties in any court or before any arbitrator of any kind or
before or by any Governmental Authority (including, without limitation, the
SBA).
(v) Absence of Defaults. No event has occurred or is continuing
which constitutes a Default or an Event of Default, or which constitutes, or
which with the passage of time or giving of notice or both would constitute, a
default or event of default by any Credit Party or any Subsidiary of the
Borrower under any Material Contract or judgment, decree or order to which such
Credit Party or such Subsidiary is a party or by which such Credit Party or
such Subsidiary or any of their respective properties may be bound which would
require such Credit Party or such Subsidiary to make any payment thereunder
prior to the scheduled maturity date therefor.
(w) Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on behalf of any
Credit Party or any Subsidiary thereof and furnished to the Lenders were, at
the time the same were so furnished, complete and correct in all respects to
the extent necessary to give the recipient a true and accurate knowledge of the
subject matter. No document furnished or written statement made to the Agent
or the Lenders by any Credit Party or any Subsidiary thereof in connection with
the negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of such Credit Party or its Subsidiaries or omits or will
omit to state a fact necessary in order to make the statements contained
therein not misleading as to the creditworthiness of such Credit Party or the
Borrower's Subsidiaries. Neither Credit Party
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52
is aware of any facts which it has not disclosed in writing to the Agent having
a Material Adverse Effect, or insofar as the such Credit Party can now foresee,
could reasonably be expected to have a Material Adverse Effect.
SECTION 5.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date, shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lenders or any borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations and Guaranteed Obligations have been finally
and indefeasibly paid and satisfied in full and the Commitments terminated,
unless consent has been obtained in the manner set forth in Section 13.12
hereof, the Credit Parties will furnish or cause to be furnished to the Agent
and each Lender at their respective addresses set forth in Section 13.1 hereof,
or such other office as may be designated by the Agent from time to time:
SECTION 6.1. Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in
any event within forty-five (45) days after the end of each fiscal quarter, an
unaudited Consolidated and consolidating balance sheet of the Credit Parties
and their Subsidiaries as of the close of such fiscal quarter and unaudited
Consolidated and consolidating statements of income, retained earnings and cash
flows for the fiscal quarter then ended and that portion of the Fiscal Year
then ended, including the notes thereto, all in reasonable detail setting forth
in comparative form the corresponding figures for the preceding Fiscal Year and
prepared by the Credit Parties in accordance with GAAP (subject to year-end
audit adjustments and the inclusion of footnotes) and, if applicable,
containing disclosure of the effect on the financial position or results of
operations of any change in the application of accounting principles and
practices during the period, and certified by the chief financial officer of
each Credit Party to present fairly in all material respects the financial
condition of the Credit Parties and their Subsidiaries as of their respective
dates and the results of operations of the Credit Parties and their
Subsidiaries for the respective periods then ended, subject to normal year end
adjustments.
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(b) Annual Financial Statements. As soon as practicable and in
any event within one hundred twenty (120) days after the end of each Fiscal
Year, an audited Consolidated and consolidating balance sheet of the Credit
Parties and their Subsidiaries as of the close of such Fiscal Year and audited
Consolidated and consolidating statements of income, retained earnings and cash
flows for the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by an independent certified public
accounting firm acceptable to the Agent in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position or
results of operation of any change in the application of accounting principles
and practices during the year, and accompanied by a report thereon by such
certified public accountants that is not qualified with respect to scope
limitations imposed by any Credit Party or any of its Subsidiaries or with
respect to accounting principles followed by any Credit Party or any of its
Subsidiaries not in accordance with GAAP.
(c) Annual Budget and Financial Projections. As soon as
practicable and in any event within thirty (30) days prior to the beginning of
each Fiscal Year, an annual budget of the Credit Parties and their Subsidiaries
for the ensuing four (4) fiscal quarters, such plan to be presented in the same
format as the Credit Parties' financial statement and to include, on a
quarterly basis, the following: a quarterly operating and capital budget, a
projected income statement, statement of cash flows (including sources and
uses, which shall be updated on a quarterly basis) and balance sheet,
accompanied by a certificate from the chief financial officer of each Credit
Party to the effect that, to the best of such officer's knowledge, such
projections are good faith estimates of the financial condition and operations
of the Credit Parties and their Subsidiaries for such four (4) quarter period.
SECTION 6.2. Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Sections 6.1 (a) or (b) and at
such other times as the Agent shall reasonably request, a certificate of the
chief financial officer or the treasurer of each Credit Party in the form of
Exhibit F attached hereto (an "Officer's Compliance Certificate").
SECTION 6.3. Accountants' Certificate. At each time financial
statements are delivered pursuant to Section 6.1(b), a certificate of the
independent public accountants certifying such financial statements addressed
to the Agent for the benefit of the Lenders and stating that in making the
examination necessary for the certification of such financial statements, they
obtained no knowledge of any Default or Event of Default or, if such is not the
case, specifying such Default or Event of Default and its nature and period of
existence.
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SECTION 6.4. Other Reports.
(a) As soon as practicable and in any event within fifteen (15)
days after the end of each calendar month, (i) a Borrowing Base Certificate in
the form of Exhibit D hereto showing the calculation of Eligible Loans,
Eligible Securities and the Borrowing Base as of the end of the preceding
calendar month and certified by the chief financial officer of the Borrower,
(ii) a Portfolio Certificate in the form of Exhibit E-3 hereto, certified by
the chief financial officer of each Credit Party and their Subsidiaries and
(iii) the Portfolio Reports as of the end of the preceding calendar month in
the form of Exhibit E-2 hereto, certified by the chief financial officer of the
Borrower;
(b) Promptly upon receipt thereof, copies of all reports, if any,
submitted to any Credit Party or its Board of Directors by its independent
public accountants in connection with their auditing function, including,
without limitation, any management report and any management responses thereto;
(c) Promptly upon receipt thereof, copies of all SBA audit reports
and all other material correspondence and reports to, from or regarding the
SBA, including, without limitation, any and all correspondence or report
reflecting a material criticism by the SBA or the Borrower's response to any
such criticism;
(d) Promptly but in any event within ten (10) Business Days after
the filing thereof, a copy of (i) each report or other filing made by any
Credit Party or any Subsidiary with the Securities and Exchange Commission
("SEC") and required by the SEC to be delivered to the shareholders of such
Credit Party or such Subsidiary, and (ii) each report made by any Credit Party
or any Subsidiary to the SEC on Form 8-K and each final registration statement
of the any Credit Party or any Subsidiary filed with the SEC; and
(e) Such other information regarding the operations, business
affairs and financial condition of any Credit Party or any of its Subsidiaries
as the Agent or any Lender may reasonably request.
SECTION 6.5. Notice of Litigation and Other Matters. Prompt (but in
no event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or
before any Governmental Authority (including, without limitation, the SBA) and
all actions and proceedings in any court or before any arbitrator against or
involving any Credit Party or any Subsidiary thereof or any of their respective
properties, assets or businesses;
(b) any notice of any violation received by any Credit Party or
any Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of the SBIC Regulations, the Investment
Company Act or Environmental Laws;
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(c) any labor controversy that has resulted in, or threatens to
result in, a strike or other work action against any Credit Party or any
Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding
$100,000 that may be assessed against or threatened against any Credit Party or
any Subsidiary thereof;
(e) any Default or Event of Default, or any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Material Contract to which
any Credit Party or any Subsidiary thereof is a party or by which any Credit
Party or any Subsidiary thereof or any of their respective properties may be
bound;
(f) (i) any unfavorable determination letter from the Internal
Revenue Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code (along with a copy thereof), (ii) all notices
received by any Credit Party or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iii) all notices received by any Credit Party or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA and (iv) any Credit
Party obtaining knowledge or reason to know that any Credit Party or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA;
(g) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any respect; and
(h) any change in the status of any Credit Party as an "investment
company" under the Investment Company Act and as a regulated investment company
under the Code.
