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PREMIER GRAPHICS, INC.
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LOAN AND SECURITY AGREEMENT
Dated: August 21, 1998
$15,000,000.00
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DEUTSCHE FINANCIAL SERVICES CORPORATION
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION.................... - 1 -
1.1. DEFINITIONS........................................... - 1 -
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1.2. ACCOUNTING TERMS...................................... - 19 -
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1.3. OTHER TERMS........................................... - 19 -
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1.4. CERTAIN MATTERS OF CONSTRUCTION....................... - 20 -
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SECTION 2. CREDIT FACILITIES.................................... - 20 -
2.1. REVOLVER LOANS........................................ - 20 -
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2.2. LETTERS OF CREDIT..................................... - 21 -
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2.3. INDEMNIFICATION....................................... - 23 -
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SECTION 3. INTEREST, FEES AND CHARGES............................ - 23 -
3.1. INTEREST.............................................. - 23 -
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3.2. FEES.................................................. - 25 -
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3.3. COMPUTATION OF INTEREST AND FEES...................... - 26 -
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3.4. REIMBURSEMENT OF EXPENSES............................. - 26 -
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3.5. BANK CHARGES.......................................... - 27 -
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3.6. MAXIMUM INTEREST...................................... - 27 -
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3.7. ILLEGALITY............................................ - 28 -
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3.8. INCREASED COSTS....................................... - 28 -
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3.9. CAPITAL ADEQUACY...................................... - 29 -
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3.10. FUNDING LOSSES........................................ - 29 -
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SECTION 4. LOAN ADMINISTRATION................................... - 30 -
4.1. MANNER OF BORROWING REVOLVER LOANS.................... - 30 -
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4.2. SPECIAL PROVISIONS GOVERNING LIBOR LOANS.............. - 31 -
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4.3. REPAYMENT OF REVOLVER LOANS........................... - 31 -
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4.4. PAYMENT OF OTHER OBLIGATIONS.......................... - 32 -
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4.5. APPLICATION OF PAYMENTS AND COLLECTIONS............... - 32 -
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4.6. ALL LOANS TO CONSTITUTE ONE OBLIGATION................ - 33 -
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4.7. LOAN ACCOUNT.......................................... - 33 -
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4.8. STATEMENTS OF ACCOUNT................................. - 33 -
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4.9. MARSHALLING; PAYMENTS SET ASIDE....................... - 33 -
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SECTION 5. TERM AND TERMINATION.................................. - 33 -
5.1. TERM OF AGREEMENT..................................... - 33 -
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5.2. TERMINATION........................................... - 33 -
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SECTION 6. COLLATERAL SECURITY................................... - 34 -
6.1. GRANT OF SECURITY INTEREST IN COLLATERAL.............. - 34 -
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6.2. LIEN PERFECTION; FURTHER ASSURANCES................... - 35 -
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6.3. LIEN ON DEPOSIT ACCOUNTS.............................. - 35 -
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SECTION 7. COLLATERAL ADMINISTRATION............................. - 36 -
7.1. GENERAL............................................... - 36 -
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7.2. ADMINISTRATION OF ACCOUNTS............................ - 37 -
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7.3. ADMINISTRATION OF INVENTORY........................... - 38 -
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7.4. PAYMENT OF CHARGES.................................... - 39 -
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SECTION 8. REPRESENTATIONS AND WARRANTIES........................ - 39 -
8.1. GENERAL REPRESENTATIONS AND WARRANTIES................ - 39 -
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8.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES....... - 43 -
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8.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES............ - 44 -
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SECTION 9. COVENANTS AND CONTINUING AGREEMENTS................... - 44 -
9.1. AFFIRMATIVE COVENANTS................................. - 44 -
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9.2. NEGATIVE COVENANTS.................................... - 46 -
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9.3. SPECIFIC FINANCIAL COVENANTS.......................... - 49 -
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SECTION 10. CONDITIONS PRECEDENT.................................. - 50 -
10.1. CONDITIONS PRECEDENT TO INITIAL LOANS................. - 50 -
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10.2. CONDITIONS PRECEDENT TO EXECUTION OF LC APPLICATION... - 51 -
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10.3. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS......... - 52 -
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10.4. LIMITED WAIVER OF CONDITIONS PRECEDENT................ - 52 -
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SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..... - 53 -
11.1. EVENTS OF DEFAULT..................................... - 53 -
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11.2. ACCELERATION OF THE OBLIGATIONS....................... - 55 -
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11.3. OTHER REMEDIES........................................ - 55 -
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11.4. SETOFF................................................ - 56 -
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11.5. REMEDIES CUMULATIVE; NO WAIVER........................ - 56 -
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SECTION 12. MISCELLANEOUS......................................... - 57 -
12.1. POWER OF ATTORNEY..................................... - 57 -
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12.2. INDEMNITY............................................. - 58 -
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12.3. MODIFICATION OF AGREEMENT; SALE OF INTEREST........... - 58 -
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12.4. SEVERABILITY.......................................... - 58 -
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12.5. SUCCESSORS AND ASSIGNS................................ - 58 -
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12.6. CUMULATIVE EFFECT; CONFLICT OF TERMS.................. - 59 -
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12.7. EXECUTION IN COUNTERPARTS............................. - 59 -
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12.8. NOTICE................................................ - 59 -
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12.9. LENDER'S CONSENT...................................... - 60 -
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12.10. CREDIT INQUIRIES...................................... - 60 -
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12.11. TIME OF ESSENCE....................................... - 60 -
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12.12. ENTIRE AGREEMENT; EXHIBITS AND SCHEDULES.............. - 60 -
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12.13. INTERPRETATION........................................ - 60 -
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12.15. GOVERNING LAW; CONSENT TO FORUM....................... - 61 -
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12.16. WAIVERS BY BORROWER................................... - 61 -
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-ii-
LIST OF EXHIBITS
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Exhibits
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Exhibit A Revolving Credit Note
Exhibit B Compliance Certificate
Exhibit C Borrowing Base Certificate
Exhibit D Opinion Letter
Schedules
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Borrower's and each Subsidiary's Business Locations
Jurisdictions in which Borrower and each Subsidiary is Authorized to do
Business
Capital Structure of Borrower
Corporate Names
Tax Identification Numbers of Subsidiaries
Patents, Trademarks, Copyrights and Licenses
Contracts Restricting Borrower's Right to Incur Debts
Litigation
Capitalized and Operating Leases
Operating Leases
Pension Plans
Labor Contracts
Permitted Liens
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 21st day of August, 1998, by
and between DEUTSCHE FINANCIAL SERVICES CORPORATION (together with its
successors and assigns, "Lender"), a Nevada corporation with an office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; and PREMIER GRAPHICS,
INC. ("Borrower"), a Delaware corporation with its chief executive office and
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
R E C I T A L S
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Borrower has requested that Lender make revolving loans and other financial
accommodations to Borrower as more fully described in this Agreement.
Lender is willing to make such loans and other financial accommodations to
Borrower, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
1.1. Definitions. When used herein the following terms shall have the
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following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account - shall have the meaning given to "account" in the UCC.
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Account Debtor - any Person who is or may become obligated under or on
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account of an Account.
Accounts Formula Amount - on any date of determination thereof, an
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amount equal to 85% of the net amount of Eligible Accounts on such date.
As used herein, the phrase "net amount of Eligible Accounts" shall mean the
face amount of such Accounts on any date less any and all returns, rebates,
discounts (which may, at Lender's option, be calculated on shortest terms),
credits, allowances or Taxes (including sales, excise or other taxes) at
any time issued, owing, claimed by Account Debtors, granted, outstanding or
payable in connection with, or any interest accrued on the amount of, such
Accounts at such date.
Acquisition Consideration - with respect to any Eligible Acquisition,
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the aggregate consideration and transaction costs payable in connection
therewith, including customary indemnities and holdbacks, any debt owed to
the applicable seller and, subject to Lender's prior consent, any Debt
assumed by Borrower.
Acquisition Loan - a Revolver Loan the proceeds of which will be used
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for an Eligible Acquisition.
Acquisition Loan Availability Requirement - as of the date of the
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funding of an Acquisition Loan and for 60 days thereafter, the sum of (a)
the Accounts Formula Amount (inclusive of Eligible Accounts to be acquired
in the proposed Acquisition) and (b) the Inventory Formula Amount
(inclusive of Eligible Inventory to be acquired in the proposed
Acquisition), less (c) the outstanding Revolver Loan balance at any time
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during such period, is not less than $5,000,000 as of any such date.
Acquisition Loan Conditions - in respect of each request for an
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Acquisition Loan, each of the following:
(i) Borrower shall have given Lender 30 days' prior notice of its
intent to request an Acquisition Loan;
(ii) Lender, in its sole discretion, shall have determined that the
proposed Acquisition constitutes an Eligible Acquisition;
(iii) As of the date of the funding of the requested Acquisition Loan
(based on pro-formas prepared in connection with the proposed Acquisition
in form acceptable to Lender), the sum of (a) the Accounts Formula Amount
(inclusive of Eligible Accounts to be acquired in the proposed Acquisition)
and (b) the Inventory Formula Amount (inclusive of Eligible Inventory to be
acquired in the proposed Acquisition), less (c) the outstanding Revolver
----
Loan balance as of such date, is $5,000,000 or more.
Adjusted LIBOR Rate - with respect to each Interest Period for a LIBOR
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Loan, an interest rate per annum (rounded upwards, to the next 1/16th of
1%) equal to the quotient of (a) the LIBOR Rate in effect for such Interest
Period divided by (b) a percentage (expressed as a decimal) equal to 100%
minus Statutory Reserves.
Affiliate - a Person (other than a Subsidiary or GECC or an Affiliate
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of GECC): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, a Person; (ii) which beneficially owns or holds 5% or more of any
class of the Voting Stock of a Person; or (iii) 5% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or more of
the equity interest) of which is beneficially owned or held by a Person or
a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
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sentence hereof and all Exhibits and Schedules hereto.
Applicable Margin - a percentage equal to 2.25% with respect to LIBOR
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Loans and 0% with respect to Prime Rate Loans; provided that, commencing
January 1, 1999, if there exists no Default or Event of Default, then the
Applicable Margin shall be increased or decreased, based upon the Funded
Debt/EBITDA Ratio, as follows:
Applicable Margin Applicable Margin for
Funded Debt/EBITDA Ratio for Prime Rate Loans LIBOR Loans
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(i) If the Funded Debt/EBITDA Ratio
is equal to or greater
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than 4.25 to 1.0 .5% 2.75%
(ii) If the Funded Debt/EBITDA Ratio
is less than 4.25 to 1.0
but is equal to or greater
than to 3.0 to 1.0 0% 2.25%
(iii) If the Funded Debt/EBITDA Ratio
is less than 3.0 to 1.0 0% 2.0%
The Applicable Margin shall be subject to reduction or increase, as
applicable and as set forth in the table above, on a quarterly basis
according to the performance of Borrower as measured by the Funded
Debt/EBITDA Ratio for the immediately preceding 4 Fiscal Quarters of
Borrower. Except as set forth in the last sentence hereof, any such
increase or reduction in the Applicable Margin provided for herein shall be
effective 3 Business Days after receipt by Lender of the applicable
financial statements and corresponding Compliance Certificate; provided,
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however, that any reduction in the Applicable Margin shall not apply to any
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LIBOR Loans outstanding on the effective date of such reduction that have
an Interest Period commencing prior to the effective date of such
reduction. If the financial statements and the Compliance Certificate of
Borrower setting forth the Funded Debt/EBITDA Ratio are not received by
Lender by the date required pursuant to Section 9.1.3 of the Agreement, the
Applicable Margin shall be determined as if the Funded Debt/EBITDA Ratio
exceeds 4.25 to 1.0 until such time as such financial statements and
Compliance Certificate are received and any Event of Default resulting from
a failure timely to deliver such financial statements or Compliance
Certificate is waived in writing by Lender; provided, however, that nothing
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herein shall be deemed to prevent Lender from charging interest at the
Default Rate for so long as an Event of Default exists. For the final
quarter of any fiscal year of Borrower, Borrower may provide the unaudited
financial statements of Borrower, subject only to year-end adjustments, for
the purpose of determining the Applicable Margin; provided, however, that
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if, upon delivery of the annual audited financial statements required to be
submitted by Borrower to Lender pursuant to Section 9.1.3(i) of the
Agreement, Borrower have not met the criteria for reduction of the
Applicable Margin pursuant to the terms hereinabove for the final Fiscal
Quarter of the Fiscal Year of Borrower then ended, then such Applicable
Margin reduction shall be terminated and, effective on the first day of the
month following receipt by Lender of such audited financial statements, the
Applicable Margin shall be the Applicable Margin that would have been in
effect if such reduction had not been implemented based upon the unaudited
financial statements of Borrower for the final Fiscal Quarter of the Fiscal
Year of Borrower then ended.
Applicable Law - all laws, rules and regulations applicable to the
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Person, conduct, transaction, covenant or Loan Documents in question,
including all applicable common law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of governmental bodies; and orders, judgments
and decrees of all courts and arbitrators.
Availability - the amount that Borrower is entitled to borrow from
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time to time as Revolver Loans, such amount being the difference derived
when the sum of the principal amount of Revolver Loans then outstanding
(including any amounts which Lender may have paid for the account of
Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by Borrower) is subtracted from the Borrowing Base. If the
amount of the Revolver Loans outstanding is equal to or greater than the
Borrowing Base, Availability is 0.
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Availability Reserve - on any date of determination thereof, an amount
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equal to the sum of the following on such date: (i) a reserve for general
inventory shrinkage, whether as a result of theft or otherwise, that is
determined by Lender from time to time in its reasonable credit judgment
based upon Borrower's historical losses due to such shrinkage; (ii) any
amounts which Borrower is obligated to pay pursuant to the provisions of
the Loan Documents but does not pay when due and which Lender elects to pay
pursuant to any of the Loan Documents for the account of Borrower; (iii)
the LC Reserve; and (iv) for so long as any Event of Default exists, such
additional reserves as Lender in its sole and absolute discretion may elect
to impose from time to time, without waiving any such Event of Default or
Lender's entitlement to accelerate the maturity of the Obligations as a
consequence thereof.
Average Loan Balance - for any month, the amount obtained by adding
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the unpaid balance of Revolver Loans owing by Borrower to Lender at the end
of each day for each day during the month in question and by dividing such
sum by the number of days in such month that the Agreement is in effect.
Bank - Deutsche Bank AG, New York Branch.
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Bankruptcy Code - title 22 of the United States Code.
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Borrowing - a Borrowing consisting of Loans made on the same day and
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of the same Type by Lender.
Borrowing Base - on any date of determination thereof, an amount equal
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to the lesser of: (a) $15,000,000, minus LC Obligations outstanding on such
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date, or (b) an amount equal to (i) the sum of the Accounts Formula Amount
plus the Inventory Formula Amount on such date minus (ii) the Availability
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Reserve on such date.
Borrowing Base Certificate - a Borrowing Base Certificate in the form
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of EXHIBIT G attached hereto.
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Business Day - any day excluding Saturday, Sunday and any day which is
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a legal holiday under the laws of the State of Georgia or Missouri or is a
day on which banking institutions located in such states are closed.
Capital Expenditures - expenditures made or liabilities incurred for
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the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Debt represented by obligations
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under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Equivalents - (i) marketable direct obligations issued or
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unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government having maturities
of not more than 22 months from the date of acquisition; (ii) domestic
certificates of deposit and time deposits having maturities of not more
than 22 months from the date of acquisition, bankers' acceptances having
maturities of not more than 22 months from the date of acquisition and
overnight bank deposits, in each case issued by any commercial bank
organized under the laws of the United States, any state thereof or the
District of Columbia, which at the time of
-4-
acquisition are rated A-2 (or better) by Standard & Poor's Corporation or
P-2 (or better) by ▇▇▇▇▇'▇ Investors Services, Inc., and (unless issued by
a Lender) not subject to offset rights in favor of such bank arising from
any banking relationship with such bank; (iii) repurchase obligations with
a term of not more than 30 days for underlying securities of the types
described in clauses (i) and (ii) entered into with any financial
institution meeting the qualifications specified in clause (ii) above; and
(iv) commercial paper having at the time of investment therein or a
contractual commitment to invest therein a rating of A-2 (or better) by
Standard & Poor's Corporation or P-2 (or better) by ▇▇▇▇▇'▇ Investors
Services, Inc., and having a maturity within 9 months after the date of
acquisition thereof.
CERCLA - the Comprehensive Environmental Response Compensation and
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Liability Act, 42 U.S.C. (S) 9602 et seq. and its implementing regulations.
Chattel Paper - shall have the meaning ascribed to the term "chattel
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paper" in the UCC.
Claims - any and all claims, demands, liabilities, obligations,
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losses, damages, penalties, actions, judgments, suits, awards, remedial
response, costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys', accountants' or consultants' fees and
expenses), whether arising under or in connection with the Loan Documents,
under any Applicable Law (including any Environmental Law) or otherwise,
that may now or hereafter be suffered or incurred by a Person.
Closing Date - the date on which all of the conditions precedent in
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Section 10 hereof are satisfied and the initial Loan is made or the initial
LC Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property described
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in Section 6 hereof, and all other Property and interests in Property that
now or hereafter secure the payment and performance of any of the
Obligations.
Commitment Amount - $15,000,000.
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Commencement Date - shall mean (i) for the Original Division, for the
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Argus Division, and for the ▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇)
for each of the ▇▇▇▇▇▇▇▇, Harperprints and the ▇▇▇▇▇▇▇▇ Divisions, April 1,
1998, and (iii) for the ▇▇▇▇▇▇▇▇ Division, May 1, 1998.
Compliance Certificate - a Compliance Certificate to be provided by
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Borrower to Lender in accordance with, and in the form annexed as EXHIBIT B
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to, the Agreement.
Concentration Account - the account maintained by Borrower at First
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American National Bank or SunTrust Bank, N.A. in Atlanta, Georgia to which
all sums received by any Collecting Bank will be consolidated and
concentrated as contemplated pursuant to Section 7.2.6 hereof.
Consolidated - the consolidation in accordance with GAAP of the
------------
accounts or other items as to which such term applies.
Cumulative Basis - the EBITDA of Parent on a Consolidated basis
----------------
achieved by obtaining the sum of the EBITDA of each of the Divisions,
measured (unless otherwise specified) from the respective Commencement Date
for each Division, until such time as the Cumulative Measurement Period for
a Division is greater than four Fiscal Quarters, at which time EBITDA of
such Division shall be measured on a rolling four quarter basis.
-5-
Cumulative Measurement Period - for any Division, the period
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commencing with the Commencement Date for such Division and ending on the
date of determination of the EBITDA of such Division.
Debt - as applied to a Person means, without duplication: (i) all
----
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Debt is to be determined, including
Capitalized Lease Obligations; (ii) all obligations of other Persons which
such Person has guaranteed; (iii) all reimbursement obligations in
connection with letters of credit or letter of credit guaranties issued for
the account of such Person; and (iv) in the case of Borrower (without
duplication), the Obligations.
Deferred Acquisition Consideration - as defined in the GECC Documents.
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Default - an event or condition the occurrence of which would, with
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the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - a fluctuating rate per annum which, on any date, is
------------
equal to the Prime Rate in effect for such date plus 2%.
Deposit Account - a demand, time, savings, passbook, money market or
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other depository account, or a certificate of deposit, maintained Borrower
with any bank, savings and loan association, credit union or other
depository institution, but excluding any payroll account, other employee
benefit account or trust account of Borrower.
Distribution - in respect of any entity, (i) any payment of any
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dividends or other distributions on Equity Interests of the entity (except
distributions in such Equity Interests) and (ii) any purchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
entity or any Affiliate of the entity unless made contemporaneously from
the net proceeds of the sale of Equity Interests.
Divisions - collectively, the Original Division, the Argus Division,
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the ▇▇▇▇▇/Phoenix Division, the ▇▇▇▇▇▇▇▇ Division, the ▇▇▇▇▇▇▇▇ Division,
▇▇▇▇▇▇▇▇ and Harperprints (as each such term is defined in the GECC
Documents).
Document - shall have the meaning ascribed to the term "document" in
--------
the UCC.
Dollars and the sign "$" - lawful money of the United States of
------------------------
America.
Dominion Account - a special account of Lender established by Borrower
----------------
pursuant to the Agreement at a bank selected by Borrower, but acceptable to
Lender in its reasonable discretion, and over which Lender shall have sole
and exclusive access and control for withdrawal purposes.
EBITDA - for any Person for any Fiscal Quarter, without duplication,
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the sum of the following for such period determined on a Consolidated
basis: (i) Net Income, plus (ii) depreciation, plus (iii) amortization,
---- ----
plus (iv) all interest expense, plus (v) income tax expense, plus (vi)
---- ---- ----
other non-cash charges deducted in calculating Net Income (excluding
extraordinary gains and losses).
-6-
Eligible Account - an Account arising in the ordinary course of
----------------
Borrower's business from the sale of goods or rendition of services which
is payable in Dollars and which Lender, in its sole discretion, deems to be
an Eligible Account. Without limiting the generality of the foregoing, no
Account shall be an Eligible Account if: (i) it arises out of a sale made
by Borrower to a Subsidiary or an Affiliate of Borrower or to a Person
controlled by an Affiliate of Borrower; (ii) it is due or unpaid more than
90 days after the original invoice date; (iii) 50% or more of the Accounts
from the Account Debtor are not deemed Eligible Accounts hereunder; (iv)
the total unpaid Accounts of the Account Debtor exceed 20% of the net
amount of all Eligible Accounts or exceeds a credit limit established by
Lender for such Account Debtor, in each case, to the extent of such excess;
(v) any covenant, representation or warranty contained in the Agreement
with respect to such Account has been breached; (vi) the Account Debtor is
also Borrower's creditor or supplier, or the Account Debtor has disputed
liability with respect to such Account or the Account otherwise is subject
to any right of setoff, counterclaim, reserve or chargeback, to the extent
of such offset, counterclaim, disputed amount, reserve or chargeback; (vii)
it arises from a sale to an Account Debtor with its principal office,
assets or place of business outside the United States; (viii) it arises
from a sale to the Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or any other repurchase or
return basis; (ix) the Account Debtor is the United States of America or
any department, agency or instrumentality thereof, unless Borrower assigns
its right to payment of such Account to Lender, in a manner satisfactory to
Lender, so as to comply with the Assignment of Claims Act of 2940 (32
U.S.C. (S)3727 and 42 U.S.C. (S)25), or is a state, county or municipality,
or a political subdivision or agency thereof and Applicable Law disallows
or restricts an assignment of Accounts on which it is the Account Debtor;
or (x) the Account is evidenced by chattel paper or an instrument that have
not been endorsed and delivered to Lender.
