NationsCredit Commercial Funding
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This Loan and Security Agreement (as it may be amended, this "Agreement") is
entered into on April 24, 1997 between NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION ("Lender"), having an
address at 1177 Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
SOUTHWEST TELEPRODUCTIONS, INC., a Texas corporation ("Borrower"), whose chief
executive office is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
("Borrower's Address"). The Schedules to this Agreement are an integral part of
this Agreement and are incorporated herein by reference. Terms used, but not
defined elsewhere, in this Agreement are defined in Schedule B.
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 Amount. Subject to the terms and conditions contained in this
Agreement, Lender will:
(a) Revolving Loans and Credit Accommodations. From time to time during the
Term at Borrower's request, make revolving loans to Borrower ("Revolving
Loans"), and make letters of credit, bankers acceptances and other credit
accommodations ("Credit Accommodations") available to Borrower, in each case to
the extent that there is sufficient Availability at the time of such request to
cover, dollar for dollar, the requested Revolving Loan or Credit Accommodation;
provided, that after giving effect to such Revolving Loan or Credit
Accommodation, (x) the aggregate outstanding balance of all monetary Obligations
of each Company to Lender (including the principal balance of any term loans
owing by each Company to Lender and, solely for the purpose of determining
compliance with this provision, the Credit Accommodation Balance of each
Company) will not exceed the Maximum Facility Amount set forth in Section 1 of
Schedule A and (y) none of the other Loan Limits set forth in Section 1 of
Schedule A will be exceeded. For this purpose, "Availability" means:
(i) the aggregate amount of Eligible Accounts of the Companies (less
maximum existing or asserted taxes, discounts, credits and allowances)
multiplied by the Accounts Advance Rate set forth in Section 1(b)(i) of
Schedule A but not to exceed the Accounts Sublimit set forth in Section
1(c) of Schedule A;
plus
(ii) the lower of cost or market value of Eligible Inventory
multiplied by the Inventory Advance Rate(s) set forth in Section 1(b)(ii)
of Schedule A, but not to exceed the Inventory Sublimit(s) set forth in
Section 1(d) of Schedule A;
minus
(iii) all Reserves which Lender has established pursuant to Section
1.2 (including those to be established in connection with the requested
Revolving Loan or Credit Accommodation); and
minus
(iv) the outstanding balance of all of the monetary Obligations of the
Companies (excluding the Credit Accommodation Balance of each Company and
the principal balance of each term loan owing by a Company to Lender).
(b) Term Loan. On the date of this Agreement, make a term loan to Borrower
(the "Term Loan") in the principal amount, if any, set forth in Section 2(a) of
Schedule A.
1.2 Reserves. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion ("Reserves") to
reflect (i) events, conditions, contingencies or risks which affect or may
affect (A) the Collateral or its value, or the security interests and other
rights of Lender in the Collateral or (B) the assets, business or prospects of
Borrower or any Obligor, (ii) Lender's good faith concern that any Collateral
report or financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading in
any material respect, (iii) any fact or circumstance which Lender determines in
good faith constitutes, or could constitute, a Default or Event of Default or
(iv) any other events or circumstances which Lender determines in good faith
make the establishment or revision of a Reserve prudent. Without limiting the
foregoing, Lender shall (x) in the case of each Credit Accommodation issued for
the purchase of Inventory (a) which meets the criteria for Eligible Inventory
set forth in clauses (i), (ii), (iii), (v) and (vi) of Eligible Inventory, (b)
which is or will be in transit to one of the locations set forth in Section
10(d), (c) which is fully insured in a manner satisfactory to Lender and (d)
with respect to which Lender is in possession of all bills of lading and all
other documentation which Lender has requested, all in form and substance
satisfactory to Lender in its sole discretion, establish a Reserve equal to the
cost of such Inventory (plus all duties, freight, taxes, insurance, costs and
other charges and expenses relating to such Credit Accommodation or such
Eligible Inventory) multiplied by a percentage equal to 100% minus the Inventory
Advance Rate applicable to Eligible Inventory and (y) in the case of any other
Credit Accommodation issued for any purpose, establish a Reserve equal to the
full amount of the Credit Accommodation Balance. In addition, (x) Lender shall
establish a permanent Reserve in the amount set forth in Section 1(f) of
Schedule A, and (y) if the outstanding principal balance of the Term Loan
advance with respect to Eligible Equipment exceeds the percentage of the
appraised value of such Eligible Equipment set forth in Section 2(a) of Schedule
A, Lender may establish an additional Reserve in the amount of such excess (and,
for this purpose, if payments of principal on the Term Loan advances against
Eligible Equipment and Real Property are not calculated separately, payments of
principal of the Term Loan made by Borrower shall be deemed to apply to the Term
Loan advance with respect to Eligible Equipment and Real Property, respectively,
in proportion to the original principal amounts of such advances). Lender may,
in its discretion, establish and revise Reserves by deducting them in
determining Availability or by reclassifying Eligible Accounts or Eligible
Inventory as ineligible.
1.3 Other Provisions Applicable to Credit Accommodations. Lender may, in
its sole discretion and on terms and conditions acceptable to Lender, make
Credit Accommodations available to Borrower either by issuing them, or by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; provided, that after giving effect to each Credit
Accommodation, the Credit Accommodation Balance will not exceed the Credit
Accommodation Limit set forth in Section 1(e) of Schedule A. Any amounts paid by
Lender in respect of a Credit Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear interest, and
be payable, in the same manner as a Revolving Loan. Borrower agrees to execute
all documentation required by Lender or the issuer of any Credit Accommodation
in connection with any such Credit Accommodation.
1.4 Repayment. Accrued interest on all monetary Obligations of Borrower
shall be payable on the first day of each month. Principal of the Term Loan
shall be repaid as set forth in Section 2(b) of Schedule A. If at any time any
of the Loan Limits are exceeded, Borrower will immediately pay to Lender such
amounts and/or provide cash collateral to Lender with respect to the Credit
Accommodation Balance of Borrower in the manner set forth in Section 7.3, as
shall cause the Companies to be in full compliance with all of the Loan Limits.
Notwithstanding the foregoing, Lender may, in its sole discretion, make or
permit Revolving Loans, the Term Loan, any Credit Accommodations or any other
monetary Obligations to be in excess of any of the Loan Limits; provided, that
Borrower shall, upon Lender's demand, pay to Lender such amounts as shall cause
the Companies to be in full compliance with all of the Loan Limits. All unpaid
monetary Obligations shall be payable in full on the Maturity Date set forth in
Section 7.1 or, if earlier, the date of any early termination pursuant to
Section 7.2.
1.5 Minimum Borrowing. Subject to the terms and conditions of this
Agreement, Borrower agrees to (i) borrow sufficient amounts to cause the
outstanding principal balance of the Loans to Borrower and loans by Lender to
each other Company to equal or exceed, at all times prior to the Maturity Date,
the Minimum Loan Amount set forth in Section 4 of Schedule A and (ii) maintain
Availability sufficient to enable Borrower to do so. Notwithstanding any other
provision contained in this Agreement, the failure by Borrower to comply with
this Section 1.5 as a result of Borrower's failure to maintain sufficient
Availability in accordance with clause (ii) above shall not constitute an Event
of Default. However, Lender shall not be obligated to loan Borrower or any other
Company the Minimum Loan Amount other than in accordance with all of the terms
and conditions of this Agreement or any other loan and security agreement
between a Company and Lender.
