FLEET NATIONAL BANK
1999 Amended and Restated
Commercial Loan Agreement
THIS 1999 AMENDED AND RESTATED COMMERCIAL LOAN AGREEMENT ("Agreement"),
dated as of November 15, 1999, between FLEET NATIONAL BANK (the "Bank"), having
an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and SWISS ARMY
BRANDS, INC. (the "Borrower"), having its chief executive office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
This Agreement constitutes the amendment and restatement of that certain
1998 Amended and Restated Commercial Revolving Line of Credit Agreement between
the Borrower and the Lender dated as of September 30, 1998, as modified by a
First Modification to 1998 Commercial Revolving Line of Credit Agreement dated
as of April 22, 1999, a letter agreement dated as of August 6, 1999, a Second
Modification to 1998 Commercial Revolving Line of Credit Agreement dated as of
September 17, 1999, and a letter agreement dated October 15, 1999 (collectively,
the "1998 Loan Agreement, as modified").
W I T N E S S E T H:
Section 1. Definitions
Unless otherwise defined or specified herein, all accounting terms shall be
construed and all accounting determinations shall be made in accordance with
GAAP.
Account means accounts, chattel paper and instruments as those terms are
defined in the Code, whether now owned or hereafter acquired by the Borrower.
Account Debtor means any Person who is or may become obligated to Borrower
under or on account of an Account.
Advance means an advance of funds to the Borrower by the Bank pursuant to
this Agreement under the Line of Credit or a reborrowing by the Borrower of an
outstanding amount under the Line of Credit, which shall bear interest at the
Base Rate, the LIBOR Rate or the Cost of Funds Rate.
Affiliate means any person or corporation which directly or indirectly
controls, or is controlled by, or is under common control with the Borrower.
Agreement means this 1999 Amended and Restated Commercial Loan Agreement.
Applicable Interest Period means the Interest Period selected by the
Borrower pursuant to this Agreement.
Base Rate Advance means an Advance that bears interest at a rate per annum
equal to the Base Rate.
Base Rate means the variable per annum rate of interest so designated by
the Bank from time to time as its Base Rate. The Base Rate is a reference rate
and does not necessarily represent the lowest or best rate being charged to any
customer.
Borrowing Base means seventy-five percent (75%) of the face value of the
Eligible Accounts plus twenty five percent (25%) of the value of the Eligible
Inventory (determined according to the lower of market value or cost on a last
in first out basis) minus the then currently outstanding balance under the Term
Loan.
Borrowing Base Certificate means a form for reporting the Borrowing Base a
specimen of which is attached hereto as Exhibit 1 or such other form as the Bank
may require from time to time.
Borrowing Date means the date on which the Bank shall make an Advance
pursuant to the terms of this Agreement.
Business Day means in respect of any date that is specified in this
Agreement or the Notes to be subject to adjustment in accordance with the
Modified Business Day Convention, a day on which commercial banks settle
payments in (i) New York or London if the payment obligation is calculated by
reference to LIBOR, or (ii) Connecticut, if the payment obligation is calculated
by reference to any Base Rate.
Capital Assets means assets that in accordance with GAAP are required or
permitted to be depreciated or amortized on Borrower's balance sheet.
Capital Leases means capital leases, conditional sales contracts and other
title retention agreements relating to the purchase or acquisition of Capital
Assets.
Code means the Uniform Commercial Code in effect in Connecticut.
Control shall be deemed to exist if any Person shall have possession,
directly or indirectly, of the power to direct the management or policies of the
Borrower or any Person deemed to be an Affiliate of the Borrower, and shall be
deemed to include any holder of 10% or more of any stock or other interest in
the Borrower or in any Person deemed to be an Affiliate of the Borrower, whether
such holding is direct or indirect.
Cost of Funds means the per annum rate of interest which Bank is required
to pay, or is offering to pay, for wholesale liabilities, adjusted for reserve
requirements and such other requirements as may be imposed by federal, state or
local government and regulatory agencies, as determined by Fleet Treasury Group.
Cost of Funds Advance means an Advance that bears interest at a rate per
annum equal to the Cost of Funds Rate.
Cost of Funds Rate Loan shall mean a Cost of Funds Advance or the Term Loan
bearing interest at the Term Loan Cost of Funds Rate.
Cost of Funds Rate means an interest rate per annum equal at all times
during an Interest Period to the aggregate of (i) Cost of Funds and (ii) the
Interest Rate Margin.
Current Maturity of Long-Term Debt ("CMLTD") means the current maturity of
long-term Indebtedness paid during the applicable period, including, but not
limited to, amounts required to be paid during such period under Capital Leases.
Current Ratio means the ratio of Total Current Assets to Total Current
Liabilities.
Dividends means, for the applicable period, the aggregate of all amounts
paid or payable as dividends, with respect to Borrower's shares of stock,
whether now or hereafter outstanding.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
means, for the applicable period, income from continuing operations, excluding
the effect of any non-cash reductions in the value of investments on the
Borrower's balance sheet, before the payment of interest and taxes plus
depreciation and amortization, all as determined in accordance with GAAP.
Eligible Accounts shall be determined by the Bank, upon delivery to Bank of
a Borrowing Base Certificate, in the reasonable exercise of its discretion, as
to which Accounts listed thereon shall be deemed to be "Eligible Accounts". In
making this determination, Bank will consider, but shall not be limited to, the
following criteria:
(A) The goods or services giving rise to such Account have been shipped or
delivered to or performed for an Account Debtor (i) on an absolute sale basis
and not on consignment, on approval or on a sale-or-return basis or subject to
any other repurchase or return agreement, (ii) on an open account basis, (iii)
no material part of the subject goods or services has been returned, rejected,
lost or damaged, (iv) the Account is not evidenced by chattel paper or an
instrument of any kind, and (v) the Account Debtor is not insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind;
(B) If the Account Debtor is located outside the United States, (i) the
subject goods shall have been shipped or the services rendered after receipt, by
Borrower from the Account Debtor, of an irrevocable letter of credit, which
letter of credit shall have been confirmed by a financial institution acceptable
to Bank and shall be in form and substance acceptable to Bank and shall be
transferred, assigned or otherwise made payable to Bank in form and substance
satisfactory to Bank, and (ii) the Account shall be payable in the full amount
of the face value of the Account in United States dollars;
(C) The Account is a valid, legally enforceable obligation of the Account
Debtor thereunder and is not subject to any offset or other defense on the part
of such Account Debtor or to any claim on the part of such Account Debtor
denying liability thereunder; provided, however, that, if it is subject to any
such offset, defense or claim, it shall be ineligible only to the extent of such
offset, defense or claim;
(D) The Account is subject to a duly perfected first priority security
interest in favor of the Bank;
(E) The Account is subject to no lien or security interest whatsoever,
except for the security interest of Bank hereunder and liens or security
interests which have been expressly subordinated to the security interest of
Bank in form and substance satisfactory to Bank;
(F) The Account is evidenced by an invoice or other proof of delivery in
form acceptable to Bank;
(G) The Account has not remained unpaid for a period exceeding ninety (90)
days after the due date;
(H) The Account is not owing from an Account Debtor which is located in the
State of New Jersey or the State of Minnesota unless Borrower has filed a Notice
of Business Activities Report with the New Jersey Division of Taxation or the
applicable Minnesota agency, as appropriate, for the then current year;
(I) The Account does not arise out of transactions with an employee,
officer, agent, director, stockholder, Affiliate, or Subsidiary of Borrower;
(J) The Account does not arise out of a transaction with the United States
or any department or agency thereof, unless assignment of which to Bank has been
properly filed in accordance with the Federal Assignment of Claims Act; and
(K) The Account is not an Account which is, or may become, a contra
account.
Eligible Inventory shall be determined by the Bank, upon delivery to Bank
of a Borrowing Base Certificate, in the reasonable exercise of its discretion,
as to what Inventory listed thereon shall be deemed to be "Eligible Inventory."
In making this determination, Bank will consider, but shall not be limited to,
the following criteria:
(A) The Inventory consists of finished goods that are useable and saleable
by the Borrower or Bear Cutlery, Inc. in the ordinary course of business;
(B) The Inventory complies with all applicable laws, regulations and rules;
(C) The Inventory is located in the United States or the province of
Ontario, Canada;
(D) The Inventory is subject to a duly perfected first priority security
interest in favor of the Bank; and
(E) The Inventory is subject to no lien or security interest whatsoever,
except for the security interest of Bank hereunder and liens or security
interests which have been expressly subordinated to the security interest of
Bank in form and substance satisfactory to Bank.
Events of Default shall have the meaning given such term in Section 8 of
this Agreement.
Eurocurrency Liabilities shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
Fixed Rate Advance means a LIBOR Advance or a Cost of Funds Advance.
Funded Debt means (i) Indebtedness on account of borrowed money; and
(ii) obligations under Capital Leases.
GAAP means generally accepted accounting principles in the United States of
America, as from time to time in effect; provided, however, that for purposes of
compliance of Section 7 of this Agreement and the related definitions, GAAP
means such principles as in effect on the date of the preparation and delivery
of the financial statements described in Section 3.3 and Schedule A hereto and
consistently followed, without giving effect to any subsequent changes other
than changes consented to in writing by the Bank.
Guarantor means, individually and collectively, Excelsior Advertising,
Inc., Swiss Army Brand, Ltd., Swiss Army Brands (Suisse) S.A., and Bear Cutlery,
Inc.
Indebtedness means all obligations that in accordance with GAAP should be
classified as liabilities upon Borrower's balance sheet or to which reference
should be made by footnotes thereto.
Intangible Assets means assets that in accordance with GAAP are properly
classifiable as intangible assets, including, but not limited to, goodwill,
franchises, licenses, patents, trademarks, tradenames and copyrights.