SECTION 6.6. Accuracy of Information. All written information,
reports, statements and other papers and data furnished by or on behalf of any
Credit Party to the Agent or any Lender (other than financial forecasts)
whether pursuant to this Article VI or any other provision of this Agreement,
or any of the Security Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent
necessary to give the Agent or any Lender complete, true and accurate knowledge
of the subject matter based on such Credit Party's knowledge thereof.
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ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Obligations and Guaranteed Obligations have been
finally and indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner provided for in
Section 13.12, each Credit Party will, and will cause each Subsidiary of the
Borrower to:
SECTION 7.1. Preservation of Corporate Existence and Related Matters.
(a) Except as permitted by Section 9.5, preserve and maintain its
separate corporate existence and all rights, franchises, licenses and
privileges necessary to the conduct of its business, and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect.
(b) The Borrower shall remain a duly licensed small business
investment company authorized by the SBA under the SBIC Regulations. The
Borrower shall remain in good standing with the SBA and shall not become
subject to any restriction, letter agreement, probation or other special
condition respecting the Borrower's eligibility, qualification or operation as
a small business investment company, except for minor restrictions and other
matters, the occurrence of which does not render the Borrower ineligible for
continuing participation in the SBA debenture program or which could not
reasonably be expected to have a Material Adverse Effect.
(c) Maintain its status as an "investment company" (and, with
regard to the Parent, as an "investment company" that has elected treatment as
a business development company) under the Investment Company Act as a regulated
investment company under the Code.
SECTION 7.2. Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 7.3. Insurance.
(a) Maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar businesses and as may be required by Applicable Law, and
on the Closing Date and from time to time thereafter deliver to the Agent upon
its request a detailed list of the insurance then in effect, stating the names
of the insurance
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companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby.
(b) Without limiting the generality of the foregoing subsection
(a), each Credit Party shall keep its properties insured against "all risks of
physical loss" (except earthquake, unless the Agent specifically so requires as
its election, and also including flood insurance, if applicable) under a
casualty insurance policy with the "replacement cost" endorsement and a
deductible calculated on an "occurrence" basis of no more than $10,000. Each
Credit Party shall maintain public liability coverage in an amount of at least
$1,000,000 per occurrence and $2,000,000 in the aggregate. The following
provisions shall apply to all such insurance policies issued with respect to
tangible Collateral: (i) each insurance policy shall be issued by an insurance
company with a rating of "A" or better by A. M. Best & Co.; (ii) each casualty
policy shall name the Agent on behalf of the Lenders as first insured mortgagee
pursuant to a noncontribution mortgagee clause satisfactory to the Agent, and
all liability insurance policies shall name the Agent for the benefit of the
Lenders as an additional insured. The issuers of such policies must agree in
writing (by the policy provisions, endorsement or letter) to give the Agent at
least twenty (20) days prior written notice before termination or any reduction
of amount or scope of coverage; (iii) each Credit Party shall deliver such
original policies to the Agent. Not less than thirty (30) days prior to the
expiration date of each policy of insurance required under this Agreement.
Each Credit Party shall deliver to the Agent evidence of the renewal of such
policy or policies or of the substitution of another policy or policies
complying with the terms of this Agreement. If any Credit Party fails to
maintain the required insurance, the Agent may, at the Agent's option and
without notice to such Credit Party, obtain such insurance, or the Agent may
obtain single interest coverage insuring only the Agent's interest in the
Collateral. In no event shall the Agent be under any obligation to procure or
maintain insurance on the Collateral. The cost of any insurance so obtained
shall become part of the Obligations and shall be due from such Credit Party
upon demand; (iv) each Credit Party hereby assigns to the Agent, as further
security for the payment of the Obligations, all policies of insurance which
now or hereafter insure against any loss or damage to the Collateral. Each
Credit Party shall promptly give written notice to the Agent of any loss or
damage to the Collateral and will not adjust or settle any such loss without
the written consent of the Agent. If the Agent, on account of any insurance on
the Collateral, receives any money for loss or damage, such amount may, in the
reasonable exercise of the Agent's discretion, be retained and applied by the
Agent toward payment of the Obligations, or be paid to such Credit Party,
wholly or in part, subject to such conditions as the Agent may require. The
Agent is hereby irrevocably appointed attorney-in-fact for such Credit Party to
receive any sums collected under insurance policies insuring the Collateral, to
endorse any draft or instruments received under such policies, and to make
proof of loss for, settle, and give binding acquittances for claims under such
policies; and (v) each Credit Party covenants that it will not do
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any act or voluntarily suffer or permit any act to be done whereby any
insurance required hereunder shall or may be suspended, impaired or defeated,
unless replaced with similar insurance required hereby without any intervening
lapse of coverage.
SECTION 7.4. Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority
having jurisdiction over it or any of its properties (including, without
limitation, the SBA).
SECTION 7.5. Payment and Performance of Obligations. Pay and perform
all Obligations and Guaranteed Obligations under this Agreement and the other
Loan Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of its
property, and (b) all other indebtedness, obligations and liabilities in
accordance with customary trade practices; provided that such Credit Party or
such Subsidiary may contest any item described in clauses (a) and (b) above in
good faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
SECTION 7.6. Compliance With Laws and Approvals. Observe and remain
in compliance with all Applicable Laws (including, without limitation, the SBIC
Regulations and the Investment Company Act) and maintain in full force and
effect all Governmental Approvals, in each case applicable to the conduct of
its business.
SECTION 7.7. Environmental Management. In addition to and without
limiting the generality of Section 7.6, maintain its business premises (whether
leased or owned in fee) free of any Hazardous Materials, the removal of which
is required under Environmental Laws; and adopt and maintain Hazardous
Materials management practices including generation, storage, disposal and
remediation as may be required by Environmental Laws for all other Hazardous
Materials located on its business premises.
SECTION 7.8. Compliance with ERISA. In addition to and without
limiting the generality of Section 7.6, (a) comply with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, (b) not take any action
or fail to take action the result of which could be a liability to the PBGC or
to a Multiemployer Plan, (c) not participate in any prohibited transaction that
could result in any civil penalty under ERISA or tax under the Code, (d)
operate each Employee Benefit Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code and (e) furnish to the
Agent upon the Agent's request such additional information about any Employee
Benefit Plan as may be reasonably requested by the Agent.
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SECTION 7.9. Compliance With Agreements. Comply in all respects with
each material term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business including, without
limitation, any Material Contract; provided that such Credit Party or such
Subsidiary may contest any such lease, agreement or other instrument in good
faith through applicable proceedings so long as adequate reserves are
maintained in accordance with GAAP.
SECTION 7.10. Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses (including, without limitation,
with regard to the Parent, the business of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. and other
similar financial services businesses) conducted on the Closing Date.
SECTION 7.11. Visits and Inspections. Permit representatives of the
Agent or any Lender, from time to time, upon reasonable prior notice, (a) to
visit and inspect its properties; inspect, audit and make extracts from its
books, records and files, including, but not limited to, management letters
prepared by independent accountants; and discuss with its principal officers,
and its independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects and (b) to meet with
SBA representatives once each calendar quarter (and at any time a Default or
Event of Default has occurred and is continuing) to discuss the Borrower's
standing with the SBA and the SBA's view of the Borrower's operations and
prospects. The Credit Parties shall use their best efforts to arrange any
meetings between the Agent or any Lender and the SBA permitted hereunder.