2. INTEREST AND FEES.
2.1 Interest. All Loans and other monetary Obligations of Borrower shall
bear interest at the Interest Rate(s) set forth in Section 3 of Schedule A,
except where expressly set forth to the contrary in this Agreement or another
Loan Document; provided, that after the occurrence of an Event of Default, all
Loans and other monetary Obligations of Borrower shall, at Lender's option, bear
interest at a rate per annum equal to two percent (2%) in excess of the rate
otherwise applicable thereto (the "Default Rate") until such Event of Default
has been cured (notwithstanding the entry of any judgment against Borrower or
the exercise of any other right or remedy by Lender), and all such interest
shall be payable on demand. Changes in the Interest Rate shall be effective as
of the date of any change in the Prime Rate. Notwithstanding anything to the
contrary contained in this Agreement, the aggregate of all amounts deemed to be
interest hereunder and charged or collected by Lender is not intended to exceed
the highest rate permissible under any applicable law, but if it should, such
interest shall automatically be reduced to the extent necessary to comply with
applicable law and Lender will refund to Borrower any such excess interest
received by Lender.
2.2 Fees and Warrants. Borrower shall pay Lender the following fees, and
issue Lender the following warrants, which are in addition to all interest and
other sums payable by Borrower to Lender under this Agreement, and are not
refundable:
(a) Closing Fee. A closing fee in the amount set forth in Section 6(a) of
Schedule A, which shall be deemed to be fully earned as of, and payable on, the
date hereof.
(b) Facility Fees. A facility fee for the Initial Term in the amount set
forth in Section 6(b)(i) of Schedule A (which shall be fully earned as of the
date of this Agreement and shall be payable in equal installments due,
respectively, on each anniversary of the date hereof during the Initial Term),
and a facility fee for each Renewal Term in the amount set forth in Section
6(b)(ii) of Schedule A (which shall be fully earned as of the first day of such
Renewal Term and shall be payable in equal installments due, respectively, on
the first day of such Renewal Term and on each anniversary thereof during such
Renewal Term).
(c) Servicing Fee. A monthly servicing fee in the amount set forth in
Section 6(c) of Schedule A, in consideration of Lender's administration and
other services for each month (or part thereof), which shall be fully earned as
of, and payable in advance on, the date of this Agreement and on the first day
of each month thereafter so long as any of the Obligations are outstanding.
(d) Unused Line Fee. An unused line fee at a rate equal to the percentage
per annum set forth in Section 6(d) of Schedule A of the amount by which the
Maximum Facility Amount exceeds the average daily outstanding principal balance
of the Loans and the Credit Accommodation Balance during the immediately
preceding month (or part thereof), which fee shall be payable, in arrears, on
the first day of each month so long as any of the Obligations are outstanding
and on the Maturity Date.
(e) Minimum Borrowing Fee. A minimum borrowing fee equal to the excess, if
any, of (i) interest which would have been payable in respect of each period set
forth in Section 6(e) of Schedule A if, at all times during such period, the
principal balance of the Loans and all other loans by Lender to each other
Company was equal to the Minimum Loan Amount over (ii) the actual interest
payable in respect of such period, which fee shall be fully earned as of the
first day of such period and payable on the date set forth in Section 6(e)(ii)
of Schedule A and on the Maturity Date.
(f) Success Fee. A success fee in the amount set forth in Section 6(f) of
Schedule A, which shall be fully earned as of the date of this Agreement and
payable as set forth in Section 6(f) of Schedule A.
(g) Warrants. Warrants to acquire the capital stock of Borrower, as
summarized in Section 6(g) of Schedule A and as more fully set forth in a
separate warrant agreement executed by Borrower contemporaneously with this
Agreement.
(h) Credit Accommodation Fees. All of the fees relating to Credit
Accommodations set forth in Section 6(i) and 6(j) of Schedule A.
2.3 Computation of Interest and Fees. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the actual
number of days elapsed in a year of 360 days. For purposes of calculating
interest and fees, if the outstanding daily principal balance of the Revolving
Loans is a credit balance, such balance shall be deemed to be zero.
2.4 Loan Account; Monthly Accountings. Lender shall maintain a loan account
for Borrower reflecting all advances, charges, expenses and payments made
pursuant to this Agreement (the "Loan Account"), and shall provide Borrower with
a monthly accounting reflecting the activity in the Loan Account. Each
accounting shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within sixty days after such account is rendered,
describing the nature of any alleged errors or admissions. However, Lender's
failure to maintain the Loan Account or to provide any such accounting shall not
affect the legality or binding nature of any of the Obligations of Borrower.
Interest, fees and other monetary Obligations of Borrower due and owing under
this Agreement (including fees and other amounts paid by Lender to issuers of
Credit Accommodations) may, in Lender's discretion, be charged to the Loan
Account, and will thereafter be deemed to be Revolving Loans and will bear
interest at the same rate as other Revolving Loans.
3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the Obligations of
Borrower when due, Borrower hereby grants to Lender a continuing security
interest in all of Borrower's property and interests in property, whether
tangible or intangible, now owned or in existence or hereafter acquired or
arising, wherever located, including Borrower's interest in all of the
following, whether or not eligible for lending purposes: (i) all Accounts,
Chattel Paper, Instruments, Documents, Goods (including Inventory, Equipment,
farm products and consumer goods), Investment Property, General Intangibles,
Deposit Accounts and money, (ii) all proceeds and products of all of the
foregoing (including proceeds of any insurance policies, proceeds of proceeds
and claims against third parties for loss or any destruction of any of the
foregoing) and (iii) all books and records relating to any of the foregoing.
4. ADMINISTRATION.
4.1 Lock Boxes and Blocked Accounts. Borrower will, at its expense,
establish (and revise from time to time as Lender may require) collection
procedures acceptable to Lender, in Lender's sole discretion, for the collection
of checks, wire transfers and other proceeds of Accounts ("Account Proceeds"),
which may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Lender either in the name of
Borrower (but as to which Lender has exclusive access) or in the name of Lender
(a "Lock Box") or (ii) depositing all Account Proceeds received by Borrower into
one or more bank accounts maintained in Lender's name (each, a "Blocked
Account"), under an arrangement acceptable to Lender with a depository bank
acceptable to Lender, pursuant to which all funds deposited into each Blocked
Account are to be transferred to Lender in such manner, and with such frequency,
as Lender shall specify or (iii) a combination of the foregoing. Borrower agrees
to execute, and to cause its depository banks to execute, such Lock Box and
Blocked Account agreements and other documentation as Lender shall require from
time to time in connection with the foregoing.
4.2 Remittance of Proceeds. Except as provided in Section 4.1, all proceeds
arising from the sale or other disposition of any Collateral shall be delivered,
in kind, by Borrower to Lender in the original form in which received by
Borrower not later than the following Business Day after receipt by Borrower.