Interest means, for the applicable period, all interest paid or payable,
including, but not limited to, interest paid or payable on Indebtedness and on
Capital Leases, determined in accordance with GAAP.
Interest Period means with respect to the Term Loan and each Fixed Rate
Advance:
(i) initially the period (A) commencing on the Borrowing Date of the Term
Loan or such Advance, and (B) ending at the end of the Applicable Interest
Period, for LIBOR Loans - 7, 30, 60 or 90 days thereafter, and for Cost of Funds
Rate Loans, 7, 14, or 21 days thereafter, as the case may be, as selected by the
Borrower, and (ii) thereafter, such subsequent Interest Period for the Term Loan
or such Fixed Rate Advance shall begin on the last day of the preceding Interest
Period for the Term Loan or such Fixed Rate Advance and shall end at the end of
the Applicable Interest Period as the Borrower may select pursuant to this
Agreement; provided that (A) any Interest Period for a LIBOR Loan which would
otherwise end on a day which is not a Business Day shall end and the next
Interest Period shall commence on the next preceding or the next succeeding day
which is a Business Day as determined conclusively by the Bank in accordance
with the then current bank practices in London, England, (B) any Interest Period
for a Cost of Funds Rate Loan which would otherwise end on a day which is not a
Business Day shall end and the next Interest Period shall commence on the next
preceding or the next succeeding day which is a Business Day as determined
conclusively by the Bank; and (C) no Interest Period for the Term Loan or a
Fixed Rate Advance shall end after the Termination Date.
Interest Rate Margin means, with regard to the Term Loan and the Line of
Credit, the percentage rate by which LIBOR and Cost of Funds is increased as
determined by referring to the Performance Pricing Grid attached hereto as
Schedule B.
Inventory means inventory, as the term is defined in the Code, whether now
owned or hereafter acquired by the Borrower, and, including, without limitation,
any and all goods, merchandise and other personal property, wheresoever located
and whether or not in transit, now owned or hereafter acquired by the Borrower,
which is or may at any time be held for sale or lease, or furnished or to be
furnished under any contract of service or held as raw materials, work in
process, supplies or materials used or consumed in the Borrower's businesses,
and all such property the sale or other disposition of which has given rise to
Accounts or Documents (as that term is defined in the Code) and which has been
returned to or repossessed or stopped in transit by the Borrower.
LIBOR Advance means an Advance that bears interest at a rate per annum
equal to the LIBOR Interest Rate.
LIBOR shall mean, as applicable to any Term Loan LIBOR Rate or LIBOR
Advance (collectively, a "LIBOR Loan"), the rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as determined on the basis of the
offered rates for deposits in U.S. dollars, for a period of time comparable to
such LIBOR Loan which appears on the Telerate page 3750 as of 11:00 a.m. London
time on the day that is two (2) London Banking Days preceding the first day of
such LIBOR Loan; provided, however, if the rate described above does not appear
on the Telerate system on any applicable interest determination date, the LIBOR
rate shall be the rate (rounded upwards as described above, if necessary) for
deposits in U.S. dollars for a period substantially equal to the interest period
on the Reuters Page "LIBO" or such other page as may replace the LIBO Page on
that service for the purpose of displaying such rates), as of 11:00 a.m. (London
Time), on the day that is two (2) London Banking Days prior to the beginning of
such interest period. "Banking Day" shall mean, in respect of any city, any date
on which commercial banks are open for business in that city.
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by the calculation agent. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
(2) such quotations are provided, the rate for that date will be the arithmetic
mean of the quotations. If fewer than two (2) quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of time
comparable to such LIBOR Loan offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Loan. In the event that Bank
is unable to obtain any such quotation as provided above, it will be deemed that
LIBOR pursuant to LIBOR Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Rate with respect to LIBOR deposits of Bank, then for any
period during which such Reserve Rate shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve Rate.
LIBOR Interest Rate means an interest rate per annum equal at all times
during an Interest Period to the aggregate of (i) LIBOR and (ii) the Interest
Rate Margin.
LIBOR Loan shall mean a LIBOR Advance or the Term Loan bearing interest at
the Tem Loan LIBOR Rate.
Line of Credit means the revolving line of credit set forth in Section 2.1
of this Agreement that the Bank may advance to the Borrower and the Borrower may
borrow from the Bank.
Line of Credit Note means the note executed and delivered by the Borrower
in substantially the form of Exhibit 2 hereto and which evidences the Line of
Credit.
Modified Following Business Day Convention shall mean the convention for
adjusting any relevant date if it would otherwise fall on a day that is not a
Business Day. The following terms, when used in conjunction with the term,
"Modified Following Business Day Convention", and a date, shall mean that an
adjustment will be made if that date would otherwise fall on a day that is not a
Business Day so that the date will be the first following day that is a Business
Day.
Net Income (Net Loss) means the net income (or net loss, expressed as a
negative number) for any period, after all taxes actually paid or accrued and
all expenses and other charges determined in accordance with GAAP.
Notes means the Line of Credit Note and the Term Note.
Performance Pricing Grid means that chart outlining the applicable
adjustment to the interest rate payable under the Line of Credit Note and the
Term Note, respectively, which chart is attached hereto as Schedule B.
Person means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party, or government (whether
national, federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
Related Agreements means the various agreements and documents described
under the heading "Related Agreements" in Schedule A to this Agreement and such
other documents, delivered or caused to be delivered, by the Borrower to the
Bank.
Reserve Rate means the rate (expressed as a decimal) at which the Bank
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System against Eurocurrency Liabilities if such
liabilities were outstanding. The LIBOR Interest Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve Rate,
and the rate of interest thereby effected shall simultaneously change.
Subsidiary means any corporation, a majority of whose outstanding stock
having ordinary voting powers for the election of directors, shall at any time
be owned or controlled by the Borrower or one or more of its subsidiaries.
Stockholder Equity means total stockholders' equity determined in
accordance with GAAP.
Tangible Net Worth means Stockholder Equity minus Intangible Assets.
Termination Date shall have the meaning given such term in Section 2.1 of
this Agreement.
Term Loan means the Term Loan as defined in Section 2.A. hereof.
Term Loan Base Rate means the variable per annum rate of interest equal at
all times to the Base Rate.
Term Loan Cost of Funds Rate means an interest rate per annum equal at all
times during an Interest Period to the aggregate of (i) Cost of Funds and (ii)
the Interest Rate Margin.
Term Loan Fixed Rate means the Term Loan LIBOR Rate or the Term Loan Cost
of Funds Rate.
Term Loan LIBOR Rate means an interest rate per annum equal at all times
during an Interest Period to the aggregate of (i) LIBOR and (ii) the Interest
Rate Margin.
Term Note means the 1999 Commercial Promissory Term Note substantially in
the form of Exhibit 3 hereto.
Total Current Assets means total current assets determined in accordance
with GAAP.
Total Current Liabilities means total current Indebtedness determined in
accordance with GAAP.
Total Liabilities means total Indebtedness determined in accordance with
GAAP.
Working Capital means Total Current Assets less Total Current Liabilities.
Year 2000 Compliant means, with regard to the Borrower and/or its
suppliers, vendors and customers, that all software, embedded microchips, and
other processing capabilities utilized by, and material to the business
operations or financial condition of, such entity are able to interpret and
manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenario, including in relation to dates on and
after January 1, 2000.
Year 2000 Risk means the risk that computer applications used by Borrower
and/or its suppliers, vendors and customers may be unable to recognize and
perform without error date-sensitive functions involving certain dates prior to
and any date after December 31, 1999.
Section 2. The Line of Credit
2.1 The Line of Credit. Pursuant to the terms of this Agreement and upon
the satisfaction of the conditions precedent referred to in Section 4 hereof,
the Bank will lend to the Borrower, and the Borrower may, in its sole
discretion, borrow from the Bank, Advances not to exceed the aggregate principal
amount to be outstanding at any time of the lesser of: (a) Sixteen Million and
No/100 DOLLARS ($16,000,000.00); or (b) the amount of the Borrowing Base (the
"Line of Credit") as evidenced by the Line of Credit Note. Unless an Event of
Default occurs and is continuing, the Borrower may borrow, repay and reborrow
Advances under this Agreement during the period from the date hereof until June
30, 2001(as such date may be extended in writing from time to time in the Bank's
sole and absolute discretion, the "Termination Date"); provided, however, that
all outstanding principal plus accrued and unpaid interest shall be paid in full
on the Termination Date as adjusted by the Modified Following Business Day
Convention.
2.2 Advances. (a) The Borrower may, in writing, request that the Bank make
an Advance under the Line of Credit. Each such written request shall be
accompanied by a certificate by the president or chief financial officer of the
Borrower stating that: (i) the Borrower is current with its obligation to submit
Borrowing Base Certificates to the Bank pursuant to Section 5.1(f) of this
Agreement; and (ii) the aggregate outstanding Advances are not in excess of the
lesser of the Borrowing Base and the Line of Credit; and (iii) the making of the
requested Advance will not increase the aggregate outstanding Advances to an
amount greater than the lesser of the Borrowing Base and the Line of Credit. If
any Advance is made, the Advance shall be made by a deposit to any of Borrower's
accounts with the Bank. Advances will be payable as provided in the Line of
Credit Note. In the event the Borrower fails to provide notice of the type of
Advance to be effected by a new borrowing, Borrower shall be deemed to have
elected a Base Rate Advance. If any Advance is made, the Bank may, at its
option, record on the books and records of the Bank or endorse on a schedule
attached to the Line of Credit Note, an appropriate notation evidencing any
Advance, each repayment on account of the principal thereof and the amount of
interest paid; and the Borrower authorizes the Bank to maintain such records or
make such notations and agrees that the amount shown on the books and records or
on said schedule, as applicable, as outstanding from time to time shall
constitute the amount owing to the Bank pursuant to this Agreement, absent
manifest error. In the event the amount shown on the schedule conflicts with the
amount noted as due pursuant to the books and records of the Bank, the books and
records of the Bank shall control the disposition of the conflict.