SECTION 7.12. Subsidiaries. Upon the creation of any Subsidiary of
the Borrower permitted by this Agreement, cause to be executed and delivered to
the Agent, on or prior to the creation of such Subsidiary, a guaranty
agreement, security documents and such other documents reasonably requested by
the Agent, all in form and content satisfactory to the Required Lenders in
their sole discretion, in order that such Subsidiary shall unconditionally
guarantee the Obligations and the applicable assets of such Subsidiary shall
become Collateral for the Obligations.
SECTION 7.13. Additional Subsidiary Guarantors/Joinder. Upon the
creation of any Subsidiary of the Borrower permitted by this Agreement, cause
to be executed and delivered to the Agent within ten (10) Business Days after
the creation of such Subsidiary (a) a Subsidiary Guaranty substantially in the
form attached as Exhibit L hereto executed by such new Subsidiary, (b) the
supplement substantially in the form attached as Annex II to the Security
Agreement executed by such new Subsidiary, (c) the closing documents and
certificates required of each Subsidiary pursuant to Section 4.2(b) and (c)
hereof with respect to such new Subsidiary, and (d) such other documents
reasonably requested by the Agent in order that such Subsidiary shall become
bound by all of the terms, covenants and agreements contained in the Security
Agreement and the Subsidiary Guaranty of the applicable assets of such
Subsidiary shall become Collateral for the Obligations.
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SECTION 7.14. Ownership of Portfolio Companies. Maintain ownership
of all of the investments in their respective issuers and obligors; provided
that (i) no such investment by any Credit Party or any Subsidiary thereof in an
issuer or obligor shall be owned collectively by any other Credit Party or any
Subsidiary thereof, (ii) neither Credit Party nor any Subsidiary thereof shall
have any investment in any issuer or obligor in which the other Credit Party or
any Subsidiary thereof has any investment, and (iii) with respect to the
Parent, such ownership may be direct or indirect through the creation of
special purpose vehicles created for the purpose of the ownership of such
investments.
SECTION 7.15. Contribution of Equity by the Parent. With regard to
the Parent only, upon any increase in the Commitments of the Lenders above the
then existing amount of the Commitments pursuant to Section 2.8, contribute to
the Borrower equity in an amount equal to fifty percent (50%) of such increase.
SECTION 7.16. Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments (including, without
limitation, any acts, things, deeds and instruments related to the investments
set forth on the Portfolio Reports) as the Agent or any Lender may reasonably
require to document and consummate the transactions contemplated hereby and to
vest completely in and insure the Agent and the Lenders their respective rights
under this Agreement, the Notes and the other Loan Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations and Guaranteed Obligations have been
finally and indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set forth in Section
13.12 hereof, the Borrower and its Subsidiaries on a Consolidated basis will
not:
SECTION 8.1. Minimum Tangible Net Worth. As of the end of any fiscal
quarter, permit Tangible Net Worth to be less than (a) $81,600,000 plus (b)
fifty percent (50%) of the aggregate amount by which the Aggregate Commitment
exceeds $50,000,000.
SECTION 8.2. Debt to Total Adjusted Capitalization. As of the end of
any fiscal quarter, permit the ratio of (a) Consolidated Debt of the Borrower
and its Subsidiaries as of such fiscal quarter end to (b) Total Adjusted
Capitalization as of such fiscal quarter end to exceed 0.70 to 1.00.
SECTION 8.3. Interest Coverage Ratio. As of the end of any fiscal
quarter, permit the ratio of (a) Consolidated EBIT for the period of four (4)
consecutive fiscal quarters ending on such fiscal quarter end to (b)
Consolidated Interest Expense for such
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period of four (4) consecutive fiscal quarters, to be less than 1.85 to 1.0.
SECTION 8.4. Non-Accrual and Delinquent Loans. As of the end of any
fiscal quarter, permit the ratio of (a) loans in its portfolio (calculated on a
fair value basis) which have payments more than thirty (30) days past due or
which are on a non-accrual basis to (b) the aggregate amount of loans in its
portfolio (calculated on a fair value basis) to exceed .085 to 1.00.
SECTION 8.5. Loan Loss Ratio. As of the end of any fiscal quarter,
permit the ratio of (a) the difference between (i) net losses realized from
loans in its portfolio (calculated on a cost basis) minus (ii) net gains
realized from securities in its portfolio, each as determined for the period of
four (4) consecutive fiscal quarters ending on such fiscal quarter end to (b)
the aggregate amount of loans in its portfolio (calculated on a cost basis) as
of such fiscal quarter end to exceed .02 to 1.00.
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations and Guaranteed Obligations have been
finally and indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set forth in Section
13.12 hereof, each Credit Party has not and will not permit any Subsidiary of
the Borrower to:
SECTION 9.1. Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with any Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to the
Agent;
(c) SBA Debt;
(d) existing Debt set forth on Schedule 9.1 and the renewal and
refinancing (but not the increase) thereof;
(e) Debt permitted pursuant to Section 9.4(c); provided that such
Debt is subordinated to the Loans on terms and conditions satisfactory to the
Required Lenders; and
(f) Debt consisting of Contingent Obligations permitted by Section
9.2;
(g) Purchase money Debt for the purchase of equipment in an amount
not to exceed $100,000 in the aggregate; and
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(h) Debt of the Parent; provided that all terms and conditions of
any agreement, document or instrument under which such Debt is created directly
relating to intercompany activities, including, without limitation, terms and
conditions directly relating to the ability of the Parent to downstream funds
to the Borrower (except upon an event of default under such agreements,
documents, or instruments), shall be subject to the review of the Agent and the
Lenders and shall be in form and substance reasonably satisfactory to the Agent
and the Lenders.
SECTION 9.2. Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) Contingent Obligations in favor of the Agent for the benefit
of the Agent and the Lenders;
(b) Contingent Obligations guarantying the Debt permitted pursuant
to Section 9.1; provided that the Borrower shall not create, incur, assume or
suffer to exist any Contingent Obligations guarantying the Debt of the Parent;
and
(c) Contingent Obligations of the Parent; provided that all terms
and conditions of any agreement, document or instrument under which such
Contingent Obligations are created directly relating to intercompany
activities, including, without limitation, terms and conditions directly
relating to the ability of the Parent to downstream funds to the Borrower
(except upon an event of default under such agreements, documents, or
instruments), shall be subject to the review of the Agent and the Lenders and
shall be in form and substance reasonably satisfactory to the Agent and the
Lenders.
SECTION 9.3. Limitations on Liens. Create, incur, assume or suffer
to exist, any Lien on or with respect to any of its assets or properties
(including shares of capital stock), real or personal, whether now owned or
hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA
or Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation;
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(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do
not, in any case, detract from the value of such property or impair the use
thereof in the ordinary conduct of business;
(e) Liens of the Agent for the benefit of the Agent and the
Lenders;
(f) Liens securing the Debt permitted by Section 9.1(c), (g), or
(h) and securing Contingent Obligations permitted by Section 9.2(c); provided
that, (A) with respect to purchase money Debt, (i) the Lien attaches solely to
the assets being acquired and (ii) the Debt secured by any such Liens does not
exceed 100% of the purchase price of the asset being acquired and (B) with
respect to Liens securing the Debt permitted by Section 9.1(h), such Liens
shall not attach to or encumber the assets of the Borrower or its Subsidiaries;
and
(g) Existing liens described on Schedule 9.3.