Until so delivered to Lender, Borrower shall hold such proceeds separate and
apart from Borrower's other funds and property in an express trust for Lender.
Nothing in this Section 4.2 shall limit the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
4.3 Application of Payments. Lender may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash proceeds of Collateral or other
payments received with respect to the Obligations of Borrower, in such order and
manner as Lender shall determine, whether or not the Obligations of Borrower are
due, and whether before or after the occurrence of a Default or an Event of
Default. For purposes of determining Availability, such amounts will be credited
to the Loan Account and the Collateral balances to which they relate upon
Lender's receipt of advice from Lender's Bank (set forth in Section 11 of
Schedule A) that such items have been credited to Lender's account at Lender's
Bank (or upon Lender's deposit thereof at Lender's Bank in the case of payments
received by Lender in kind), in each case subject to final payment and
collection. However, for purposes of computing interest on the Obligations of
Borrower, such items shall be deemed applied by Lender two Business Days after
Lender's receipt of advice of deposit thereof at Lender's Bank.
4.4 Notification; Verification. Lender or its designee may, from time to
time, whether or not a Default or Event of Default has occurred: (i) verify
directly with the Account Debtors the validity, amount and other matters
relating to the Accounts and Chattel Paper, by means of mail, telephone or
otherwise, either in the name of Borrower, Lender or a pseudonym of Lender; (ii)
notify Account Debtors that Lender has a security interest in the Accounts and
that payment thereof is to be made directly to Lender; and (iii) demand, collect
or enforce payment of any Accounts and Chattel Paper (but without any duty to do
so).
4.5 Power of Attorney. Borrower hereby grants to Lender an irrevocable
power of attorney, coupled with an interest, authorizing and permitting Lender
(acting through any of its officers, employees, attorneys or agents), at any
time (whether or not a Default or Event of Default has occurred and is
continuing, except as expressly provided below), at Lender's option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the following, in Borrower's name or otherwise: (i) execute on
behalf of Borrower any documents that Lender may, in its sole discretion, deem
advisable in order to perfect and maintain Lender's security interests in the
Collateral, to exercise a right of Borrower or Lender, or to fully consummate
all the transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements, and
amendments thereto, as Lender shall deem necessary or appropriate) and to file
as a financing statement any copy of this Agreement or any financing statement
signed by Borrower; (ii) if Borrower fails to promptly do so after Lender's
request, execute on behalf of Borrower any document exercising, transferring or
assigning any option to purchase, sell or otherwise dispose of or lease (as
lessor or lessee) any real or personal property which is part of the Collateral
or in which Lender has an interest; (iii) execute on behalf of Borrower any
invoices relating to any Accounts, any draft against any Account Debtor and any
notice to any Account Debtor, any proof of claim in bankruptcy, any notice of
Lien or claim, assignment or satisfaction of mechanic's, materialman's or other
Lien; (iv) receive and otherwise take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; (v) endorse Borrower's name
on all checks and other forms of remittances received by Lender; (vi) pay,
contest or settle any Lien, charge, encumbrance, security interest and adverse
claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (vii) after the
occurrence of a Default or Event of Default, grant extensions of time to pay,
compromise claims relating to, and settle Accounts, Chattel Paper and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (viii) pay any sums required on account of
Borrower's taxes or to secure the release of any Liens therefor; (ix) pay any
amounts necessary to obtain, or maintain in effect, any of the insurance
described in Section 5.13; (x) settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (xi) instruct any third party having custody or control of any
Collateral or books or records belonging to, or relating to, Borrower to give
Lender the same rights of access and other rights with respect thereto as Lender
has under this Agreement; and (xii) after the occurrence of a Default or Event
of Default, change the address for delivery of Borrower's mail and receive and
open all mail addressed to Borrower. Any and all sums paid, and any and all
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred, by Lender with respect to the foregoing shall be added to and become
part of the Obligations of Borrower, shall be payable on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations of Borrower. Borrower agrees that Lender's rights under the
foregoing power of attorney or any of Lender's other rights under this Agreement
or the other Loan Documents shall not be construed to indicate that Lender is in
control of the business, management or properties of Borrower.
4.6 Disputes. Borrower shall promptly notify Lender of all disputes or
claims relating to Accounts and Chattel Paper. Borrower will not, without
Lender's prior written consent, compromise or settle any Account or Chattel
Paper for less than the full amount thereof, grant any extension of time of
payment of any Account or Chattel Paper, release (in whole or in part) any
Account Debtor or other person liable for the payment of any Account or Chattel
Paper or grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any Account or Chattel Paper; except
that prior to an Event of Default Borrower may do such things in the ordinary
course of business. Borrower will promptly report any such permitted settlement
or forgiveness to Lender.
4.7 Invoices. At Lender's request, Borrower will cause all invoices and
statements which it sends to Account Debtors or other third parties to be
marked, in a manner satisfactory to Lender and using a pseudonym of Lender, to
reflect Lender's security interest therein.
4.8 Inventory.
(a) Returns. Provided that no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower will promptly determine the reason for
such return and promptly issue a credit memorandum to the Account Debtor in the
appropriate amount (sending a copy to Lender). After the occurrence of an Event
of Default, Borrower will not accept any return without Lender's prior written
consent. Regardless of whether an Event of Default has occurred, Borrower will
(i) hold the returned Inventory in trust for Lender; (ii) segregate all returned
Inventory from all of Borrower's other property; (iii) conspicuously label the
returned Inventory as Lender's property; and (iv) immediately notify Lender of
the return of such Inventory, specifying the reason for such return, the
location and condition of the returned Inventory and, at Lender's request,
deliver such returned Inventory to Lender at an address specified by Lender.
(b) Other Covenants. Borrower will not, without Lender's prior written
consent, (i) store any Inventory or other Collateral with any warehouseman or
other third party other than as set forth in Section 9(d) of Schedule A or (ii)
sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other
contingent basis. Borrower will produce Inventory only in accordance with the
Fair Labor Standards Act of 1938 as amended, and all rules, regulations and
orders promulgated thereunder.