(b) Whenever Borrower desires that the Bank make an Advance which is to be
a Base Rate Advance, it shall give the Bank notice of such request. The
Borrowing Date relating to such Advance shall be a Business Day.
(c) When Borrower desires that Bank make an Advance which is to be a LIBOR
Advance or a Cost of Funds Advance, it shall give Bank not less than two (2)
Business Days notice of such request. The Borrowing Date relating to such
Advance shall be a Business Day. No LIBOR Advance will be made in an amount less
than $100,000 and no more than eight (8) Fixed Rate Advances may be outstanding
under the Line of Credit at any time.
(d) Each request for an Advance shall specify whether such Advance is to be
a Base Rate Advance, or a LIBOR Advance or a Cost of Funds Advance and, once so
specified, such specification may not be changed except with prior approval of
the Bank. Each such request shall further specify the Interest Period to be
applicable to such Advance as follows:
(i) for Base Rate Advances no Interest Period need be specified; and
(ii) for LIBOR Advances, the Interest Period may be of a duration of 7, 30,
60 or 90 days; and
(iii) for Cost of Funds Advances, the Interest Period may be of a duration
of from 7, 14 or 21 days.
2.2.A Letters of Credit; Reduction in Availability. (a) Within the limits
set forth in 2.1 of this Agreement and subject to the provisions of this Section
2.2.A, the Borrower may, from time to time, request the Lender to issue
commercial letters of credit and standby letters of credit ("Letters of
Credit"). The aggregate outstanding available undrawn amount of all outstanding
Letters of Credit shall not exceed $10,000,000.
(b) The amount of Advances which would otherwise be available to the
Borrower under the Line of Credit shall be reduced by the aggregate outstanding
available undrawn amount of outstanding Letters of Credit.
(c) A draw under a Letter of Credit shall be deemed to be a request for an
Advance under the Line of Credit.
(d) No Letters of Credit shall be issued with an expiration date later than
180 days after the Termination Date.
(e) Borrower shall execute any additional documentation as the Bank may
request in connection with the issuance of Letters of Credit including, without
limitation, reimbursement agreements.
(f) The Bank's obligation to issue Letters of Credit is contingent upon the
payment by the Borrower of the applicable fees from the Bank's then current fee
schedule for commercial letters of credit, and a fee of 1.5% of the face amount
for standby letters of credit.
2.3 Interest; Principal. LIBOR Advances, Base Rate Advances and Cost of
Funds Advances will bear interest at a per annum rate as provided in the Line of
Credit Note. Such interest shall be payable as specified in the Line of Credit
Note. Principal shall also be repaid in accordance with the terms of the Line of
Credit Note. Upon the occurrence of and during the continuance of an Event of
Default or after maturity or after judgment has been rendered on the Line of
Credit Note, Borrower's right to select pricing options shall, at the option of
the Bank, cease and the unpaid principal of all advances shall, at the option of
the Bank, bear interest at a rate which is two (2) percentage points per annum
greater than that which would otherwise be applicable.
All agreements between Borrower and Bank are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to Bank for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term "applicable law" shall mean the law in effect as
of the date hereof provided, however that in the event there is a change in the
law which results in a higher permissible rate of interest, then the Line of
Credit Note shall be governed by such new law as of its effective date. In this
regard, it is expressly agreed that it is the intent of Borrower and Lender in
the execution, delivery and acceptance of the Line of Credit to contract in
strict compliance with the laws of the State of Connecticut from time to time in
effect. If, under or from any circumstances whatsoever, fulfillment of any
provision hereof, the Line of Credit Note or of any of the Related Agreements at
the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from any circumstances whatsoever Bank should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between Borrower
and Bank.
2.4 Computation of Interest. All computations of interest on the Line of
Credit Note shall be made on the basis of a three hundred sixty (360) day year
and the actual days elapsed.
2.5 Payment of Principal and Interest. All payments shall be made in lawful
money of the United States in immediately available funds. The Bank is
authorized (but not required) to charge principal and interest and all other
amounts due hereunder and under the Line of Credit Note to any account of the
Borrower when and as it becomes due.
2.6 Prepayments. (a) The Borrower may prepay Base Rate Advances LIBOR
Advances or Cost of Funds Advances in accordance with the terms of the Line of
Credit Note. If at any time, the aggregate principal amount of all Advances
under the Line of Credit Note shall exceed the lesser of the Borrowing Base and
the Line of Credit, the Borrower shall immediately prepay so much of the
outstanding principal balance, together with accrued interest on the portion of
principal so prepaid as shall be necessary in order that the unpaid principal
balance, after giving effect to such prepayments, shall not exceed the lesser of
the Borrowing Base and the Line of Credit. Any such prepayment will, at the
option of the Bank, be applied first to the payment of all costs and expenses
incurred by the Bank and arising out of this Agreement, the Notes or any Related
Agreement and which has not been paid or reimbursed to the Bank, then to accrued
interest to the date of the prepayment and the remainder to the outstanding
principal.
(b) Notwithstanding any other provision of this Agreement, (i) if, after
the date of this Agreement, the introduction of or any change in any law or
regulation (or change in the interpretation thereof by regulatory authorities)
applicable to the Bank, shall make it, or (ii) if any central bank or other
governmental authority having jurisdiction over the Bank shall assert that it
is, unlawful for the Bank to perform its obligations hereunder to make LIBOR
Advances to the Borrower or to continue to fund or maintain LIBOR Advances to
the Borrower hereunder, then, on notice thereof by the Bank to the Borrower, (A)
the obligation of the Bank to the Borrower to make LIBOR Advances shall
terminate, and (B) within five (5) Business Days after the Bank gives notice,
the Borrower shall prepay in full all such LIBOR Advances then outstanding,
which the Bank is prohibited from maintaining or continuing, together with
interest accrued thereon, provided, however, the Borrower may elect to convert
all outstanding LIBOR Advances to Base Rate Advances.
(c) The Borrower may, at its option, prepay any Base Rate Advances, in
whole or in part, at any time, without fee or premium.
(d) If at any time (i) the interest rate on the Line of Credit is a fixed
rate, and (ii) Bank in its sole discretion should determine that current market
conditions can accommodate a prepayment request, Borrower shall have the right
at any time and from time to time to prepay the Line of Credit in whole or in
part, in minimum increments of $100,000, and Borrower shall pay to Bank a make
whole premium in an amount computed as follows: The current rate for United
States Treasury securities (bills on a discounted basis shall be converted to a
bond equivalent) with a maturity date closest to the maturity date of the term
chosen pursuant to the Fixed Rate Election as to which the prepayment is made,
shall be subtracted from the "cost of funds" component of the fixed rate in
effect at the time of prepayment. If the result is zero or a negative number,
there shall be no make whole premium. If the result is a positive number, then
the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the term chosen pursuant to the
Fixed Rate Election as to which the prepayment is made. Said amount shall be
reduced to present value calculated by using the above-referenced United States
Treasury security rate and the number of days remaining in the term chosen
pursuant to the Fixed Rate Election as to which the prepayment is made. The
resulting amount shall be the make whole premium due to Bank upon prepayment of
the fixed rate loan. Each reference in this paragraph to "Fixed Rate Election"
shall mean the effective election by Borrower pursuant to paragraph 2.2 of this
Loan Agreement and the Line of Credit Note of a Fixed Rate Advance.
If by reason of the occurrence and continuance of an Event of Default Bank
elects to declare the Line of Credit to be immediately due and payable, then any
make whole premium with respect to the Line of Credit shall become due and
payable in the same manner as though Borrower had exercised such right of
prepayment
2.7 Intentionally Omitted.
2.8 Late Charge. If the entire amount of any required installment of
principal and/or interest is not paid in full within ten (10) days after the
same is due, Borrower shall, at the discretion of the Bank, pay to the Bank a
late fee equal to five percent (5%) of the required payment. The minimum late
charge shall be $25.00. The assessment and collection of a late fee by the Bank
shall not waive any Event of Default or preclude the exercise of the other
rights and remedies available to the Bank hereunder.
2.9 Additional Payments. (a) If the Bank shall deem applicable to this
Agreement or the Line of Credit Note (including, in each case, any borrowed and
any unused portion thereof), any requirement of any law of the United States of
America, any regulation, order, interpretation, ruling, official directive or
guideline (whether or not having the force of law) of the Board of Governors of
the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation or any other board or governmental or administrative
agency of the United States of America which shall impose, increase, modify or
make applicable to this Agreement or the Line of Credit Note or cause this
Agreement or the Line of Credit Note to be included in any reserve, special
deposit, calculation used in the computation of regulatory capital standards,
assessment or other requirement which imposes on the Bank any cost that is
attributable to the maintenance thereof, then, and in each such event, the
Borrower shall promptly pay the Bank, upon its demand, such amount as will
compensate the Bank for any such cost, which determination may be based upon the
Bank's reasonable allocation of the aggregate of such costs resulting from such
events. In the event any such cost is a continuing cost, a fee payable to the
Bank may be imposed upon the Borrower periodically for so long as any such cost
is deemed applicable by the Bank, in an amount determined by the Bank to be
necessary to compensate the Bank for any such cost, which determination may be
based upon the Bank's reasonable allocation of the aggregate of such costs
resulting from such events. The determination by the Bank of the existence and
amount of any such costs shall, in the absence of manifest error, be conclusive.