SECTION 9.4. Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture,
evidence of Debt or other obligation or security, substantially all or a
portion of the business or assets of any other Person or any other investment
or interest whatsoever in any other Person, or make or permit to exist,
directly or indirectly, any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any Person, or enter into,
directly or indirectly, any commitment or option in respect of the foregoing,
except:
(a) existing loans, advances and investments described on Schedule
9.4;
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof maturing within 120 days from the date of acquisition thereof, (ii)
commercial paper maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., (iii) certificates of
deposit maturing no more than 120 days from the date of creation thereof issued
by commercial banks incorporated under the laws of the United States of
America, each having combined capital, surplus and undivided profits of not
less than $500,000,000 and having a rating of "A" or better by a nationally
recognized rating agency; provided that except for certificates of deposit
pledged to the Agent, for the benefit of itself and the Lenders under the
Collateral Assignment of Certificates of Deposit the aggregate amount invested
in such certificates of deposit shall not at any time exceed $5,000,000 for any
one such certificate of deposit and $10,000,000 for any one such bank, or (iv)
time deposits maturing no more than
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30 days from the date of creation thereof with commercial banks or savings
banks or savings and loan associations each having membership either in the
FDIC or the deposits of which are insured by the FDIC and in amounts not
exceeding the maximum amounts of insurance thereunder;
(c) intercompany loans, advances and other transfers in the
ordinary course of business; provided that no intercompany loans, advances and
other transfers may be made by the Borrower to the Parent or any Subsidiary of
the Parent except dividends distributed pursuant to Section 9.7(c);
(d) advances to employees for reasonable travel and business
expenses in the ordinary course of business;
(e) deposits for utilities, security deposits, leases and similar
prepaid expenses incurred in the ordinary course of business;
(f) trade accounts created, or prepaid expenses accrued, in the
ordinary course of business; and
(g) other loans, advances, investments and acquisitions of a class
and type permitted pursuant to the Investment Company Act, including loans and
advances by the Parent to its Subsidiaries (with regard to the Parent and the
Borrower) and the SBIC Regulations (with regard to the Borrower).
SECTION 9.5. Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); provided that (i) any Wholly-Owned Subsidiary of the Parent
(other than the Borrower) may merge with any other Wholly-Owned Subsidiary of
the Parent (other than the Borrower) or with the Parent, so long as, with
respect to mergers with the Parent, the Parent is the surviving corporation and
(ii) any Wholly-Owned Subsidiary of the Borrower may merge with any other
Wholly-Owned Subsidiary of the Borrower or with the Borrower, so long as, with
respect to mergers with the Borrower, the Borrower is the surviving
corporation.
SECTION 9.6. Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, the sale of any receivables and
leasehold interests and any sale-leaseback or similar transaction), whether now
owned or hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of any Credit Party or any of its Subsidiaries;
(c) so long as no Default or Event of Default has occurred and is
continuing, the sale or transfer of notes, warrants or other
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securities in the ordinary course of the Borrower's business and in accordance
with the terms of the applicable instruments governing said notes, warrants or
securities; and
(d) the sale or transfer of notes, warrants or other securities in
the ordinary course of the Guarantor's business and in accordance with the
terms of the applicable instruments governing said notes, warrants or
securities.
SECTION 9.7. Limitations on Dividends and Distributions. Declare or
pay any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares
of its capital stock, or make any change in its capital structure; provided
that:
(a) any Credit Party or any Subsidiary may pay dividends in shares
of its own capital stock;
(b) any Subsidiary of the Borrower may pay cash dividends to the
Borrower; and
(c) so long as no Default or Event of Default shall have occurred
and be continuing and such Credit Party maintains its status as a "regulated
investment company", each Credit Party may pay dividends required under the
Code to maintain its status as a "regulated investment company".
SECTION 9.8. Limitations on Exchange and Issuance of Capital Stock.
Issue, sell or otherwise dispose of any class or series of capital stock that,
by its terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would
be, (a) convertible or exchangeable into Debt or (b) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or
has, or upon the happening of an event or passage of time would have, a
redemption or similar payment due.
SECTION 9.9. Transactions with Affiliates. Except for those matters
in existence on the Closing Date and set forth on Schedule 9.9 hereto and as
otherwise permitted in this Agreement, directly or indirectly: (a) make any
loan or advance to, or purchase or assume any note or other obligation to or
from, any of its officers, directors, shareholders or other Affiliates, or to
or from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates, or subcontract any operations to any of its
Affiliates, or (b) enter into, or be a party to, any transaction with any of
its Affiliates, except pursuant to the reasonable requirements of its business
and upon fair and reasonable terms that are fully disclosed to and approved in
writing by the Required Lenders and are no less favorable to it than it would
obtain in a comparable arm's length transaction with a Person not its
Affiliate.
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SECTION 9.10. Certain Accounting Changes. Change its Fiscal Year
end, or make any change in its accounting treatment and reporting practices
except as required by GAAP.
SECTION 9.11. Amendments; Payments and Prepayments of Debt.
(a) With regard to the Borrower and its Subsidiaries, amend or
modify (or permit the modification or amendment of) any of the terms or
provisions of any Debt, or cancel or forgive, make any voluntary or optional
payment or prepayment on, or redeem or acquire for value (including, without
limitation, by way of depositing with any trustee with respect thereto money or
securities before due for the purpose of paying when due) any Debt; and
(b) With regard to the Parent, amend or modify (or permit the
modification or amendment of) any of the terms or provisions of any Debt to the
extent such terms and provisions directly relate to intercompany activities,
including, without limitation, terms and provisions (and any amendment or
modification thereto) directly relating to the ability of the Parent to
downstream funds to the Borrower (except upon an event of default under such
agreements, documents, or instruments), which terms and provisions shall be
subject to the review of the Agent and the Lenders and shall be in form and
substance reasonably satisfactory to the Agent and the Lenders.
SECTION 9.12. Leasebacks. Enter into, extend, renew or otherwise
become or remain liable as lessee or as guarantor or other surety with respect
to any lease of any property that was owned on the Closing Date or thereafter
acquired by any Credit Party or any Subsidiary of the Borrower and has been or
is to be sold or transferred by such Credit Party or such Subsidiary to any
other Person in connection with such lease.
SECTION 9.13. Changes to Borrower's Rating System and Valuation
Method. Change or alter, in any way, the Borrower's Rating System or the
Borrower's Valuation Method.
SECTION 9.14. Change in Management. Allow or suffer to occur any
change of management, staffing or structure whereby ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ or
▇▇▇▇▇ ▇. ▇▇▇▇▇ ceases active participation in the management of each Credit
Party; provided that such a change shall not constitute an Event of Default
hereunder, but shall only permit the Agent, at the request of the Required
Lenders, to accelerate the maturity of the Obligations upon ninety (90) days
prior written notice to each Credit Party. Such notice may be given only
during the period (a) beginning sixty (60) days after the change occurs, or, if
the position is filled within that period, sixty (60) days after the position
is filled and (b) ending sixty (60) days after it commences. Each Credit Party
hereby acknowledges that the participation in such Credit Party's management of
the individuals named above is a primary factor in the agreement of the Lenders
to extend the Loans.