Eligible Acquisition - any transaction or series of transactions
--------------------
pursuant to or as a result of which Borrower merges or consolidates with or
otherwise acquire all or a substantial portion of the ownership interests
or assets or properties of any Person of or a going concern business (as
defined in accordance with GAAP) (an "Acquisition") with respect to which
-----------
all of the conditions set forth in Section 2.1.2 and all of the conditions
set forth below have been satisfied in full:
(a) if such Acquisition involves the purchase of stock or other
ownership interests, (i) the acquired Person shall be organized and
existing under the laws of, and shall have its primary place of business
located in, a state of the United States, and (ii) such Acquisition shall
be effected in such a manner as to ensure that the acquired Person is
promptly merged into the Borrower, with the Borrower being the surviving
entity;
(b) the primary business activity of the Acquisition target is the
same or substantially similar to the business activities of the Borrower
(that is, commercial printing) and the Acquisition target shall have been
engaged in such business for at least ten (10) years;
(c) the aggregate Acquisition Consideration payable by the Borrower
or Parent in connection with such Acquisition (other than earn-outs,
customary post-closing adjustments, escrows, holdbacks, indemnities and
seller notes permitted by Lender) shall be payable in full on the date of
such Acquisition;
(d) the ratio of the aggregate Acquisition Consideration payable by
Borrower or Parent in connection with such Acquisition to the Acquisition
target's adjusted pro forma EBITDA for the
-7-
trailing twelve-month period ending the last day of the month immediately
preceding the date of such Acquisition shall not exceed 5.50 to 1.00;
(e) the amount of the Revolver Loan proceeds to be used in such
Acquisition shall be no more than four (4) times the amount of the
Acquisition target's adjusted pro forma EBITDA for the trailing twelve
month period ending the last day of the month immediately preceding the
date of such Acquisition;
(f) the Acquisition Consideration payable by Borrower or Parent in
connection with such Acquisition shall not exceed 120% of the fair market
value of the Collateral to be acquired by Borrower, as determined by an
independent appraiser selected by Lender;
(g)(i) the Borrower shall not have assumed or agreed to remain
liable with respect to any Debt (including any material tax or ERISA
liability) of a seller, except (A) to the extent permitted under Section
9.2.3, (B) obligations of a seller incurred in the ordinary course of
business and necessary or desirable to the continued operation of the
underlying properties, and (C) such other Debt as Lender shall approve, the
assumption of which shall constitute Acquisition Consideration, and (ii)
any other such liabilities or obligations not permitted to be assumed or
otherwise supported by the Borrower hereunder shall be paid in full or
release as to the assets being so acquired on or before the consummation of
such Acquisition;
(h) all assets and properties acquired in connection with any such
Acquisition shall be free and clear of any liens, charges and other
encumbrances other than as permitted under Section 9.2.5;
(i) no Event of Default or Default exists immediately prior to
such Acquisition or would occur immediately after giving effect thereto (as
determined, with respect to financial covenants, by reference to pro forma
financial statements in form and substance satisfactory to Lender);
(j) Lender and Lender's counsel shall have conducted, or caused to
be conducted by Persons selected by Lender, all such due diligence reviews,
audits and investigations (including without limitation, environmental
audits) as they shall have deemed necessary or appropriate in connection
therewith, and Lender shall be satisfied in its sole discretion with the
scope and the results thereof; and
(k) such Acquisition shall have been approved in writing by Lender
in its sole and absolute discretion.
Eligible Inventory - such Inventory of Borrower (other than packaging
------------------
materials, labels and supplies) which Lender, in its sole discretion, deems
to be Eligible Inventory. Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory unless: (i) it is raw
materials or finished goods; (ii) it is in good, new and saleable
condition; (iii) it is not slow-moving, obsolete or unmerchantable; (iv) it
meets all standards imposed by any governmental agency or authority; (v) it
conforms in all respects to the warranties and representations set forth in
the Agreement; (vi) it is at all times subject to Lender's duly perfected,
first priority security interest and no other Lien except a Permitted Lien;
(vii) it is in Borrower's possession and control, situated at a location in
compliance with the Agreement and is not in transit or outside the
continental United States.
Environmental Certificate - the Certificate Regarding Environmental
-------------------------
Matters to be executed on or about the Closing Date by one or more Senior
Officers in favor of Lender.
-8-
Environmental Laws - all federal, state and local laws, rules,
------------------
regulations, codes, ordinances, programs, permits, guidance, orders and
consent decrees, now or hereafter in effect and relating to health, safety
or environmental matters, including the CERCLA.
Environmental Release - a release as defined in CERCLA or under any
---------------------
applicable Environmental Law.
Equity Interest - the interest of (i) a shareholder in a corporation,
---------------
(ii) a partner (whether general or limited) in a partnership (whether
general, limited or limited liability), (iii) a member in a limited
liability company, or (iv) any other Person having any other form of equity
security.
ERISA - the Employee Retirement Income Security Act of 1974, as
-----
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 11.1 hereof.
----------------
Fiscal Quarter - any of the quarterly accounting periods of Borrower
--------------
or Parent, as applicable.
Fiscal Year - the fiscal year of Borrower and its Subsidiaries for
-----------
accounting and tax purposes.
Fixed Charges -with respect to any Person, determined on a
-------------
Consolidated basis for any period the sum of (a) interest paid, and (b) all
scheduled payments by such Persons for such period on the principal of
Indebtedness of such Person, and (c) Deferred Acquisition Consideration
paid.
Fixed Charge Coverage Ratio - for any Person for any Fiscal Quarter,
---------------------------
the ratio of (a) the EBITDA of such Person, minus the non-financed Capital
-----
Expenditures of such Person, minus the cash taxes paid by such Person to
-----
(b) the Fixed Charges of such Person.
Funded Debt - with respect to any Person, all of its Debt which by
-----------
terms of the agreement governing or instrument evidencing such Debt matures
more than one year, or is directly or indirectly renewable or extendible at
the option of such Person under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more
than one year from, the date of creation thereof, including current
maturities of long-term debt, revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and shall also
include, without limitation, the Obligations and the Subordination Notes.
GAAP - generally accepted accounting principles in the United States
----
of America in effect from time to time.
GECC - General Electric Capital Corporation, a New York corporation
----
having an office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
GECC Documents - the Second Amended and Restated Loan and Security
--------------
Agreement, dated on or after the date hereof, as amended, among Borrower,
GECC, as agent for itself and other financial institutions who may be party
thereto from time to time, and all other instruments, agreements,
guarantees and documents executed or delivered in connection therewith.
GECC Eligible Acquisition - an Eligible Acquisition as defined in the
-------------------------
GECC Documents.
-9-
General Intangibles - all general intangibles of Borrower, whether now
-------------------
owned or hereafter created or acquired by Borrower, including all chooses
in action, causes of action, company or other business records, deposit
accounts, inventions, blueprints, designs, patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, service
marks, goodwill, brand names, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, computer programs,
operational manuals, all claims under guaranties, security interests or
other security held by or granted to Borrower to secure payment of any of
the Accounts by an Account Debtor, all rights to indemnification and all
other intangible property of every kind and nature (other than Accounts).
Governmental Approvals - means all authorizations, consents,
----------------------
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all national state or local government (whether domestic or
foreign) and any political subdivisions thereof in any other governmental,
quasi-governmental, judicial, administrative, public or statutory
instrumentality, authority, body, agency, bureau or entity.
Guarantors - Parent, Harperprints and any other Person who may
----------
hereafter guarantee payment or performance of the whole or any part of the
Obligations.
Guaranty Agreement - a guaranty that is at any time executed by a
------------------
Guarantor in favor of Lender.
Harperprints - Harperprints, Inc., a North Carolina corporation
------------
Harperprints Advances - advances by Borrower to Harperprints made in
---------------------
compliance with the provisions of Section 9.2.2. of this Agreement.
Insolvency Proceeding - any action, case or proceeding commenced by or
---------------------
against a Person, or any agreement of such Person, for (a) the entry of an
order for relief under any chapter of the Bankruptcy Code or other
insolvency or debt adjustment law (whether state, federal or foreign), (b)
the appointment of a receiver, trustee, liquidator or other custodian for
such Person or any part of its Property, (c) an assignment or trust
mortgage for the benefit of creditors of such Person, or (d) the
liquidation, dissolution or winding up of the affairs of such Person.
Instrument - shall have the meaning ascribed to the term "instrument"
----------
in the UCC.
Intellectual Property - Property constituting under any Applicable Law
---------------------
a patent, patent application, copyright, trademark, service ▇▇▇▇, tradename
or mask work, or license or other right to use any of the foregoing.
Intellectual Property Claim - the assertion by any Person of a claim
---------------------------
(whether asserted in writing, by action, suit or proceeding or by other
means) that Borrower's ownership, use, marketing, sale or distribution of
any Inventory, Intellectual Property or other Property is violative of any
ownership, patent, copyright, trademark or other rights of such Person.
Intercreditor Agreement - the Intercreditor Agreement, dated on or
-----------------------
about the date hereof, between GECC, as Agent, and Lender.
-10-
Interest Coverage Ratio - with respect to any Fiscal Quarter, the
-----------------------
ratio of for any period of (a) EBITDA of Parent, determined on a
Consolidated basis for such period to (b) interest paid by Parent or
Borrower, determined on a Consolidated basis, with respect to all Debt.
Interest Expense - for any period the amount which would, in
----------------
conformity with GAAP, be set forth opposite the caption "interest expense"
or any like caption on an income statement of Borrower.
Interest Period - as defined in Section 3.1.2 of the Agreement.
---------------
Inventory - all of Borrower's inventory, whether now owned or
---------
hereafter acquired, including all goods intended for sale or lease by
Borrower, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description
used or which might be used in connection with the manufacture, printing,
packing, shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in Borrower's business; and all
documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower.
Inventory Formula Amount - on any date of determination thereof, an
------------------------
amount equal to the lesser of (i) $7,500,000 or (ii) 65% of the Value of
Eligible Inventory on such date consisting of raw materials or finished
goods.
Investment Property - all Securities (whether certificated or
-------------------
uncertificated), security entitlements, securities, accounts, commodity
contracts and commodity accounts.
LC Application - an application to Bank, in the form approved by Bank
--------------
and duly executed by Borrower and Lender as co-applicants, for the issuance
of a Letter of Credit.
LC Conditions - the following conditions, the satisfaction of each of
-------------
which is required before Lender shall be obligated to execute any LC
Application in connection with a request to Bank for the issuance of a
Letter of Credit: (i) no Default or Event of Default exists; (ii) after
giving effect to the issuance of the requested Letter of Credit and each
Letter of Credit to be issued and for which an LC Application has been
signed by Lender, the LC Obligations would not exceed $500,000, no Out-of-
Formula Condition would exist, and, if no Revolver Loans are outstanding,
the LC Obligations do not exceed the Borrowing Base; (iii) the expiry date
of the Letter of Credit does not extend beyond the earlier to occur of 365
days from the date of issuance or 10 days prior to the last day of the
Original Term or of any effective Renewal Term; and (iv) the currency in
which payment is to be made under the Letter of Credit is Dollars.
LC Documents - any and all agreements, instruments and documents
------------
(other than an LC Application or an LC Guaranty) required by Bank to be
executed by Borrower or any other Person and delivered to Bank for the
issuance of a Letter of Credit.
LC Guaranty - a guaranty executed by Lender in favor of Bank pursuant
-----------
to which Lender shall guarantee the payment or performance by Borrower of
Borrower's reimbursement obligation under each Letter of Credit in respect
of which Lender has joined with Borrower in executing an LC Application.
-11-
LC Obligations - on any date of determination thereof, an amount (in
--------------
Dollars) equal to the sum of (i) all amounts then due and payable by any
Obligor on such date by reason of any payment made on or before such date
by Lender under any LC Guaranty, plus (ii) the aggregate undrawn amount of
----
all Letters of Credit then outstanding or to be issued by Bank under an LC
Application theretofore submitted to Bank.
LC Request - a written request from Borrower to Lender for Lender to
----------
join with Borrower in the execution of an LC Application for the issuance
of a Letter of Credit, which shall be in the form of EXHIBIT E to the
---------
Agreement.
LC Reserve - on any date of determination thereof, an amount equal to
----------
the sum of (i) the aggregate LC Obligations at such time with respect to
standby Letters of Credit, exclusive of any LC Obligations that are fully
secured by Cash Collateral.
Letter of Credit - a letter of credit issued by Bank for the account
----------------
of Borrower.
Leverage Ratio - for any Fiscal Quarter, the ratio of (a) the Funded
--------------
Debt of Parent, determined on a Consolidated basis, to (b) the EBITDA of
Parent, determined on a Consolidated basis (provided that, for the purposes
of this definition and to the extent applicable to the determination of the
EBITDA of Parent, if the applicable Cumulative Measurement Period for any
Division is comprised of fewer than four Fiscal Quarters, then the EBITDA
of such Division shall be determined, to the extent necessary to obtain
data for four consecutive Fiscal Quarters, by reference to the pro forma
financial statements (with agreed upon add-backs) delivered in connection
with the acquisition of said Division and approved by Lender).
LIBOR Loan - a Loan, or portion thereof, during any period in which it
----------
bears interest at a rate based upon the applicable Adjusted LIBOR Rate.
LIBOR Rate -with respect to each day of an Interest Period, the rate
----------
per annum equal to the rate for deposits in Dollars approximately equal in
principal amount to or comparable to the amount of the LIBOR Loan to which
such Interest Period relates and for a term comparable to such Interest
Period which appears on Telerate Page 3750 as of 11:00 a.m., London time, 3
Business Days prior to the commencement of such LIBOR Loan. If at least
two rates appear on such Telerate Page for such Interest Period, the "LIBOR
Rate" shall be the arithmetic mean of such rates. If the "LIBOR Rate"
cannot be determined in accordance with the immediately preceding sentences
with respect to any Interest Period, the "LIBOR Rate" with respect to each
day during such Interest Period shall be the rate per annum equal to the
rate (rounded upward to the nearest 1/100th of 1%) at which the Bank is
offered Dollar deposits at or about 10:00 A.M., New York City time, 3
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations are then being conducted by the Bank on the first day
of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the LIBOR Loan to be outstanding during
such Interest Period. Each determination by Lender of any LIBOR Rate
shall, in the absence of manifest error, be conclusive.
Lien - any interest in Property securing an obligation owed to, or a
----
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements, rights-of-
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purpose hereof, Borrower
shall be deemed to be the owner of any Property which
-12-
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
------------
pursuant to Section 4.7 hereof.
Loan Documents - the Agreement, the Other Agreements and the Security
--------------
Documents.
Loan Year - a period commencing each calendar year on the same month
---------
and day as the date hereof and ending on the same month and day in the
immediately succeeding calendar year, with the first such period (i.e., the
----
first Loan Year) to commence on the date of this Agreement.
Loans - all loans and advances of any kind made by Lender pursuant to
-----
the Agreement.
Margin Stock - as such term is defined in Regulation U and Regulation
------------
G of the Board of Governors.
Material Adverse Effect - the effect of any event or condition which,
-----------------------
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (a) has a material adverse effect upon the
business, operations, Properties, condition (financial or otherwise) or
business prospects of any Obligor; (b) has any material adverse effect
whatsoever upon the validity or enforceability hereof or any of the other
Loan Documents; (c) has or may be reasonably expected to have any material
adverse effect upon the value of the whole or any material part of the
Collateral, the Liens of Lender with respect to the Collateral or any
material part thereof or the priority of such Liens; (d) materially impairs
the ability of Borrower or any other Obligor to perform its obligations
under this Agreement, any Guaranty Agreement or any of the other Loan
Documents, including repayment of the Obligations when due; or (e)
materially impairs the ability of Lender to enforce or collect the
Obligations or realize upon any of the Collateral in accordance with the
Loan Documents and Applicable Law.
Material Contract - an agreement to which an Obligor is a party (other
-----------------
than the Loan Documents) for which breach, termination, cancellation,
nonperformance or failure to renew could reasonably be expected to have a
Material Adverse Effect.
Maximum Rate - the maximum non-usurious rate of interest permitted by
------------
Applicable Law that at any time, or from time to time, may be contracted
for, taken, reserved, charged or received on the Debt in question or, to
the extent that at any time Applicable Law may thereafter permit a higher
maximum non-usurious rate of interest, then such higher rate.
Notwithstanding any other provision hereof, the Maximum Rate shall be
calculated on a daily basis (computed on the actual number of days elapsed
over a year of 365 or 366 days, as the case may be).
Money Borrowed - means (i) Debt arising from the lending of money by
--------------
any Person to Borrower; (ii) Debt, whether or not in any such case arising
from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures,
notes or similar instruments, or (C) upon which interest charges are
customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Debt that
constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations
with respect to letters of credit or
-13-
guaranties of letters of credit and (v) Debt of Borrower under any guaranty
of obligations that would constitute Debt for Money Borrowed under clauses
(i) through (iii) hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
------------------
of ERISA.
Net Income (Loss) - for any Person for any period, the aggregate net
-----------------
income (or loss) from continuing operations (excluding any income (or loss)
included therein resulting from extraordinary items) of such Person and its
Subsidiaries for such period.
Note - the Revolver Note to be executed by Borrower in favor of Lender
----
on the Closing Date in substantially the form of EXHIBIT A attached hereto.
---------
Obligations - all debts, liabilities, obligations, covenants and
-----------
duties now or at any time or times hereafter owing by Borrower to Lender,
howsoever evidenced or arising, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or
several, including all of the Loans and LC Obligations and all interest
payable in connection therewith and all other sums chargeable to or payable
by Borrower under the Loan Documents, any other agreement heretofore or
hereafter entered into by Borrower with or executed by Borrower in favor of
Lender, or Applicable Law.
Obligor - Borrower, each Guarantor and each other Person (other than
-------
Lender) who is at any time liable for the payment of any of the
Obligations.
Organization Documents - with respect to any Person, its charter,
----------------------
certificate or articles of incorporation, articles of organization,
operating agreement, partnership agreement or similar agreement or
instrument governing the formation or operation of such Person.
Original Term - as defined in Section 5.1 hereof.
-------------
Other Agreements - any and all agreements, instruments and documents
----------------
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other
Person and delivered to Lender in respect of the transactions contemplated
by the Agreement, including the Intercreditor Agreement, the Subordinated
Notes and the Subordination Agreements.
Out-of-Formula Condition - as defined in Section 2.1 hereof.
------------------------
Out-of-Formula Loan - a Revolver Loan made when an Out-of-Formula
-------------------
Condition exists or the amount of any Revolver Loan which, when funded,
results in an Out-of-Formula Condition.
Parent - Master Graphics, Inc., a Tennessee corporation.
------
Parent Pledge Agreement -the Pledge Agreement, dated on or about the
-----------------------
date hereof, executed by Parent in favor of GECC, as agent, for the benefit
of itself and Lender and certain other banks or financial institution, as
from time to time amended, supplemented or modified.
-14-
Participant - each Person who shall be granted the right by Lender to
-----------
participate in any of the Loans described in the Agreement and who shall
have entered into a participation agreement in form and substance
satisfactory to Lender.
Payment Items - all checks, drafts, or other items of payment payable
-------------
to Borrower, including proceeds of any of the Collateral.
Permitted Lien - a Lien of a kind specified in Section 9.2.5 hereof.
--------------
Permitted Use - a use of proceeds of any of the Loans to pay (i) on
-------------
the Closing Date, Debt owing to First American National Bank, fees and
expenses payable to Lender under the Agreement, and (ii) after the Closing
Date, any Debt incurred in the ordinary course of Borrower's business to
the extent not prohibited by the Agreement, Capital Expenditures to the
extent permitted by the Loan Documents, principal and interest payments
with respect to any Subordinated Debt to the extent not prohibited by the
Agreement or any Subordination Agreement, Harperprint Advances, Eligible
Acquisitions and any of the Obligations.
Person - an individual, partnership, corporation, limited liability
------
company, limited liability partnership, joint stock company, land trust,
business trust, unincorporated organization or other form of business
entity, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
----
employees of Borrower that is covered by Title IV of ERISA.
Prime Rate -the "prime rate" for corporate loans from the United
----------
States financial institutions, as published by The Wall Street Journal from
-----------------------
time to time, provided that if for any reason such rate is not published by
The Wall Street Journal or if Lender elects to no longer use The Wall
----------------------- --------
Street Journal as a reference for interest rates on Prime Rate based loans
--------------
under this Agreement, the term "Prime Rate" shall mean the prime or base
rate of interest announced publicly from time to time by Citibank, N.A. (or
such other reference bank as Lender may elect) as its prime rate, which
rate of interest may not be the lowest rate of interest charged by such
bank for extensions of credit. Any change in an interest rate resulting
from a change in the Prime Rate shall become effective on the date such
change appears in The Wall Street Journal or, if the Prime Rate is no
-----------------------
longer determined by reference to The Wall Street Journal, on the date the
-----------------------
applicable reference bank announces a change in its prime rate.
Prime Rate Loan - a loan, or portion thereof, during any period in
---------------
which it bears interest at a rate based upon the Prime Rate.
Projections - Borrower's forecasted (a) balance sheets, (b) profit
-----------
and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
Properly Contested - in the case of any Debt of a Obligor (including
------------------
any Tax) that is not paid as and when due or payable by reason of such
Obligor's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such Debt and any Liens securing same
are being properly contested in good faith by appropriate proceedings
promptly instituted and diligently
-15-
conducted; (ii) such Obligor has established appropriate reserves as shall
be required in conformity with GAAP; (iii) the non-payment of such Debt
during the period being contested by such Obligor will not have a Material
Adverse Effect and does not and will not result in a forfeiture of,
foreclosure upon or loss of any assets of such Obligor; (iv) no Lien is
imposed upon any of such Obligor's assets with respect to such Debt unless
such Lien is at all times junior and subordinate in priority to the Liens
in favor of Lender (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien
is stayed during the period prior to the final resolution or disposition of
such dispute; (v) if the Debt results from or is determined by the entry,
rendition or issuance against a Obligor or any of its assets of a judgment,
writ, order or decree, such judgment, writ, order or decree is stayed
pending a timely appeal or other judicial review and such Obligor shall
have established adequate reserves in accordance with GAAP for such
judgment, writ, order or decree or the same is either fully insured against
by an insurer that has not denied or reserved rights with respect to
coverage or has been bonded to Lender's satisfaction; and (vi) if such
dispute or contest is abandoned, settled or determined adversely to such
Obligor, such Obligor forthwith pays such Debt and all penalties and
interest in connection therewith.
Property - any interest in any kind of property or asset, whether
--------
real, personal or mixed, or tangible or intangible.
Purchase Money Debt - means and includes (i) Debt (other than the
-------------------
Obligations) for the payment of all or any part of the purchase price of
any fixed assets, (ii) any Debt (other than the Obligations) incurred at
the time of or within 10 days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof,
but not any increases in the principal amounts thereof outstanding at the
time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
-------------------
Money Debt, but only if such Lien shall at all times be confined solely to
the fixed assets acquired through the incurrence of the Purchase Money Debt
secured by such Lien.
Renewal Term - as defined in Section 5.1 hereof.
------------
Reportable Event - any of the events set forth in Section 4043(b) of
----------------
ERISA.
Restricted Investment - any acquisition of Property by Borrower or any
---------------------
of its Subsidiaries in exchange for cash or other Property, whether in the
form of an acquisition of Equity Interests or Debt, or the purchase or
acquisition by Borrower or any Subsidiary of any other Property, or a loan,
advance, capital contribution or subscription, except acquisitions of the
following: (a) fixed assets to be used in the business of Borrower or any
Subsidiary so long as the acquisition costs thereof constitute Capital
Expenditures permitted hereunder; (b) goods held for sale or lease or to be
used in the manufacture of goods or the provision of services by Borrower
or any Subsidiary in the ordinary course of business; (c) Current Assets
arising from the sale or lease of goods or the rendition of services in the
ordinary course of business of Borrower or any Subsidiary; (d) investments
in Subsidiaries to the extent existing on the Closing Date; (e) Cash
Equivalents; (f) GECC Eligible Acquisitions; and (g) Eligible Acquisitions
hereunder.