(b) In the event the Bank shall determine that, by reason of circumstances
affecting the London inter-bank Eurodollar market, adequate and reasonable
methods do not exist for ascertaining the LIBOR Interest Rate which would
otherwise be applicable during any Interest Period, the Bank shall forthwith
give notice of such determination (which shall be conclusive and binding on the
Borrower) to the Borrower at least one Business Day before the first day of such
Interest Period. In such event: (i) any pending notice of borrowing which
specified a LIBOR Advance shall be of no effect; and (ii) the obligation of the
Bank to make the LIBOR Advance shall be suspended until the Bank determines that
the circumstances giving rise to such suspension no longer exist, whereupon the
Bank shall notify the Borrower.
(c) If, after the date of this Agreement, there shall be any increase in
the cost to the Bank due to either (i) the introduction of or any change in any
law or regulation (or the interpretation thereof by regulatory authorities) or
(ii) compliance with any written guideline or written request from any central
bank or other governmental authority having jurisdiction over Bank (whether or
not such guideline or request has the force of law), of agreeing to make or
making, funding or maintaining LIBOR Advances to the Borrower, then the Borrower
shall, from time to time, upon such notice by the Bank, pay to the Bank
additional amounts sufficient to reimburse the Bank for such increased cost.
Section 2A. The Term Loan
2A.1 The Term Loan. Pursuant to the terms of this Agreement and upon the
satisfaction of the conditions precedent referred to in Section 4 hereof, the
Bank will lend to the Borrower the aggregate principal amount of Seven Million
and No/100 DOLLARS ($7,000,000.00) (the "Term Loan") as evidenced by the Term
Note. All outstanding principal plus accrued and unpaid interest shall be paid
in full on the Termination Date (as the Termination Date may be extended from
time to time) or November 1, 2004 (the "Maturity Date") should the Termination
Date be extended beyond the Maturity Date.
2A.2 Interest Rate. (a) The outstanding principal balance of the Term Loan
shall bear interest equal to a Term Loan Base Rate, the Term Loan LIBOR Rate, or
the Term Loan Cost of Funds Rate.
(b) Whenever Borrower desires that the Term Loan bear interest at the Term
Loan Base Rate, it shall give the Bank notice of such request. The effective
date of a Term Loan Base Rate request shall be a Business Day.
(c) Whenever Borrower desires that the Term Loan bear interest at the Term
Loan LIBOR Rate or the Term Loan Cost of Funds Rate: it shall give Bank not less
than two (2) Business Days notice of such request; and the effective date of a
Term Loan LIBOR Rate request or Term Loan Cost of Funds Rate shall be a Business
Day.
(d) Each request regarding the interest rate applicable to the Term Loan
shall specify whether the interest rate is to be the Term Loan Base Rate, the
Term Loan LIBOR Rate, or the Term Loan Cost of Funds Rate and, once so
specified, such specification may not be changed except with prior approval of
the Bank. Each such request shall further specify the Interest Period to be
applicable to such request as follows:
(i) for Term Loan Base Rate no Interest Period need be specified;
(ii) for Term Loan LIBOR Rate, the Interest Period may be of a duration of
7, 30, 60 or 90 days; and
(iii) for Term Loan Cost of Funds Rate, the Interest Period may be of a
duration of from 7, 14 or 21 days.
2A.3 Interest; Principal. The Term Loan will bear interest at a per annum
rate as provided in the Term Note. Such interest shall be payable as specified
in the Term Note. Principal shall also be repaid in accordance with the terms of
the Term Note. Upon the occurrence of and during the continuance of an Event of
Default or after maturity or after judgment has been rendered on the Term Note,
Borrower's right to select pricing options shall, at the option of the Bank,
cease and the unpaid principal of the Term Loan shall, at the option of the
Bank, bear interest at a rate which is two (2) percentage points per annum
greater than that which would otherwise be applicable.
All agreements between Borrower and Bank are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to Bank for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term "applicable law" shall mean the law in effect as
of the date hereof provided, however that in the event there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of Borrower and Lender in the execution,
delivery and acceptance of the Term Note to contract in strict compliance with
the laws of the State of Connecticut from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any provision hereof, the Term
Note or of any of the Related Agreements at the time of performance of such
provision shall be due, shall involve transcending the limit of such validity
prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
any circumstances whatsoever Bank should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Bank.
2A.4 Computation of Interest. All computations of interest on the Term Note
shall be made on the basis of a three hundred sixty (360) day year and the
actual days elapsed.
2A.5 Payment of Principal and Interest. All payments shall be made in
lawful money of the United States in immediately available funds. The Bank is
authorized (but not required) to charge principal and interest and all other
amounts due hereunder and under the Term Note to any account of the Borrower
when and as it becomes due.
2A.6 Prepayments. (a) The Borrower may prepay the Term Loan in accordance
with the terms of the Term Note. Any such prepayment will, at the option of the
Bank, be applied first to the payment of all costs and expenses incurred by the
Bank and arising out of this Agreement, the Term Note or any Related Agreement
and which has not been paid or reimbursed to the Bank, then to accrued interest
to the date of the prepayment and the remainder to the outstanding principal.
(b) Notwithstanding any other provision of this Agreement, (i) if, after
the date of this Agreement, the introduction of or any change in any law or
regulation (or change in the interpretation thereof by regulatory authorities)
applicable to the Bank, shall make it, or (ii) if any central bank or other
governmental authority having jurisdiction over the Bank shall assert that it
is, unlawful for the Bank to perform its obligations hereunder to continue to
offer or maintain the Term Loan LIBOR Rate for the Borrower hereunder, then, on
notice thereof by the Bank to the Borrower, (A) the obligation of the Bank to
the Borrower to offer or maintain the Term Loan LIBOR Rate shall terminate, and
(B) within five (5) Business Days after the Bank gives notice, the Borrower
shall convert the outstanding principal balance of the Term Loan to the Term
Loan Base Rate.
(c) The Borrower may, at its option, prepay any Base Rate Advances, in
whole or in part, at any time, subject only to the prepayment premium, if
applicable, as set forth in the Term Note.
(d) If at any time (i) the interest rate on the Term Loan is a fixed rate,
and (ii) Bank in its sole discretion should determine that current market
conditions can accommodate a prepayment request, Borrower shall have the right
at any time and from time to time to prepay the Term Loan in whole or in part,
in minimum increments of $100,000, and Borrower shall pay to Bank a make whole
premium in an amount computed as follows: The current rate for United States
Treasury securities (bills on a discounted basis shall be converted to a bond
equivalent) with a maturity date closest to the maturity date of the term chosen
pursuant to the Fixed Rate Election as to which the prepayment is made, shall be
subtracted from the "cost of funds" component of the fixed rate in effect at the
time of prepayment. If the result is zero or a negative number, there shall be
no make whole premium. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the term chosen pursuant to the Fixed Rate Election
as to which the prepayment is made. Said amount shall be reduced to present
value calculated by using the above-referenced United States Treasury security
rate and the number of days remaining in the term chosen pursuant to the Fixed
Rate Election as to which the prepayment is made. The resulting amount shall be
the make whole premium due to Bank upon prepayment of the fixed rate loan. Each
reference in this paragraph to "Fixed Rate Election" shall mean the effective
election by Borrower pursuant to paragraph 2A.2 of this Loan Agreement and the
Term Note of a Term Loan LIBOR Rate or the Term Loan Cost of Funds Rate.
If by reason of the occurrence and continuance of an Event of Default Bank
elects to declare the loan to be immediately due and payable, then any make
whole premium with respect to the Term Loan shall become due and payable in the
same manner as though Borrower had exercised such right of prepayment
2A.8 Late Charge. If the entire amount of any required installment of
principal and/or interest is not paid in full within ten (10) days after the
same is due, Borrower shall, at the discretion of the Bank, pay to the Bank a
late fee equal to five percent (5%) of the required payment. The minimum late
charge shall be $25.00. The assessment and collection of a late fee by the Bank
shall not waive any Event of Default or preclude the exercise of the other
rights and remedies available to the Bank hereunder.
2A.9 Additional Payments. (a) If the Bank shall deem applicable to this
Agreement or the Term Note (including, in each case, any borrowed and any unused
portion thereof), any requirement of any law of the United States of America,
any regulation, order, interpretation, ruling, official directive or guideline
(whether or not having the force of law) of the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation or any other board or governmental or administrative
agency of the United States of America which shall impose, increase, modify or
make applicable to this Agreement or the Term Note or cause this Agreement or
the Term Note to be included in any reserve, special deposit, calculation used
in the computation of regulatory capital standards, assessment or other
requirement which imposes on the Bank any cost that is attributable to the
maintenance thereof, then, and in each such event, the Borrower shall promptly
pay the Bank, upon its demand, such amount as will compensate the Bank for any
such cost, which determination may be based upon the Bank's reasonable
allocation of the aggregate of such costs resulting from such events. In the
event any such cost is a continuing cost, a fee payable to the Bank may be
imposed upon the Borrower periodically for so long as any such cost is deemed
applicable by the Bank, in an amount determined by the Bank to be necessary to
compensate the Bank for any such cost, which determination may be based upon the
Bank's reasonable allocation of the aggregate of such costs resulting from such
events. The determination by the Bank of the existence and amount of any such
costs shall, in the absence of manifest error, be conclusive.
(b) In the event the Bank shall determine that, by reason of circumstances
affecting the London inter-bank Eurodollar market, adequate and reasonable
methods do not exist for ascertaining the LIBOR Interest Rate which would
otherwise be applicable during any Interest Period, the Bank shall forthwith
give notice of such determination (which shall be conclusive and binding on the
Borrower) to the Borrower at least one Business Day before the first day of such
Interest Period. In such event: (i) any pending request for the Term Loan LIBOR
Rate shall be of no effect; and (ii) the obligation of the Bank to maintain or
offer the Term Loan LIBOR Rate shall be suspended until the Bank determines that
the circumstances giving rise to such suspension no longer exist, whereupon the
Bank shall notify the Borrower.