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ARTICLE X
UNCONDITIONAL GUARANTY
SECTION 10.1. Guaranty of Obligations. The Guarantor hereby
unconditionally guarantees to the Agent for the ratable benefit of the Agent
and the Lenders, and their respective successors, endorsees, transferees and
assigns, the prompt payment and performance of all Obligations of the Borrower,
whether primary or secondary (whether by way of endorsement or otherwise),
whether now existing or hereafter arising, whether or not from time to time
reduced or extinguished (except by payment thereof) or hereafter increased or
incurred, whether or not recovery may be or hereafter become barred by the
statute of limitations, whether enforceable or unenforceable as against the
Borrower, whether or not discharged, stayed or otherwise affected by any
bankruptcy, insolvency or other similar law or proceeding, whether created
directly with the Agent or any Lender or acquired by the Agent or any Lender
through assignment, endorsement or otherwise, whether matured or unmatured,
whether joint or several, as and when the same become due and payable (whether
at maturity or earlier, by reason of acceleration, mandatory repayment or
otherwise), in accordance with the terms of any such instruments evidencing any
such obligations, including all renewals, extensions or modifications thereof
(all Obligations of the Borrower to the Agent or any Lender, including all of
the foregoing, being hereinafter collectively referred to as the "Guaranteed
Obligations").
SECTION 10.2. Nature of Guaranty. The Guarantor agrees that this
Guaranty is a continuing, unconditional guaranty of payment and performance and
not of collection, and that its obligations under this Guaranty shall be
primary, absolute and unconditional, irrespective of, and unaffected by (a) the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in, this Agreement or any other Loan Document or any other agreement,
document or instrument to which the Borrower is or may become a party, (b) the
absence of any action to enforce this Guaranty, this Agreement or any other
Loan Document or the waiver or consent by the Agent or any Lender with respect
to any of the provisions of this guaranty, this Agreement or any other Loan
Document, (c) the existence, value or condition of, or failure to perfect its
Lien against, any security for or other guaranty of the Guaranteed Obligations
or any action, or the absence of any action, by the Agent or any Lender in
respect of such security or guaranty (including, without limitation, the
release of any such security or guaranty) or (d) any other action or
circumstances which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor; it being agreed by the Guarantor that its
obligations under this Guaranty shall not be discharged until the final payment
and performance, in full, of the Guaranteed Obligations and the termination of
the Commitments. The Guarantor expressly waives all rights it may now or in
the future have under any statute (including, without limitation, North
Carolina General Statutes Section 26-7, et seq. or similar law), or at law or
in equity, or otherwise, to compel the Agent or any Lender to proceed
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in respect of the Guaranteed Obligations against the Borrower or any other
party or against any security for or other guaranty of the payment and
performance of the Guaranteed Obligations before proceeding against, or as a
condition to proceeding against, the Guarantor. The Guarantor further
expressly waives and agrees not to assert or take advantage of any defense
based upon the failure of the Agent or any Lender to commence an action in
respect of the Guaranteed Obligations against the Borrower, the Guarantor or
any other party or any security for the payment and performance of the
Guaranteed Obligations. The Guarantor agrees that any notice or directive
given at any time by any of the Credit Parties to the Agent or any Lender which
is inconsistent with the waivers in the preceding two sentences shall be null
and void and may be ignored by the Agent or such Lender, and, in addition, may
not be pleaded or introduced as evidence in any litigation relating to this
Guaranty for the reason that such pleading or introduction would be at variance
with the written terms of this Guaranty, unless the Required Lenders have
specifically agreed otherwise in writing. The foregoing waivers are of the
essence of the transaction contemplated by the Loan Documents and, but for this
Guaranty and such waivers, the Agents and Lenders would decline to enter into
this Agreement.
SECTION 10.3. Demand by the Agent. In addition to the terms set
forth in Section 10.2, and in no manner imposing any limitation on such terms,
if all or any portion of the then outstanding Guaranteed Obligations under this
Agreement are declared to be immediately due and payable, then the Guarantor
shall, upon demand in writing therefor by the Agent to the Guarantor, pay all
or such portion of the outstanding Guaranteed Obligations then declared due and
payable. Payment by the Guarantor shall be made to the Agent, to be credited
and applied upon the Guaranteed Obligations, in immediately available funds in
Dollars to an account designated by the Agent or at the Agent's office or at
any other address that may be specified in writing from time to time by the
Agent.
SECTION 10.4. Waivers. In addition to the waivers contained in
Section 10.2, the Guarantor waives, and agrees that it shall not at any time
insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshalling of assets
or redemption laws, or exemption, whether now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance by the
Guarantor of its obligations under, or the enforcement by the Agent or the
Lenders of, this Guaranty. The Guarantor further hereby waives diligence,
presentment, demand, protest and notice of whatever kind or nature with respect
to any of the Guaranteed Obligations and waives the benefit of all provisions
of law which are or might be in conflict with the terms of this Guaranty. The
Guarantor represents, warrants and agrees that its obligations under this
Guaranty are not and shall not be subject to any counterclaims, offsets or
defenses of any kind against the Agent, the Lenders or the Borrower whether now
existing or which may arise in the future.
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SECTION 10.5. Modification of Loan Documents etc. If the Agent or
the Lenders shall at any time or from time to time, with or without the consent
of, or notice to, the Guarantor (a) change or extend the manner, place or terms
of payment of, or renew or alter all or any portion of, the Guaranteed
Obligations, (b) take any action under or in respect of the Loan Documents in
the exercise of any remedy, power or privilege contained therein or available
to it at law, in equity or otherwise, or waive or refrain from exercising any
such remedies, powers or privileges, (c) amend or modify, in any manner
whatsoever, the Loan Documents, (d) extend or waive the time for performance by
the Guarantor, the Borrower or any other Person of, or compliance with, any
term, covenant or agreement on its part to be performed or observed under a
Loan Document (other than this Guaranty), or waive such performance or
compliance or consent to a failure of, or departure from, such performance or
compliance, (e) take and hold security or collateral for the payment of the
Guaranteed Obligations or sell, exchange, release, dispose of, or otherwise
deal with, any property pledged, mortgaged or conveyed, or in which the Agent
or the Lenders have been granted a Lien, to secure any Debt of the Guarantor or
the Borrower to the Agent or the Lenders, (f) release anyone who may be liable
in any manner for the payment of any amounts owed by the Guarantor or the
Borrower to the Agent or any Lender, (g) modify or terminate the terms of any
intercreditor or subordination agreement pursuant to which claims of other
creditors of the Guarantor or the Borrower are subordinated to the claims of
the Agent or any Lender or (h) apply any sums by whomever paid or however
realized to any amounts owing by the Guarantor or the Borrower to the Agent or
any Lender on account of the Obligations in such manner as the Agent or any
Lender shall determine in its reasonable discretion, then neither the Agent nor
any Lender shall incur any liability to the Guarantor as a result thereof, and
no such action shall impair or release the obligations of the Guarantor under
this Guaranty.
SECTION 10.6. Reinstatement. The Guarantor agrees that, if any
payment made by the Borrower or any other Person applied to the Obligations is
at any time annulled, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of Collateral are required to be returned by the Agent or any
Lender to the Borrower, its estate, trustee, receiver or any other party,
including, without limitation, the Guarantor, under any Applicable Law or
equitable cause, then, to the extent of such payment or repayment, the
Guarantor's liability hereunder (and any Lien or Collateral securing such
liability) shall be and remain in full force and effect, as fully as if such
payment had never been made, and, if prior thereto, this Guaranty shall have
been canceled or surrendered (and if any Lien or Collateral securing the
Guarantor's liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender), this Guaranty (and such Lien or
Collateral) shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of the Guarantor in respect of the amount of
such payment (or any Lien or Collateral securing such obligation).