Revolver Loan - a Loan made by Lender as provided in Section 2.1
-------------
hereof.
-16-
Schedule of Accounts - as defined in Section 7.2.1 hereof.
--------------------
Security - shall have the same meaning as in Section 2(1) of the
--------
Securities Act of 1933.
Security Documents - each Guaranty Agreement, the Parent Pledge
------------------
Agreement and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations.
Senior Officer - the chairman of the board of directors, the
--------------
president, the chief operating officer or the chief financial officer of,
or any in-house legal counsel to, Borrower.
Solvent - as to any Person, such Person (i) owns Property whose fair
-------
saleable value is greater than the amount required to pay all of such
Person's Debts (including contingent debts), (ii) is able to pay all of its
Debts as such Debts mature, (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage; and (iv) is not "insolvent" within the meaning of Section
101(32) of the Bankruptcy Code.
Statutory Reserves - on any date, the percentage (expressed as a
------------------
decimal) established by the Board of Governors which is the then stated
maximum rate for all reserves (including, any emergency, supplemental or
other marginal reserve requirements) applicable to any member bank of the
Federal Reserve System in respect to Eurocurrency Liabilities (or any
successor category of liabilities under Regulation D). Such reserve
percentage shall include, without limitation, those imposed pursuant to
said Regulation D. The Statutory Reserve shall be adjusted automatically
on and as of the effective date of any change in such percentage.
Subordinated Debt - Debt of Borrower that is subordinated to the
-----------------
Obligations in a manner satisfactory to Lender.
Subordinated Notes - collectively, (i) the $1,000,000 deferred
------------------
compensation obligation payable June 19, 2007, pursuant to the Employment
Agreement between Borrower and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, (ii) the subordinated
promissory notes dated the dates set forth below in the principal amounts
set forth below issued by Borrower or Parent to the respective Subordinated
Noteholders identified below, (iii) the subordinated earn-out promissory
notes issued by Parent to the ▇▇▇▇▇ Sellers (as defined in the GECC
Documents) and the Phoenix Sellers (as defined in the GECC Documents) and
(iv) any other subordinated notes issued by Borrower or Parent to a Seller
(as defined in the GECC Documents) in connection with an Eligible
Acquisition (other than the ▇▇▇▇▇▇▇▇ Note)(as defined in the GECC
Documents), all in form and substance satisfactory to Lender:
-17-
Amount Date Subordinated Noteholder
------ ---- -----------------------
$3,750,000.00 June 19, 1997 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
$1,000,000.00 June 19, 1997 ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
$ 500,000.10 December 4, 1992 ▇▇▇▇ ▇▇▇▇▇▇
$ 500,000.10 December 4, 1992 ▇▇▇▇ ▇▇▇▇▇▇
$ 100,000.00 December 4, 1992 ▇▇▇▇ ▇▇▇▇▇▇
$ 300,000.06 December 4, 1992 ▇▇▇▇▇▇ ▇▇▇▇▇▇
$3,750,000.00 September 26, 1997 Argus Sellers
$1,250,000.00 December 16,1997 ▇▇▇▇▇ Sellers
$1,150,000.00 December 16,1997 Phoenix Sellers
$3,471,314.64 December 16,1997 Existing Phoenix Noteholders
$ 854,219.00 March 4, 1998 ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
$ 559,175.47 March 31, 1998 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
$ 565,824.53 March 31, 1998 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
$ 193,000.00 March 31, 1998 ▇▇▇▇▇▇▇▇ Sellers
$1,807,000.00 March 31, 1998 Existing ▇▇▇▇▇▇▇▇ Noteholders
Subordinated Noteholders - as defined in the GECC Documents.
------------------------
Subordination Agreement - collectively, the separate Subordination
-----------------------
Agreements among Borrower, GECC, First American National Bank and each
Seller (other than the McQuiddy Sellers) and each Existing Noteholder (as
defined in the GECC Documents), pursuant to which the Subordinated Notes
issued to the respective Sellers and Existing Noteholders are subordinated
to the prior payment and satisfaction of the Obligations, together with the
acknowledgment and consent of such Sellers and Existing Noteholders that
Lender, upon the funding of the initial Loan hereunder, shall have the
benefit of the debt subordinations provided therein.
Subsidiary - any Person a majority of the Equity Interests of which is
----------
at the time owned, directly or indirectly, by Borrower or by one or more
other Subsidiaries or by Borrower and one or more other Subsidiaries.
Taxes - any present or future taxes, levies, imposts, duties, fees,
-----
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, transfer, license,
payroll, withholding, social security and franchise taxes now or hereafter
imposed or levied by the United States, or any state, local or foreign
government or by any department, agency or other political subdivision or
taxing authority thereof or therein and all interest, penalties, additions
to tax and similar liabilities with respect thereto.
Termination Date - the date on which this Agreement is terminated for
----------------
any reason under Section 5 hereof.
Type - with respect to any Loan, a Prime Rate Loan or a LIBOR Loan.
----
UCC - the Uniform Commercial Code (or any successor statute) as
---
adopted and in force in the State of Georgia or, when the laws of any other
state govern the method or manner of the creation
-18-
or perfection of any security interest in any of the Collateral, the
Uniform Commercial Code (or any successor statute) of such state.
Value - with reference to the value of Eligible Inventory, value
-----
determined on the basis of the lower of cost or market of such Eligible
Inventory, with the cost thereof calculated on a first-in, first-out basis.
Voting Stock - Securities of any class or classes of a corporation the
------------
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
1.2. ACCOUNTING TERMS. Unless otherwise specified herein, all terms of
----------------
an accounting character used in the Agreement shall be interpreted, all
accounting determinations under the Agreement shall be made, and all financial
statements required to be delivered under the Agreement shall be prepared, in
accordance with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrower and its Subsidiaries heretofore
delivered to Lender and using the same method for inventory valuation as used in
such audited financial statements, except for any change in which Borrower's
independent public accountants concur or as required by GAAP unless (i) Borrower
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) Lender shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made. In the event of any change in GAAP that
occurs after the date hereof and that is material to Borrower, Lender shall the
right to require either that conforming adjustments be made to any financial
covenants set forth in the Agreement, or the components thereof, that are
affected by such change or that Borrower report its financial condition based on
GAAP as in effect immediately prior to the occurrence of such change.
1.3. OTHER TERMS. All other terms contained in the Agreement shall have,
-----------
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
-------------------------------
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation hereof. All references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any Person shall mean and
include the successors and permitted assigns of such Person. All references to
any of the Loan Documents shall include any and all amendments or modifications
thereto and any and all restatements, extensions or renewals thereof. Wherever
the phrase "including" shall appear in the Agreement, such word shall be
understood to mean "including, without limitation." All references to the time
of day shall mean the time of day on the day in question in Atlanta, Georgia,
unless otherwise expressly provided in the Agreement. Whenever the phrase "to
the best of Borrower's knowledge" or words of similar import relating to the
knowledge or the awareness of Borrower are used herein, such phrase shall mean
and refer to (i) the actual knowledge of a Senior Officer of Borrower or (ii)
the knowledge that a Senior Officer would have obtained if they had engaged in
good faith and the diligent performance of their duties.
-19-
SECTION 2. CREDIT FACILITIES
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $15,000,000
available upon Borrower's request therefor, as follows:
2.1. REVOLVER LOANS.
--------------
2.1.1. Revolver Loans. Lender agrees, during the term of this
--------------
Agreement and for so long as no Default or Event of Default exists, to make
Revolver Loans to Borrower from time to time, as requested by Borrower in the
manner set forth in Section 4.1.1 hereof, up to a maximum principal amount at
any time outstanding equal to the Borrowing Base at such time. The Revolver
Loans shall be evidence by the Note and used solely for Permitted Uses. In no
event shall any proceeds of any Revolver Loans be used to purchase or to carry,
or to reduce, retire or refinance any Debt incurred to purchase or carry, any
Margin Stock. The initial Revolver Loan shall be for an amount in excess of
$250,000. If the unpaid balance of Revolver Loans outstanding at any time should
exceed the Borrowing Base at such time (an "Out-of-Formula Condition"), such
Revolver Loans shall nevertheless constitute Obligations that are secured by the
Collateral and entitled to all of the benefits of the Loan Documents. In the
event that Lender is willing in its sole and absolute discretion to make Out-of-
Formula Loans, such Out-of-Formula Loans shall be payable ON DEMAND and shall
bear interest as provided in this Agreement for Revolver Loans generally or at
such higher rate of interest as Lender may require as a condition to making any
such Out-of-Formula Loans.
2.1.2. Acquisition Loans. Upon Borrower's satisfaction of the
-----------------
provisions of Section 2.1.1 above and each of the Acquisition Loan Conditions,
Lender agrees, during the term of this Agreement and for so long as no Default
or Event of Default exists, to make Revolver Loans to Borrower for the purpose
of financing Eligible Acquisitions. If the unpaid balance of such Acquisition
Loans should exceed the Acquisition Loan Availability Requirement at any
applicable date, the Acquisition Loans shall be payable on demand to the extent
necessary to satisfy the Acquisition Loan Availability Requirement as of such
date.
2.1.3. Voluntary Reduction in Commitment. Borrower shall have the
---------------------------------
right to permanently reduce the Commitment Amount, at any time and from time to
time upon written notice to Lender of such reduction, which notice shall specify
the amount of such reduction, shall be irrevocable once given, shall be given at
least 5 Business Days prior to the end of the month and shall be effective only
upon Lender's receipt thereof. The effective date of any voluntary reduction of
the Commitment Amount shall be the first day of a month following the month in
which such notice is received by Lender. If the Commitment Amount is reduced to
zero, then such reduction shall be deemed a termination of this Agreement by
Borrower pursuant to Section 5.2.2 hereof. The Commitment Amount, once reduced,
may not be reinstated without the consent of Lender.
2.2. LETTERS OF CREDIT. During the period from the date hereof (but
-----------------
excluding the 30th day prior to the last day of the Original Term or any
applicable Renewal Term), and provided no Default or Event of Default exists,
Lender agrees to request from Bank one or more Letters of Credit on Borrower's
request therefor, subject to the following terms and conditions:
(i) Borrower acknowledges that Bank's willingness to issue any
Letter of Credit is conditioned upon Bank's receipt of (A) the LC Guaranty
duly executed and delivered to Bank by Lender, (B) an LC Application with
respect to the requested Letter of Credit and (C) such other instruments
and agreements as Bank may customarily require for the issuance of a letter
of credit of equivalent type and amount as the requested Letter of Credit.
Lender shall have no obligation to execute any LC Guaranty or to join with
Borrower in executing an LC Application unless (x) Lender receives from
Borrower, at least three (3) Business Days prior to the date on which
Borrower desires
-20-
to submit such LC Application to Bank, an LC Request, and (y) each of the
LC Conditions is satisfied on the date of Lender's receipt of the LC
Request and at the time of the requested execution of the LC Application.
Any Letter of Credit issued on the Closing Date hereof shall be for an
amount in Dollars that is greater than $250,000. If Lender shall have
complied with its obligations under this Section 2.2, Lender shall have no
liability or obligation to Borrower for any failure or refusal by Bank to
issue, for Bank's delay in issuing, or for any error of Bank in issuing any
Letter of Credit.
(ii) Letters of Credit may be requested hereunder by Borrower only
if they are to be used (i) to support obligations of Borrower incurred in
the ordinary course of its business, as presently conducted, on a standby
basis or (ii) for such other purposes as Lender may approve from time to
time in writing.
(iii) Borrower shall comply with all of the terms and conditions
imposed on Borrower by Bank, whether such terms and conditions are
contained in an LC Application or in any agreement with respect thereto,
and subject to the rights of Bank, Lender shall have the same rights and
remedies that Bank has under any agreements that Borrower may have with
Bank in addition to any rights and remedies contained in any of the Loan
Documents. Borrower agrees to reimburse Bank for any draw under any Letter
of Credit immediately upon demand, and to pay Bank the amount of all other
liabilities and obligations payable to Bank under or in connection with any
Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right that Borrower may have at any time against Bank or
any other Person. If Lender shall pay any amount under the LC Guaranty
with respect to any Letter of Credit, then Borrower shall be absolutely and
unconditionally obligated to pay to Lender and Borrower shall be deemed to
have requested an additional Revolver Loan in the amount thereof, on the
first Business Day following the date on which payment was made by Lender
under such LC Guaranty, an amount equal to the amount paid by Lender under
such LC Guaranty together with interest from and after the date of
Lender's payment under such LC Guaranty. Borrower agrees that any claim
made upon Lender by Bank under an LC Guaranty shall be conclusive on Lender
and Borrower.
(iv) Borrower assumes all risks of the acts, omissions or misuses
of any Letter of Credit by the beneficiary thereof. The obligation of
Borrower to reimburse Lender for any payment made by Lender under an LC
Guaranty shall be absolute, unconditional and irrevocable and shall be paid
without regard to any lack of validity or enforceability of any Letter of
Credit, the existence of any claim, setoff, defense or other right which
Borrower may have at any time against a beneficiary of any Letter of
Credit, or untimely or improper honor by Bank of any draw request under a
Letter of Credit. Without limiting the generality of the foregoing, if
presentation of a demand, draft or certificate or other document does not
comply with the terms of a Letter of Credit and Borrower contends that, as
a consequence of such noncompliance it has no obligation to reimburse Bank
for any payment made with respect thereto, Borrower shall nevertheless be
obligated to reimburse Lender for any payment made under the LC Guaranty
with respect to such Letter of Credit, but without waiving any claim
Borrower may have against Bank in connection therewith.
(v) If any LC Obligations, whether or not then due or payable,
shall for any reason be outstanding (i) at any time that an Event of
Default exists, (ii) on any date that Availability is less than zero, or
(iii) on the effective date of termination of this Agreement pursuant to
Section 5 hereof, then Borrower shall, upon demand, forthwith deposit with
Lender, in cash, an amount equal to the maximum aggregate amount of all LC
Obligations then outstanding. If Borrower fails to make such deposit on
Lender's demand therefor, Lender may advance such amount as a Revolver Loan
(whether
-21-
or not an Out-of-Formula Condition is created thereby). Such cash (together
with any interest accrued thereon) shall be held by Lender in the Cash
Collateral Account and may be invested, in Lender's discretion, in Cash
Equivalents. Borrower hereby pledges, and grants to Lender a security
interest in, all of Borrower's right, title and interest in the Cash
Collateral Account and all Cash Collateral held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the
payment of the LC Obligations, whether or not then due or payable. From
time to time after cash is deposited in the Cash Collateral Account, Lender
may apply any Cash Collateral then held in the Cash Collateral Account to
the payment of any amounts, in such order as Lender may elect to the LC
Obligations, which may then be outstanding. Neither Borrower nor any other
Person claiming by, through or under or on behalf of Borrower shall have
any right to withdraw any of the funds held in the Cash Collateral Account,
including any accrued interest, provided that upon termination of all
Letters of Credit and the payment and satisfaction in full of the LC
Obligations, any Cash Collateral remaining in the Cash Collateral Account
shall be returned to Borrower unless an Event of Default then exists (in
which event Lender may apply such funds to the payment of any other
Obligations outstanding).
(vi) No Letter of Credit shall be extended or amended in any
respect that is not solely ministerial, unless all of the LC Conditions are
met as though a new Letter of Credit were being requested and issued.
(vii) In addition to and without limiting any other right or
remedy of Lender contained in this Agreement or in any of the other Loan
Documents, Lender shall be fully subrogated to the rights and remedies of
Bank under any agreement made between Borrower and Bank, including each LC
Application, relating to the issuance of any Letter of Credit, each such
agreement being incorporated herein by reference, and Lender shall be
entitled to exercise all such rights and remedies thereunder and under
Applicable Law in such regard as fully as if it were Bank. If any Letter
of Credit is drawn upon to discharge any obligation of Borrower to the
beneficiary of such Letter of Credit, in whole or in part, Lender shall be
fully subrogated to the rights of such beneficiary with respect to the
obligation of Borrower to such beneficiary discharged with the proceeds of
such Letter of Credit.
2.3. INDEMNIFICATION. In addition to any other indemnity which Borrower
---------------
may have to Bank or Lender under this Agreement, any of the other Loan Documents
or any of the LC Documents, and without limiting such other indemnification
provisions, Borrower hereby agrees to indemnify Lender from and to defend and
hold Lender harmless against any and all Claims that Lender may (other than as
the result of its own gross negligence or willful misconduct) incur or be
subject to as a consequence, directly or indirectly, of (i) the issuance of,
payment or failure to pay or any performance or failure to perform under any
Letter of Credit, LC Guaranty or (ii) any suit, investigation or proceeding as
to which Lender is or may become a party to as a consequence, directly or
indirectly, of the issuance of any Letter of Credit, any LC Guaranty or the
payment or failure to pay thereunder. This indemnity shall survive payment in
full of the Obligations and termination of this Agreement.
SECTION 3. INTEREST, FEES AND CHARGES
3.1. Interest.
--------
3.1.1. Rates of Interest. Borrower agrees to pay interest in respect
-----------------
of all unpaid principal amounts of the Loans from the respective dates such
principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a rate per annum equal to the following applicable
rate: (a) for Loans outstanding as Prime Rate Loans, the Applicable Margin plus
----
the Prime Rate in effect from time to
-22-
time; and (b) for Loans outstanding as LIBOR Rate Loans, the Applicable
Margin plus the relevant Adjusted LIBOR Rate for the applicable Interest
----
Period selected by Borrower in conformity with this Agreement. Upon determining
the Adjusted LIBOR Rate for any Interest Period requested by Borrower, Lender
shall promptly notify Borrower thereof by telephone and, if so requested by
Borrower, confirm the same in writing. Such determination shall, absent manifest
error, be final, conclusive and binding on all parties and for all purposes. The
applicable rate of interest for all Loans (or portions thereof) bearing interest
based upon the Prime Rate shall be increased or decreased, as the case may be,
by an amount equal to any increase or decrease in the Prime Rate, with such
adjustments to be effective as of the opening of business on the day that any
such change in the Prime Rate becomes effective. Interest on each Loan shall
accrue from and including the date on which such Loan is made, converted to a
Loan of another type or continued as a LIBOR Loan to (but excluding) the date of
any repayment thereof; provided, however, that, if a Loan is repaid on the same
-------- -------
day made, one day's interest shall be paid on such Loan. The Prime Rate on the
date hereof is 8.5% per annum and, therefore, the rate of interest in effect
hereunder on the date hereof, expressed in simple interest terms, is 8.5% per
annum with respect to any portion of the Loans bearing interest as a Prime Rate
Loan.
3.1.2. Interest Periods. In connection with the making or
----------------
continuation of, or conversion into, each Borrowing of LIBOR Loans, Borrower
shall select an interest period (each an "Interest Period") to be applicable to
such LIBOR Loan, which interest period shall commence on the date such LIBOR
Loan is made and shall end on a numerically corresponding day in the first,
second or third month thereafter; provided, however, that:
-------- -------
(i) the initial Interest Period for a LIBOR Loan shall commence
on the date such Loan is made (including the date of any conversion from a
Loan of another Type) and each Interest Period occurring thereafter in
respect of such Loan 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 in respect of
LIBOR Loans 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 a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period shall expire on the last Business Day of such calendar
month;
(iv) no Interest Period with respect to any portion of principal
of a Loan shall extend beyond a date on which Borrower is required to make
a scheduled payment of such portion of principal;
(v) no Interest Period shall extend beyond the last day of the
Original Term or of any Renewal Term; and
(vi) there shall be no more than four (4) Interest Periods in
effect at any one time.
3.1.3. Conversions and Continuations.
-----------------------------
-23-
(i) Borrower may on any Business Day, subject to the giving of a
proper Notice of Conversion/Continuation as hereinafter described, elect (A) to
continue all or any part of a LIBOR Loan by selecting a new Interest Period
therefor, to commence on the last day of the immediately preceding Interest
Period, or (B) to convert all or any part of a Loan of one Type into a Loan of
another Type; provided, however, that no outstanding Loan may be converted into
-------- -------
a LIBOR Loan or continued as a LIBOR Loan after the expiration of the Interest
Period applicable thereto when any Default or Event of Default exists. Any
conversion of a LIBOR Loan into a Prime Rate Loan shall be made on the last day
of the Interest Period for such LIBOR Loan.
(ii) Whenever Borrower desires to convert or continue Loans under
Section 3.1.3(i), Borrower shall give Lender written notice (or telephonic
notice promptly confirmed in writing) substantially in the form of EXHIBIT D,
---------
signed by an authorized officer of Borrower, on the requested conversion date by
11:00 a.m., in the case of a conversion into Prime Rate Loans, and by 11:00 a.m.
at least 2 Business Days before the requested conversion or continuation date,
in the case of a conversion into or continuation of LIBOR Loans. Each such
Notice of Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Loans to be converted or continued, the date
of such conversion or continuation (which shall be a Business Day) and whether
the Loans are being converted into or continued as LIBOR Loans (and, if so, the
duration of the Interest Period to be applicable thereto) or Prime Rate Loans.
If, upon the expiration of any Interest Period in respect of any LIBOR Loans,
Borrower shall have failed to deliver the Notice of Conversion/Continuation,
Borrower shall be deemed to have elected to convert such LIBOR Loans to Prime
Rate Loans.
3.1.4. Interest Rate Not Ascertainable. If Lender shall determine
-------------------------------
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Adjusted LIBOR
Rate for any Interest Period, by reason of any changes arising after the date of
this Agreement affecting the London interbank market or Lender's or Bank's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Adjusted LIBOR Rate, then, and in any such event, Lender shall forthwith give
notice (by telephone confirmed in writing) to Borrower of such determination.
Until Lender notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the obligation of Lender to make
LIBOR Loans shall be suspended, and such affected Loans then outstanding shall,
at the end of the then applicable Interest Period or at such earlier time as may
be required by Applicable Law, bear the same interest as Prime Rate Loans.
3.1.5. Default Rate of Interest. Interest shall accrue at the Default
------------------------
Rate (i) with respect to the principal amount of any portion of the Obligations
(and, to the extent permitted by Applicable Law, all past due interest) that is
not paid on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise), until such amount is paid in full, and (ii)
with respect to the principal amount of all of the Obligations (and, to the
extent permitted by Applicable Law, all past due interest), upon the earliest to
occur of (x) Borrower's receipt of notice of Lender's election to charge the
Default Rate based upon the existence of any Event of Default or (y) the
commencement by or against Borrower of an Insolvency Proceeding, whether or not
under the circumstances described in either clause (i) or (ii) hereof Lender
elects to accelerate the maturity or demand payment of any of the Obligations.
To the fullest extent permitted by Applicable Law, the Default Rate shall apply
and accrue on any judgment entered with respect to any of the Obligations and
with respect to the unpaid principal amount of the Obligations during any
Insolvency Proceeding of Borrower. Borrower acknowledges that the cost and
expense to Lender attendant upon the occurrence of an Event of Default are
difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Lender for such added cost and expense.
-24-
3.2. FEES.
----
3.2.1. Origination Fee. Borrower shall pay to Lender an origination
---------------
fee of $ 100,000, which shall be paid concurrently with funding of the initial
Loan hereunder.