4.9 Access to Collateral, Books and Records. At reasonable times, and on
one Business Day's notice, prior to the occurrence of a Default or an Event of
Default, and at any time and with or without notice after the occurrence and
during the continuance of a Default or an Event of Default, Lender or its agents
shall have the right to inspect the Collateral, and the right to examine and
copy Borrower's books and records. Lender shall take reasonable steps to keep
confidential all information obtained in any such inspection or examination, but
Lender shall have the right to disclose any such information to its auditors,
regulatory agencies, attorneys and participants, and pursuant to any subpoena or
other legal process. Borrower agrees to give Lender access to any or all of
Borrower's premises to enable Lender to conduct such inspections and
examinations. Such inspections and examinations shall be at Borrower's expense
and the charge therefor shall be $650 per person per day (or such higher amount
as shall represent Lender's then current standard charge), plus reasonable
out-of-pocket expenses. Lender may, at Borrower's expense, use Borrower's
personnel, computer and other equipment, programs, printed output and computer
readable media, supplies and premises for the collection, sale or other
disposition of Collateral to the extent Lender, in its sole discretion, deems
appropriate. Borrower hereby irrevocably authorizes all accountants and third
parties to disclose and deliver to Lender, at Borrower's expense, all financial
information, books and records, work papers, management reports and other
information in their possession regarding Borrower. Borrower will not enter into
any agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address
without first obtaining Lender's written consent (which consent may be
conditioned upon such accounting firm, service bureau or other third party
agreeing to give Lender the same rights with respect to access to books and
records and related rights as Lender has under this Agreement).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Lender, and (ii) compliance with
each such covenant will be a condition to each Loan and Credit Accommodation:
5.1 Existence and Authority. Borrower is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation. Borrower is qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a material adverse effect
on Borrower. The execution, delivery and performance by Borrower of this
Agreement and all of the other Loan Documents have been duly and validly
authorized, do not violate Borrower's articles or certificate of incorporation,
by-laws or other organizational documents, or any law or any agreement or
instrument or any court order which is binding upon Borrower or its property, do
not constitute grounds for acceleration of any indebtedness or obligation under
any agreement or instrument which is binding upon Borrower or its property, and
do not require the consent of any Person. This Agreement and such other Loan
Documents have been duly executed and delivered by, and are enforceable against,
Borrower, and all other Obligors who have signed them, in accordance with their
respective terms. Sections 9(g) and 9(h) of Schedule A sets forth the ownership
of Borrower and its Subsidiaries as of the date of this Agreement.
5.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct and complete legal name. Listed in
Section 9 of Schedule A are all prior names of Borrower and all of Borrower's
present and prior trade names. Borrower shall give Lender at least 30 days'
prior written notice before changing its name or doing business under any other
name. Borrower has complied with all laws relating to the conduct of business
under a fictitious business name. Borrower represents and warrants that (i) each
trade name does not refer to another corporation or other legal entity; (ii) all
Accounts invoiced under any such trade names are owned exclusively by Borrower
and are subject to the security interest of Lender and the other terms of this
Agreement and (iii) all schedules of Accounts, including any sales made or
services rendered using the trade name shall show Borrower's name as assignor.
5.3 Title to Collateral; Permitted Liens. Borrower has good and marketable
title to the Collateral. The Collateral now is and will remain free and clear of
any and all liens, charges, security interests, encumbrances and adverse claims,
except for Permitted Liens. Lender now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Lender and the Collateral against all claims of others. None of the
Collateral which is Equipment is or will be affixed to any real property in such
a manner, or with such intent, as to become a fixture. Borrower is not a lessee
under any real property lease pursuant to which the lessor may obtain any rights
in any of the Collateral, and no such lease now prohibits, restrains, impairs or
conditions, or will prohibit, restrain, impair or condition, Borrower's right to
remove any Collateral from the leased premises. Whenever any Collateral is
located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Lender, cause each such third party to
execute and deliver to Lender, in form acceptable to Lender, such waivers and
subordinations as Lender shall specify, so as to ensure that Lender's rights in
the Collateral are, and will continue to be, superior to the rights of any such
third party. Borrower will keep in full force and effect, and will comply with
all the terms of, any lease of real property where any of the Collateral now or
in the future may be located.
5.4 Accounts and Chattel Paper. As of each date reported by Borrower, all
Accounts which Borrower has reported to Lender as being Eligible Accounts comply
in all respects with the criteria for eligibility established by Lender and in
effect at such time. All Accounts and Chattel Paper are genuine and in all
respects what they purport to be, arise out of a completed, bona fide and
unconditional and non-contingent sale and delivery of goods or rendition of
services by Borrower in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts or other
documents relating thereto, each Account Debtor thereunder had the capacity to
contract at the time any contract or other document giving rise to such Accounts
and Chattel Paper were executed, and the transactions giving rise to such
Accounts and Chattel Paper comply with all applicable laws and governmental
rules and regulations.
5.5 Investment Property. Borrower will take any and all actions required or
requested by Lender, from time to time, to (i) cause Lender to obtain exclusive
control of any Investment Property in a manner acceptable to Lender and (ii)
obtain from any issuers of Investment Property and such other Persons as Lender
shall specify, for the benefit of Lender, written confirmation of Lender's
exclusive control over such Investment Property. For purposes of this Section
5.5, Lender shall have exclusive control of Investment Property if (A) such
Investment Property consists of certificated securities and Borrower delivers
such certificated securities to Lender (with appropriate endorsements if such
certificated securities are in registered form); (B) such Investment Property
consists of uncertificated securities and either (x) Borrower delivers such
uncertificated securities to Lender or (y) the issuer thereof agrees, pursuant
to documentation in form and substance satisfactory to Lender, that it will
comply with instructions originated by Lender without further consent by
Borrower, and (C) such Investment Property consists of security entitlements and
either (x) Lender becomes the entitlement holder thereof or (y) the appropriate
securities intermediary agrees, pursuant to documentation in form and substance
satisfactory to Lender, that it will comply with entitlement orders originated
by Lender without further consent by Borrower.
5.6 Place of Business; Location of Collateral. Borrower's Address is
Borrower's chief executive office and the location of its books and records. In
addition, except as provided in the immediately following sentence, Borrower has
places of business and Collateral located only at the locations set forth on
Sections 9(d) and 9(e) of Schedule A. Borrower will give Lender at least 30
days' prior written notice before opening any additional place of business,
changing its chief executive office or the location of its books and records, or
moving any of the Collateral to a location other than Borrower's Address or one
of the locations set forth in Sections 9(d) and 9(e) of Schedule A, and will
execute and deliver all financing statements and other agreements, instruments
and documents which Lender shall require as a result thereof.
5.7 Financial Condition, Statements and Reports. All financial statements
delivered to Lender by or on behalf of Borrower have been prepared in conformity
with GAAP and completely and fairly reflect the financial condition of Borrower,
at the times and for the periods therein stated. Between the last date covered
by any such financial statement provided to Lender and the date hereof, there
has been no material adverse change in the financial condition or business of
Borrower. Borrower is solvent and able to pay its debts as they come due, and
has sufficient capital to carry on its business as now conducted and as proposed
to be conducted. All schedules, reports and other information and documentation
delivered by Borrower to Lender with respect to the Collateral are, or will be,
when delivered, true, correct and complete as of the date delivered or the date
specified therein.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed all tax returns and reports required by applicable law, and Borrower has
timely paid all applicable taxes, assessments, deposits and contributions now or
in the future owed by Borrower. Borrower may, however, defer payment of any
contested taxes; provided, that Borrower (i) in good faith contests Borrower's
obligation to pay such taxes by appropriate proceedings promptly and diligently
instituted and conducted; (ii) notifies Lender in writing of the commencement
of, and any material development in, the proceedings; (iii) posts bonds or takes
any other steps required to keep the contested taxes from becoming a Lien upon
any of the Collateral and (iv) maintains adequate reserves therefor in
conformity with GAAP. Borrower is unaware of any claims or adjustments proposed
for any of Borrower's prior tax years which could result in additional taxes
becoming due and payable by Borrower. Borrower has paid, and shall continue to
pay, all amounts necessary to fund all present and future pension, profit
sharing and deferred compensation plans in accordance with their terms, and
Borrower has not withdrawn from participation in, permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or any other governmental
agency.