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SECTION 10.7. No Subrogation. Until all amounts owing to the Agent
and the Lenders on account of the Obligations are paid in full and the
Commitments are terminated, the Guarantor hereby waives any claims or other
rights which it may now or hereafter acquire against the Borrower that arise
from the existence or performance of the Guarantor's obligations under this
Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, any right to participate in any
claim or remedy of the Agent or the Lenders against the Borrower or any
Collateral which the Agent or the Lenders now have or may hereafter acquire,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from the Borrower, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to the Guarantor on account of such rights at any time when all
of the Obligations shall not have been paid in full, such amount shall be held
by the Guarantor in trust for the Agent, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over
to the Agent in the exact form received by the Guarantor (duly indorsed by the
Guarantor to the Agent, if required) to be applied against the Obligations,
whether matured or unmatured, in such order as set forth herein.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1. Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans. The Borrower shall
default in any payment of principal of any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan or Note or any other Obligation or any
Credit Party shall default in the payment of any other amount due hereunder,
and such default shall continue unremedied for three (3) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by any Credit Party or any of its Subsidiaries under this
Agreement, any Loan Document or any amendment hereto or thereto, shall at any
time prove to have been incorrect or misleading in any material respect when
made or deemed made.
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(d) Default in Performance of Certain Covenants. Any Credit Party
shall default in the performance or observance of any covenant or agreement
contained in Sections 6.5(e) or Articles VIII or IX of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
Credit Party or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
11.1) or any other Loan Document and such default shall continue for a period
of thirty (30) days after written notice thereof has been given to the Borrower
by the Agent.
(f) Hedging Agreement. Any termination payment shall be due by
the Borrower under any Hedging Agreement and such amount is not paid within
three (3) Business Days of the due date thereof.
(g) Debt Cross-Default. Any Credit Party or any of its
Subsidiaries shall (i) default in the payment of any Debt (other than the
Notes) the aggregate outstanding amount of which is in excess of $100,000
beyond the period of grace if any, provided in the instrument or agreement
under which such Debt was created, or (ii) default in the observance or
performance of any other agreement or condition relating to any Debt (other
than the Notes) the aggregate outstanding amount of which is in excess of
$100,000 or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such holder
or holders) to cause, with the giving of notice if required, any such Debt to
become due prior to its stated maturity (any applicable grace period having
expired).
(h) Change in Control. (i) Any person or group of persons (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended), shall obtain ownership or control in one or more series of
transactions of more than fifty percent (50%) of the common stock and fifty
percent (50%) of the voting power of the Parent entitled to vote in the
election of members of the board of directors of the Parent, (ii) there shall
have occurred under any indenture or other instrument evidencing any Debt in
excess of $100,000 any "change in control" (as defined in such indenture or
other evidence of Debt) obligating any Credit Party to repurchase, redeem or
repay all or any part of the Debt or capital stock provided for therein, or
(iii) the Borrower shall cease to be a Wholly-Owned Subsidiary of the Parent
(any such event, a "Change in Control").
(i) Voluntary Bankruptcy Proceeding. Any Credit Party or any
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking
to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization,
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winding up or composition for adjustment of debts, (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become
due, (vi) make a general assignment for the benefit of creditors, or (vii) take
any corporate action for the purpose of authorizing any of the foregoing.
(j) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Credit Party or any Subsidiary thereof in any
court of competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like for any Credit Party or any Subsidiary thereof or for
all or any substantial part of their respective assets, domestic or foreign,
and such case or proceeding shall continue undismissed or unstayed for a period
of sixty (60) consecutive days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for relief
under such federal bankruptcy laws) shall be entered.
(k) Failure of Agreements. Any provision of this Agreement or of
any other Loan Document shall for any reason cease to be valid and binding on
any Credit Party or Subsidiary party thereto or any such Person shall so state
in writing, or this Agreement or any other Loan Document shall for any reason
cease to create a valid and perfected first priority Lien on, or security
interest in, any of the collateral purported to be covered thereby, in each
case other than in accordance with the express terms hereof or thereof.
(l) Termination Event. The occurrence of any of the following
events: (i) any Credit Party or any ERISA Affiliate fails to make full payment
when due of all amounts which, under the provisions of any Pension Plan or
Section 412 of the Code, such Credit Party or such ERISA Affiliate is required
to pay as contributions thereto, (ii) an accumulated funding deficiency in
excess of $100,000 occurs or exists, whether or not waived, with respect to any
Pension Plan, (iii) a Termination Event or (iv) any Credit Party or any ERISA
Affiliate as employers under one or more Multiemployer Plan makes a complete or
partial withdrawal from any such Multiemployer Plan and the plan sponsor of
such Multiemployer Plans notifies such withdrawing employer that such employer
has incurred a withdrawal liability requiring payments in an amount exceeding
$100,000.
(m) Judgment. A judgment or order for the payment of money which
causes the aggregate amount of such judgments to exceed $100,000 in any Fiscal
Year (except such amount shall be $250,000
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with respect to the Subsidiaries of the Guarantor) shall be entered against any
Credit Party or any Subsidiary thereof by any court and such judgment or order
shall continue undischarged or unstayed for a period of thirty (30) days.
SECTION 11.2. Remedies. Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Agent may, or upon the request of
the Required Lenders, the Agent shall, by notice to each Credit Party:
(a) Acceleration; Termination of Facilities. Declare the
principal of and interest on the Loans and the Notes at the time outstanding,
and all other amounts owed to the Lenders and to the Agent under this Agreement
or any of the other Loan Documents and all other Obligations and Guaranteed
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrower to request
borrowings thereunder; provided that upon the occurrence of an Event of Default
specified in Section 11.1(i) or (j), the Credit Facility shall be automatically
terminated and all Obligations and Guaranteed Obligations shall automatically
become due and payable.
(b) Rights of Collection. Exercise on behalf of the Lenders all
of its other rights and remedies under this Agreement, the other Loan Documents
and Applicable Law, in order to satisfy all of the Credit Parties' Obligations
and Guaranteed Obligations.
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Agent and the Lenders set forth
in this Agreement is not intended to be exhaustive and the exercise by the
Agent and the Lenders of any right or remedy shall not preclude the exercise of
any other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder or under the Loan
Documents or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Credit Parties, the Agent
and the Lenders or their respective agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of the other
Loan Documents or to constitute a waiver of any Event of Default.
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ARTICLE XII
THE AGENT
SECTION 12.1. Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Agent of such Lender under this
Agreement and the other Loan Documents and each such Lender irrevocably
authorizes First Union as Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Agent by the terms of this Agreement and such other Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or
such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
SECTION 12.2. Delegation of Duties. The Agent may execute any of its
respective duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by the Agent with reasonable care.
SECTION 12.3. Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates shall be (a) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or the
other Loan Documents (except for actions occasioned solely by its or such
Person's own gross negligence or willful misconduct), or (b) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Credit Party or any of its Subsidiaries or any officer
thereof contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or the
other Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of any Credit Party or any of its Subsidiaries to perform its
obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of any Credit Party
or any of its Subsidiaries.
SECTION 12.4. Reliance by the Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit,
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letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Credit Parties), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless such Note shall have been transferred
in accordance with Section 13.11 hereof. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by the relevant other
Loan Document, all the Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action except for its own gross negligence or willful misconduct.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the Notes in accordance with a request of
the Required Lenders (or, when expressly required hereby, all the Lenders), and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Notes.
SECTION 12.5. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless it has received notice from a Lender or the Credit Parties
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, it shall promptly give notice thereof to the Lenders.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
SECTION 12.6. Non-Reliance on the Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates has made any representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the affairs of any Credit
Party or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
each Credit Party and its Subsidiaries and made its own decision to make its
Loans hereunder
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and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of each Credit Party and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder or by the other Loan Documents, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, financial and
other condition or creditworthiness of each Credit Party or any of its
Subsidiaries which may come into the possession of the Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.