3.2.2. Unused Line Fee. Borrower shall pay to Lender a monthly fee
---------------
equal to .125% per annum of the amount by which the Average Loan Balance for any
month (or portion thereof that this Agreement is in effect) is less than
$15,000,000, such fee to be paid on the first day of the following month; but if
this Agreement is terminated on a day other than the first day of a month, then
any such fee payable for the month in which termination shall occur shall be
paid on the effective date of such termination.
3.2.3. Audit and Appraisal Fees. Borrower shall reimburse Lender for
------------------------
all costs and expenses incurred in connection with audits and appraisals of any
Obligor's books and records and such other matters as Lender shall deem
appropriate. At any time when an Event of Default does not exist, Borrower
shall not be obligated to reimburse Lender for such costs and expenses in excess
of $3,000 per location per year.
3.2.4. Letter of Credit Charges. Borrower shall pay to Bank all fees
------------------------
and charges associated with Bank's issuance, renewal, amendment and
administration of each Letter of Credit as follows.
(1) for Bank's issuance of a standby Letter of Credit, a fee
equal to the greater of (a) $200 or (b) 2.0% per annum of the face amount
of such Letter of Credit, payable upon the issuance date and on each
anniversary of such date thereafter for so long as such Letter of Credit
remains outstanding;
(2) for Bank's issuance of a documentary Letter of Credit, a fee
equal to the greater of (a) $200 or (b) 1.0% per annum of the face amount
of such Letter of Credit, payable upon the issuance date and on each
anniversary of such date thereafter for so long as such Letter of Credit
remains outstanding;
(3) for Bank's amendment of a Letter of Credit, a fee of $75 and
for Bank's renewal or cancellation of a Letter of Credit, a fee of $100.
3.2.5. General Provisions Relating to Fees. All fees shall be fully
-----------------------------------
earned by Lender when due and payable and, except as otherwise set forth herein
or required by Applicable Law, shall not be subject to refund, rebate or
proration. All fees provided for in Section 3.2 hereof are and shall be deemed
to be for compensation for services and are not, and shall not be deemed to be,
interest or any other charge for the use, forbearance or detention of money.
3.3. COMPUTATION OF INTEREST AND FEES. All interest, fees and other
--------------------------------
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year of 360 days. For the purpose of computing
interest hereunder, all Payment Items received by Lender shall be deemed applied
by Lender on account of the Obligations (subject to final payment of such items)
on the first Business Day after receipt by Lender of such items in Lender's
account located in Atlanta, Georgia, and Lender shall be deemed to have received
such Payment Item on the date specified in Section 4.5 hereof.
3.4. REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
-------------------------
whether or not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses
-25-
in connection with (i) the negotiation and preparation of this Agreement or any
of the other Loan Documents, any amendment of or modification of this Agreement
or any of the other Loan Documents, or, in the event the Commitment Amount is
increased after the date hereof, any sale or attempted sale of any interest
herein to a Participant; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any of the other Loan Documents or Borrower's affairs; (iv)
any attempt to enforce any rights of Lender against Borrower or any other Person
which may be obligated to Lender by virtue of this Agreement or any of the other
Loan Documents, including the Account Debtors; or (v) any attempt to inspect
(subject to limits as may be applicable under Section 3.2.3 hereof), verify,
protect, preserve, perfect or continue the perfection of Lender's Liens upon,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such reasonable legal and accounting expenses, other costs
and out of pocket expenses of Lender shall be charged to Borrower. All amounts
chargeable to Borrower under this Section 3.4 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Lender. Borrower shall also
reimburse Lender for expenses incurred by Lender in its administration of the
Collateral to the extent and in the manner provided in Section 6 hereof.
3.5. BANK CHARGES. Borrower shall pay to Lender, ON DEMAND, any and all
------------
fees, costs or expenses which Lender or any Participant pays to a bank or other
similar institution (including, any fees paid by Lender to any Participant)
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Lender or any Participant, of proceeds of Loans
made by Lender to Borrower pursuant to this Agreement and (ii) the depositing
for collection, by Lender or any Participant, of any check or item of payment
received or delivered to Lender or any Participant on account of the
Obligations. Borrower acknowledges and agrees that Lender may charge such
costs, fees and expenses to Borrower based upon Lender's good faith estimate of
such costs, fees and expenses as they are incurred by Lender, subject to later
adjustment for the amount actually incurred.
3.6. MAXIMUM INTEREST. Regardless of any provision contained in any of
----------------
the Loan Documents, in no contingency or event whatsoever shall the aggregate of
all amounts that are contracted for, charged or received by Lender pursuant to
the terms of any of the Loan Documents and that are deemed interest under
Applicable Law exceed the highest rate permissible under any Applicable Law. No
agreements, conditions, provisions or stipulations contained in any of the Loan
Documents or the exercise by Lender of the right to accelerate the payment or
the maturity of all or any portion of the Obligations, or the exercise of any
option whatsoever contained in any of the Loan Documents, or the prepayment by
Borrower of any of the Obligations, or the occurrence of any contingency
whatsoever, shall entitle Lender to charge or receive in any event, interest or
any charges, amounts, premiums or fees deemed interest by Applicable Law (such
interest, charges, amounts, premiums and fees referred to herein collectively as
"Interest") in excess of the Maximum Rate and in no event shall Borrower be
obligated to pay Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay Interest
exceeding the Maximum Rate shall be without binding force or effect, at law or
in equity, to the extent only of the excess of Interest over such Maximum Rate.
If any Interest is charged or received in excess of the Maximum Rate ("Excess"),
Borrower acknowledges and stipulates that any such charge or receipt shall be
the result of an accident and bona fide error, and such Excess, to the extent
received, shall be applied first to reduce the principal Obligations and the
balance, if any, returned to Borrower, it being the intent of the parties hereto
not to enter into a usurious or otherwise illegal relationship. The right to
accelerate the maturity of any of the Obligations does not include the right to
accelerate any interest that has not otherwise accrued on the date of such
acceleration, and Lender does not intend to collect any unearned interest in the
event of any such acceleration. Borrower recognizes that, with fluctuations in
the rates of
-26-
interest set forth in Section 3.1.1 of this Agreement and the Maximum Rate, such
an unintentional result could inadvertently occur. All monies paid to Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned interest as and to the
extent required by Applicable Law. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Lender, based in whole or
in part upon contracting for, charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Lender, all interest at any time
contracted for, charged or received from Borrower in connection with any of the
Loan Documents shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Obligations. Borrower and Lender shall, to the maximum extent permitted under
Applicable Law, (i) characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary prepayments and the
effects thereof. The provisions of this Section shall be deemed to be
incorporated into every Loan Document (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by Borrower and all figures set forth therein
shall, for the sole purpose of computing the extent of Obligations, be
automatically recomputed by Borrower, and by any court considering the same, to
give effect to the adjustments or credits required by this Section 3.6.
3.7. ILLEGALITY. Notwithstanding anything to the contrary contained
----------
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for Lender to make or maintain a
LIBOR Loan or to give effect to its obligations as contemplated hereby with
respect to a LIBOR Loan or (ii) at any time Lender determines that the making or
continuance of any LIBOR Loan has become impracticable as a result of a
contingency occurring after the date hereof which adversely affects the London
interbank market or the position of Lender or Bank in such market, then, by
written notice to Borrower, Lender may (1) declare that LIBOR Loans will not
thereafter be made by Lender, whereupon any request by Borrower for a LIBOR Loan
shall be deemed a request for a Prime Rate Loan unless Lender's declaration
shall be subsequently withdrawn; and (2) require that all outstanding LIBOR
Loans made by Lender be converted to Prime Rate Loans, under the circumstances
of clause (i) or (ii) of this Section 3.7 insofar as Lender determines the
continuance of LIBOR Loans to be impracticable, in which event all such LIBOR
Loans shall be automatically converted to Prime Rate Loans as of the date of
Borrower's receipt of the aforesaid notice from Lender.
3.8. INCREASED COSTS. If, by reason of (a) the introduction of or any
---------------
change (including any change by way of imposition or increase of Statutory
Reserves or other reserve requirements) in or in the interpretation of any law
or regulation, or (b) the compliance with any guideline or request from any
central bank or other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally (whether or
not having the force of law):
(i) Lender shall be subject after the date hereof to any Taxes,
duty or other charge with respect to any LIBOR Loan or its obligation to
make LIBOR Loans, or a change shall result in the basis of taxation or
payment to Lender of the principal of or interest on its LIBOR Loans or its
obligation to make LIBOR Loans (except for changes in the rate of tax on
the overall net income of Lender imposed by the jurisdiction in which
Lender's principal executive office is located); or
(ii) any reserve (including any imposed by the Board of Governors),
special deposits or similar requirement against assets of, deposits with or
for the account of, or credit extended by, Lender
-27-
shall be imposed or deemed applicable or any other condition affecting its
LIBOR Loans or its obligation to make LIBOR Loans shall be imposed on
Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining LIBOR Loans (except to the
extent already included in the determination of the applicable Adjusted LIBOR
Rate for LIBOR Loans), or there shall be a reduction in the amount received or
receivable by Lender, then Borrower shall from time to time, upon written notice
from and demand by Lender (with a copy of such notice and demand to Lender), pay
to Lender, within 5 Business Days after the date specified in such notice and
demand, an additional amount sufficient to indemnify Lender against such
increased cost. A certificate as to the requirement that imposes the increased
cost, the amount of such increased cost and showing in reasonable detail the
basis for the computation thereof submitted to Borrower by Lender, shall, absent
manifest error, be final, conclusive and binding for all purposes.
If Lender shall advise Borrower at any time that, because of the
circumstances described hereinabove in this Section 3.8 or any other
circumstances arising after the date of this Agreement affecting Lender or the
London interbank market or Lender's or Bank's position in such market, the
Adjusted LIBOR Rate, as determined by Lender, will not adequately and fairly
reflect the cost to Lender of funding LIBOR Loans, then, and in any such event:
(i) Lender shall forthwith give written notice to Borrower of such
event;
(ii) Borrower's right to request and Lender's obligation to make
LIBOR Loans shall be immediately suspended and Borrower's right to continue
a LIBOR Loan as such beyond the then applicable Interest Period shall also
be suspended; and
(iii) Lender shall make a Prime Rate Loan as part of the requested
Borrowing of LIBOR Loans, which Prime Rate Loan shall, for all purposes, be
considered part of such Borrowing.
For purposes of this Section 3.8, all references to Lender shall be deemed
to include any bank holding company or bank parent of Lender.
3.9. CAPITAL ADEQUACY. If after the date hereof Lender determines that
----------------
(a) the adoption of any Applicable Law regarding capital requirements for banks
or bank holding companies or the subsidiaries thereof, (b) any change in the
interpretation or administration of any such Applicable Law, any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or (c) compliance by Lender or its holding company with
any request or directive of any such governmental authority, central bank or
comparable agency regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's capital to a level below
that which Lender could have achieved (taking into consideration Lender's and
its holding company's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that Lender's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of Lender's commitment to make
the Loans pursuant hereto by any amount deemed by Lender to be material,
Borrower shall pay to Lender, as an additional fee from time to time, on demand,
such amount as Lender certifies to be the amount that will compensate Lender for
such reduction. A certificate of Lender claiming entitlement to compensation as
set forth herein will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to Lender (including
the basis for Lender's determination of such amount), and the method by which
such amounts were determined. In determining such amount, Lender may use any
-28-
reasonable averaging and attribution method. For purposes of this Section 3.9,
all references to Lender shall be deemed to include any bank holding company or
bank parent of Lender.
3.10. FUNDING LOSSES. Borrower shall be obligated to compensate Lender,
--------------
upon Lender's written request (which request shall set forth the basis for
requesting such amounts and shall, absent manifest error, be final, conclusive
and binding upon all parties hereto), for all losses, expenses and liabilities
(including any interest paid by Lender to lenders of funds borrowed by Lender to
make or carry its LIBOR Loans to the extent not recovered by Lender in
connection with the re-employment of such funds), which Lender may sustain: (i)
if for any reason (other than a default by Lender) a Borrowing of, or conversion
to or continuation of, LIBOR Loans does not occur on the date specified therefor
in a Notice of Borrowing or Notice of Conversion/ Continuation (whether or not
withdrawn), (ii) if any repayment (including any conversions pursuant to Section
3.1.3 hereof) of any its LIBOR Loans occurs on a date that is not the last day
of an Interest Period applicable thereto, or (iii) if, for any reason, Borrower
defaults in its obligation to repay LIBOR Loans when required by the terms of
this Agreement. For purposes of this Section 3.10, all references to Lender
shall be deemed to include any bank holding company or bank parent of Lender.
The calculations of all amounts payable to Lender under this Section 3.10 shall
be made as though Lender had actually funded or committed to fund its LIBOR Loan
through the purchase of an underlying deposit in an amount equal to the amount
of such LIBOR Loan and having a maturity comparable to the relevant Interest
Period for such LIBOR Loan; provided, however, Lender may fund its LIBOR Loans
-------- -------
in any manner it deems fit and the foregoing assumption shall be utilized only
for the calculation of amounts payable under this Section 3.10.
SECTION 4. LOAN ADMINISTRATION
4.1. MANNER OF BORROWING REVOLVER LOANS. Borrowings under the credit
----------------------------------
facility established pursuant to Section 1.1 hereof shall be as follows:
4.1.1. Notice of Borrowing.
-------------------
(i) Whenever Borrower desires to obtain a Revolver Loan under Section
2.1 of this Agreement (other than a Borrowing resulting from a conversion or
continuation pursuant to Section 3.1.3), Borrower shall give Lender prior
written notice (or telephonic notice promptly confirmed in writing) of such
Borrowing request (a "Notice of Borrowing"), which shall be in the form of
EXHIBIT C annexed hereto and signed by an authorized officer of Borrower. Such
---------
Notice of Borrowing shall be given by Borrower to Lender no later than 11:00 a.m
Atlanta, Georgia time. (a) on the Business Day of the requested funding date of
such Borrowing, in the case of a Prime Rate Loan, and (b) at least 2 Business
Days prior to the requested funding date of such Borrowing, in the case of a
LIBOR Loan. Notices received after 11:00 a.m. shall be deemed received on the
next Business Day. Revolver Loans made by Lender on the Closing Date shall be
in the principal amount of at least $250,000 and shall be made as Prime Rate
Loans and thereafter may be made or continued as, or converted into, Prime Rate
Loans or LIBOR Loans. Each Notice of Borrowing (or telephonic notice thereof)
shall be irrevocable and shall specify (a) the principal amount of the
Borrowing, (b) the date of Borrowing (which shall be a Business Day), (c)
whether the Borrowing is to consist of Prime Rate Loans or LIBOR Loans, (d) in
the case of LIBOR Loans, the duration of the Interest Period to be applicable
thereto, and (e) the account of Borrower to which the proceeds of such Borrowing
are to be disbursed. Borrower may not request any LIBOR Loans if a Default or
Event of Default exists.
(ii) Unless payment is otherwise timely made by Borrower, the becoming
due of any amount required to be paid under this Agreement or any of the other
Loan Documents as principal, accrued interest, fees or other charges shall be
deemed irrevocably to be a request for Revolver Loans on the due date
-29-
of, and in an aggregate amount required to pay, such principal, accrued
interest, fees or other charges, and the proceeds of such Revolver Loans may be
disbursed by way of direct payment of the relevant Obligation and shall bear
interest as Prime Rate Loans. Lender shall have no obligation to Borrower to
honor any deemed request for a Revolver Loan, but may do so in its discretion
without regard to the existence or creation of, and without being deemed to have
waived, any Default, Event of Default or Out-of-Formula Condition.
(iii) As an accommodation to Borrower, Lender may permit telephonic
requests for Borrowings and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower; provided, however,
-------- -------
that Borrower shall confirm each such telephonic request for a Borrowing of
LIBOR Loans by delivery of the required Notice of Borrowing to Lender by
facsimile transmission promptly, but in no event later than 5:00 p.m. on the
same day. Unless Borrower specifically directs Lender in writing not to accept
or act upon telephonic or electronic communications from Borrower, Lender shall
not have any liability to Borrower for any loss or damage suffered by Borrower
as a result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Lender by
Borrower and Lender shall not have any duty to verify the origin of any such
communication or the identity or authority of the Person sending it.
4.1.2. Disbursement Authorization. Borrower hereby irrevocably
--------------------------
authorizes Lender to disburse the proceeds of each Revolver Loan requested, or
deemed to be requested pursuant to Section 4.1.1, as follows: (i) the proceeds
of each Revolver Loan requested under Section 4.1.1(i) shall be disbursed by
Lender in accordance with the terms of the written disbursement letter from
Borrower in the case of the initial Borrowing, and, in the case of each
subsequent Borrowing, by wire transfer to such bank account as may be agreed
upon by Borrower and Lender from time to time or elsewhere if pursuant to a
written direction from Borrower; and (ii) the proceeds of each Revolver Loan
requested under Section 4.1.1(ii) shall be disbursed by Lender by way of direct
payment of the relevant interest or other Obligation.
4.2. SPECIAL PROVISIONS GOVERNING LIBOR LOANS.
----------------------------------------
4.2.1. Number of LIBOR Loans. In no event may the number of LIBOR
---------------------
Loans outstanding at any time to Lender exceed four (4).
4.2.2. Minimum Payments. Each election of LIBOR Loans pursuant to
----------------
Section 4.1.1(i), and each continuation of or conversion to LIBOR Loans pursuant
to Section 3.1.3 hereof, shall be in a minimum amount of $500,000 with respect
to any portion of the Loans that bear interest as a LIBOR Loan and integral
multiples of $100,000 in excess of that amount.
4.2.3. LIBOR Lending Office. Lender's initial LIBOR Lending Office
--------------------
is set forth opposite its name on the signature pages hereof. Lender shall have
the right at any time and from time to time to designate a different office of
itself or of any Affiliate as Lender's LIBOR Lending Office, and to transfer any
outstanding LIBOR Loans to such LIBOR Lending Office. No such designation or
transfer shall result in any liability on the part of Borrower for increased
costs or expenses under Sections 3.8, 3.9, 3.10 or otherwise resulting solely
from such designation or transfer. Increased costs for expenses resulting from
a change in Applicable Law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such designation or transfer.
4.3. REPAYMENT OF REVOLVER LOANS.
---------------------------
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4.3.1. Payment of Principal. The outstanding principal amounts
--------------------
with respect to the Revolver Loans shall be due and payable in Dollars without
any offset or counterclaim as follows:
(i) Any portion of the Revolver Loans consisting of the principal
amount of Prime Rate Loans shall be paid by Borrower to Lender, unless timely
converted to a LIBOR Loan in accordance with this Agreement, immediately upon
(a) each receipt by Borrower or Lender of any proceeds or payments of any of the
Collateral, to the extent of such proceeds or payments, and (b) the Termination
Date.
(ii) Any portion of the Revolver Loans consisting of the principal
amount of LIBOR Loans shall be paid by Borrower to Lender, unless converted to a
Prime Rate Loan or continued as a LIBOR Loan in accordance with the terms of
this Agreement, upon the earlier of (a) the last day of the Interest Period
applicable thereto or (b) the Termination Date. In no event shall Borrower be
authorized to pay any LIBOR Loan prior to the last day of the Interest Period
applicable thereto unless (x) otherwise agreed in writing by Lender or Borrower
is otherwise expressly authorized or required by any other provision of this
Agreement to pay any LIBOR Loan outstanding on a date other than the last day of
the Interest Period applicable thereto, and (y) Borrower pays to Lender
concurrently with any prepayment of a LIBOR Loan any amount due Lender under
Section 3.10 hereof as a result of such prepayment.
(iii) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, if an Out-of-Formula Condition shall exist, Borrower shall, ON
DEMAND, repay the outstanding Revolver Loans that are Prime Rate Loans in an
amount sufficient to reduce the aggregate unpaid principal amount of all
Revolver Loans by an amount equal to such excess; and, if such payment of Prime
Rate Loans is not sufficient to cure the Out-of-Formula Condition, then Borrower
shall immediately either (a) deposit with Lender, for application to any
outstanding Revolver Loans bearing interest as LIBOR Loans as the same become
due and payable at the end of the applicable Interest Periods, cash in an amount
sufficient to cure such Out-of-Formula Condition to be held by Lender, but
subject to Lender's Lien thereon and rights of offset with respect thereto, or
(b) pay the Revolver Loans outstanding that bear interest as LIBOR Loans to the
extent necessary to cure such Out-of-Formula Condition and also pay to Lender
any and all amounts required by Section 3.10 hereof to be paid by reason of the
prepayment of a LIBOR Loan prior to the last day of the Interest Period
applicable thereto.
4.3.2. Payment of Interest. Interest accrued on the Revolver Loans
-------------------
shall be due and payable on (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan (whether a Prime Rate Loan or
LIBOR Loan), (ii) the last day of the applicable Interest Period in the case of
a LIBOR Loan, and (iii) on the Termination Date. With respect to any Prime Rate
Loan converted into a LIBOR Loan pursuant to Section 3.1.3 on a day when
interest would not otherwise have been payable with respect to such Prime Rate
Loan, accrued interest to the date of such conversion on the amount of such
Prime Rate Loan so converted shall be paid on the conversion date.
4.4. PAYMENT OF OTHER OBLIGATIONS. The balance of the Obligations
----------------------------
requiring the payment of monies shall be payable by Borrower to Lender in
Dollars and without offset, defense or counterclaim, as and when provided in the
Loan Documents, or, if no date of payment is otherwise specified in the Loan
Documents, on demand.
4.5. APPLICATION OF PAYMENTS AND COLLECTIONS. All Payment Items received
---------------------------------------
by Lender by 12:00 noon, Atlanta, Georgia time, on any Business Day shall be
deemed received on that Business Day. All Payment Items received after 12:00
noon, Atlanta, Georgia time, on any Business Day shall be deemed
-31-
received on the following Business Day. If as the result of collections of
Accounts as authorized by Section 7.2.7 hereof a credit balance exists in the
Loan Account, such credit balance shall not accrue interest in favor of
Borrower, but shall be available to Borrower at any time or times for so long as
no Default or Event of Default exists.
4.6. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
--------------------------------------
one general Obligation of Borrower and (unless and to the extent otherwise
expressly provided in any of the Security Documents) shall be secured by
Lender's Lien upon all of the Collateral.
4.7. LOAN ACCOUNT. Lender shall establish an account on its books (the
------------
"Loan Account") and shall enter all Loans as debits to the Loan Account and
shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
4.8. STATEMENTS OF ACCOUNT. Lender will account to Borrower monthly with
---------------------
a statement of Loans, charges and payments made pursuant to this Agreement, and
such accounting rendered by Lender shall be deemed rebuttably conclusive upon
Borrower unless Lender is notified by Borrower in writing to the contrary within
30 days after the date each accounting is deemed to have been sent pursuant to
Section 12.8. Such notice shall only be deemed an objection to those items
specifically objected to therein.
4.9. MARSHALLING; PAYMENTS SET ASIDE. Lender shall be under no
-------------------------------
obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Borrower or any other Obligor or
against or in payment of any or all of the Obligations. To the extent that
Borrower makes a payment to Lender or Lender receives payment from the proceeds
of any Collateral or exercises its right of setoff, and such payment or the
proceeds of such enforcement or setoff (or any part thereof) are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other Person, then to the extent of any
such recovery, the obligation or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. The provisions of the immediately
preceding sentence of this Section 4.9 shall survive any termination of this
Agreement and payment in full of the Obligations.