5.9 Compliance with Laws. Borrower has complied in all material respects
with all provisions of all applicable laws and regulations, including those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, the payment and withholding of taxes, ERISA
and other employee matters, safety and environmental matters.
5.10 Litigation. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of Borrower's
knowledge) threatened against Borrower. There is no claim, suit, litigation,
proceeding or investigation pending or (to the best of Borrower's knowledge)
threatened by or against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which may result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Lender in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower.
5.11 Use of Proceeds. All proceeds of all Loans will be used solely for
lawful business purposes.
5.12 Insurance. Borrower will at all times carry property, liability and
other insurance, with insurers acceptable to Lender, in such form and amounts,
and with such deductibles and other provisions, as Lender shall require, and
Borrower will provide evidence of such insurance to Lender, so that Lender is
satisfied that such insurance is, at all times, in full force and effect. Each
property insurance policy shall name Lender as loss payee and shall contain a
lender's loss payable endorsement in form acceptable to Lender, each liability
insurance policy shall name Lender as an additional insured, and each business
interruption insurance policy shall be collaterally assigned to Lender, all in
form and substance satisfactory to Lender. All policies of insurance shall
provide that they may not be cancelled or changed without at least thirty days'
prior written notice to Lender, shall contain breach of warranty coverage, and
shall otherwise be in form and substance satisfactory to Lender. Upon receipt of
the proceeds of any such insurance, Lender shall apply such proceeds in
reduction of the Obligations of Borrower as Lender shall determine in its sole
discretion. Borrower will promptly deliver to Lender copies of all reports made
to insurance companies.
5.13 Financial and Collateral Reports. Borrower has kept and will keep
adequate records and books of account with respect to its business activities
and the Collateral in which proper entries are made in accordance with GAAP
reflecting all its financial transactions, and will cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP,
unless Borrower's certified public accountants concur in any change therein and
such change is disclosed to Lender and is consistent with GAAP):
(a) Collateral Reports. On or before the twentieth day of each month, an
aging of Borrower's Accounts, Chattel Paper and notes receivable, and weekly
Inventory reports, all in such form, and together with such additional
certificates, schedules and other information with respect to the Collateral or
the business of Borrower or any Obligor, as Lender shall request; provided, that
Borrower's failure to execute and deliver the same shall not affect or limit
Lender's security interests and other rights in any of the Accounts, nor shall
Lender's failure to advance or lend against a specific Account affect or limit
Lender's security interest and other rights therein. Together with each such
schedule, Borrower shall furnish Lender with copies (or, at Lender's request,
originals) of all contracts, orders, invoices, and other similar documents, and
all original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of which gave
rise to such Accounts, and Borrower warrants the genuineness of all of the
foregoing. In addition, Borrower shall deliver to Lender the originals of all
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts, immediately upon receipt
thereof and in the same form as received, with all necessary endorsements.
Lender may destroy or otherwise dispose of all documents, schedules and other
papers delivered to Lender pursuant to this Agreement (other than originals of
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts) six months after Lender
receives them, unless Borrower requests their return in writing in advance and
arranges for their return to Borrower at Borrower's expense;
(b) Annual Statements. Not later than 120 days after the close of each
fiscal year of Borrower, unqualified (except for a qualification for a change in
accounting principles with which the accountant concurs) audited financial
statements of Borrower and its Subsidiaries as of the end of such year, on a
consolidated and consolidating basis, certified by a firm of independent
certified public accountants of recognized standing selected by Borrower but
acceptable to Lender, together with a copy of any management letter issued in
connection therewith and a letter from such accountants acknowledging that
Lender is relying on such financial statements. Concurrently with the delivery
of such financial statements, Borrower shall forward to Lender a copy of the
accountants' letter to Borrower's management that is prepared in connection with
such financial statements;
(c) Interim Statements. Not later than twenty days after the end of each
month hereafter, including the last month of Borrower's fiscal year, unaudited
interim financial statements of Borrower and its Subsidiaries as of the end of
such month and of the portion of Borrower's fiscal year then elapsed, on a
consolidated and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly presenting
the consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain notes;
(d) Projections, Etc. Such projections of business plans, budgets, cash
flow statements and Availability projections for Borrower and its Subsidiaries
as Lender shall request from time to time;
(e) Shareholder Reports, Etc. Promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial statements or
reports which Borrower has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which Borrower
files with the Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or any national securities exchange;
(f) ERISA Reports. Upon request by Lender, copies of any annual report to
be filed pursuant to the requirements of ERISA in connection with each plan
subject thereto; and
(g) Other Information. Such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's and each of its Subsidiary's financial
condition or results of operations.
5.14 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Lender with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Lender, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that Lender may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.15 Maintenance of Collateral, Etc. Borrower will maintain all of its
Equipment in good working condition, ordinary wear and tear excepted, and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim relating
to the Collateral or which may result in an adverse impact upon Borrower's
business, assets or financial condition.
5.16 Notification of Changes. Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening of any new bank
account or other deposit account, or any material adverse change in the business
or financial affairs of Borrower or the existence of any circumstance which
would make any representation or warranty of Borrower untrue in any material
respect or constitute a material breach of any covenant of Borrower.
5.17 Further Assurances. Borrower agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords, mortgagees and
processors and other bailees, subordination and intercreditor agreements and
other agreements, instruments and documents as Lender may request from time to
time, to perfect and maintain Lender's security interests in the Collateral and
to fully effectuate the transactions contemplated by this Agreement.
5.18 Negative Covenants. Borrower will not, without Lender's prior written
consent which consent will not be unreasonably withheld, (i) merge or
consolidate with another Person, form any new Subsidiary or acquire any interest
in any Person; (ii) acquire any assets except in the ordinary course of business
and as otherwise permitted by this Agreement and the other Loan Documents; (iii)
enter into any transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral or other assets, except that Borrower may sell finished
goods Inventory in the ordinary course of its business; (v) make any loans to,
or investments in, any Affiliate or other Person in the form of money or other
assets; (vi) incur any debt outside the ordinary course of business; (vii)
guaranty or otherwise become liable with respect to the obligations of another
party or entity; (viii) pay or declare any dividends or other distributions on
Borrower's stock, if Borrower is a corporation (except for dividends payable
solely in capital stock of Borrower) or with respect to any equity interests, if
Borrower is not a corporation; (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's capital stock or other equity
interests; (x) make any change in Borrower's capital structure; (xi) dissolve or
elect to dissolve; (xii) pay any principal or interest on any indebtedness owing
to an Affiliate except as may be permitted by any subordination agreement of
such Affiliate in favor of Lender; (xiii) enter into any transaction with an
Affiliate other than on arms-length terms; or (xiv) agree to do any of the
foregoing.
5.19 Financial Covenants.
(a) Capital Expenditures. Borrower will not expend or commit to expend,
directly or indirectly, for capital expenditures (including capital lease
obligations) in excess of the amount set forth in Section 8(a) of Schedule A as
the Capital Expenditure Limitation in any fiscal year.