(c) If, after the date of this Agreement, there shall be any increase in
the cost to the Bank due to either (i) the introduction of or any change in any
law or regulation (or the interpretation thereof by regulatory authorities) or
(ii) compliance with any written guideline or written request from any central
bank or other governmental authority having jurisdiction over Bank (whether or
not such guideline or request has the force of law), of agreeing to make or
making, funding or maintaining the Term Loan LIBOR Rate to the Borrower, then
the Borrower shall, from time to time, upon such notice by the Bank, pay to the
Bank additional amounts sufficient to reimburse the Bank for such increased
cost.
Section 3. Representations and Warranties
The Borrower hereby represents and warrants to the Bank (which
representations and warranties will survive the delivery of the Notes and this
Agreement and the making of any Advances and shall be deemed to be continuing
until the Notes are fully paid and this Agreement is terminated) that:
3.1 Existence and Power. (a) The Borrower is a corporation which is and
will continue to be, duly organized and validly existing; the Borrower is in
good standing under the laws of its state of organization; (b) the Borrower is
qualified and in good standing to do business in all other jurisdictions in
which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary; (c) the Borrower has the
power to execute and deliver this Agreement, the Notes, the Related Agreements
and to borrow hereunder, and (d) the Borrower has all permits, authorizations
and licenses, without unusual restrictions or limitations, to own, operate and
lease its properties and to conduct the business in which it is presently
engaged, all of which are in full force and effect.
3.2 Authority. The making and performance by the Borrower of this Agreement
and the Related Agreements have been authorized by all necessary action. The
execution and delivery of this Agreement, the Notes and the Related Agreements,
the consummation of the transactions herein and therein contemplated, the
fulfillment of or compliance with the terms and provisions hereof and thereof,
(a) are within its powers, (b) will not violate any provision of law or, of its
certificate of incorporation or by-laws or (c) will not result in the breach of,
or constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of the Borrower pursuant to any
indenture or bank loan or credit agreement (other than pursuant to this
Agreement) or other material agreement or instrument to which the Borrower is a
party. No approval, authorization, consent or other order of or registration or
filing with any governmental body is required in connection with the making and
performance of this Agreement, the Notes or the Related Agreements.
3.3 Financial Condition. The financial statements described in Schedule A
hereto under the heading "Description of Financial Statements," heretofore
delivered to the Bank, were prepared in conformity with GAAP and are correct and
complete and fairly present the financial condition and the results of
operations of the Borrower for the period(s) and as of the date(s) thereof with
the exception of all interim statements. The Borrower has no direct or
contingent liabilities not disclosed in such statements or in Schedule A hereto
under the heading "Liabilities Not Disclosed in Financial Statements." Since the
date of the latest financial statement delivered to the Bank, except as
disclosed to the Bank in writing, there has been no adverse change in the
assets, liabilities, financial condition or business of the Borrower and, no
Dividends have been declared or made to stockholders.
3.4 Information Complete. Subject to any limitations stated therein or in
connection therewith, all information furnished or to be furnished by the
Borrower pursuant to the terms hereof is, or will be at the time the same is
furnished, accurate and complete in all respects necessary in order to make the
information furnished, in the light of the circumstances under which such
information is furnished, not misleading.
3.5 Statutory Compliance. The Borrower is in compliance with all federal,
state, county and municipal laws, ordinances, rules or regulations applicable to
it, its property or the conduct of its business, including, without limitation,
those pertaining to or concerning the employment of labor, employee benefits,
public health, safety and the environment.
3.6 Litigation. No proceedings by or before any private, public or
governmental body, agency or authority and no litigation is pending, or, so far
as is known to the Borrower or, a any of its officers, threatened against it
except such as are disclosed in Schedule A hereto under the heading "Litigation
Pending or Threatened."
3.7 Subsidiaries, Affiliates. The Borrower has no Subsidiaries or
Affiliates other than those shown on Schedule A attached hereto under the
heading "Subsidiaries, Affiliates and Trade Names" and the Borrower has not
invested in the stock, common or preferred, of any other corporation and there
are no fixed, contingent or other obligations on the part of the Borrower to
issue any additional shares of its capital stock
3.8 Events of Default. No Event of Default has occurred and no event has
occurred or is continuing which, pursuant to the provisions of Section 8, with
the lapse of time and/or the giving of a notice specified therein, would
constitute such an Event of Default.
3.9 Validity. This Agreement, the Notes and all Related Agreements, upon
the execution and delivery thereof, will be legal, valid, binding and
enforceable obligations of the Borrower or the person executing the same, as the
case may be, in accordance with the terms of each.
3.10 Title to Property. The Borrower has good and marketable title to its
properties and assets subject to no mortgage, pledge, lien, security interest,
encumbrance or other material charge not set forth in (a) Schedule A hereto
under the heading "Encumbrances Not Otherwise Disclosed" or (b) Section 6.1
hereinafter stated.
3.11 Taxes. The Borrower has filed all tax returns and reports required to
be filed by it with all federal, state or local authorities and has paid in full
or made adequate provision for the payment of all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due on or in
respect of such tax returns and reports.
3.12 Business Name and Locations. The Borrower conducts its business solely
in its own name without the use of a trade name or the intervention of or
through any other entity of any kind, other than as disclosed on Schedule A
under the heading "Subsidiaries, Affiliates and Trade Names." All books and
records relating to Borrower's assets are located at the Borrower's chief
executive office as set forth above and its other places and locations, where
its assets are located, are as set forth on Schedule A hereto under the heading
"Places of Business."
3.13 Notices of Environmental Problems. The Borrower and any tenants have
not given nor have they received, any notice that: (a) there has been a release,
or there is a threat of release, of toxic substances or hazardous wastes from
any real property owned or operated by the Borrower, (b) the Borrower or any
tenants may be or is liable for the costs of cleaning up or responding to a
release of any toxic substances or hazardous wastes; or (c) any of such real
property is subject to a lien for any liability arising from costs incurred in
response to a release of toxic substances or hazardous wastes.
3.14 ERISA Compliance. The Borrower has received no notice to the effect
that it is not in full compliance with any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA") and the
regulations promulgated thereunder and, to the best of its knowledge there
exists no event described in Section 4043 of ERISA, excluding subsections
4043(b)(2) and 4043(b)(3) thereof.
3.15 Year 2000. The Borrower will be Year 2000 Compliant by January 1,
2000.
3.16 Year 2000 Risk. Borrower has reviewed the Year 2000 Risk and
represents that it is taking such action as may be necessary to ensure that the
Year 2000 Risk will not materially adversely affect its business operations
and/or financial condition.
Section 4. Conditions Precedent
4.1 The initial Advance under the Line of Credit and the funding of the
Term Loan shall be subject to the following conditions precedent:
(a) Approval of Bank Counsel. All legal matters incident to the
transactions hereby contemplated shall be reasonably satisfactory to counsel for
the Bank.
(b) Proof of Action. The Bank shall have received such documents evidencing
the Borrower's power to execute and deliver this Agreement, the Notes and the
Related Agreements as the Bank or its counsel shall reasonably request.
(c) The Notes, Related Agreements and Documents. The Borrower shall have
delivered to the Bank the Notes, this Agreement and the Related Agreements and
such other documents as the Bank may reasonably request.
4.2 Every Advance under the Line of Credit shall be subject to the
following conditions precedent that:
(a) No Event of Default. No Event of Default has occurred and is continuing
and no event has occurred or is continuing which, pursuant to the provisions of
Section 8, with the lapse of time and/or the giving of a notice as specified
therein, would constitute an Event of Default.
(b) No Material Adverse Change. There has been no material adverse change
in the assets, liabilities, financial condition or business of the Borrower or
any Guarantor since the date of any financial statements delivered to the Bank
before or after the date of this Agreement.
(c) Representations and Warranties. That the representations and warranties
contained in Sections 3.1 through 3.16 are true and correct, and that the
Borrower shall have so certified to the Bank. Any request for a borrowing shall
be deemed a certification by the Borrower as to the truth and accuracy of the
representations and warranties contained in Sections 3.1 through 3.16 as of the
date of such request.
Section 5. Affirmative Covenants
The Borrower covenants and agrees that from the date hereof until payment
in full of the Notes, the performance of all Borrower's obligations hereunder
and under any Related Agreement is complete and the termination of this
Agreement, unless the Bank otherwise consents in writing, the Borrower shall:
5.1 Financial Statements; Notice of Default. Deliver to the Bank (a)within
forty-five (45) days after close of each of the quarters of each fiscal year of
the Borrower, consolidated and consolidating financial statements that are
internally prepared, consisting of a balance sheet and statement of income and
retained earnings and cash flows for that portion of the fiscal year to date
then ended, which statements shall be prepared in accordance with GAAP
consistently applied; (b) within ninety (90) days after the close of each fiscal
year of the Borrower, consolidated and consolidating financial statements
including a balance sheet as of the close of such year and statements of income
and retained earnings and cash flows for the year then ended, prepared in
conformity with GAAP and audited by a firm of independent certified public
accountants selected by the Borrower and acceptable to the Bank, such financial
statements shall be accompanied by an opinion of the auditor which (i) shall not
disclaim the auditor's obligation to address the Year 2000 Risk as it relates to
the Borrower's liabilities or contingent liabilities and (ii) shall not be
qualified due to the Borrower's possible failure to take all appropriate steps
to successfully address the Year 2000 Risk; (c) within ninety (90) days after
the close of each fiscal year, a copy of the Borrower's annual report on Form
10-k as filed with the Securities and Exchange Commission together with all
schedules, exhibits and attachments thereto; (d) promptly upon the Bank's
written request, such other information about the financial condition, business
and operations of the Borrower or any Guarantor, as the Bank may, from time to
time, reasonably request; (e) promptly upon becoming aware of any occurrence
that but for the giving of notice or the passage of time, would constitute an
Event of Default, notice thereof in writing; and (f) as of the date of this
Agreement and thereafter as of the first Business Day of each calendar month, a
Borrowing Base Certificate. Together with any and all financial statements to be
delivered to the Bank pursuant to Section 5.1, the Borrower shall submit a
certificate of compliance by the president or chief financial officer of the
Borrower, certifying that the Borrower is in compliance with all affirmative and
negative covenants of this Agreement.