SECTION 5. TERM AND TERMINATION
5.1. TERM OF AGREEMENT. Subject to Lender's right to cease making Loans
-----------------
to Borrower upon or after the occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period of three (3) years from the date
hereof, through August 20, 2001 (the "Original Term"), and this Agreement shall
automatically renew itself for one-year periods thereafter (each a "Renewal
Term"), unless terminated as provided in Section 5.2 hereof.
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5.2. TERMINATION.
-----------
5.2.1. Termination by Lender. Upon at least 60 days prior written
---------------------
notice to Borrower, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence of an Event of Default;
provided, however, that if ▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇ cease to serve as
-------- -------
Senior Officers of Borrower Lender may terminate this Agreement upon 120 days
prior written notice to Borrower. This Agreement shall automatically terminate
as provided in Section 11.2 hereof.
5.2.2. Termination by Borrower. Upon at least 60 days prior
-----------------------
written notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination by Borrower shall be effective until
-------- -------
Borrower has satisfied all of the Obligations and executed in favor of Lender.
Any notice of termination given by Borrower shall be irrevocable unless Lender
otherwise agrees in writing. Borrower may elect to terminate this Agreement in
its entirety only. For purposes hereof, the Obligations shall not be deemed to
have been satisfied until all Obligations for the payment of money have been
paid to Lender in same day funds and all Obligations that are at the time in
question contingent (including, all LC Obligations that exist by virtue of an
outstanding Letter of Credit) have been fully cash collateralized in favor and
to the satisfaction of Lender or Lender has received as beneficiary a direct pay
letter of credit in form and from an issuing bank acceptable to Lender and
providing for direct payment to Lender of all such contingent Obligations at the
time they become fixed (including reimbursement of all sums paid by Lender under
any LC Guaranty). No section of this Agreement or Type of Loan available
hereunder may be terminated singly.
5.2.3. Termination Charges. On the effective date of termination
-------------------
of this Agreement for any reason, Borrower shall pay to Lender (in addition to
the then outstanding principal, accrued interest, fees and other charges owing
under the terms of this Agreement and any of the other Loan Documents), as
liquidated damages for the loss of the bargain and not as a penalty, an amount
equal to $150,000 if termination occurs during the first Loan Year; and $75,000
if termination occurs during the second Loan Year. No termination charge shall
be payable if termination occurs at any time after the last day of the second
Loan Year.
5.2.4. Effect of Termination. All of the Obligations shall be
---------------------
immediately due and payable upon the effective date of termination by Lender or,
in the case of a termination by Borrower, upon the date specified in Borrower's
notice of termination of this Agreement as the effective date of such
termination. On the effective date of any termination (whether by Lender or
Borrower), Lender shall have no obligation to make any Loans, join in any LC
Application or issue any LC Guaranty or otherwise to extend credit to or for the
direct or indirect benefit of Borrower. All undertakings, agreements,
covenants, warranties and representations of Borrower contained in the Loan
Documents shall survive any such termination, and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination, until Borrower has satisfied all of the
Obligations in the manner described in Section 5.2.2. Notwithstanding the
payment in full of the Obligations, Lender shall not be required to terminate
its security interests in the Collateral unless, with respect to any loss or
damage Lender may incur as a result of dishonored Payment Items received by
Lender from Borrower or any Account Debtor and applied to the Obligations,
Lender has either (at its option) (i) received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Lender from any such
loss or damage; or (ii) retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage. The provisions
of Section 4.8 hereof and all obligations of Borrower pursuant to this Agreement
to indemnify Lender shall in all events survive any termination of this
Agreement.
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SECTION 6. COLLATERAL SECURITY
6.1. GRANT OF SECURITY INTEREST IN COLLATERAL. To secure the prompt
----------------------------------------
payment and performance to Lender of all of the Obligations, Borrower hereby
grants to Lender a continuing security interest in and Lien upon all of the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:
(1) All Accounts;
(2) All Inventory;
(3) All Instruments;
(4) All Chattel Paper;
(5) All Documents;
(6) All General Intangibles;
(7) All Investment Property, including Securities, whether
certificated or uncertificated (but excluding any portion thereof that
constitutes Margin Stock), and all securities entitlements;
(8) All monies now or at any time or times hereafter in the
possession or under the control of Lender or a bailee or Affiliate of
Lender;
(9) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (viii) above,
including proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral and claims against any Person for
loss of, damage to, or destruction of any of the Collateral; and
(10) All books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (ix)
above.
6.2. LIEN PERFECTION; FURTHER ASSURANCES. Promptly after Lender's
-----------------------------------
request therefor, Borrower shall execute and deliver to Lender such instruments,
assignments or documents as are necessary under the UCC or other Applicable Law
to perfect (or continue the perfection of) Lender's Lien upon the Collateral and
shall take such other action as may be reasonably requested by Lender to give
effect to or carry out the intent and purposes of this Agreement. Unless
prohibited by Applicable Law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The parties agree that
a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.
6.3. LIEN ON DEPOSIT ACCOUNTS. As additional security for the payment
------------------------
and performance of the Obligations, Borrower grants to Lender a security
interest in and assigns to Lender all of Borrower's right, title and interest in
and to each Deposit Account of Borrower and in and to any deposits or other sums
at any time credited to each such Deposit Account, including any sums in any
blocked account or any special lockbox
-34-
account. In connection with the foregoing, Borrower hereby authorizes and
directs each bank or other depository at which a Deposit Account is maintained
to pay or deliver to Lender upon its written demand therefor made at any time
that an Event of Default exists and without further notice to Borrower (such
notice being hereby expressly waived), all balances in each Deposit Account
maintained by Borrower with such depository for application to the Obligations
then outstanding. The rights given Lender in this Section shall be cumulative
with and in addition to Lender's other rights and remedies in regard to the
foregoing Property as proceeds of Collateral. Borrower hereby irrevocably
appoints Lender as its attorney to collect any and all such balances to the
extent any such payment is not made to Lender by such bank or other depository
after demand thereon is made by Lender pursuant hereto.
SECTION 7. COLLATERAL ADMINISTRATION
7.1. GENERAL.
-------
7.1.1. Location of Collateral. All tangible items of Collateral,
----------------------
other than Inventory in transit and motor vehicles, shall at all times be kept
by Borrower and its Subsidiaries at one or more of the business locations set
forth in SCHEDULE 7.1.1 hereto and shall not be moved therefrom, without the
--------------
prior written approval of Lender, except that prior to an Event of Default and
Lender's acceleration of the maturity of the Obligations in consequence thereof,
Borrower may (i) make sales or other dispositions of any Collateral to the
extent authorized by Section 9.2.9 hereof and (ii) may move Inventory or any
record relating to any Collateral to a location in the United States other than
those shown on SCHEDULE 7.1.1 hereto so long as Borrower has given Lender at
--------------
least 30 Business Days' prior written notice of such new location and prior to
moving any Inventory to such location Borrower has executed and delivered to
Lender UCC-1 financing statements and any other appropriate documentation to
perfect or continue the perfection of Lender's Liens with respect to such
Inventory and all proceeds thereof.
7.1.2. Insurance of Collateral; Insurance and Condemnation Proceeds.
------------------------------------------------------------
(i) Borrower shall maintain and pay for insurance upon all Collateral,
wherever located, covering casualty, hazard, public liability, theft, malicious
mischief, and such other risks in such amounts and with such insurance companies
as are reasonably satisfactory to Lender. All proceeds payable under each such
policy shall be payable to Lender for application to the Obligations. Borrower
shall deliver the originals or certified copies of such policies to Lender with
satisfactory lender's loss payable endorsements reasonably satisfactory to
Lender, naming Lender as loss payee, assignee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever and
a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
For so long as no Event of Default exists, Borrower shall have the right to
settle, adjust and compromise any claim with respect to any insurance maintained
by Borrower provided that all proceeds thereof are applied in the manner
specified in this Agreement, and Lender agrees promptly to provide any necessary
endorsement to any checks or drafts issued in payment of any such claim. At any
time that an Event of Default exists, only Lender shall be authorized to settle,
adjust and compromise such claims. Lender shall have all rights and remedies
with respect to such policies of insurance as are provided for in this Agreement
and the other Loan Documents.
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7.1.3. Protection of Collateral. All expenses of protecting,
------------------------
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all Taxes imposed by any Applicable Law on any of the Collateral or
in respect of the sale thereof, and all other payments required to be made by
Lender to any Person to realize upon any Collateral shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof when due,
Lender may, at its option, but shall not be required to, pay the same and charge
Borrower therefor. Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Borrower's sole risk.
7.1.4. Defense of Title to Collateral. Borrower shall at all times
------------------------------
defend Borrower's title to the Collateral and Lender's Liens therein against all
Persons and all claims and demands whatsoever.
7.2. ADMINISTRATION OF ACCOUNTS.
--------------------------
7.2.1. Records, Schedules and Assignments of Accounts. Borrower
----------------------------------------------
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. Borrower shall also provide to Lender on or before the
20th day of each month, a detailed aged trial balance of all Accounts existing
as of the last day of the preceding month, specifying the names, addresses, face
value, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed ("Schedule of Accounts") and the basis on which such Schedules
of Accounts are prepared and, upon Lender's request therefor, copies of proof of
delivery and the original copy of all documents, including repayment histories
and present status reports relating to the Accounts so scheduled and such other
matters and information relating to the status of then existing Accounts as
Lender shall reasonably request. In addition, if Accounts in an aggregate face
amount in excess of $1,500,000 cease to be Eligible Accounts in whole or in
part, Borrower shall notify Lender of such occurrence promptly (and in any event
within 2 Business Days) after Borrower's having obtained knowledge of such
occurrence and the Borrowing Base shall thereupon be adjusted to reflect such
occurrence. Upon Lender's written request, Borrower shall promptly deliver to
Lender copies of invoices or invoice registers related to all of its Accounts.
-36-
7.2.2. Borrowing Base Certificate. Borrower shall deliver to
--------------------------
Lender a current, complete and accurate Borrowing Base Certificate on or before
the 20th day of each month, or more frequently as Lender may request in writing,
together with such other documents or items as Lender may reasonably request.
7.2.3. Discounts, Allowances, Disputes. If Borrower grants any
-------------------------------
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $50,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an
Event of Default, Lender shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Lender may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorneys' fees, to Borrower.
7.2.4. Taxes. If an Account includes a charge for any Taxes
-----
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor if Borrower shall fail to
pay such amounts within three (3) Business Days after Lender's request to do so
; provided, however, that Lender shall not be liable for any Taxes that may be
-------- -------
due by Borrower.
7.2.5. Account Verification. Whether or not a Default or an Event
--------------------
of Default exists, any of Lender's officers, employees or agents shall have the
right, at any time or times hereafter, in the name of Lender, any designee of
Lender or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Lender in an effort to facilitate and promptly conclude any
such verification process.
7.2.6. Maintenance of Lockbox and Dominion Account. Borrower shall
-------------------------------------------
maintain a Dominion Account and a lockbox pursuant to a lockbox arrangement
("Lockbox") acceptable to Lender with such banks ("Collecting Banks") as may be
selected by Borrower and be acceptable to Lender. Borrower shall issue to each
such Collecting Bank an irrevocable letter of instruction directing such banks
to deposit all payments or other remittances received in the Lockbox to the
Concentration Account. Borrower shall enter into agreements, in form
satisfactory to Lender, with each bank at which a Dominion Account is maintained
by which such banks shall immediately transfer to Lender for application on
account of the Obligations all monies deposited to the Concentration Account.
All funds deposited in a Dominion Account or the Concentration Account shall
immediately become the property of Lender and Borrower shall obtain the
agreement by such banks in favor of Lender to waive any offset rights against
the funds so deposited. Lender assumes no responsibility for such lockbox
arrangements, including any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
7.2.7. Collection of Accounts; Proceeds of Collateral. In every
----------------------------------------------
invoice issued by Borrower commencing 30 days after the Closing Date, it shall
direct all Account Debtors to send their payments directly to the post office
box established by the Lockbox arrangement. All Payment Items received by
Borrower in respect of Accounts, together with the proceeds of any other
Collateral, shall be held as Lender's property by Borrower as trustee of an
express trust for Lender's benefit and Borrower shall immediately deposit same
in kind in a Dominion Account. Lender retains the right at all times after the
occurrence of a Default or an Event of Default to notify Account Debtors that
Accounts have been assigned
-37-
to Lender and to collect Accounts directly in its own name and to charge to
Borrower the collection costs and expenses, including attorneys' fees.
7.3. ADMINISTRATION OF INVENTORY.
---------------------------
7.3.1. Records and Reports of Inventory. Borrower shall keep
--------------------------------
accurate and complete records of its Inventory consistent with past practices
and without change in format or assumptions on which such Inventory reports are
based. Borrower shall furnish Lender Inventory reports in form and detail
satisfactory to Lender at such times as Lender may request, but at least once
each month, not later than the 20th day of such month. Borrower shall conduct a
physical inventory no less frequently than annually and shall provide to Lender
a report based on each such physical inventory promptly thereafter, together
with such supporting information as Lender shall request.
7.3.2. Returns of Inventory. Borrower shall not return any of its
--------------------
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the ordinary course of business of Borrower and
such Person, (ii) no Default or Event of Default exists or would result
therefrom, (iii) the return of such Inventory will not result in an Out-of-
Formula Condition, (iv) if the aggregate Value of all Inventory returned in any
month exceeds $500,000, Borrower promptly notifies Lender thereof, and (v) any
payments received by Borrower in connection with any such return is promptly
turned over to Lender for application to the Obligations.
7.4. PAYMENT OF CHARGES. All amounts chargeable to Borrower under this
------------------
Section 7 shall be Obligations secured by all of the Collateral and shall be
payable on demand.
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1. General Representations and Warranties. To induce Lender to enter
--------------------------------------
into this Agreement and to make advances hereunder, Borrower warrants and
represents to Lender and covenants with Lender that:
8.1.1. Organization and Qualification. Each of Borrower and its
------------------------------
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of Borrower and
its Subsidiaries is duly qualified and is authorized to do business and is in
good standing as a foreign limited liability company or corporation in each
state or jurisdiction listed on SCHEDULE 8.1.1 hereto and in all other states
--------------
and jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary.
8.1.2. Corporate Power and Authority. Each of Borrower and its
-----------------------------
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of
the other Loan Documents have been duly authorized by all necessary action and
do not and will not (i) require any consent or approval of any of the holders of
the Equity Interests of Borrower or any of its Subsidiaries; (ii) contravene
Borrower's or any of its Subsidiaries' Organization Documents; (iii) violate, or
cause Borrower or any of its Subsidiaries to be in default under, any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect having applicability to Borrower or any of its
Subsidiaries; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower or any of its Subsidiaries is a party or by which
it or its Properties may be bound or affected; or (v) result in, or require, the
creation or imposition
-38-
of any Lien (other than Permitted Liens) upon or with respect to any of the
Properties now owned or hereafter acquired by Borrower or any of its
Subsidiaries.
8.1.3. Legally Enforceable Agreement. This Agreement is, and each
-----------------------------
of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms.
8.1.4. Capital Structure. As of the date hereof, SCHEDULE 8.1.4
----------------- --------------
hereto states (i) the correct name of each of the Subsidiaries of Borrower, its
jurisdiction of organization and the percentage of its Equity Interests having
voting powers owned by Borrower, and (ii) the name of each of Borrower's
corporate or joint venture Affiliates and the nature of the affiliation.
Borrower has good title to all of the shares it purports to own of the Equity
Interests of each of its Subsidiaries, free and clear in each case of any Lien
other than Permitted Liens. All such Equity Interests have been duly issued and
are fully paid and non-assessable.
8.1.5. Corporate Names. Neither Borrower nor any of its
---------------
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on SCHEDULE 8.1.5 hereto. Except as set forth on SCHEDULE
-------------- --------
8.1.5, neither Borrower nor any of its Subsidiaries has been the surviving
-----
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
8.1.6. Business Locations; Agent for Process. Each of Borrower's
-------------------------------------
and its Subsidiaries' chief executive office and other places of business are as
listed on SCHEDULE 7.1.1 hereto. During the preceding five-year period, neither
--------------
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on SCHEDULE 7.1.1. Except as
--------------
shown on SCHEDULE 7.1.1, no Inventory is stored with a bailee, warehouseman or
--------------
similar Person, nor is any Inventory consigned to any Person.
8.1.7. Title to Properties; Priority of Liens. Each of Borrower
--------------------------------------
and its Subsidiaries has good, indefeasible and marketable title to and fee
simple ownership of, or valid and subsisting leasehold interests in, all of its
real Property, and good title to all of the Collateral and all of its other
Property, in each case free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged all lawful claims which, if unpaid, might become
a Lien against any of Borrower's Properties that is not a Permitted Lien. The
Liens granted to Lender under Section 6 hereof are first priority Liens, subject
only to those Permitted Liens which are expressly stated to have priority over
the Liens of Lender.
8.1.8. Accounts. Lender may rely, in determining which Accounts
--------
are Eligible Accounts, on all statements and representations made by Borrower
with respect to any Account. Unless otherwise indicated in writing to Lender,
with respect to each Account:
(1) It is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(2) It arises out of a completed, bona fide sale and delivery of
---- ----
goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of
the contract between Borrower and the Account Debtor;
-39-
(3) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Lender;
(4) Borrower has made no agreement with any Account Debtor for
any extension, compromise, settlement or modification of any such Account
or any deduction therefrom, except discounts or allowances which are
granted by Borrower in the ordinary course of its business for prompt
payment and which are reflected in the calculation of the net amount of
each respective invoice related thereto and are reflected in the Schedules
of Accounts submitted to Lender pursuant to Section 7.2.1 hereof;
(5) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and
statements delivered to Lender with respect thereto;
(6) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent;
(7) To the best of Borrower's knowledge, there are no proceedings
or actions which are threatened or pending against any Account Debtor which
might result in any material adverse change in such Account Debtor's
financial condition or the collectibility of such Account;
(8) There are no restrictions on Borrower's right to assign to
Lender the right to payment represented by the Account or any Lien upon the
Account.
8.1.9. Financial Statements; Fiscal Year. The Consolidated and
---------------------------------
consolidating balance sheets of Parent and such other Persons described therein
(including the accounts of all Subsidiaries of Borrower for the respective
periods during which a Subsidiary relationship existed) as of May 31, 1998, and
the related statements of income, changes in stockholder's equity, and changes
in financial position for the periods ended on such dates, have been prepared in
accordance with GAAP, and present fairly, in all material respects, the
financial positions of Parent, Borrower and such Persons at such dates and the
results of Borrower's operations for such periods. Since May 31, 1998, there
has been no material change in the condition, financial or otherwise, of Parent,
Borrower and such other Persons as shown on the Consolidated balance sheet as of
such date, except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse.
8.1.10. Full Disclosure. The financial statements referred to in
---------------
Section 8.1.9 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a fact or omit
a fact necessary to make the statements contained therein or herein not
misleading in any material respect. There is no fact or circumstances which
Borrower has failed to disclose to Lender in writing and which may reasonably be
expected to have a Material Adverse Effect.
8.1.11. Solvent Financial Condition. Each of Borrower and its
---------------------------
Subsidiaries is now and, after giving effect to the Loans to be made hereunder,
at all times will be, Solvent.
8.1.12. Surety Obligations. Neither Borrower nor any of its
------------------
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement
-40-
to assure payment, performance or completion of performance of any undertaking
or obligation of any Person except in connection with the GECC Documents.
8.1.13. Taxes. Borrower's federal tax identification number is 62-
-----
1694320. The federal tax identification number of each of Borrower's
Subsidiaries is shown on SCHEDULE 8.1.13 hereto. Borrower and each of its
---------------
Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all Taxes upon it, its income and Properties as and when such Taxes
are due and payable, except to the extent being Properly Contested. The
provision for Taxes on the books of Borrower and its Subsidiaries are adequate
for all years not closed by applicable statutes, and for its current fiscal
year.
8.1.14. Brokers. There are no claims for brokerage commissions,
-------
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
8.1.15. Patents, Trademarks, Copyrights and Licenses. Borrower and its
--------------------------------------------
Subsidiaries each owns or possesses all Intellectual Property necessary for the
present and planned future conduct of its business without any conflict with the
rights of others; there is no objection to or pending Intellectual Property
Claim with respect to any Borrower's right to use any such Intellectual Property
and Borrower is not aware of any grounds for challenge or objection thereto;
and, except as may be disclosed on SCHEDULE 8.1.15, Borrower pays no royalty or
---------------
other compensation to any Person for the right to use any Intellectual Property.
All such patents, trademarks, service marks, tradenames, copyrights, licenses
and other similar rights are listed on SCHEDULE 8.1.15 hereto.
---------------
8.1.16. Governmental Approvals. Each of Borrower and its Subsidiaries
----------------------
has, and is in good standing with respect to, all Governmental Approvals
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it.
8.1.17. Compliance with Laws. Each of Borrower and its Subsidiaries
--------------------
has duly complied with, and its Properties, business operations and leaseholds
are in compliance in all material respects with, the provisions of all
Applicable Law (except to the extent that any such noncompliance with Applicable
Law would not reasonably be expected to have a Material Adverse Effect) and
there have been no citations, notices or orders of noncompliance issued to
Borrower or any of the Subsidiaries under any such law, rule or regulation. No
Inventory has been produced in violation of the Fair Labor Standards Act (29
U.S.C. (S) 201 et seq.). With respect to matters arising under any
-- ---
Environmental Laws, the representations and warranties contained in the
Environmental Certificate are true and correct on the date hereof.
8.1.18. Restrictions. Neither Borrower nor any of its Subsidiaries
------------
is a party or subject to any contract, agreement, or charter or other corporate
restriction, which has or could be reasonably expected to have a Material
Adverse Effect. Neither Borrower nor any of its Subsidiaries is a party or
subject to any contract or agreement which restricts its right or ability to
incur Debt, other than as set forth on SCHEDULE 8.1.18 hereto, none of which
---------------
prohibit the execution of or compliance with this Agreement or the other Loan
Documents by Borrower or any of its Subsidiaries, as applicable.
8.1.19 Litigation. Except as set forth on SCHEDULE 8.1.19 hereto,
---------- ---------------
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of Borrower or any of its Subsidiaries, none of which if resolved
adversely to Borrower or its
-41-
Subsidiaries would have Material Adverse Effect. Neither Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
8.1.20. No Defaults. No event has occurred and no condition exists
-----------
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes or which with the passage of
time or the giving of notice or both would constitute a default, under any
Material Contract or in the payment of any Debt to any Person for Money
Borrowed.
8.1.21. Leases. SCHEDULE 8.1.21 hereto is a complete listing of all
------ ---------------
capitalized and operating leases of Borrower and its Subsidiaries on the date
hereof. Each of Borrower and its Subsidiaries is in full compliance with all of
the terms of each of its respective capitalized and operating leases.
8.1.22. Pension Plans. Except as disclosed on SCHEDULE 8.1.22 hereto,
------------- ---------------
neither Borrower nor any of its Subsidiaries has any Plan on the date hereof.
Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a material adverse change
in the financial condition of Borrower or any of its Subsidiaries exists in
connection with any Plan. Neither Borrower nor any of its Subsidiaries has any
withdrawal liability in connection with a Multiemployer Plan.