(b) Net Worth. Borrower will at all times maintain a net worth of at least
the amount set forth in Section 8(b) of Schedule A as the Minimum Net Worth
Requirement.
(c) Working Capital. Borrower will at all times maintain working capital of
at least the amount set forth in Section 8(c) of Schedule A as the Minimum
Working Capital Requirement.
(d) Other Financial Covenants. Borrower will comply with any additional
financial covenants set forth in Section 8(f) of Schedule A.
6. RELEASE AND INDEMNITY.
6.1 Release. Borrower hereby releases Lender and its Affiliates and their
respective directors, officers, employees, attorneys and agents and any other
Person affiliated with or representing Lender (the "Released Parties") from any
and all liability arising from acts or omissions under or pursuant to this
Agreement, whether based on errors of judgment or mistake of law or fact, except
for those arising from gross negligence or willful misconduct. However, in no
circumstance will any of the Released Parties be liable for lost profits or
other special or consequential damages. Such release is made on the date hereof
and remade upon each request for a Loan or Credit Accommodation by Borrower.
Without limiting the foregoing:
(a) Lender shall not be liable for (i) any shortage or discrepancy in,
damage to, or loss or destruction of, any goods, the sale or other disposition
of which gave rise to an Account; (ii) any error, act, omission, or delay of any
kind occurring in the settlement, failure to settle, collection or failure to
collect any Account; (iii) settling any Account in good faith for less than the
full amount thereof; or (iv) any of Borrower's obligations under any contract or
agreement giving rise to an Account; and
(b) In connection with Credit Accommodations or any underlying transaction,
Lender shall not be responsible for the conformity of any goods to the documents
presented, the validity or genuineness of any documents, delay, default or fraud
by Borrower, shippers and/or any other Person. Borrower agrees that any action
taken by Lender, if taken in good faith, or any action taken by an issuer of any
Credit Accommodation, under or in connection with any Credit Accommodation,
shall be binding on Borrower and shall not create any resulting liability to
Lender. In furtherance thereof, Lender shall have the full right and authority
to clear and resolve any questions of non-compliance of documents, to give any
instructions as to acceptance or rejection of any documents or goods, to execute
for Borrower's account any and all applications for steamship or airway
guaranties, indemnities or delivery orders, to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents, and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the Credit Accommodations or applications and other documentation pertaining
thereto.
6.2 Indemnity. Borrower hereby agrees to indemnify the Released Parties and
hold them harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including attorneys' fees), of every nature, character and description, which
the Released Parties may sustain or incur based upon or arising out of any of
the transactions contemplated by this Agreement or the other Loan Documents or
any of the Obligations, including any transactions or occurrences relating to
the issuance of any Credit Accommodation, the Collateral relating thereto, any
drafts thereunder and any errors or omissions relating thereto (including any
loss or claim due to any action or inaction taken by the issuer of any Credit
Accommodation) (and for this purpose any charges to Lender by any issuer of
Credit Accommodations shall be conclusive as to their appropriateness and may be
charged to the Loan Account), or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Lender relating to Borrower or
the Obligations (except any such amounts sustained or incurred as the result of
the gross negligence or willful misconduct of the Released Parties).
Notwithstanding any provision in this Agreement to the contrary, the indemnity
agreement set forth in this Section shall survive any termination of this
Agreement.
7. TERM.
7.1 Maturity Date. Lender's obligation to make Loans and to provide Credit
Accommodations under this Agreement shall initially continue in effect until the
Initial Maturity Date set forth in Section 7 of Schedule A (the "Initial Term");
provided, that such date shall automatically be extended (the Initial Maturity
Date, as it may be so extended, being referred to as the "Maturity Date") for
successive additional terms of three years each (each a "Renewal Term"), unless
one party gives written notice to the other, not less than sixty days prior to
the Maturity Date, that such party elects not to extend the Maturity Date. This
Agreement and the other Loan Documents and Lender's security interests in and
Liens upon the Collateral, and all representations, warranties and covenants of
Borrower contained herein and therein, shall remain in full force and effect
after the Maturity Date until all of the monetary Obligations are indefeasibly
paid in full.
7.2 Early Termination. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective thirty business days after
written notice of termination is given to Lender or (ii) by Lender at any time
after the occurrence and during the continuance of an Event of Default, without
notice, effective immediately; provided, that if any Affiliate of Borrower is
also a party to a financing arrangement with Lender, no such early termination
shall be effective unless such Affiliate simultaneously terminates its financing
arrangement with Lender. If so terminated under this Section 7.2, Borrower shall
pay to Lender (i) an early termination fee (the "Early Termination Fee") in the
amount set forth in Section 6(h) of Schedule A plus (ii) any earned but unpaid
Facility Fee. Such fee shall be due and payable on the effective date of
termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations of Borrower. In addition, if Borrower
so terminates and repays its Obligations without having provided Lender with at
least thirty days' prior written notice thereof, an additional amount equal to
thirty days of interest at the applicable Interest Rate(s), based on the average
outstanding amount of the Obligations of Borrower for the six month period
immediately preceding the date of termination.
7.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all of its
Obligations, whether or not all or any part of such Obligations are otherwise
then due and payable. Without limiting the generality of the foregoing, if, on
the Maturity Date or on any earlier effective date of termination, there are any
outstanding Credit Accommodations, then on such date Borrower shall provide to
Lender cash collateral in an amount equal to 110% of the Credit Accommodation
Balance of Borrower to secure all of the Obligations of Borrower (including
estimated attorneys' fees and other expenses) relating to said Credit
Accommodations or such greater percentage or amount as Lender reasonably deems
appropriate, pursuant to a cash pledge agreement in form and substance
satisfactory to Lender.