SECTION 12.7. Indemnification. The Lenders agree to indemnify the
Agent in its capacity as such and (to the extent not reimbursed by the Credit
Parties and without limiting the obligation of the Credit Parties to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or
the other Loan Documents, or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent's bad faith, gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the payment of the Notes and all other amounts
payable hereunder and the termination of this Agreement.
SECTION 12.8. The Agent in Its Individual Capacity. The Agent and
its respective Subsidiaries and Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with each Credit Party as
though the Agent were not an Agent hereunder. With respect to any Loans made
or renewed by it and any Note issued to it, the Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
SECTION 12.9. Resignation of the Agent; Successor Agent. Subject to
the appointment and acceptance of a successor as
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provided below, the Agent may resign at any time by giving notice thereof to
the Lenders and the Credit Parties. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent, which successor
shall have minimum capital and surplus of at least $500,000,000. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the Agent's giving
of notice of resignation, then the Agent may, on behalf of the Lenders, appoint
a successor Agent, which successor shall have minimum capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 12.9 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to
be received by a party hereto (i) on the date of delivery if delivered by hand
or sent by telecopy, (ii) on the next Business Day if sent by recognized
overnight courier service and (iii) on the third Business Day following the
date sent by certified mail, return receipt requested. A telephonic notice to
the Agent as understood by the Agent will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive a
confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to
it at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to the Parent: Sirrom Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Borrower: Sirrom Investments, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to First Union as First Union National Bank of
Agent: Tennessee
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
First Union National Bank of
North Carolina
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attention: Syndication Agency
Services
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: To the Address set forth on
Schedule 1 hereto
(c) Agent's Office. The Agent hereby designates its office
located at the address set forth above, or any subsequent office which shall
have been specified for such purpose by written notice to each Credit Party and
Lenders, as the Agent's Office referred to herein, to which payments due are to
be made and at which Loans will be disbursed.
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SECTION 13.2. Expenses; Indemnity. The Credit Parties will (a) pay
all out-of-pocket expenses of the Agent in connection with: (i) the
preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including, without
limitation, all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Agent, (ii) the
preparation, execution and delivery of any waiver, amendment or consent by the
Agent or the Lenders relating to this Agreement or any other Loan Document,
including, without limitation, reasonable fees and disbursements of counsel for
the Agent and (iii) the administration and enforcement of any rights and
remedies of the Agent and Lenders under the Credit Facility, including
consulting with appraisers, accountants, engineers, attorneys and other Persons
concerning the nature, scope or value of any right or remedy of the Agent or
any Lender hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (b) defend, indemnify
and hold harmless the Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and
against any losses, penalties, fines, liabilities, settlements, damages, costs
and expenses, suffered by any such Person in connection with any claim,
investigation, litigation or other proceeding (whether or not the Agent or any
Lender is a party thereto) and the prosecution and defense thereof, arising out
of or in any way connected with the Agreement, any other Loan Document or the
Loans, including, without limitation, reasonable attorney's and consultant's
fees, except to the extent that any of the foregoing directly result from the
gross negligence or willful misconduct of the party seeking indemnification
therefor.
SECTION 13.3. Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the
continuance thereof, the Lenders and any assignee or participant of a Lender in
accordance with Section 13.11 are hereby authorized by the Credit Parties at
any time or from time to time, without notice to the Credit Parties or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness at any
time held or owing by the Lenders, or any such assignee or participant to or
for the credit or the account of the Credit Parties against and on account of
the Obligations irrespective of whether or not (a) the Lenders shall have made
any demand under this Agreement or any of the other Loan Documents or (b) the
Agent shall have declared any or all of the Obligations to be due and payable
as permitted by Section 11.2 and although such Obligations shall be contingent
or unmatured.
SECTION 13.4. Governing Law. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance
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with the laws of the State of North Carolina, without reference to the
conflicts or choice of law principles thereof.
SECTION 13.5. Consent to Jurisdiction. The Credit Parties hereby
irrevocably consent to the personal jurisdiction of the state and federal
courts located in Mecklenburg County, North Carolina, in any action, claim or
other proceeding arising out of any dispute in connection with this Agreement,
the Notes and the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations. The Credit
Parties hereby irrevocably consent to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the Agent or
any Lender in connection with this Agreement, the Notes or the other Loan
Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 13.1. Nothing in this Section
13.5 shall affect the right of the Agent or any Lender to serve legal process
in any other manner permitted by Applicable Law or affect the right of the
Agent or any Lender to bring any action or proceeding against any Credit Party
or its properties in the courts of any other jurisdictions.
SECTION 13.6. Binding Arbitration.
(a) Binding Arbitration. Upon demand of any party, whether made
before or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any
other Loan Documents ("Disputes"), between or among parties to the Notes or any
other Loan Document shall be resolved by binding arbitration as provided
herein. Institution of a judicial proceeding by a party does not waive the
right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class
actions, claims arising from Loan Documents executed in the future, or claims
concerning any aspect of the past, present or future relationships arising out
or connected with the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of the
U.S. Code. All arbitration hearings shall be conducted in Nashville,
Tennessee. The expedited procedures set forth in Rule 51, et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys.
The single arbitrator selected for expedited procedure shall be a retired judge
from the highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted. The arbitrators shall be appointed as
provided in the Arbitration Rules.
(b) Preservation of Certain Remedies. Notwithstanding the
preceding binding arbitration provisions, the Agent and the Lenders
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81
preserve, without diminution, certain remedies that the Agent and the Lenders
may employ or exercise freely, either alone, in conjunction with or during a
Dispute. The Agent and the Lenders shall have and hereby reserve the right to
proceed in any court of proper jurisdiction or by self help to exercise or
prosecute the following remedies: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted in
the Loan Documents or under applicable law or by judicial foreclosure and sale,
(ii) all rights of self help including peaceful occupation of property and
collection of rents, set off, and peaceful possession of property, (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in filing
an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the
power of an arbitrator to grant similar remedies that may be requested by a
party in a Dispute.
SECTION 13.7. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE CREDIT PARTIES, THE AGENT AND THE LENDERS, BY EXECUTION
HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS AGREEMENT, THE
NOTES OR THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, THE NOTES, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR THEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY WITH RESPECT HERETO OR THERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS TO ENTER INTO THIS AGREEMENT.
SECTION 13.8. Reversal of Payments. To the extent any Credit Party
makes a payment or payments to the Agent for the ratable benefit of the Lenders
or the Agent receives any payment or proceeds of the collateral which payments
or proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds repaid, the Obligations, the Guaranteed Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and
effect as if such payment or proceeds had not been received by the Agent.
SECTION 13.9. Injunctive Relief. Each Credit Party recognizes that,
in the event such Credit Party fails to perform, observe or discharge any of
its obligations or liabilities under this Agreement, any remedy of law may
prove to be inadequate relief to the Lenders. Therefore, each Credit Party
agrees that the Lenders, at the Lenders' option, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
SECTION 13.10. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any
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82
purpose relating to this Agreement, including, without limitation, all
computations utilized by the Credit Parties or any Subsidiary thereof to
determine compliance with any covenant contained herein, shall, except as
otherwise expressly contemplated hereby or unless there is an express written
direction by the Agent to the contrary agreed to by the Credit Parties, be
performed in accordance with GAAP as in effect on the Closing Date. In the
event that changes in GAAP shall be mandated by the Financial Accounting
Standards Board, or any similar accounting body of comparable standing, or
shall be recommended by the Credit Parties' certified public accountants, to
the extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Credit Parties
and the Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.