8.1.23. Trade Relations. There exists no actual or threatened
---------------
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no condition or state of facts
or circumstances which would materially affect adversely Borrower or any of its
Subsidiaries or prevent Borrower or any of its Subsidiaries from conducting such
business after the consummation of the transactions contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.
8.1.24. Labor Relations. Except as described on SCHEDULE 8.1.24
--------------- ---------------
hereto, neither Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's or any of its Subsidiaries' employees, or
threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
8.1.25. Investment Company Act; Public Utility Holding Company Act.
----------------------------------------------------------
No Obligor is an "investment company" or a "person directly or indirectly
controlled by or acting on behalf of an investment company" within the meaning
of the Investment Company Act of 1940, or a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935.
8.1.26. Margin Stock. Neither Borrower nor any of the Subsidiaries is
------------
engaged, principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
-42-
8.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
-----------------------------------------------
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be reaffirmed by Borrower on each date that
Borrower requests an extension of credit under this Agreement, except for
changes in the nature of Borrower's or, if applicable, any of its Subsidiaries'
business or operations that may occur after the date hereof in the ordinary
course of business so long as Lender has consented to such changes or such
changes are not violative of any provision of this Agreement. Notwithstanding
the foregoing, representations and warranties which by their terms are
applicable only to a specific date shall be deemed made only at and as of such
date.
8.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
------------------------------------------
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1. AFFIRMATIVE COVENANTS. During the term of this Agreement, and
---------------------
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall and
shall cause each Subsidiary to:
9.1.1. Visits and Inspections. Permit representatives of Lender,
----------------------
from time to time, as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of Borrower and each
of its Subsidiaries, inspect, audit and make extracts from Borrower's and each
Subsidiary's books and records, and discuss with Borrower's officers, employees
and independent accountant, Borrower's and each Subsidiary's business, assets,
liabilities, financial condition, business prospects and results of operations.
9.1.2. Notices. Notify Lender in writing promptly after Borrower's
-------
obtaining knowledge thereof (i) of the occurrence of any event or the existence
of any fact which renders any representation or warranty in this Agreement or
any of the other Loan Documents inaccurate, incomplete or misleading; (ii) of
the commencement of any litigation affecting Borrower or any of its Properties
or the institution of any administrative proceeding which, if determined
adversely to Borrower, would have a Material Adverse Effect; (iii) at least 60
days prior thereto, of Borrower's opening of any new office or place of business
or Borrower's closing of any existing office or place of business; (iv) of any
labor dispute to which Borrower may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any
labor contract to which it is a party or by which it is bound; (v) of any
material default by any Obligor under or termination of any Material Contract or
any note, indenture, loan agreement, mortgage, lease, deed, guaranty or other
similar agreement relating to any Debt of Borrower exceeding $250,000; (vi) of
the existence of any Default or Event of Default; (vii) of any default by any
Person under any note or other evidence of Debt payable to Borrower; (viii) of
any judgment rendered against any Obligor in an amount exceeding $250,000.
9.1.3. Financial Statements. Keep adequate records and books of
--------------------
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions; and cause to
be prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Lender and is consistent with GAAP):
-43-
(1) not later than 120 days after the close of each Fiscal Year
of Borrower, unqualified audited financial statements of Borrower and its
Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to
Lender (except for a qualification for a change in accounting principles
with which the accountant concurs);
(2) not later than 30 days after the end of each month hereafter,
including the last month of Borrower's Fiscal Year, unaudited interim
financial statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's Fiscal Year then elapsed, on a
Consolidated and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of operations of
Borrower and its Subsidiaries for such month and period subject only to
changes from audit and year-end adjustments and except that such statements
need not contain notes;
(3) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which
Borrower has made available to its shareholders and copies of any regular,
periodic and special reports or registration statements which Borrower
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange;
(4) promptly after the filing thereof, copies of any annual
report to be filed in accordance with ERISA in connection with each Plan;
and
(5) such other data and information (financial and otherwise) as
Lender, from time to time, may reasonably request, bearing upon or related
to the Collateral or Borrower's and each of its Subsidiaries' financial
condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 9.1.3, Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Lender a certificate of the aforesaid certified public accountants
certifying to Lender that, based upon their examination of the financial
statements of Borrower and its Subsidiaries performed in connection with their
examination of said financial statements, they are not aware of any Default or
Event of Default, or, if they are aware of such Default or Event of Default,
specifying the nature thereof, and acknowledging, in a manner satisfactory to
Lender, that they are aware that Lender is relying on such financial statements
in making its decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clause (i) of this Section
and concurrently with the delivery of the monthly financial statement described
in clause(ii) of this Section ending a Fiscal Quarter, or more frequently if
requested by Lender, Borrower shall cause to be prepared and furnished to Lender
a Compliance Certificate executed by the chief financial officer of Borrower.
9.1.4. Landlord and Storage Agreements. Provide Lender with copies
-------------------------------
of all agreements between Borrower or any of its Subsidiaries and any landlord
or warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
9.1.5. Projections. No later than 30 days prior to the end of each
-----------
Fiscal Year of Borrower, deliver to Lender Projections of Borrower for the
forthcoming 3 years, year by year, and for the forthcoming Fiscal Year, quarter
by quarter.
-44-
9.1.6. Taxes. Pay and discharge all Taxes prior to the date on
-----
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
9.1.7. Compliance with Laws. Comply with all Applicable Law,
--------------------
including all laws, statutes, regulations and ordinances regarding the
collection, payment and deposit of Taxes, and all ERISA and Environmental Laws,
and obtain and keep in force any and all Governmental Approvals necessary to the
ownership of its Properties or to the conduct of its business, which violation
or failure to obtain might have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any Environmental Release shall occur at or on
any of the Properties of Borrower or any Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, act immediately to investigate the extent
of, and to make appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by any
governmental authority.
9.1.8. Insurance. In addition to the insurance required herein with
---------
respect to the Collateral, maintain with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, business
interruption, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of Borrower or as
otherwise reasonably required by Lender.
9.1.9. Year 2000 Compatibility. Take all action necessary to assure
-----------------------
that Borrower's computer based systems are able to operate and effectively
process data including dates on and after January 1, 2000. Borrower shall
provide Lender written assurance reasonably acceptable to Lender that such
systems are Year 2000 compliant on or before September 30, 1999. Borrowers
shall (i) promptly and in no event later than September 30, 1999, take all
action necessary to ensure that all computer based systems of Borrower and its
Subsidiaries are capable of the following: (a) handling date information
involving all and any dates before, during and/or after January 1, 2000,
including accepting input, providing output and performing date calculations in
whole or in part; (b) operating, accurately without interruption on and in
respect of any and all dates before, during and/or after January 1, 2000, and
without any change in performance; (c) responding to and processing two digit
year input without creating any ambiguity as to the century; (d) storing and
providing date input information without creating any ambiguity as to the
century; and (ii) promptly and in no event later than September 30, 1999, take
all action necessary to ensure that all computer based systems of each of their
vendors, suppliers and customers are capable of (a) through (d) above, where
noncompliance could have a Material Adverse Effect.
9.2. NEGATIVE COVENANTS. During the term of this Agreement, and
------------------
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it shall
not and shall not permit any Subsidiary to:
9.2.1. Fundamental Changes. Enter into any transaction to merge,
-------------------
reorganize, consolidate or amalgamate with any Person, or liquidate, wind up or
dissolve itself, except for mergers or consolidations of any Subsidiary with
another Subsidiary, GECC Eligible Acquisitions and Eligible Acquisitions
hereunder.
9.2.2. Loans. Make any loans or other advances of money to any
-----
Person other than (i) to an officer or employee of Borrower or a Subsidiary for
salary, travel advances, advances against commissions and other similar advances
in the ordinary course of business plus other loans up to an aggregate
-45-
amount outstanding at any time not to exceed $250,000, or (ii) so long as no
Event of Default or Out-of-Formula Condition shall exist or be caused thereby,
(a) make advances to Harperprints from time to time for Harperprints' working
capital needs up to an aggregate amount outstanding at any time not to exceed
$1,000,000, such advances to be evidenced by one or more promissory notes
executed by Harperprints in favor of Borrower and the original of each such note
delivered to Lender, and (b) advances to Parent in connection with Eligible
Acquisitions or GECC Eligible Acquisitions to enable Parent to pay a portion of
the amount due to the applicable sellers, such loans to be evidenced by one or
more promissory note executed by Parent in favor of Borrower and the original of
each such note evidencing advances to Parent utilizing the proceeds of an
Acquisition Loan hereunder delivered to Lender.
9.2.3. Total Debt. Create, incur, assume, or suffer to exist any
----------
Debt, except: (1) the Obligations; (2) Subordinated Debt existing on the
Closing Date; (3) Debt of any Subsidiary of Borrower to Borrower; (4) accounts
payable to trade creditors and current operating expenses (other than for Money
Borrowed) which are not aged more than 120 days from billing date or more than
30 days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being Properly
Contested; (5) obligations to pay rent in connection with Borrower's business
operations; (6) Purchase Money Debt incurred for Capital Expenditures made in
conformity with this Agreement; (7) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business; (8) Debt owing under the GECC
Documents; (ix) Deferred Acquisition Consideration; (x) Subordinated Debt; (xi)
Debt described in SCHEDULE 9.2.3 attached hereto; and (xii) Debt not included
---------------
in paragraphs (i) through (xi) above which does not exceed at any time, in the
aggregate, the sum of $250,000.
9.2.4. Affiliate Transactions. Enter into, or be a party to any
----------------------
transaction with any Affiliate or stockholder, except: (i) the transactions
contemplated by the Loan Documents, including, loans to Harperprints permitted
under Section 9.2.2 ; (ii) payment of customary directors' fees and indemnities;
(iii) transactions with Affiliates that were consummated prior to the date
hereof and have been disclosed to Lender prior to the Closing Date; (iv) in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
such Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to Borrower or such Subsidiary
than would obtain in a comparable arm's length transaction with a Person not an
Affiliate or stockholder of Borrower or such Subsidiary.
9.2.5. Limitation on Liens. Create or suffer to exist any Lien
-------------------
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(1) Liens at any time granted in favor of Lender;
(2) Liens for Taxes (excluding any Lien imposed pursuant to any
of the provisions of ERISA) incurred in the ordinary course of Borrower's
business and not yet due or being Properly Contested;
(3) Liens arising in the ordinary course of Borrower's business
by operation of law or regulation, but only if payment in respect of any
such Lien is not at the time required or the Debt secured by any such Lien
is being Properly Contested and such Liens do not materially detract from
the value of the Property of Borrower or materially impair the use thereof
in the operation of Borrower's business;
-46-
(4) Purchase Money Liens securing Purchase Money Debt;
(5) Liens securing Debt of a Subsidiary to Borrower or another
such Subsidiary;
(6) Liens arising by virtue of the rendition, entry or issuance
against Borrower or any Subsidiary, or any Property of Borrower or any
Subsidiary, of any judgment, writ, order, or decree for so long as each
such Lien is (a) either in existence for less than 20 consecutive days
after it first arises or is being Properly Contested and (b) is at all
times junior in priority to the Liens in favor of Lender;
(7) Liens incurred or deposits made in the ordinary course of
business to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Money Borrowed), statutory obligations and
other similar obligations or arising as a result of progress payments under
government contracts, provided that, to the extent any such Liens attach to
any of the Collateral, such Liens are at all times subordinate and junior
to the Liens upon the Collateral in favor of Lender;
(8) easements, rights-of-way, restrictions, covenants or other
agreements of record and other similar charges or encumbrances on real
Property of Borrower or a Subsidiary that do not interfere with the
ordinary conduct of the business of Borrower or such Subsidiary;
(9) Liens in existence immediately prior to the Closing Date that
are satisfied in full and released on the Closing Date as a result of the
application of Borrower's cash on hand at the Closing Date or the proceeds
of the Loans to be made on the Closing Date;
(10) such other Liens as appear on SCHEDULE 9.2.5 hereto; and
--------------
(11) such other Liens as Lender may hereafter approve in writing.
9.2.6. Subordinated Debt. Make any payment of all or any part of
-----------------
any Subordinated Debt or take any other action or omit to take any other action
in respect of any Subordinated Debt, except in accordance with the Subordination
Agreement relative thereto.
9.2.7. Distributions. Declare or make any Distributions.
-------------
9.2.8. Capital Expenditures. Make Capital Expenditures (including
--------------------
expenditures by way of capitalized leases) which, in the aggregate, as to
Borrower, Harperprints and their respective Subsidiaries, exceed (i) $3,000,000
during the period from the date of this Agreement through December 31, 1998;
(ii) $4,000,000 during Borrower's 1999 Fiscal Year; (iii) $5,000,000 during
Borrower's 2000 Fiscal Year; (iv) $6,000,000 during Borrower's 2001 Fiscal Year
or during any Fiscal Year thereafter.
9.2.9. Disposition of Assets. Sell, lease or otherwise dispose of
---------------------
any of its Properties, including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower, and (iii) other dispositions expressly authorized by other provisions
of the Loan Documents.
9.2.10. Equity Interests of Subsidiaries. Permit any of its
--------------------------------
Subsidiaries to issue any additional Equity Interests except director's
qualifying shares.
-47-
9.2.11. ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer on a
------------------------
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
9.2.12. Restricted Investment. Make or have any Restricted
---------------------
Investment.
9.2.13. Tax Consolidation. File or consent to the filing of any
-----------------
consolidated income tax return with any Person other than Parent or a Subsidiary
of Parent.
9.2.14. Fiscal Year. Establish a fiscal year different from the
-----------
Fiscal Year.
9.2.15. Organization Documents. Amend, modify or otherwise change any
----------------------
of the terms or provisions and any of its Organization Documents as in effect on
date hereof, except for changes that do not affect in any way Borrower's or such
Subsidiary's rights and obligations to enter into and to perform the Loan
Documents to which it is a party and to pay all of the Obligations and that do
not otherwise have a Material Adverse Effect.
9.3. SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement,
----------------------------
and thereafter for so long as there are any Obligations outstanding, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall
not:
9.3.1. EBITDA. Permit the EBITDA of Parent, determined on a
------
Consolidated basis, as of the last day of each Fiscal Quarter set forth below
for the Fiscal Year to date to be less than the corresponding amount set forth
below:
Date Amount
---- ------
March 31, 1998 $ 3,000,000
June 30, 1998 $ 8,200,000
September 30, 1998 $12,400,000
December 31, 1998 $16,000,000
9.3.2. Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
---------------------------
Ratio of Parent, determined on a Consolidated basis, as of the last day of each
Fiscal Quarter set forth below for the 4 Fiscal Quarters then ending to be less
than the corresponding ratio set forth below:
Fiscal Quarter Ending Ratio
--------------------- -----
December 31, 1998 1.10:1.0
March 31, 1999 1.10:1.0
June 30, 1999 1.10:1.0
September 30, 1999 1.10:1.0
December 31, 1999 1.10:1.0
March 31, 2000 1.10:1.0
June 30, 2000 1.10:1.0
September 30, 2000 1.10:1.0
December 31, 2000 1.15:1.0
March 31, 2001 1.15:1.0
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June 30, 2001 1.15:1.0
September 30, 2001 1.15:1.0
December 31, 2001 1.20:1.0
March 31, 2002 1.20:1.0
June 30, 2002 1.20:1.0
September 30, 2002 1.20:1.0
December 31, 2002 1.20:1.0
9.3.3. Leverage Ratio. Permit the Leverage Ratio of Parent, determined
--------------
on a Consolidated basis, as of the last day of each Fiscal Quarter set forth
below for the 4 Fiscal Quarters then ending to be more than the corresponding
ratio set forth below:
Fiscal Quarter Ending Ratio
--------------------- -----
June 30, 1998 5.00:1.0
September 30, 1998 5.00:1.0
December 31, 1998 5.00:1.0
March 31, 1999 4.75:1.0
June 30, 1999 4.75:1.0
September 30, 1999 4.75:1.0
December 31, 1999 4.25:1.0
March 31, 2000 4.25:1.0
June 30, 2000 4.25:1.0
September 30, 2000 4.25:1.0
December 31, 2000 3.75:1.0
March 31, 2001 3.75:1.0
June 30, 2001 3.75:1.0
September 30, 2001 3.75:1.0
December 31, 2001 3.50:1.0
March 31, 2002 3.50:1.0
June 30, 2002 3.50:1.0
September 30, 2002 3.50:1.0
December 31, 2002 3.50:1.0
SECTION 10. CONDITIONS PRECEDENT
10.1. Conditions Precedent to Initial Loans. Notwithstanding any other
-------------------------------------
provision of this Agreement or any of the other Loan Documents, and without
affecting in any manner the rights of Lender under the other sections of this
Agreement, Lender shall not be required to fund any Loan requested by Borrower
unless, on or before August 30, 1998, each of the following conditions has been
and continues to be satisfied:
10.1.1. Documentation. Lender shall have received, in form and
-------------
substance satisfactory to Lender and its counsel, a duly executed counterpart of
this Agreement and the other Loan Documents, together with such additional
documents, instruments and certificates as Lender and its counsel shall require
in connection therewith from time to time, all in form and substance
satisfactory to Lender and its counsel.
-49-
10.1.2. Evidence of Perfection and Priority of Liens in Collateral.
----------------------------------------------------------
Lender shall have received copies of all filing receipts or acknowledgments
issued by any governmental authority to evidence any filing or recordation
necessary to perfect the Liens of Lender in the Collateral and evidence in form
satisfactory to Lender that such Liens constitute valid and perfected Liens, and
that there are no other Liens upon any Collateral except for Permitted Liens.
10.1.3. Organization Documents. Lender shall have received a copy
----------------------
of the Organization Documents of Borrower, and all amendments thereto, certified
by the Secretary of State or other appropriate official of the jurisdiction of
Borrower's formation.
10.1.4. Good Standing Certificates. Lender shall have received good
--------------------------
standing certificates for Borrower, issued by the Secretary of State or other
appropriate official of Borrower's jurisdiction of organization and each
jurisdiction where the conduct of Borrower's business activities or ownership of
its Property necessitates qualification.
10.1.5. Opinion Letters. Lender shall have received a favorable,
---------------
written opinion of Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, counsel to Borrower, as
to the transactions contemplated by this Agreement and the matters set forth in
EXHIBIT F attached hereto.
---------
10.1.6. Insurance. Lender shall have received copies of the
---------
casualty insurance policies of Borrower, together with loss payable endorsements
on Lender's standard form of loss payee endorsement naming Lender as loss payee
and copies of Borrower's liability insurance policies, including product
liability policies, together with endorsements naming Lender as a co-insured.
10.1.7. Disbursement Letter. Lender shall have received written
-------------------
instructions from Borrower directing application of proceeds of the initial
Loans made pursuant to this Agreement, and an initial Borrowing Base Certificate
from Borrower, in form satisfactory to Lender.
10.1.8. Dominion Account. Lender shall have received the duly
----------------
executed agreement establishing the Dominion Account with a financial
institution acceptable to Lender for the collection or servicing of the
Accounts.
10.1.9. Landlord Agreements. Lender shall have received all landlord
-------------------
or warehouseman agreements with respect to all premises leased by Borrower and
which are disclosed on Schedule 7.1.1 hereto.
--------------
10.1.10. License Agreements. Lender shall have received, reviewed and
------------------
found satisfactory in all respects all licenses and other agreements pursuant to
which Borrower manufacturers, markets, distributes or sells any of its
Inventory.
10.1.11. Disbursement Letter; Borrowing Base Certificate. Lender
-----------------------------------------------
shall have received written instructions from Borrower directing application of
the proceeds of the Loans made pursuant to this Agreement, and an initial
Borrowing Base Certificate from Borrower, in form satisfactory to Lender.
10.2. CONDITIONS PRECEDENT TO EXECUTION OF LC APPLICATION.
---------------------------------------------------
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Lender under other
sections of this Agreement, Lender shall not be required to execute any LC
-50-
Application requested by Borrower, unless and until each of the following
conditions has been and continues to be satisfied:
10.2.1. Letter of Credit Documentation. Bank shall have received,
------------------------------
in form and substance satisfactory to Bank and its counsel, duly executed LC
Documents with respect to the Letters of Credit requested to be issued by Bank
and an LC Guaranty with respect to each such Letter of Credit.
10.2.2. LC Request. Lender shall have received an LC Request from a
----------
Borrower.
10.2.3. LC Conditions. Each of the LC Conditions shall have been
-------------
satisfied.
10.2.4. Satisfaction of Other Conditions. Each of the conditions
--------------------------------
set forth in Section 10.1 hereof shall have been satisfied.
10.3. CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Notwithstanding any
---------------------------------------------
other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Lender under the other sections of
this Agreement, Lender shall not be required to make any Loan or otherwise
extend any credit or other financial accommodations to or for the benefit of
Borrower, unless and until each of the following conditions has been and
continues to be satisfied:
10.3.1. No Default. No Default or Event of Default exists at the
----------
time of, or would result from, the funding of such Loan or other extension of
credit.
10.3.2. No Litigation. No action, proceeding, investigation,
-------------
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of any of the Loan Documents or the consummation of the transactions
contemplated hereby or thereby.
10.3.3. No Material Adverse Effect. No event shall have occurred
--------------------------
and no condition shall exist which has or may be reasonably likely to have a
Material Adverse Effect.
10.3.4. Current Borrowing Base Certificate. Lender shall have
----------------------------------
timely received a Borrowing Base Certificate in compliance with the provisions
of Section 7.2.2.
10.4. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lender shall make any
--------------------------------------
Loans or otherwise extend any credit to Borrower under this Agreement at a time
when any of the foregoing conditions precedent are not satisfied (regardless of
whether the failure of satisfaction of any such conditions precedent was known
or unknown to Lender), the funding of such Loans or the extension of such credit
shall not operate as a waiver of the right of Lender to insist upon the
satisfaction of all conditions precedent with respect to each subsequent
borrowing requested by Borrower or a waiver of any Default or Event of Default
as a consequence of the failure of any such conditions to be satisfied, unless
Lender, in writing waives the satisfaction of any condition precedent in which
event such waiver shall only be applicable for the specific instance given and
only to the extent and for the period of time expressly stated in such written
waiver.
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SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
-----------------
following events or conditions shall constitute an "Event of Default":
11.1.1. Payment of Obligations. Borrower shall fail to pay on the due
----------------------
date thereof any of the Revolver Loans or any other Obligations (whether due at
stated maturity, on demand, upon acceleration or otherwise).
11.1.2. Misrepresentations. Any representation, warranty or other
------------------
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 8.2 hereof.
11.1.3. Breach of Specific Covenants. Borrower shall fail or
----------------------------
neglect to perform, keep or observe any covenant contained in Sections 6.2, 6.3,
7.1.1, 9.1.1, 9.2 or 9.3 hereof on the date that Borrower is required to
perform, keep or observe such covenant.
11.1.4. Breach of Other Covenants. (i) Borrower shall fail or
-------------------------
neglect to perform, keep or observe any covenant contained in Section 7.2 or
9.1.3 and the breach of such covenant is not cured to Lender's satisfaction
within 5 days after the sooner to occur of Borrower's receipt of notice of such
breach from Lender or the date on which such failure or neglect first becomes
known to any officer of Borrower or (ii) Borrower shall fail or neglect to
perform, keep or observe any other covenant contained in this Agreement (other
than a covenant which is dealt with specifically elsewhere in Section 11.1
hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 30 days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower; provided, however, that any such
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notice and opportunity to cure under this clause (ii) shall not apply in the
case of any failure to perform, keep or observe any covenant which is not
capable of being cured at all or within such 30 day period, or which has been
the subject of a prior failure within the preceding 180 days, or which is a
willful and knowing breach by Borrower.