The Borrower shall also deliver to the Bank, promptly upon receipt thereof,
any management audit letter issued to the Borrower by its firm of certified
public accountants.
5.2 Insurance. (a) Keep its properties insured against fire and other
hazards (so called "All Risk" coverage) in amounts and with companies reasonably
satisfactory to the Bank to the same extent and covering such risks as is
customary in the same or a similar business, (b) maintain public liability
coverage against claims for personal injuries or death, and (c) maintain all
worker's compensation, employment or similar insurance as may be required by
applicable law. Such policies of insurance shall contain an endorsement, in form
and substance satisfactory to Bank, showing loss payable to Bank. Such
endorsement or an independent instrument furnished to Bank, shall provide that
the insurance companies will give Bank at least thirty (30) days prior written
notice before any such policy or policies of insurance shall be altered or
canceled and that no act, default or misrepresentation of Borrower or any other
person shall affect the right of Bank to recover under such policy or policies
of insurance in case of loss or damage. Borrower hereby directs all insurers
under such policies of insurance to pay all proceeds payable thereunder directly
to Bank. Borrower agrees to deliver certificates and evidence of insurance to
the Bank upon request.
5.3 Compliance with Laws; Payment of Taxes and Other Liens. Comply in all
respects with all federal, state, county and municipal laws, rules, ordinances
and regulations applicable to Borrower, Borrower's business or property,
including without limitation, those pertaining to or concerning the employment
of labor, employee benefits, public health, safety and the environment. The
Borrower shall pay all taxes, assessments, governmental charges or levies, or
claims for labor, supplies, rent and other obligations made against Borrower or
Borrower's property which, if unpaid, might become a lien or charge against the
Borrower or Borrower's property, except liabilities being contested in good
faith and against which, if requested by the Bank, the Borrower shall maintain
reasonable reserves.
5.4 Chief Executive Office and Places of Business. Keep its chief executive
office, principal places of business and locations of assets at the locations
set forth in this Agreement and maintain its principal places of business, its
chief executive office and locations of assets at said locations or, in the
event that the Borrower changes any of such locations or adds any new locations,
Borrower shall promptly give Bank written notice of any change in any of such
addresses or such new locations. All business records of the Borrower, including
those pertaining to all accounts and contract rights, shall be kept at the said
chief executive office of the Borrower unless prior written notice is given to
the Bank with respect to a change of location.
5.5 Inspection. Allow the Bank by or through any of its officers, agents,
attorneys, or accountants designated by it, for the purpose of ascertaining
whether or not the provisions hereof and of any Related Agreement, instrument or
document is being performed and for the purpose of examining the assets of the
Borrower and the records relating thereto, to enter the offices, and plants of
the Borrower to examine or inspect any of the properties, books and records or
extracts therefrom and to discuss the affairs, finances and accounts thereof
with the Borrower with prior notification and consent; such consent not to be
unreasonably withheld, all at reasonable times and as often as the Bank may
reasonably request.
5.6 Litigation. Promptly advise the Bank of the commencement of litigation,
including arbitration proceedings and any proceedings before any governmental
agency, which might have a material adverse effect upon the assets, liabilities,
financial condition or business of the Borrower, or where the amount involved is
$100,000.00 or more.
5.7 Notices of Environmental and Labor Actions and Claims. Promptly notify
the Bank in writing of (a) any enforcement, clean-up, removal or other action
instituted by any federal, state, county or municipal authority or agency
pursuant to any public health, safety or environmental laws, rules, ordinances
and regulations, (b) any and all claims made by any third party against Borrower
or any real property owned or operated by either relating to the existence of,
or damage, loss or injury from any toxic substances or hazardous wastes or any
other conditions constituting actual or potential violations of such laws,
rules, ordinances or regulations and (c) any enforcement or compliance action,
instituted or claim made by any federal or state authority relating to the
employment of labor or employee benefits.
5.8 Maintenance of Existence. Continue to conduct its business as presently
conducted, maintain its existence and maintain its properties in good repair,
working order and operating condition. The Borrower shall promptly notify the
Bank of any event causing material loss or unusual depreciation in the value of
its business assets and the amount of same.
5.9 Performance. Comply with all terms and conditions of this Agreement,
the Related Agreements and the Notes and pay all debts of the Borrower before
the same shall become delinquent.
5.10 Covenant to Secure Equally and Ratably. Secure the Notes or cause the
Notes to be secured equally and ratably with any and all Indebtedness secured by
any lien or encumbrance created after the date hereof by the Borrower or any
Subsidiary upon any of its property or assets, whether owned or hereafter
acquired, other than liens or encumbrances permitted pursuant to Section 6.1
hereof.
5.11 Deposits. Maintain the Bank as its principal bank of deposit and
account.
5.12 Use of Proceeds.
(a) Advances Under the Line of Credit. The Borrower shall use the proceeds
of each Advance under the Line of Credit for general commercial purposes,
provided that no part of such proceeds will be used, in whole or in part, for
the purpose of (i) purchasing or carrying any "margin stock" as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System,
or (ii) acquiring all or substantially all of the assets or stock of, or
otherwise investing in, any person, firm or corporation;
(b) Advances under the Term Loan. The Borrower shall use the proceeds of
the Term Loan to pay down existing indebtedness owing to the Bank.
5.13 Victorinox Contract. The Borrower shall maintain in full force and
effect the exclusive distribution agreement with Victorinox Cutlery Company,
dated December 12, 1983, as amended and modified from time to time (the
"Victorinox Cutlery Contract"). The Borrower will not modify or amend the
Victorinox Cutlery Contract so as to disturb its status as the exclusive
distributor thereunder without the prior express written consent of the Bank.
Section 6. Negative Covenants
The Borrower covenants and agrees that until payment is made in full of the
Notes, the performance of all Borrower's obligations hereunder and under any
Related Agreement is complete and the termination of this Agreement, unless the
Bank otherwise consents in writing which consent shall not be unreasonably
withheld, the Borrower shall not:
6.1 Encumbrances. Incur or permit to exist any lien, mortgage, security
interest, pledge, charge or other encumbrance against any of its property or
assets (including, without limitation, the Victorinox Cutlery Contract), whether
now owned or hereafter acquired (including, without limitation, any lien or
encumbrance relating to any response, removal or clean-up of any toxic
substances or hazardous wastes), except: (a) pledges or deposits in connection
with or to secure workers' compensation and unemployment insurance; (b) tax
liens which are being contested in good faith and in compliance with Section 5.3
hereof; (c)liens, mortgages, security interests, pledges, charges or other
encumbrances in favor of the Bank or specifically permitted, in writing, by the
Bank; and (d) purchase money security interests provided such purchase money
security interest does not attach to any property other than the property being
acquired with the proceeds of purchase money security interest indebtedness
permitted under Section 6.2 hereof.
6.2 Limitation on Indebtedness. Create or incur any Indebtedness for
borrowed money, become liable, either actually or contingently, in respect of
letters of credit or banker's acceptances or issue or sell any obligations of
the Borrower, excluding, however, from the operation of this covenant: (a) the
Line of Credit and the Term Loan hereunder and all other Indebtedness of the
Borrower to the Bank; (b) Indebtedness subordinated in payment and priority to
all Indebtedness of the Borrower to the Bank in writing and in form and
substance reasonably satisfactory to the Bank; (c) trade debt incurred in the
ordinary course of business; (d) Indebtedness secured by a purchase money
security interest, provided such Indebtedness does not exceed the lesser of
(i) the purchase price or (ii) the value of the property acquired with the
proceeds thereof; (e) obligations in connection with performance bonds which the
Borrower is required to provide in the ordinary course of its business; and (f)
Indebtedness to financial institutions under or pursuant to foreign currency
exchange facilities.
6.3 Disposition of Assets. Sell, lease, pledge, transfer or otherwise
dispose of all or any of its assets whether now owned or hereafter acquired
except for liens or encumbrances required or permitted hereby or by any Related
Agreement, except (a) sales of inventory in the ordinary course of business; (b)
sales of machinery, equipment and inventory which has become obsolete and is no
longer used or useful; (c) sales of machinery or equipment in the ordinary
course of business if such machinery and equipment is replaced with other
similar equipment or machinery; (d) sales of any assets not described in (a),
(b), or (c) above, having an aggregate value not in the excess of $100,000 in
any year calculated on a consolidated basis; and (e) a lien on the currency or
contracts which are the subject of any foreign exchange transaction.
6.4 Contingent Liabilities. Without prior notice to the Bank (Bank consent
not required) assume, guarantee, endorse or otherwise become liable upon the
obligations of any Person except by the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business.
6.5 Consolidation or Merger. Merge or consolidate with, or acquire all or
substantially all of the assets of, or make any investment in the securities of,
any other Person or other entity, except that (a) the Borrower may merge or
consolidate with one or more of its Subsidiaries, provided that the Borrower is
the surviving corporation, or, if it is not the surviving corporation, the
surviving corporation assumes all of the Borrower's liabilities hereunder and
under the Notes and the Security Agreement; (b) the Borrower's Subsidiaries may
merge or consolidate with one another so long as the surviving corporation is a
Guarantor hereunder; and (c) Borrower may issue shares of its stock, without
dollar limitation.