7.4 Effect of Termination. No termination shall affect or impair any right
or remedy of Lender or relieve Borrower of any of its Obligations until all of
the monetary Obligations of Borrower have been indefeasibly paid in full. Upon
indefeasible payment and performance in full of all of the monetary Obligations
of Borrower (or the provision of cash collateral with respect to the Credit
Accommodation Balance of Borrower as set forth in Section 7.3) and termination
of this Agreement, Lender shall promptly deliver to Borrower termination
statements, requests for reconveyances and such other documents as may be
reasonably required to terminate Lender's security interests in the Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
Lender immediate written notice thereof: (i) if any warranty, representation,
statement, report or certificate made or delivered to Lender by Borrower or any
of Borrower's officers, employees or agents is untrue or misleading; (ii) if
Borrower fails to pay when due any principal or interest on any Loan or any
other monetary Obligation; (iii) if Borrower breaches any covenant or obligation
contained in this Agreement or any other Loan Document or fails to perform any
other non-monetary Obligation; (iv) if any levy, assessment, attachment,
seizure, lien or encumbrance (other than a Permitted Lien) is made or permitted
to exist on all or any part of the Collateral; (v) if one or more judgments
aggregating in excess of $25,000, or any injunction or attachment, is obtained
against Borrower or any Obligor or which remains unstayed for more than ten days
or is enforced; (vi) the occurrence of any default which remains uncured or
unwaived following any applicable cure or grace period under any financing
agreement, security agreement or other agreement, instrument or document
executed and delivered by (A) Borrower with, or in favor of, any Person other
than Lender and such Person has accelerated the indebtedness evidenced thereby
or (B) Borrower or any Affiliate of Borrower with, or in favor of, Lender or any
Affiliate of Lender; (vii) the dissolution, death, termination of existence in
good standing, insolvency or business failure or suspension or cessation of
business as usual of Borrower or any Obligor (or of any general partner of
Borrower or any Obligor if it is a partnership) or the appointment of a
receiver, trustee or custodian for all or any part of the property of, or an
assignment for the benefit of creditors by Borrower or any Obligor, or the
commencement of any proceeding by Borrower or any Obligor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, or if Borrower makes or sends a notice of a bulk transfer or
calls a meeting of its creditors; (viii) the commencement of any proceeding
against Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; (ix) the actual or
attempted revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations of Borrower or any security document by
any Obligor; (x) if Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations of Borrower other than
as permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations attempts to limit or terminate its
subordination agreement; (xi) if there is any actual or threatened indictment of
Borrower or any Obligor under any criminal statute or commencement or threatened
commencement of criminal or civil proceedings against Borrower or any Obligor,
pursuant to which the potential penalties or remedies sought or available
include forfeiture of any property of Borrower or such Obligor; (xii) if there
is a change in the record or beneficial ownership of an aggregate of more than
20% of the outstanding shares of stock of Borrower (or partnership or membership
interests if it is a partnership or limited liability company), in one or more
transactions, compared to the ownership of outstanding shares of stock (or
partnership or membership interests) of Borrower as of the date hereof, without
the prior written consent of Lender; (xiii) if there is any change in the chief
executive officer or chief financial officer of Borrower; (xiv) if an Event of
Default occurs under any Loan and Security Agreement between Lender and an
Affiliate of Borrower; (xv) if Lender determines in good faith that the
Collateral is insufficient to fully secure the Obligations of Borrower or that
the prospect of payment of performance of the Obligations of Borrower is
impaired; or (xvi) Borrower defaults under any of its real estate leases and any
applicable cure periods under such leases have expired.
8.2 Remedies. Upon the occurrence of any Event of Default, and at any time
thereafter, Lender, at its option, and without notice or demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of the
following: (i) cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other Loan Document; (ii) accelerate and declare all
or any part of the Obligations of Borrower to be immediately due, payable and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any of the Obligations of Borrower; (iii)
take possession of any or all of the Collateral wherever it may be found, and
for that purpose Borrower hereby authorizes Lender, without judicial process, to
enter onto any of Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain (or
cause a custodian to remain) on the premises in exclusive control thereof,
without charge for so long as Lender deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, that if Lender seeks to take possession of any of the
Collateral by court process, Borrower hereby irrevocably waives (A) any bond and
any surety or security relating thereto required by law as an incident to such
possession, (B) any demand for possession prior to the commencement of any suit
or action to recover possession thereof and (C) any requirement that Lender
retain possession of, and not dispose of, any such Collateral until after trial
or final judgment; (iv) require Borrower to assemble any or all of the
Collateral and make it available to Lender at one or more places designated by
Lender which are reasonably convenient to Lender and Borrower, and to remove the
Collateral to such locations as Lender may deem advisable; (v) complete the
processing, manufacturing or repair of any Collateral prior to a disposition
thereof and, for such purpose and for the purpose of removal, Lender shall have
the right to use Borrower's premises, vehicles and other Equipment and all other
property without charge; (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Lender obtains possession of it or
after further manufacturing, processing or repair, at one or more public or
private sales, in lots or in bulk, for cash, exchange or other property, or on
credit (a "Sale"), and to adjourn any such Sale from time to time without notice
other than oral announcement at the time scheduled for Sale (and, in connection
therewith, (A) Lender shall have the right to conduct such Sale on Borrower's
premises without charge, for such times as Lender deems reasonable, on Lender's
premises, or elsewhere, and the Collateral need not be located at the place of
Sale; (B) Lender may directly or through any of its Affiliates purchase or lease
any of the Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition and (C) any Sale of Collateral shall
not relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title, physical condition or otherwise at the time of sale);
(vii) demand payment of and collect any Accounts, Chattel Paper, Instruments and
General Intangibles included in the Collateral and, in connection therewith,
Borrower irrevocably authorizes Lender to endorse or sign Borrower's name on all
collections, receipts, Instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of Collateral or proceeds thereof and, in Lender's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Accounts, General Intangibles and the like for less than face value; and (viii)
demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
relating thereto. In addition to the rights and remedies set forth above, Lender
shall have all the other rights and remedies accorded a secured party after
default under the UCC and under all other applicable laws, and under any other
Loan Document, and all of such rights and remedies are cumulative and
non-exclusive. Exercise or partial exercise by Lender of one or more of its
rights or remedies shall not be deemed an election or bar Lender from subsequent
exercise or partial exercise of any other rights or remedies. The failure or
delay of Lender to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations of Borrower have been fully paid and performed. If
notice of any sale or other disposition of Collateral is required by law, notice
at least ten days prior to the sale designating the time and place of sale in
the case of a public sale or the time after which any private sale or other
disposition is to be made shall be deemed to be reasonable notice, and Borrower
waives any other notice. If any Collateral is sold or leased by Lender on credit
terms or for future delivery, the Obligations of Borrower shall not be reduced
as a result thereof until payment is collected by Lender.
8.3 Application of Proceeds. Subject to any application required by law,
all proceeds realized as the result of any Sale shall be applied by Lender to
the Obligations of Borrower in such order as Lender shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other persons legally
entitled thereto; but Borrower shall remain liable to Lender for any deficiency.
If Lender, in its sole discretion, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any Sale, Lender shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations of Borrower by the principal amount of the purchase
price or deferring the reduction of such Obligations until the actual receipt by
Lender of the cash therefor.
9. GENERAL PROVISIONS.
9.1 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private delivery
service or by certified mail return receipt requested, addressed to Lender or
Borrower at the address shown in the heading to this Agreement, or by facsimile
to the facsimile number shown in Section 9(i) of Schedule A, or at any other
address (or to any other facsimile number) designated in writing by one party to
the other party in the manner prescribed in this Section 9.1. All notices shall
be deemed to have been given when received or when delivery is refused by the
recipient.
9.2 Severability. If any provision of this Agreement, or the application
thereof to any party or circumstance, is held to be void or unenforceable by any
court of competent jurisdiction, such defect shall not affect the remainder of
this Agreement, which shall continue in full force and effect.
9.3 Integration. This Agreement and the other Loan Documents represent the
final, entire and complete agreement between Borrower and Lender and supersede
all prior and contemporaneous negotiations, oral representations and agreements,
all of which are merged and integrated into this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT
SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 Waivers. The failure of Lender at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
Loan Documents shall not waive or diminish any right of Lender later to demand
and receive strict compliance therewith. Any waiver of any default shall not
waive or affect any other default, whether prior or subsequent, and whether or
not similar. None of the provisions of this Agreement or any other Loan Document
shall be deemed to have been waived by any act or knowledge of Lender or its
agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper, Investment Property or guaranty at any time held by Lender on which
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement, and notice of acceptance
hereof.