11.1.5. Default Under Security Documents/Other Agreements. Any
-------------------------------------------------
event of default shall occur under, or Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any of
the Security Documents, the Other Agreements or the GECC Documents and such
default shall continue beyond any applicable cure or grace period.
11.1.6. Other Defaults. There shall occur any default or event of
--------------
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Debt (other than the Obligations) if (i) such Debt
is Subordinated Debt or (ii) the payment or maturity of such Debt in an amount
exceeding $250,000 in the aggregate is accelerated in consequence of such event
of default or demand for payment of such Debt is made.
11.1.7. Uninsured Losses. Any material loss, theft, damage or
----------------
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
11.1.8. Solvency. Any Obligor shall cease to be Solvent.
--------
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11.1.9. Insolvency Proceedings. Any Insolvency Proceeding shall be
----------------------
commenced by or against Borrower (and, if against Borrower, the continuation of
such Insolvency Proceeding for more than 45 days), or Borrower shall make any
offer of settlement, extension or composition to Borrower's unsecured creditors
generally.
11.1.10. Business Disruption; Condemnation. There shall occur a
---------------------------------
cessation of a substantial part of the business of Borrower, any Subsidiary of
Borrower or any Guarantor for a period which may be reasonably expected to have
a Material Adverse Effect; or Borrower, any Subsidiary of Borrower or any
Guarantor shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower or such Guarantor which is necessary to the
continued or lawful operation of its business; or Borrower or any Guarantor
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which Borrower or any
Guarantor leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term; or any material part of the
Collateral shall be taken through condemnation or the value of such Property
shall be materially impaired through condemnation.
11.1.11. Change of Ownership. Parent shall cease to own and control,
-------------------
beneficially and of record, all of the issued and outstanding capital stock of
Borrower.
11.1.12. ERISA. A Reportable Event shall occur which Lender, in its
-----
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower, any Subsidiary of Borrower or any Guarantor is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from Borrower's, such Subsidiary's or such
Guarantor's complete or partial withdrawal from such Plan.
11.1.13. Challenge to Loan Documents. Borrower, any Subsidiary of
---------------------------
Borrower or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
11.1.14. Repudiation of or Default Under Guaranty Agreement. Any
--------------------------------------------------
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, shall repudiate such Guarantor's liability thereunder, or shall
be in default under the terms thereof, or shall fail to confirm in writing,
promptly after receipt of Lender's written request therefor, such Guarantor's
ongoing liability under the Guaranty Agreement in accordance with the terms
thereof.
11.1.15. Criminal Forfeiture. Borrower, any Subsidiary of Borrower
-------------------
or any Guarantor shall be criminally indicted or convicted under any law that
could lead to a forfeiture of any Property of Borrower, any Subsidiary of
Borrower or any Guarantor.
11.1.16. Judgment. A judgment or order for the payment of money in an
--------
amount that exceeds the uncontested insurance available therefor by $250,000 or
more shall be entered against the Borrower by any court and such judgment or
order shall result in the creation of a Lien upon any asset of Borrower that is
not a Permitted Lien.
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11.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
-------------------------------
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with this Agreement, upon or at any time after the
occurrence of an Event of Default and for so long as such Event of Default shall
exist, Lender may in its discretion declare the principal of and any accrued
interest on the Loans and all other Obligations to be, whereupon the same shall
become without further notice or demand (all of which further notice and demand
Borrower expressly waives), forthwith due and payable and Borrower shall
forthwith pay to Lender the entire principal of and accrued and unpaid interest
on the Loans and other Obligations plus reasonable attorneys' fees and expenses
----
if such principal and interest are collected by or through an attorney-at-law.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
specified in Section 11.1.9 hereof all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Lender
and this Agreement shall automatically terminate as if terminated by Lender
pursuant to Section 5.2.1 and with the effect set forth in Section 5.2.4 hereof.
11.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
--------------
Default, and for so long as such Event of Default shall exist, Lender shall have
and may exercise from time to time the following rights and remedies:
11.3.1. All of the rights and remedies of a secured party under the
UCC or under other Applicable Law, and all other legal and equitable rights and
remedies to which Lender may be entitled under any of the Loan Documents, all of
which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
11.3.2. The right to collect all amounts at any time payable to
Borrower from any Account Debtor or other Person at any time indebted to
Borrower.
11.3.3. The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, then
Borrower agrees not to charge Lender for storage thereof).
11.3.4. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Lender, in its sole discretion, may deem advisable. Borrower agrees that any
requirement of notice to Borrower or any other Obligor of any proposed public or
private sale or other disposition of Collateral by Lender shall be deemed
reasonable notice thereof if given at least 10 days prior thereto, and such sale
may be at such locations as Lender may designate in said notice. Lender shall
have the right to conduct such sales on Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in accordance with
Applicable Law. Lender shall have the right to sell, lease or otherwise dispose
of the Collateral, or any part thereof, for cash, credit or any combination
thereof, and Lender may purchase all or any part of the Collateral at public or,
if permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Obligations.
The proceeds realized from the sale or other disposition of any Collateral may
be applied, after allowing 2 Business Days for collection, first to the costs,
expenses and attorneys' fees incurred by Lender in collecting the Obligations,
in enforcing the rights of Lender under the Loan Documents and in collecting,
retaking, completing, protecting, removing, storing, advertising for sale,
selling and delivering any Collateral, second to interest accrued with respect
to any of the Obligations; and third, to
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the principal of the Obligations. If any deficiency shall arise, Borrower and
each Guarantor shall remain jointly and severally liable to Lender therefor.
11.3.5. The right to require Borrower to deposit with Lender funds
equal to the LC Obligations and, if Borrower fails promptly to make such
deposit, Lender may advance such amount as a Revolver Loan (whether or not an
Out-of-Formula Condition exists or is created thereby). Any such deposit or
advance shall be held by Lender as a reserve to fund future payments on the LC
Guaranty. At such time as the LC Guaranty has been paid or terminated and all
Letters of Credit have been drawn upon or expired, any amounts remaining in such
reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, returned to Borrower.
Lender is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
11.4. SETOFF. In addition to any Liens granted under any of the Loan
------
Documents and any rights now or hereafter available under Applicable Law, Lender
is hereby authorized by Borrower at any time that an Event of Default exists,
without notice to Borrower or 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 (including Debt evidenced by certificates of
deposit whether matured or unmatured (but not including trust accounts)) and any
other Debt at any time held or owing by Lender or its Affiliates to or for the
credit or the account of Borrower against and on account of the Obligations of
Borrower arising under the Loan Documents to Lender, including all Loans and all
claims of any nature or description arising out of or in connection with this
Agreement, irrespective of whether or not (i) Lender shall have made any demand
hereunder or (ii) Lender shall have declared the principal of and interest on
the Loans and other amounts due hereunder to be due and payable as permitted by
this Agreement and even though such Obligations may be contingent or unmatured
or (iii) the Collateral for the Obligations is adequate.
11.5. REMEDIES CUMULATIVE; NO WAIVER.
------------------------------
11.5.1 All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of Borrower contained in this Agreement and
the other Loan Documents, or in any document referred to herein or contained in
any agreement supplementary hereto or in any schedule or in any Guaranty
Agreement given to Lender or contained in any other agreement between Lender and
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained.
11.5.2. The failure or delay of Lender to require strict performance
by Borrower of any provision of this Agreement or to exercise or enforce any
rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and all other Obligations owing or to become owing
from Borrower to Lender shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement or any other Loan Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument
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in writing specifying such suspension or waiver and is signed by a duly
authorized representative of Lender and directed to Borrower.
11.5.3. If Lender shall accept performance by Borrower, in whole or
in part, of any obligation that Borrower is required by any of the Loan
Documents to perform only when a Default or Event of Default exists, or if
Lender shall exercise any right or remedy under any of the Loan Documents that
may not be exercised other than when a Default or Event of Default exists,
Lender's acceptance of such performance by Borrower or Lender's exercise of any
such right or remedy shall not operate to waive any such Event of Default or to
preclude the exercise by Lender of any other right or remedy.
SECTION 12. MISCELLANEOUS
12.1. POWER OF ATTORNEY. Borrower hereby irrevocably designates, makes,
-----------------
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
12.1.1. At such time or times as Lender or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
12.1.2. At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory and any other
Collateral; (xi) make and adjust claims under policies of insurance; and (xii)
do all other acts and things necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement.
12.2. INDEMNITY. Borrower hereby agrees to indemnify and defend Lender
---------
and hold Lender harmless from and against any Claims against Lender as the
result of Borrower's failure to observe, perform or discharge any of Borrower's
duties hereunder. In addition, Borrower shall indemnify and defend Lender
against and save Lender harmless from all Claims of any Person arising out of,
related to, or with respect to any transactions entered into pursuant to this
Agreement or any of the other Loan Documents or Lender's Lien upon any of the
Collateral, excluding, however, Claims arising by reason of Lender's own gross
negligence
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or intentional misconduct. Without limiting the generality of the foregoing,
this indemnity shall extend to any Claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Additionally, if any Taxes (excluding
Taxes imposed upon or measured solely by the net income of Lender, but
including, any intangibles tax, stamp tax, recording tax or franchise tax) shall
be payable by Lender or Obligor on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any of the other
Loan Documents, or the creation of any of the Obligations hereunder, by reason
of any existing or hereafter enacted federal, state, foreign or local statute,
rule or regulation, Borrower will pay (or will promptly reimburse Lender for the
payment of) all such Taxes, including any interest and penalties thereon, and
will indemnify, defend and hold Lender harmless from and against all liability
in connection therewith. Notwithstanding any contrary provision in this
Agreement, the obligation of Borrower under this Section 12.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.
12.3. MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may not
-------------------------------------------
be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrower hereby consents to
Lender's participation, sale, assignment, transfer or other disposition, at any
time or times hereafter, of the Obligations, this Agreement and any of the other
Loan Documents, or of any portion hereof or thereof, including Lender's rights,
title, interests, remedies, powers, and duties hereunder or thereunder. In the
case of an assignment, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would if it were
"Lender" hereunder and Lender shall be relieved of all obligations hereunder
upon any such assignment. Borrower agrees that it will use its best efforts to
assist and cooperate with Lender in any manner reasonably requested by Lender to
effect the sale of participations in or assignments of any of the Loan Documents
or any portion thereof or interest therein, including assisting in the
preparation of appropriate disclosure documents. Borrower further agrees that
Lender may disclose credit information regarding Borrower and its Subsidiaries
to any potential participant or assignee.
12.4. SEVERABILITY. Wherever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and
----------------------
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 12.3
hereof.
12.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the Other
------------------------------------
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 4.2
hereof and except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
12.7. EXECUTION IN 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 and delivered shall
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be deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument.
12.8. NOTICE. All notices, requests and demands to or upon a party
------
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or 3 Business Days after
deposit in the U.S. mail, postage prepaid, or, in the case of facsimile
transmission, when received at the office where the noticed party's telecopier
is located, in each case addressed as follows:
If to Lender: Deutsche Financial Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, IX
Facsimile No.: 770.933.2993
Deutsche Financial Services Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: 314.523.3228
With a courtesy copy to:
-----------------------
Parker, Hudson, Rainer & ▇▇▇▇▇ LLP
1500 Marquis Two Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: 404.522.8409
If to Borrower: Premier Graphics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Fair
Facsimile No.: 901.685.3600
With a courtesy copy to:
-----------------------
Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Good, Esq.
Facsimile No.: 901.577.2303
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
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request or demand to or upon Lender pursuant to Section 4.1.1 or 5.2.2 hereof
shall not be effective until received by Lender. Any written notice or demand
that is not sent in
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conformity with the provisions hereof shall nevertheless be effective on the
date that such notice is actually received by the noticed party.
12.9. LENDER'S CONSENT. Whenever Lender's consent is required to be
----------------
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
12.10. CREDIT INQUIRIES. Borrower hereby authorizes and permits Lender
----------------
(but Lender shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning Borrower or any of its Subsidiaries.
12.11. TIME OF ESSENCE. Time is of the essence of this Agreement, the
---------------
Other Agreements and the Security Documents.
12.12. ENTIRE AGREEMENT; EXHIBITS AND SCHEDULES. This Agreement and the
----------------------------------------
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Each of the Exhibits and Schedules attached hereto
are incorporated into this Agreement and by this reference made a part hereof.
12.13. INTERPRETATION. No provision of this Agreement or any of the
--------------
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
12.14. CONFIDENTIALITY. Lender agrees to exercise reasonable efforts (and,
---------------
in any event, with at least the same degree of care as it ordinarily exercises
with respect to confidential information of its other customers) to keep any
confidential information delivered or made available by Borrower to it,
including information obtained by Lender by reason of a visit or investigation
by any Person contemplated in Section 9.1.1 hereof, confidential from any Person
other than individuals employed or retained by Lender who are or are expected to
become engaged in evaluating, approving, structuring, administering or otherwise
giving professional advice with respect to any of the Loans or Collateral;
provided, however, that nothing herein shall prevent Lender from disclosing such
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confidential information (i) to any party to this Agreement from time to time or
any Participant, (ii) pursuant the order of any court or administrative agency,
(iii) upon the request or demand of any regulatory agency or authority having
jurisdiction over Lender, (iv) which has been publicly disclosed other than by
an act or omission of Lender except as permitted herein, (v) to the extent
reasonably required in connection with any litigation (with respect to any of
the Loan Documents or any of the transactions contemplated thereby) to which
Lender or its Affiliates may be a party, (vi) to the extent reasonably required
in connection with the exercise of any remedies hereunder, (vii) to Lender's
Affiliates, Lender's legal counsel and independent auditors, and (viii) to any
actual or proposed Participant, assignee or other transferee of all or part of
Lender's rights hereunder so long as such transferee has agreed in writing to be
bound by the provisions of this Section.
12.15. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
-------------------------------
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA: PROVIDED, HOWEVER, THAT IF ANY
-------- -------
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA, THE
LAWS OF SUCH
-59-
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF GEORGIA. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER,
BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF ▇▇▇▇▇▇ COUNTY,
GEORGIA, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, SHALL HAVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
----- --- ----------
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
12.16. WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY
-------------------
APPLICABLE LAW, BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH LENDER
HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL; (II) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (III) NOTICE PRIOR TO TAKING POSSESSION
OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (IV)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF
ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER.
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
-60-
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, this Agreement has been duly executed in Atlanta,
Georgia, on the day and year specified at the beginning of this Agreement.
PREMIER GRAPHICS, INC.
("Borrower")
By: /s/ ▇▇▇▇▇ ▇. Fair
Name: ▇▇▇▇▇ ▇. Fair
Title: Secretary
ACCEPTED IN ATLANTA, GEORGIA:
DEUTSCHE FINANCIAL SERVICES
CORPORATION ("Lender")
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
LIBOR Lending Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
-61-
EXHIBIT A
---------
FORM OF REVOLVER NOTE
August 21, 1998
U.S. $15,000,000.00 Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, PREMIER GRAPHICS, INC. ("Borrower"), a
Delaware corporation, hereby unconditionally promises to pay to the order of
DEUTSCHE FINANCIAL SERVICES CORPORATION (herein, together with any subsequent
holder hereof, called the "Holder") the principal sum of $15,000,000 or such
lesser sum as may constitute the outstanding principal amount of all Revolver
Loans pursuant to the terms of the Loan Agreement (as defined below) on the date
on which such outstanding principal amounts become due and payable pursuant to
Section 4.3 of the Loan Agreement, in strict accordance with the terms thereof.
Borrower likewise unconditionally promises to pay to Holder interest from and
after the date hereof on the outstanding principal amount of Revolver Loans at
such interest rates, payable at such times, and computed in such manner as are
specified in the Loan Agreement, in strict accordance with the terms thereof.
This Revolver Note ("Note") is issued pursuant to, and is the "Note"
referred to in, the Loan and Security Agreement dated the date hereof (as the
same may be amended from time to time, the "Loan Agreement"), between Borrower
and Holder is and shall be entitled to all benefits thereof and of all Loan
Documents executed and delivered in connection therewith. All capitalized terms
used herein, unless otherwise defined herein, shall have the meanings ascribed
to such terms in the Loan Agreement.
The repayment of the principal balance of this Note is subject to the
provisions of Section 4.3.1 of the Loan Agreement. The entire unpaid principal
balance and all accrued interest on this Note shall be due and payable
immediately upon the termination of the Loan Agreement as set forth in Section
5.2.4 of the Loan Agreement.
All payments of principal and interest shall be made in Dollars in
immediately available funds as specified in the Loan Agreement.
Upon or after the occurrence of an Event of Default and for so long as such
Event of Default exists, the principal balance and all accrued interest of this
Note may be declared due and payable in the manner and with the effect provided
in the Loan Agreement, and the unpaid principal balance hereof shall bear
interest at the Default Rate as and when provided in the Loan Agreement.
Borrower agrees to pay, and save Holder harmless against, any liability for the
payment of, all costs and expenses, including, but not limited to, reasonable
attorneys' fees, if this Note is collected by or through an attorney-at-law.
All principal amounts of Revolver Loans made by Holder to Borrower pursuant
to the Loan Agreement, and all accrued and unpaid interest thereon, shall be
deemed outstanding under this Note and shall continue to be owing by Borrower
until paid in accordance with the terms of this Note and the Loan Agreement.
In no contingency or event whatsoever, whether by reason of advancement of
the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to
Holder for the use, forbearance or detention of money advanced hereunder exceed
the highest lawful rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto; and, in the event of any such payment
inadvertently paid by Borrower or inadvertently received by Holder, such excess
sum shall be, at Borrower's option, returned to Borrower
forthwith or credited as a payment of principal, but shall not be applied to the
payment of interest. It is the intent hereof that Borrower not pay or contract
to pay, and that Holder not receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by Borrower under Applicable Law.
Time is of the essence of this Note. To the fullest extent permitted by
Applicable Law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible each provision of this Note shall be interpreted in such
a manner as to be effective and valid under Applicable Law, but if any provision
of this Note shall be prohibited or invalid under Applicable Law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Holder in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Holder of any right or
remedy preclude any other right or remedy. Holder, at its option, may enforce
its rights against any Collateral securing this Note without Holder enforcing
its rights against any Borrower, any Guarantor of the indebtedness evidenced
hereby or any other property or indebtedness due or to become due to Borrower.
Borrower agrees that, without releasing or impairing Borrower's liability
hereunder, Holder may at any time release, surrender, substitute or exchange any
Collateral securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
The rights of Holder and obligations of Borrower hereunder shall be
construed in accordance with and governed by the laws (without giving effect to
the conflict of law principles thereof) of the State of Georgia. This Note is
intended to take effect as an instrument under seal under Georgia law.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed under seal
and delivered by its duly authorized officers on the date first above written.
BORROWER:
--------
ATTEST: PREMIER GRAPHICS, INC.
_________________________ By:____________________________________
Secretary Title:______________________________
[CORPORATE SEAL]
-2-
EXHIBIT B
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
__________________, 19__
Deutsche Financial Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned, the chief financial officer of Premier Graphics, Inc., a
Delaware corporation ("Borrower"), gives this certificate to Deutsche Financial
Services Corporation ("Lender") in accordance with the requirements of Section
9.1.3 of that certain Loan and Security Agreement dated August 21, 1998, between
Borrower and Lender ("Loan Agreement"). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of
income of Parent for the [fiscal year] [monthly period] ending
__________________, 19__, copies of which are attached hereto, I hereby certify
that:
(a) EBITDA is $_________;
(b) Fixed Charge Coverage Ratio is ____ to 1;
(c) Leverage Ratio is ____ to 1;
(d) Capital Expenditures during the period and for the fiscal year to
date total $__________ and $__________, respectively.
2. No default exists on the date hereof under any lease covering
business premises leased by Borrower, other than:
_________________________________ [if none, so state]; and
3. No Default exists on the date hereof, other than: _____________
________________________________________________ [if none, so
state]; and
4. No Event of Default exists on the date hereof, other than________
____________________________________________________ [if none, so state].
5. As of the date hereof, Borrower is current in its payment of all
accrued rent and other charges to Persons who own or lease any premises where
any of the Collateral is located, and there are no pending disputes or claims
regarding Borrower's failure to pay or delay in payment of any such rent or
other charges.
Very truly yours,
-------------------------------
Chief Financial Officer
-2-
EXHIBIT C
---------
FORM OF NOTICE OF BORROWING
Date ______________, ______
Deutsche Financial Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Officer
---------
Re: Loan and Security Agreement dated August 21, 1998, by and between
Premier Graphics, Inc. and Deutsche Financial Services Corporation (as at
any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Borrowing is delivered to you pursuant to Section 3.1.1 of
the Loan Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Loan Agreement.
Borrower hereby requests a Revolver Loan in the aggregate principal amount of
$______________ to be made on _____________, _____, and to consist of:
Check as applicable: [ ] Prime Rate Loans in the aggregate principal
amount of $_____________
[ ] LIBOR Loans in the aggregate principal amount of $___________,
with Interest Periods as follows:
(i) As to $_____________, an Interest Period of ______ month(s);
(ii) As to $_____________, an Interest Period of ______ months;
(iii) As to $_____________, an Interest Period of ______ months.
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and Borrower hereby certifies that no
Default or Event of Default exists on the date hereof.
Borrower has caused this Notice of Borrowing to be executed and delivered
by its duly authorized representative, this ______ day of _____________, _____.
________________________________________
By:____________________________________
Title:_______________________________
EXHIBIT D
---------
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date ______________,______
Deutsche Financial Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Officer
---------
Re: Loan and Security Agreement dated August 21, 1998, by and between
Premier Graphics, Inc. and Deutsche Financial Services Corporation (as at
any time amended, the "Loan Agreement")
Gentlemen:
This Notice of Conversion/Continuation is delivered to you pursuant to
Section 2.1.2 of the Loan Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings attributable thereto in
the Loan Agreement. Borrower hereby gives notice of its request as follows:
Check as applicable:
[ ] A conversion of Loans from one Type to another, as follows:
(i) The requested date of the proposed conversion is ______________,
19__ (the "Conversion Date");
(ii) The Type of Loans to be converted pursuant hereto are presently
__________________ [select either LIBOR Loans or Prime Rate Loans] in the
principal amount of $_____________ outstanding as of the Conversion Date;
(iii) The portion of the aforesaid Loans to be converted on the
Conversion Date is $_____________ (the "Conversion Amount");
(iv) The Conversion Amount is to be converted into a ____________
[select either a LIBOR Loan or a Prime Rate Loan] (the "Converted Loan") on
the Conversion Date.
(v) [In the event Borrower selects a LIBOR Loan:] Borrower hereby
requests that the Interest Period for such Converted Loan be for a duration
of _____ [insert length of Interest Period].
[ ] A continuation of LIBOR Loans for new Interest Period, as follows:
(i) The requested date of the proposed continuation is
_______________, 19__ (the "Continuation Date");
(ii) The aggregate amount of the LIBOR Loans subject to such
continuation is $__________________;
(iii) The duration of the selected Interest Period for the LIBOR
Loans which are the subject of such continuation is: _____________ [select
duration of applicable Interest Period];
Borrower hereby ratifies and reaffirms all of its liabilities and
obligations under the Loan Documents and certifies that no Default or Event of
Default exists on the date hereof.