6.6 Loans, Advances, Investments. Purchase or otherwise acquire any shares
of stock or obligations of, or make loans or advances to, or investments in, any
Person; provided, however: (1) the Borrower or any Subsidiary may extend credit
to any customer of the Borrower or such Subsidiary who is also a stockholder of
the Borrower or such Subsidiary, provided such extension of credit meets the
standards set forth in Section 6.8 below; and (2) the Borrower and any
Subsidiary may make loans or advances to any other Person, provided that the
aggregate amount of all such loans or advances outstanding at any time does not
exceed $150,000.
6.7 Dividends. Declare or pay dividends or make any distributions of its
property or assets upon any of its stock or make any loans, advances, or
extension of credit to any of its stockholders unless no Event of Default, or
any event or condition which with the passage of time, the giving of notice or
both would constitute an Event of Default, is existing hereunder at the time of
or immediately following such transaction; provided, however, that,
notwithstanding this Section, any Subsidiaries of the Borrower may declare or
pay dividends or make distributions of its property or assets upon any of its
stock to the Borrower or make loans, advances or extensions of credit to the
Borrower.
6.8 Transactions with Subsidiaries and Affiliates. Enter into, or be a
party to, any transaction with any Subsidiary or Affiliate (including, without
limitation, transactions involving the purchase, sale or exchange of property,
the rendering of services or the sale of stock) except in the ordinary course of
business pursuant to the reasonable requirements of the Borrower and upon fair
and reasonable terms no less favorable to the Borrower than Borrower would
obtain in a comparable arm's-length transaction with a person other than a
Subsidiary or an Affiliate.
6.9 Change of Name or Location. Without at least 30 days prior notice to
the Bank, change its name or conduct its business under any trade name or style
other than as herein above set forth or change its chief executive office,
places of business or the present locations of its assets or records relating
thereto from those addresses set forth on page 1 of this Agreement.
6.10 Subsidiaries, Affiliates. Acquire, form or dispose of any Subsidiary
or Affiliate or acquire all or substantially all or any portion of the stock or
assets of any other person, firm or corporation.
6.11 Management, Capital Structure, Accounting Methods. Make or consent to
a change in the ownership or capital structure of the Borrower, or make a change
in the executive management of the Borrower or in the manner in which the
business of the Borrower is conducted or in its method of accounting.
6.12 Use of Property. Allow any business or activity to be conducted on
real property owned or occupied by the Borrower that uses, manufacturers,
treats, stores or disposes of any toxic substances or hazardous wastes which are
prohibited or regulated under any public health, safety or environmental law,
rule, ordinance or regulation or contrary to the provisions of any insurance
policy.
6.13 Grant of Negative Pledge. Enter into any agreement with any Person
(other than the Bank) in which the Borrower agrees not to create or suffer to
exist any liens or encumbrances of any kind on any property of the Borrower,
except that the Borrower may enter into such an agreement with respect to assets
which are subject to liens permitted under Section 6.1.
6.14 Acquisition of Stock of Borrower. Purchase, acquire, redeem or retire,
or make any commitment to purchase, acquire, redeem or retire any of the capital
stock of the Borrower, whether now or hereafter outstanding.
6.15 Transactions with Victorinox Cutlery Company. Make any distributions
of its assets or any loans, advances or extensions of credit to Victorinox
Cutlery Company, except in the ordinary course of business as reasonable payment
for goods or services actually received.
Section 7. Financial Covenants
The Borrower covenants and agrees that until payment is made in full of the
Notes, the performance of Borrower's obligations hereunder and under any Related
Agreement is complete and the termination of this Agreement, unless the Bank
otherwise consents in writing:
7.1 Calculation of Financial Covenants. The calculation of the financial
covenants set forth in this Section 7 shall be measured against the Borrower's
financial statements required to be delivered to the Bank pursuant to Section
3.1 of this Agreement on a consolidated basis unless otherwise noted.
All financial covenants set forth below are to be tested quarterly.
7.2 Funded Debt to EBITDA Ratio. On a rolling four quarter basis, Borrower
shall not permit its ratio of Funded Debt to EBITDA to be greater than:
3.7 to 1.0 through December 30, 1999;
2.25 to 1.0 as of December 31, 1999 and thereafter.
7.3 Current Ratio. Borrower shall not permit its Current Ratio to be less
than:
2.0 to 1.0 through March 30, 2001;
2.5 to 1.0 as of March 31, 2001 and thereafter.
7.4 EBITDA to Interest Expenses plus CMLTD Ratio. On a rolling four quarter
basis, Borrower shall not permit its ratio of EBITDA to Interest Expense plus
CMLTD to be less than 3.0 to 1.0.
7.5 Tangible Net Worth: Borrower shall not permit Tangible Net Worth to be
less than:
$64,000,000 through December 30, 1999
$66,000,000 as of December 31, 1999 through
September 29, 2000;
$66,500,000 as of September 30, 2000 through
December 30, 2000; and
$68,000,000 as of December 31, 2000 and thereafter.
Section 8. Events of Default
If any one or more of the following "Events of Default" shall occur and be
continuing:
8.1 Failure to make due payment of the principal of the Notes, or in the
payment of interest on the Notes or in the payment of any other liability owing
by the Borrower to the Bank within 10 days of the due date, now existing or
hereinafter incurred, whether direct or contingent; or
8.2 Failure by the Borrower to observe or perform any covenant contained in
Sections 5, 6 or 7 hereof; or
8.3 Failure by the Borrower to perform any act, duty, obligation or other
agreement contained herein and not otherwise constituting an Event of Default
hereunder, or failure by the Borrower to perform any of its obligations under
any Related Agreement, which shall occur and continue without correction for
thirty (30) days following the Bank giving the Borrower notice thereof; or
8.4 Any representation or warranty made by the Borrower herein or in any
Related Agreement, or any statement, certificate or other data furnished by the
Borrower in connection herewith or with any Related Agreement, proves to have
been incorrect when made in any material respect; or
8.5 A judgment or judgments for the payment of money shall be rendered
against the Borrower, and any such judgment shall remain unsatisfied and in
effect for any period of thirty (30) consecutive days without a stay of
execution; or
8.6 Any levy, seizure, attachment, execution or similar process shall be
issued or levied on any of the Borrower's property in excess of $100,000 and
Borrower shall not in good faith be contesting such situation; or
8.7 The Borrower shall (a) apply for or consent to the appointment of a
receiver, conservator, trustee or liquidator of all or a substantial part of any
of its assets; (b) be unable, or admit in writing its inability, to pay its
debts as they mature; (c) file or permit the filing of any petition, case,
arrangement, reorganization, or the like under any insolvency or bankruptcy law,
or the adjudication of it as a bankrupt, or the making of an assignment for the
benefit of creditors or the consenting to any form of arrangement for the
satisfaction settlement or delay of debt or the appointment of a receiver for
all or any part of its properties; or (d) take any action for the purpose of
effecting any of the foregoing; or
8.8 An order, judgment or decree shall be entered, or a case shall be
commenced, against the Borrower, without the application, approval or consent of
the Borrower by or in any court of competent jurisdiction, approving a petition
or permitting the commencement of a case seeking reorganization or liquidation
of the Borrower or appointing a receiver, trustee, conservator or liquidator of
the Borrower or of all or a substantial part of its assets and Borrower, by any
act, indicates its approval thereof, consent thereto, or acquiescence therein,
or such order, judgment, decree or case shall continue unstayed and in effect
for any period of one hundred twenty (120) consecutive days; or
8.9 The Borrower shall dissolve or liquidate, or be dissolved or
liquidated, or cease to legally exist; or
8.10 Intentionally Omitted;
8.11 Failure by the Borrower to pay any other Indebtedness in an amount in
excess of $250,000, whether contingent or otherwise upon maturity or the
acceleration thereof; unless such other Indebtedness is subject to a bona fide
dispute and the Borrower maintains on its books an adequate reserve with respect
to such Indebtedness; or
8.12 Any material adverse change in the assets, liabilities, financial
condition or business of the Borrower has occurred since the date of any
financial statements delivered to the Bank before or after the date of this
Agreement which condition shall remain in effect for thirty (30) days after
notice and an opportunity to cure;
then, and in such event, the Bank may declare the then outstanding
principal balance and all interest accrued on the Notes and all applicable late
charges and surcharges and all other liabilities and obligations of the Borrower
to the Bank to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, the availability of the Line of Credit shall be
deemed to be automatically terminated, Borrower's right to select pricing
options for Advances shall terminate, and the Bank may exercise its rights and
remedies under this Agreement and the Related Agreements; all of the foregoing
without presentment or demand for payment, notice of non-payment, protest or any
other notice or demand of any kind, all of which are expressly waived by the
Borrower and each Guarantor.
Section 9. Intentionally Omitted
Section 10. Miscellaneous
10.1 Waivers.
(a) Borrower hereby waives presentment, demand, notice, protest, notice of
acceptance of this Agreement, notices of advances made, credit extended,
collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to this
Agreement, the Related Agreements, the Notes and any collateral now or hereafter
securing the Notes, Borrower assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, to the addition or
release of any party or person primarily or secondarily liable, to the
acceptance of partial payments thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Bank may deem advisable. The Bank shall not be deemed to have waived any of its
rights upon or under any document or agreement relating to the liabilities of
the Borrower, unless such waiver be in writing and signed by the Bank. No delay
or omission on the part of the Bank in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right on any future occasion. The Bank
may revoke any permission or waiver previously granted to Borrower such
revocation shall be effective whether given orally or in writing. All rights and
remedies of the Bank with respect to this Agreement, the Related Agreements or
the Notes whether evidenced hereby or by any other instrument or document, shall
be cumulative and may be exercised singularly or concurrently.