SECTION 13.11. Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Credit Parties, the Agent and the Lenders, all
future holders of the Notes, and their respective successors and assigns,
except that no Credit Party shall assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of
the Agent and the Credit Parties, which consents shall not be unreasonably
withheld, assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including, without
limitation, all or a portion of the Loans at the time owing to it and the Notes
held by it); provided that:
(i) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Commitment
is to be assigned, the Commitment so assigned shall not be less than
$5,000,000 and the Assigning Lender's Commitment shall not be less
than $5,000,000 after such assignment; provided that this subsection
(b)(ii) shall not apply to the Agent, as Lender, at any time that the
Commitment of the Agent, as Lender, is greater than $25,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit G
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Credit Parties, require the Credit Parties to file a
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83
registration statement with the Securities and Exchange Commission or
apply to or qualify the Loans or the Notes under the blue sky laws of
any state;
(v) the assigning Lender shall pay to the Agent an
assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon (i) any assignment by a Lender to an Affiliate thereof and (ii)
any assignment by a Lender arising from the denial of such Lender to
extend the date of the termination of the Credit Facility pursuant to
Section 2.7; and
(vi) without the consent of the Credit Parties, which
consent shall not be unreasonably withheld, there shall be no more
than nine (9) Lenders at any one time.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least five (5) Business Days after the execution thereof, (A)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereby and (B) the Lender thereunder shall, to the extent provided in such
assignment, be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and
delivering an Assignment and Acceptance, the assigning Lender thereunder and
the assignee thereunder confirm to and agree with each other and the other
parties hereto as set forth in such Assignment and Acceptance.
(d) Register. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the names
and addresses of the Lenders and the amount of the Loans with respect to each
Lender from time to time (the "Register"). The entries in the Register shall
be conclusive, in the absence of manifest error, and the Credit Parties, the
Agent and the Lenders may treat each person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Credit Parties or Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is substantially in the form of Exhibit G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
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(iii) give prompt notice thereof to the Lenders and the
Credit Parties; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Credit Parties.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Agent, in exchange for the surrendered Note or
Notes, a new Note or Notes to the order of such Eligible Assignee in amounts
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to the Borrower.
(f) Participations. Each Lender may sell participations to one or
more banks or other entities in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans and the Notes held by it); provided that:
(i) each such participation shall be in an amount not
less than $3,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain
unchanged;
(iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held
by it for all purposes of this Agreement;
(v) the Credit Parties, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement;
(vi) such Lender shall not permit such participant the
right to approve any waivers, amendments or other modifications to
this Agreement or any other Loan Document other than waivers,
amendments or modifications which would reduce the principal of or the
interest rate on any Loan, extend the term or increase the amount of
the Commitment, reduce the amount of any fees to which such
participant is entitled, extend any scheduled payment date for
principal of any Loan or, except as expressly contemplated hereby or
thereby, release any collateral securing the Obligations or any
Security Document; and
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(vii) any such disposition shall not, without the consent
of the Credit Parties, require the Credit Parties to file a
registration statement with the Securities and Exchange Commission to
apply to qualify the Loans or the Notes under the blue sky law of any
state.
(g) Disclosure of Information; Confidentiality. The Agent and the
Lenders shall hold all non-public information with respect to the Credit
Parties obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.11, disclose to the assignee,
participant, proposed assignee or proposed participant, any information
relating to the Credit Parties furnished to such Lender by or on behalf of the
Credit Parties; provided that prior to any such disclosure, each such assignee,
proposed assignee, participant or proposed participant shall agree with the
Credit Parties or such Lender to preserve the confidentiality of any
confidential information relating to the Credit Parties received from such
Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit
any Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.12. Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Agent with the
consent of the Required Lenders) and delivered to the Agent and, in the case of
an amendment, signed by the Credit Parties; provided that no amendment, waiver
or consent shall (a) except as specifically set forth in Section 2.8 and this
Section 13.12, increase the amount or extend the time of the obligation of the
Lenders to make Loans (including, without limitation, pursuant to Section 2.7),
(b) except as specifically set forth in Section 2.7 hereof, extend the
originally scheduled time or times of payment of the principal of any Loan or
the time or times of payment of interest on any Loan, (c) reduce the rate of
interest or fees payable on any Loan, (d) permit any subordination of the
principal or interest on any Loan, (e) release any Collateral (other than as
specifically provided in this Section 13.12) or Security Document (other than
as specifically permitted in this Agreement or the applicable Security
Document), (f) reduce the "Guaranteed Obligations" as defined in Section 10.1
or release the Guarantor from its obligations under Article X, (g) amend the
provisions of this Section 13.12 or the definition of Required Lenders or (h)
amend the definition of Borrowing Base (except that the advance rate with
respect to Eligible Loans may be increased to a percentage less or equal to
seventy five percent (75%) upon the written consent of the Required Lenders),
without the prior written consent of each Lender; and provided further that so
long as no Default or Event of Default has
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occurred or is continuing, upon the request of the Borrower the Agent may, in
its reasonable discretion, release any Collateral pledged by the Borrower under
the Borrower Pledge Agreement on the basis of the sale or transfer of notes,
warrants or other securities in the ordinary course of business of the Borrower
and in accordance with the terms of the applicable instruments governing said
notes, warrants or securities; and provided further that the Borrower may,
subject to the terms and conditions of Section 2.8 and upon the consent of the
Agent (which consent shall not be unreasonably withheld), increase the
Aggregate Commitment either by designating a lender not theretofore an existing
Lender to become a Lender or by agreeing with an existing Lender that such
Lender's Commitment shall be increased. In addition, no amendment, waiver or
consent to the provisions of Article XI shall be made without the written
consent of the Agent.
SECTION 13.13. Performance of Duties. Each Credit Party's
obligations under this Agreement and each of the Loan Documents shall be
performed by such Credit Party at its sole cost and expense.
SECTION 13.14. All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lenders, the Agent and any
Persons designated by the Agent or any Lender 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 or
Guaranteed Obligations remain unpaid or unsatisfied or the Credit Facility has
not been terminated.
SECTION 13.15. Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Agent and the
Lenders are entitled under the provisions of this Article XII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Agent and the Lenders against events arising
after such termination as well as before.
SECTION 13.16. Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
SECTION 13.17. Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 13.18. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be
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deemed to be an original and shall be binding upon all parties, their
successors and assigns, and all of which taken together shall constitute one
and the same agreement.
SECTION 13.19. Term of Agreement. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations and Guaranteed Obligations shall have been indefeasibly and
irrevocably paid and satisfied in full. No termination of this Agreement shall
affect the rights and obligations of the parties hereto arising prior to such
termination.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, all as of the day and year first
written above.
BORROWER:
[CORPORATE SEAL] SIRROM INVESTMENTS, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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GUARANTOR:
[CORPORATE SEAL] SIRROM CAPITAL CORPORATION
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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AGENT:
FIRST UNION NATIONAL BANK OF
TENNESSEE, as Agent
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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91
LENDERS:
FIRST UNION NATIONAL BANK OF
TENNESSEE, as Lender
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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FIRST AMERICAN NATIONAL BANK, as
Lender
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
- ▇▇ -
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, as Lender
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Lender
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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95
Schedule 1
Lenders and Commitments
COMMITMENT
AND COMMITMENT
LENDER PERCENTAGE ADDRESS
First Union $27,500,000 First Union National Bank
National Bank (55%) of Tennessee
of Tennessee ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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Vice President
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and
First Union National Bank of
North Carolina
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Attention: Syndication Agency
Services
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First American $ 7,500,000 First American National Bank
National Bank (15%) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President
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AmSouth Bank of $10,000,000 AmSouth Bank of Tennessee
Tennessee (20%) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
First Tennessee $ 5,000,000 First Tennessee Bank National
Bank National (10%) Association
Association
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