Borrower has caused this Notice of Conversion/Continuation to be executed
and delivered by its duly authorized representative, this _______ day of
______________, 19__.
________________________________
By:____________________________________
Title:______________________________
-2-
EXHIBIT E
LETTER OF CREDIT PROCUREMENT REQUEST
Deutsche Financial Services Corporation
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office Head
This Letter of Credit Procurement Request is delivered to you pursuant to
the Loan and Security Agreement, dated August 21, 1998, among Premier Graphics,
Inc., a Delaware corporation (the "Borrower"), and Deutsche Financial Services
Corporation (the "Lender"), as the same may be amended, supplemented, restated
or otherwise modified from time to time (the "Loan Agreement"). Unless
otherwise defined herein, terms used herein have the meanings assigned to them
in the Loan Agreement.
Borrower hereby requests Lender to join in the execution of an LC
Application for the issuance of a Letter of Credit by Bank, as follows,
(1) Amount of Letter of Credit: $_____________________
(2) Issuance Date: _____________________
(3) Beneficiary's Name: _____________________
(4) Beneficiary's Address: _____________________
_____________________
_____________________
_____________________
_____________________
(5) Expiry Date: _____________________
(6) Draw Conditions: _____________________
_____________________
_____________________
_____________________
(7) Single draw [ ] or Multiple draw [ ]
(8) Purpose of Letter of Credit:
______________________
______________________
______________________
______________________
______________________
Attached hereto is the Bank's form of LC Application, completed with the
details of the Letter of Credit requested herein.
Borrower hereby certifies that each of the LC Conditions is now, and will
on the date of issuance of the Letter of Credit, be satisfied in all respects
and that no Default or Event of Default exists. Borrower hereby ratifies and
reaffirms all of the Loan Documents and Obligations arising thereunder.
IN WITNESS WHEREOF, Borrower has caused this Letter of Credit Procurement
Request to be executed and delivered by its duly authorized officer, this ___
day of _________________, ____.
PREMIER GRAPHICS, INC.
("Borrower")
By: ____________________________________
Name: _________________________________
Title: __________________________________
-2-
EXHIBIT F
---------
OPINION LETTER REQUIREMENTS
With respect to Borrower and each Guarantor, Borrowers' counsel's opinion
letter should address the following in a manner satisfactory to Lender:
1. Borrower's and each Guarantor's due incorporation, valid existence, good
standing and qualification as a foreign corporation.
2. Corporate name of Borrower and each Guarantor.
3. Borrower and each Guarantor's corporate power to execute, deliver and
perform the Loan Documents to which it is a party.
4. Borrower and each Guarantor's due authorization to execute, deliver and
perform the Loan Documents, and their due execution and delivery thereof.
5. Borrower and each Guarantor's execution, delivery and performance of the
Loan Documents do not (a) violate the articles or bylaws, (b) cause a breach or
default under any agreement, (c) violate any law, regulation, judgment or order,
or (d) result in or require a Lien or other encumbrance other than in favor of
Lender.
7. The Loan Documents as legal, valid and binding obligations, enforceable
against all Obligors in accordance with their respective terms, subject to
standard bankruptcy and other creditor's rights and equity exceptions.
8. Counsel's lack of knowledge of litigation or other proceedings, except as
disclosed in Loan Agreement.
9. Absence of any registration, filing, consent or approval requirement of
governmental authority in connection with the execution, delivery and
performance of the Loan Documents.
10. Non-violation by the Loan Documents of any Applicable Laws relating to
interest or usury.
11. Due payment of all applicable taxes and fees required to be paid in
connection with the Loans, the Loan Documents, UCC-1 financing statements and
other Security Documents.
12. Creation in favor of Lender of a duly perfected security interest in the
Collateral described in the Security Documents.
13. Absence of violation of Section 7 of the Securities Exchange Act of 1934,
as amended, any regulations issued pursuant thereto, or regulations G, T, U and
X of the Board of Governors of the Federal Reserve System, by the transactions
contemplated by the Loan Documents.
14. Absence of requirement under the laws of applicable states for Lender to
qualify in such states to enter into or enforce the provisions of the Loan
Documents.
SCHEDULE 7.1.1
BUSINESS LOCATIONS
1. Borrower currently has the following business locations, and no others:
Chief Executive Office:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Other Locations:
1. B&M Division (Lease)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. Lithograph Printing Company (Lease)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Argus Press Division (Lease)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
4. Phoenix Division (Lease)
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
5. King Mailing Division (Lease)
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
6. ▇▇▇▇▇ Printing Company, Inc. Division (Lease)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
7. ▇▇▇▇▇▇▇▇-Arkansas Division (Lease)
Lyon Building
401 W. Capitol
Little Rock, Arkansas
8. ▇▇▇▇▇▇▇▇-Mississippi Division (Lease)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ at ▇-▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
9. ▇▇▇▇▇▇▇▇ Division
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
10. ▇▇▇▇▇▇▇▇ Division (Warehouse)
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. ▇▇▇▇▇▇▇▇ Division
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
12. ▇▇▇▇▇▇▇▇▇▇ Companies Division - Iowa
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
13. ▇▇▇▇▇▇▇▇▇▇ Division - Missouri
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
14. ▇▇▇▇▇▇▇▇▇ Lithographers
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. Borrower maintains its books and records relating to Accounts and General
Intangibles at:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Borrower has had no office, place of business or agent for process located
in any county other than as set forth above, except:
None
4. Each Subsidiary currently has the following business locations, and no
others:
Premier Graphics, Inc. has no subsidiaries
Chief Executive Office: Not Applicable
Other Locations: Not Applicable
5. Each Subsidiary maintains its books and records relating to Accounts and
General Intangibles at:
-2-
Premier Graphics, Inc. has no subsidiaries
6. Each Subsidiary has had no office, place of business or agent for process
located in any county other than as set forth above, except:
Premier Graphics, Inc. has no subsidiaries
7. The following bailees, warehouseman, similar parties and consignees hold
inventory of Borrower or one of its Subsidiaries:
=============================================================================================
Name and Address of Party Nature of Relationship Amount of Inventory Owner of Inventory
---------------------------------------------------------------------------------------------
Not Applicable
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
=============================================================================================
-3-
SCHEDULE 8.1.1
JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity Jurisdictions
-------------- -------------
Premier Graphics, Inc. Delaware (Domestic)
Arkansas
Georgia
Illinois
Iowa
Mississippi
Missouri
Tennessee
[Premier Graphics, Inc. has no subsidiaries]
SCHEDULE 8.1.4
CAPITAL STRUCTURE
1. The classes and number of authorized shares of Borrower and each Subsidiary
and the record owner of such shares are as follows:
Borrower:
--------
==========================================================================================
Number of Shares Number of Shares
Class of Stock Issued and Outstanding Record Owners Authorized but Unissued
------------------------------------------------------------------------------------------
Common 100 Master Graphics, Inc. 900
------------------------------------------------------------------------------------------
==========================================================================================
Subsidiaries:
------------
==========================================================================================
Number of Shares Number of Shares
Class of Stock Issued and Outstanding Record Owners Authorized but Unissued
------------------------------------------------------------------------------------------
Not Applicable
------------------------------------------------------------------------------------------
==========================================================================================
2. The number, nature and holder of all other outstanding Securities of
Borrower and each Subsidiary are as follows:
None
3. The correct name and jurisdiction of incorporation of each Subsidiary of
Borrower and the percentage of its issued and outstanding shares owned by
Borrower are as follows:
==========================================================================================
Percentage of Shares
Name Jurisdiction of Incorporation Owned by Borrower
------------------------------------------------------------------------------------------
Premier Graphics, Inc. has no
subsidiaries
------------------------------------------------------------------------------------------
==========================================================================================
4. The name of each of Borrower's corporate or joint venture Affiliates and
the nature of the affiliation are as follows:
None
SCHEDULE 8.1.5
CORPORATE NAMES
1. Borrower's correct corporate name, as registered with the Secretary of
State of the State of Delaware, is:
Premier Graphics, Inc.
2. In the conduct of its business, Borrower has used the following names:
Premier Graphics of Tennessee, Inc.
Lithograph Printing Company of Memphis
▇▇▇▇▇▇▇▇▇ Lithographers
B&M Printing
The Argus Press
▇▇▇▇▇ Printing Company, Inc.
▇▇▇▇▇ Colourworks, Inc.
Phoenix Communications
King Mailing Services
▇▇▇▇▇▇▇▇ Printing Company
▇▇▇▇▇▇▇▇ Brothers
▇▇▇▇▇▇▇▇▇▇ Companies
3. Each Subsidiaries' correct corporate name, as registered with the Secretary
of State of the State of its incorporation, is:
Not Applicable
4. In the conduct of its business, each Subsidiary has used the following
names:
Not Applicable
SCHEDULE 8.1.13
TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
Subsidiary Number
---------- ------
NOT APPLICABLE
Premier Graphics, Inc. has no subsidiaries
SCHEDULE 8.1.15
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Borrower's and its Subsidiaries' patents:
==========================================================================
Status in Federal Registration Registration
Patent Owner Patent Office Number Date
--------------------------------------------------------------------------
None
--------------------------------------------------------------------------
==========================================================================
2. Borrower's and its Subsidiaries' trademarks:
=====================================================================================
Status in Federal Registration Registration
Trademark Owner Trademark Office Number Date
-------------------------------------------------------------------------------------
Miscellaneous Premier Registered 1194092 April 20, 1982
Design Graphics,
Inc.
-------------------------------------------------------------------------------------
=====================================================================================
3. Borrower's and its Subsidiaries' copyrights:
=============================================================================
Status in Federal Registration Registration
Copyrights Owner Copyright Office Number Date
-----------------------------------------------------------------------------
None
-----------------------------------------------------------------------------
=============================================================================
4. Borrower's and its Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local jurisdictions):
==================================================================
Name of License Nature of License Licensor Term of License
------------------------------------------------------------------
None
------------------------------------------------------------------
==================================================================
SCHEDULE 8.1.18
CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBTS
Contracts that restrict the right of Borrower to incur Debt:
================================================================================================
Title of Contract Identity of Parties Nature of Restriction Term of Contract
------------------------------------------------------------------------------------------------
Loan and Security Premier Graphics, Inc., Prohibition against August, 2003
Agreement Master Graphics, Inc. and incurring debt other than
General Electrics Capital itemized types of debt and
Corporation, as Agent listed debt including debt
to Deutsche Financial
Services Corporation
------------------------------------------------------------------------------------------------
================================================================================================
NOTE: THIS SCHEDULE ASSUMES THAT THE GECC LOAN MODIFICATION WILL CLOSE
SIMULTANEOUSLY WITH THE DEUTSCHE CLOSING.
SCHEDULE 8.1.19
LITIGATION
1. Actions, suits, proceedings and investigations pending against Borrower or
any Subsidiary:
=============================================================================================================
Title of Action Nature of Action Complaining Parties Jurisdiction or Tribunal
-------------------------------------------------------------------------------------------------------------
None other than those
which occur during the
normal course of
business and are handled
and covered by
Borrower's insurance
carrier and
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Plaintiff The nature of the action ▇▇▇▇▇ ▇▇▇▇▇▇▇, Plaintiff Pulaski County, Iowa
▇. ▇▇▇▇▇▇▇▇▇▇ Printing is slander. The Company
Company and ▇▇▇▇▇▇▇ believes that it is not
Doll in this Individual material.
Capacity and his Officer
Capacity
=============================================================================================================
2. The only threatened actions, suits, proceedings or investigations of which
Borrower or any Subsidiary is aware are as follows:
None
SCHEDULE 8.1.21
CAPITALIZED LEASES
Borrower and its Subsidiaries have the following capitalized leases:
=================================================================================================
Lessee Lessor Term of Lease Property Covered
-------------------------------------------------------------------------------------------------
Premier Graphics, Inc. - American ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Division Trust Company of Chicago September, Binder
2002 Equipment
-------------------------------------------------------------------------------------------------
=================================================================================================
OPERATING LEASES
Borrower and its Subsidiaries have the following operating leases:
=======================================================================================================
Lessee Lessor Term of Lease Property Covered
-------------------------------------------------------------------------------------------------------
Master Graphics, Inc. Crescent Center 60 Months - February ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
(Corporate Offices of Limited 28, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Parent Company of Partnership 38119
Premier Graphics, Inc.)
-------------------------------------------------------------------------------------------------------
Premier Graphics, Inc. ▇▇▇▇ ▇. ▇▇▇▇▇▇ 10 Years - November 30, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
-------------------------------------------------------------------------------------------------------
Premier Graphics, Inc. Graphic Development 10 Years - July 31, 2004 4222 and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Company, Inc. Memphis, Tennessee
Premier Graphics, Inc. LaSalle National Bank 10 Years - December 31, 7440 Natchez
2002 ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Premier Graphics, Inc. RFTA Associates, LTD 6 Years - April 30, 2001 ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Premier Graphics, Inc. RSH Properties, LLC 5 Years - October 31, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Premier Graphics, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 10 Years - December 5, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
2007 ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Premier Graphics, Inc. Arrowhead Real Estate, 10 Years - February 28, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ at I-55 N
LLC 2008 Ridgeland, Mississippi
39158
=======================================================================================================
Lessee Lessor Term of Lease Property Covered
Premier Graphics, Inc. FL Building Corp. Year to Year ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Premier Graphics, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 10 Years - March 31, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
=======================================================================================================
SCHEDULE 8.1.22
PENSION PLANS
Borrower and its Subsidiaries have the following Plans:
==================================================================================
Party Type of Plan
----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Brothers, Inc. Pension Plan
----------------------------------------------------------------------------------
▇▇▇▇▇ Printing Division GCIU Employer Retirement Fund (multiemployer plan
covering certain employees of ▇▇▇▇▇ Printing Division)
----------------------------------------------------------------------------------
Subsidiaries - None
----------------------------------------------------------------------------------
==================================================================================
SCHEDULE 8.1.24
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements:
=====================================================================
Type of Agreement Parties Term of Agreement
---------------------------------------------------------------------
▇▇▇▇▇ Printing Division Employees Collective Bargaining Agreement
---------------------------------------------------------------------
=====================================================================
2. Material grievances, disputes of controversies with employees are as
follows:
===============================================================
Parties Involved Nature of Grievance, Dispute or Controversy
---------------------------------------------------------------
None
---------------------------------------------------------------
===============================================================
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows:
====================================
Parties Involved Nature of Matter
------------------------------------
None
------------------------------------
====================================
SCHEDULE 9.2.5
PERMITTED LIENS
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
1. Secured Party: Accounts, Chattel Paper, Contracts,
a) GECC Documents, General Intangibles, Instruments,
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Inventory, Equipment, Intellectual Property,
Cockeysville ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Investment Property
b) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
c) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇: Premier Graphics, Inc.; Premier Graphics of
Tennessee, Inc.; Master Graphics, Inc.; Master Printing;
B&M Printing, Inc.; B&M Printing; Lithograph Printing
Company of Memphis, Inc.; Lithograph Printing Company;
▇▇▇▇▇▇▇▇▇ Lithographers, Inc.; ▇▇▇▇▇▇▇▇▇▇ Printing, Inc.;
▇▇▇▇▇▇▇▇ Brothers, Inc.; ▇▇▇▇▇▇▇▇ Printing Company;
Digital Spectrum, LLC; ▇▇▇▇▇▇▇▇▇▇ Companies; ▇▇▇▇▇▇▇▇▇▇
Printing; The Argus Press, Inc.; The Argus Press; Argus;
Phoenix Communications, Inc.; King Mailing Services,
Inc.; ▇▇▇▇▇ Printing Company, Inc.; ▇▇▇▇▇ Colorworks;
▇▇▇▇▇ Colourworks, Inc.; ▇▇▇▇▇ Colourworks
#972047378/June 17, 1997
Tennessee Secretary of State
------------------------------------------------------------------------------------------------------------------------
2. Secured Party: Accounts, Chattel Paper, Contracts, Documents,
a) GECC General Intangibles, Instruments, Inventory,
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Equipment, Intellectual Property, Investment
Cockeysville ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Property
b) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
c) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇: Premier Graphics, Inc.; Premier Graphics of
Tennessee, Inc.; Master Graphics, Inc.; Master Printing;
B&M Printing, Inc.; B&M Printing; Lithograph Printing
Company of Memphis, Inc.; Lithograph Printing Company;
▇▇▇▇▇▇▇▇▇ Lithographers, Inc.; ▇▇▇▇▇▇▇▇▇▇ Printing, Inc.;
▇▇▇▇▇▇▇▇ Brothers, Inc.; ▇▇▇▇▇▇▇▇ Printing Company;
Digital Spectrum, LLC; ▇▇▇▇▇▇▇▇▇▇ Companies; ▇▇▇▇▇▇▇▇▇▇
Printing; The Argus Press, Inc.; The Argus Press; Argus;
Phoenix Communications, Inc.; King Mailing Services,
Inc.; ▇▇▇▇▇ Printing Company, Inc.; ▇▇▇▇▇ Colorworks;
▇▇▇▇▇ Colourworks, Inc.; ▇▇▇▇▇ Colourworks
#GR9375/June 18, 1997
Shelby County, Tennessee
3. Holder: GECC Open-end leasehold Deed of Trust with Security
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Agreement, Financing Statement for Fixture
Cockeysville ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Filing and Assignment of Rents
Grantor: Premier Graphics, Inc.
#GS0900/June 23, 1997
Shelby County, Tennessee
4. Secured Party: Accounts, Chattel Paper, Contracts, Documents,
a) GECC General Intangibles, Instruments, Inventory,
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Equipment, Intellectual Property, Investment
Cockeysville ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Property
b) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
c) GECC, (Itself and as Agent)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇: Premier Graphics, Inc.; Premier Graphics of
Tennessee, Inc.; Master Graphics, Inc.; Master Printing;
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
B&M Printing, Inc.; B&M Printing; Lithograph Printing
Company of Memphis, Inc.; Lithograph Printing Company;
▇▇▇▇▇▇▇▇▇ Lithographers, Inc.; ▇▇▇▇▇▇▇▇▇▇ Printing, Inc.;
▇▇▇▇▇▇▇▇ Brothers, Inc.; ▇▇▇▇▇▇▇▇ Printing Company;
Digital Spectrum, LLC; ▇▇▇▇▇▇▇▇▇▇ Companies; ▇▇▇▇▇▇▇▇▇▇
Printing; The Argus Press, Inc.; The Argus Press; Argus;
Phoenix Communications, Inc.; King Mailing Services,
Inc.; ▇▇▇▇▇ Printing Company, Inc.; ▇▇▇▇▇ Colorworks;
▇▇▇▇▇ Colourworks, Inc.; ▇▇▇▇▇ Colourworks
#0441997012462/December 11, 1997
Dekalb County, Georgia
5. Secured Party: Polychrome Corporation Equipment (PMPC-32-XT 32" Automatic Plate
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (2))
Ft. ▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: Phoenix Communications
#060199605424/March 20, 1996
▇▇▇▇▇▇ County, Georgia
6. Secured Party: Polychrome Corporation Equipment (Kodak Digital Approval Proofing
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇)
▇▇. ▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: Phoenix Communications
#060199607178/April 15, 1996
▇▇▇▇▇▇ County, Georgia
7. Secured Party: AT&T Capital Leasing Services Inc. True Lease (Equipment). Notice Purposes Only.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: King Mailing Services, Inc.
#007-97-007422/October 17, 1997
▇▇▇▇▇▇ County, Georgia
8. Secured Party: AT&T Capital Leasing Services Inc. True Lease (Equipment). Notice Purposes Only.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: King Mailing Services, Inc.
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
#007-97-006526/September 12, 1997
▇▇▇▇▇▇ County, Georgia
9. Secured Party: American National Bank and Trust Equipment
Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#2099322/February 3, 1986
Illinois Secretary of State
10. Secured Party: American National Bank and Trust Equipment
Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#2257958/March 23, 1987
Illinois Secretary of State
11. Secured Party: American National Bank and Trust Equipment
Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#2529699/January 31, 1989
Illinois Secretary of State
12. Secured Party: American National Bank and Trust Equipment
Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#2584865/June 9, 1989
Illinois Secretary of State
13. Secured Party: American National Bank and Trust Equipment
Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
Debtor: The Argus Press, Inc.
#2612095/August 21, 1989
Illinois Secretary of State
14. Secured Party: Graphic Color Corporation Equipment
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#3297067/April 18, 1994 (Copy hard to read - Compare
filing information with original copy)
Illinois Secretary of State
15. Consignor: ▇▇▇▇ & ▇▇▇▇▇▇ Printing Ink Consignment of Inventory
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Consignee: The Argus Press, Inc.
#3491984/January 11, 1996
Illinois Secretary of State
16. Consignor: ▇▇▇▇ & ▇▇▇▇▇▇ Printing Ink Consignment of Equipment
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Consignee: The Argus Press, Inc.
#3491985/January 11, 1996
Illinois Secretary of State
17. Consignor: D.S. America, Inc. Equipment
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Consignee: The Argus Press, Inc.
#3552091/June 11, 1998
(Copy hard to read - Compare filing information with
original copy)
Illinois Secretary of State
18. Secured Party: American National Bank & Trust Equipment Lease
Company of Chicago
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: The Argus Press, Inc.
#3574723/August 6, 1996
Illinois Secretary of State
19. Secured Party: Accounts, Chattel Paper, Contracts, Documents,
GECC General Intangibles, Instruments, Inventory,
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ Equipment, Intellectual Property, Investment
Cockeysville ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Property
Debtors: Premier Graphics, Inc.; Premier Graphics of
Tennessee, Inc.; Master Graphics, Inc.; Master Printing;
B&M Printing, Inc.; B&M Printing; Lithograph Printing
Company of Memphis, Inc.; Lithograph Printing Company;
▇▇▇▇▇▇▇▇▇ Lithographers, Inc.; ▇▇▇▇▇▇▇▇▇▇ Printing, Inc.;
▇▇▇▇▇▇▇▇ Brothers, Inc.; ▇▇▇▇▇▇▇▇ Printing Company;
Digital Spectrum, LLC; ▇▇▇▇▇▇▇▇▇▇ Companies; ▇▇▇▇▇▇▇▇▇▇
Printing; The Argus Press, Inc.; The Argus Press; Argus;
Phoenix Communications, Inc.; King Mailing Services,
Inc.; ▇▇▇▇▇ Printing Company, Inc.; ▇▇▇▇▇ Colorworks;
▇▇▇▇▇ Colourworks, Inc.; ▇▇▇▇▇ Colourworks
#3738694/September 11, 1997
Illinois Secretary of State
29. Secured Party: Full Photo Film, USA, Inc. Equipment
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: Argus Press, Inc.
#3836507/April 20, 1998
Illinois Secretary of State
30. Secured Party: American National Bank & Trust Equipment Lease - Notice Purposes Only
Company of Chicago
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Equipment Leasing Department,
Detroit, MI 48226
Debtor: Premier Graphics, Inc.
========================================================================================================================
Debtor/Secured Party Nature of Lien
------------------------------------------------------------------------------------------------------------------------
#3778533/December 23, 1997
Illinois Secretary of State
31. Lessor: AT&T Credit Corporation Equipment Lease
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Debtor: Premier Graphics, Inc.
#3801337/February 13, 1998
Illinois Secretary of State
32. GECC various mortgage liens, security title and
assignments of rent and leases in respect of real
Property of Borrower
========================================================================================================================