(b) BORROWER AND BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTES
OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR BANK TO ACCEPT THE NOTES AND MAKE THE LOANS DESCRIBED HEREIN.
(c) BORROWER (i) ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART IS A COMMERCIAL TRANSACTION AND (ii) TO THE EXTENT PERMITTED BY ANY
STATE OR FEDERAL LAW, WAIVES ANY RIGHT IT MAY HAVE TO PRIOR NOTICE OF AND A
HEARING AND THE POSTING OF A BOND ON THE RIGHT OF ANY HOLDER OF THE NOTES TO ANY
REMEDY OR COMBINATION OF REMEDIES THAT ENABLES SAID HOLDER BY WAY OF ATTACHMENT,
FOREIGN ATTACHMENT, GARNISHMENT OR REPLEVIN, TO DEPRIVE BORROWER OR ANY
GUARANTOR OF ANY OF THEIR PROPERTY, AT ANY TIME, PRIOR TO FINAL JUDGMENT IN ANY
LITIGATION INSTITUTED IN CONNECTION WITH THIS AGREEMENT.
[The Remainder of this Page is Intentionally Left Blank]
10.2 Notices. All notices, consents, waivers and other communications
required or permitted by this Agreement shall be in writing and shall be deemed
given to a party when (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid), (b) sent by
facsimile with confirmation of transmission by the transmitting equipment; or
(c) received or rejected by the addressee, if sent by certified mail, return
receipt requested, in each case to the following addresses, or facsimile numbers
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, or person as a party may designated
by notice to the other parties:
If to the Bank:
FLEET NATIONAL BANK
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Vice President
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
If to the Borrower:
SWISS ARMY BRANDS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇.▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
10.3 Expenses; Additional Documents. The Borrower will pay all taxes levied
or assessed upon the principal sum of the Advances made against the Bank and all
reasonable expenses arising out of the preparation, administration, amendment,
waiver, modification, protection, collection and/or other enforcement of this
Agreement, the Related Agreements, and the Notes. The Borrower will, from time
to time, at its expense, execute and deliver to the Bank all such other and
further instruments and documents as the Bank shall reasonably request.
10.4 Lien, Security Interest and Set Off. Borrower hereby grants to Bank, a
lien, security interest and right of setoff as security for all liabilities and
obligations to Bank, whether now existing or hereafter arising, upon and against
all deposits and credits, now or hereafter in the possession, custody,
safekeeping or control of Bank or in transit to the Bank. At any time, without
demand or notice, Bank may set off the same or any part thereof and apply the
same to any liability or obligation of Borrower even though unmatured.
10.5 Indemnification. The Borrower agrees to defend, indemnify and hold
harmless the Bank and any participants, successors or assigns of the Bank and
the officers, directors, employees and agents of each of them from and against
any and all losses, claims, liabilities, asserted liabilities, reasonable costs
and expenses, including, without limitation, reasonable costs of litigation and
reasonable attorneys' fees (both the allocated costs of internal counsel and
outside counsel) incurred in connection with any and all claims or proceedings
for bodily injury, property damage, abatement or remediation, environmental
damage or impairment or any other injury or damage (including all foreseeable
damage) or any diminution in value of any real property resulting from or
relating, directly or indirectly, to (a) a release into the environment of any
toxic substances or hazardous wastes (a "Release") a threatened Release, the
existence or removal of any toxic substances or hazardous wastes on, into, from,
through or under any real property owned or operated by the Borrower or any
Guarantor (whether or not such Release caused by Borrower, or Borrower
Affiliate, tenant, subtenant, prior owner or prior tenant or any other Person
and whether or not the alleged liability is attributable to the handling,
storage, generation, transportation or disposal of toxic substances or hazardous
wastes or the mere presence of such toxic substances or hazardous wastes) or (b)
the breach or alleged breach by Borrower of any federal, state or local law or
regulation concerning public health, safety or the environment with respect to
any real property owned or operated by the Borrower and/or any business
conducted thereon.
10.6 Stamp Tax. The Borrower will pay any stamp or other tax which becomes
payable in respect of the Notes, this Agreement or the Related Agreements.
10.7 Schedules. Schedule A and Schedule B, which are attached hereto, are
and shall constitute a part of this Agreement.
10.8 Connecticut Law; Jurisdiction of Connecticut Courts. This Agreement,
the Related Agreements and the rights and obligations of the parties hereunder
and thereunder shall be construed and interpreted in accordance with the laws of
Connecticut. The Borrower and each Guarantor agree that the execution of this
Agreement and Related Agreements and the performance of the Borrower's
obligations hereunder and thereunder shall be deemed to have a Connecticut situs
and the Borrower shall be subject to the personal jurisdiction of the courts of
the State of Connecticut with respect to any action the Bank or its successors
or assigns may commence hereunder or thereunder. Accordingly, the Borrower
hereby specifically and irrevocably consents to the jurisdiction of the courts
of the State of Connecticut with respect to all matters concerning this
Agreement, the Related Agreements, the Notes, or the enforcement of any of the
foregoing.
10.9 Survival of Representations. All representations, warranties,
covenants and agreements herein contained or made in writing in connection with
this Agreement shall survive the execution and delivery of the Notes, shall
continue in full force and effect until all amounts payable on account of the
Notes, the Related Agreements and this Agreement shall have been paid in full
and this Agreement has been terminated.
10.10 Severability. If any provision of this Agreement shall to any extent
be held invalid or unenforceable, then only such provision shall be deemed
ineffective and the remainder of this Agreement shall not be affected.
10.11 Integration; Modifications. This Agreement is intended by the parties
as the final, complete and exclusive statement of the transactions evidenced by
this Agreement. No modification or amendment hereof shall be effective unless
the same shall be in writing and signed by the parties hereto.
10.12 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Borrower, the Bank and their respective
successors and assigns.
10.13 Pledge by Bank to Federal Reserve. Bank may at any time pledge all or
any portion of its rights under this Agreement or the Notes including any
portion of the Notes to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or enforcement thereof shall release Bank from its obligations under this
Agreement or any of the Related Agreements.
10.14 Lost, Stolen, Destroyed or Mutilated Documents. Upon receipt of an
affidavit of an officer of Bank as to the loss, theft, destruction or mutilation
of the Notes or any other security document which is not of public record, and,
in the case of any such loss, theft, destruction or mutilation, upon surrender
and cancellation of such Notes or other security document, Borrower will issue,
in lieu thereof, a replacement Notes or other security document in the same
principal amount thereof and otherwise of like tenor.
10.15 Assignment of Bank's Interest. Bank shall have the unrestricted right
at any time or from time to time, and without Borrower's or any Guarantor's
consent, to assign all or any portion of its rights and obligations hereunder to
one or more banks or other financial institutions (each, an "Assignee"), and
Borrower and each Guarantor agrees that it shall execute, or cause to be
executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee, and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Bank, and such Assignees, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of Bank
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that such rights and
obligations have been assigned by Bank pursuant to the assignment documentation
between Bank and such Assignee, and Bank shall be released from its obligations
hereunder and thereunder to a corresponding extent.
10.16 Participations. Bank shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to Borrower or any
Guarantor to grant to one or more banks or other financial institutions (each a
"Participant") participating interest in Bank's obligation to lend hereunder
and/or any or all of the loans held by Bank hereunder. In the event of any such
grant by Bank of a participating interest to a Participant, whether or not upon
notice to Borrower, Bank shall remain responsible for the performance of its
obligations hereunder and Borrower shall continue to deal solely and directly
with Bank in connection with Bank's rights and obligations hereunder.
Bank may furnish any information concerning Borrower in its possession from
time to time to prospective Assignees and Participants, provided that Bank shall
require any such prospective Assignee or Participant to agree in writing to
maintain the confidentiality of such information.
IN WITNESS WHEREOF, the parties hereto have caused this Commercial Loan
Agreement to be duly executed as a sealed instrument as of the day and year
first above written.
SWISS ARMY BRANDS, INC.
Witness:
By /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Senior Vice President, CFO
FLEET NATIONAL BANK
Witness:
By ▇.▇.▇▇▇▇▇
Its
SCHEDULE A
Annexed to and made a part of the 1999 Amended and Restated Commercial Loan
Agreement (the "Loan Agreement") dated as of November ___, 1999 between FLEET
NATIONAL BANK (defined in the Loan Agreement as the "Bank") and SWISS ARMY
BRANDS, INC. (defined in the Loan Agreement as the "Borrower").
Description of Financial Statements (See Section 3.3 of Agreement):
Liabilities Not Disclosed in Financial Statements (Section 3.3 of Agreement):
Litigation, Pending or Threatened (See Section 3.6 of Agreement):
See addendum to Schedule A.
Subsidiaries, Affiliates and Trade Names-list name and state of organization of
each Subsidiary and Affiliate (See Section 3.7 of Agreement) and percentage
ownership if less than 100% and list each Trade Name used by Borrower (See
Section 3.13 of Agreement):
Encumbrances Not Otherwise Disclosed (See Section 3.11 of Agreement):
Places of Business (See Section 3.13 of Agreement):
Chief Executive Office and location of material assets.
Related Agreements (See Section 1 of Agreement, Definitions):
1999 Substituted Revolving Commercial Promissory Note
1999 Commercial Promissory Term Note
1999 Substituted Security Agreement
Negative Pledge Agreement
1999 Substituted Agreement of Guaranty and Suretyship
Agreement of Guaranty and Suretyship
Commercial Transaction Waiver
Borrowing Resolution
ISDA Master Agreement and Schedules
Schedule B - Pricing Grid
Exhibit 1 - Borrowing Base Certificate
Exhibit 2 - Revolving Note
Exhibit 3 - Term Note