9.5 Amendment. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and a duly
authorized officer of Lender.
9.6 Time of Essence. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement and the other Loan Documents.
9.7 Attorneys Fees and Costs. Borrower shall reimburse Lender for all
reasonable attorneys' and paralegals' fees (including in-house attorneys and
paralegals employed by Lender) and all filing, recording, search, title
insurance, appraisal, audit, and other costs incurred by Lender, pursuant to, in
connection with, or relating to this Agreement, including all reasonable
attorneys' fees and costs Lender incurs to prepare and negotiate this Agreement
and the other Loan Documents; to obtain legal advice in connection with this
Agreement and the other Loan Documents; to administer this Agreement and the
other Loan Documents (including the cost of periodic financing statement, tax
lien and other searches conducted by Lender); to enforce, or seek to enforce,
any of its rights; prosecute actions against, or defend actions by, Account
Debtors; to commence, intervene in, or defend any action or proceeding; to
initiate any complaint to be relieved of the automatic stay in bankruptcy; to
file or prosecute any probate claim, bankruptcy claim, third-party claim, or
other claim; to examine, audit, copy, and inspect any of the Collateral or any
of Borrower's books and records; to protect, obtain possession of, lease,
dispose of, or otherwise enforce Lender's security interests in, the Collateral;
and to otherwise represent Lender in any litigation relating to Borrower. If
either Lender or Borrower files any lawsuit against the other predicated on a
breach of this Agreement, the prevailing party in such action shall be entitled
to recover its reasonable costs and attorneys' fees, including reasonable
attorneys' fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. All attorneys' fees and costs
to which Lender may be entitled pursuant to this Section shall immediately
become part of the Obligations of Borrower, shall be due on demand, and shall
bear interest at a rate equal to the highest interest rate applicable to any of
the Obligations of Borrower.
9.8 Benefit of Agreement; Assignability. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors,
assigns, heirs, beneficiaries and representatives of Borrower and Lender;
provided, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Lender, and any prohibited
assignment shall be void. No consent by Lender to any assignment shall release
Borrower from its liability for any of its Obligations. Lender shall have the
right to assign all or any of its rights and obligations under the Loan
Documents, and to sell participating interests therein, to one or more other
Persons, and Borrower agrees to execute all agreements, instruments and
documents requested by Lender in connection with each such assignment and
participation.
9.9 Joint and Several Liability. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower or any other Obligor.
9.10 Headings; Construction. Section and subsection headings are used in
this Agreement only for convenience. Borrower and Lender acknowledge that the
headings may not describe completely the subject matter of the applicable
Sections or subsections, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against Lender or Borrower under any rule of construction or
otherwise.
9.11 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF SUCH STATE. BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE AND
FEDERAL COURTS IN NEW YORK OR THE STATE IN WHICH ANY OF THE COLLATERAL IS
LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER ALSO AGREES THAT ANY CLAIM OR
DISPUTE BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL COURTS OF NEW
YORK. EACH OF LENDER AND BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER
AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE
EXTENT PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF BORROWER OR LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OR BORROWER OF
ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER
THIS AGREEMENT TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
9.12 WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR
BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE; (ii) THE RIGHT TO INTERPOSE ANY CLAIMS,
DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER RELATING
THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii) NOTICE PRIOR TO LENDER'S
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES AND (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
9.13 THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of
the date set forth in the heading.
Borrower: Lender:
SOUTHWEST TELEPRODUCTIONS, INC. NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Chief Financial Officer Its Authorized Signatory
Schedule A
Description of Certain Terms
This Schedule is an integral part of the Loan and Security Agreement
between SOUTHWEST TELEPRODUCTIONS, INC. ("Borrower") and NATIONSCREDIT
COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION
(the "Agreement").
1. Loan Limits for Revolving Loans:
(a) Maximum Facility Amount: $8,500,000, in the aggregate to
the Companies
(b) Advance Rates:
(i) Accounts Advance 80% (or 90% in the case of Accounts
Rate: owing by the United States
government ("Government Accounts")
after proof of payment sign-off);
provided, that if the Dilution
Percentage exceeds 7% (or 2% in
the case of Government Accounts),
such advance rate will be reduced
by the number of full or partial
percentage points of such excess
(ii) Inventory Advance Not applicable
Rate(s):
(c) Accounts Sublimit: Not applicable
(d) Inventory Sublimit(s): Not applicable
(e) Credit Accommodation
Limit: Not applicable
(f) Permanent Reserve Amount: Not applicable
2. Loan Limits for Term Loan:
(a) Principal Amount: $815,000 (the "Equipment Advance")
(b) Repayment Schedule:
(i) Equipment Advance: 60 equal consecutive monthly
installments of $13,583.33,
commencing May 1, 1997; provided,
that if, 24 months after the date
of the Agreement, the unpaid
principal balance of the Equipment
Advance exceeds 70% of the updated
auction sale value of the Eligible
Equipment at such time (as
reflected in an appraisal
conducted as of such time by an
appraiser acceptable to Lender)
then, at Lender's election, such
excess shall be repaid in six equal
consecutive monthly installments
payable on the first day of each
calendar month commencing with the
month immediately following such
election by Lender (which
repayments shall be in addition to
the regular amortization payments
set forth above).
(ii) Real Property Not Applicable.
Advance:
3. Interest Rates:
(a) Revolving Loans: 2.25% per annum in excess of
the Prime Rate
(b) Term Loan: 2.25% per annum in excess of
the Prime Rate
4. Minimum Loan Amount: $2,500,000, in the aggregate for
the Companies.
5. Maximum days after invoice date
for Eligible Accounts: 90
6. Fees:
(a) Closing Fee: $85,000, in the aggregate for
Companies, jointly and severally as
set forth in the Fee Letter.
(b) Facility Fee:
(i) Initial Term: $85,000, in the aggregate for
Companies, jointly and severally as
set forth in the Fee Letter.
(ii) Renewal Term(s): $127,500, in the aggregate for
Companies, jointly and severally as
set forth in the Fee Letter.
(c) Servicing Fee: None
(d) Unused Line Fee: None
(e) Minimum Borrowing Fee:
(i) Applicable period: each month
(ii) Date payable: the first day of each month
(f) Success Fee: None
(g) Warrants: None
(h) Early Termination Fee: An aggregate amount for the
Companies, jointly and severally as
set forth in the Fee Letter, equal
to 5% of the Maximum Facility
Amount if terminated during the
first year of the Term, 3% of the
Maximum Facility Amount if
terminated during the second year
of the Term, 2% of the Maximum
Facility Amount if terminated
during the third year of the Term
(but not on the Initial Maturity
Date), and 1% of the Maximum
Facility Amount if terminated
thereafter and prior to, but not
on, the Maturity Date.
(i) Fees for letters of 2.75% per annum of the face amount
credit (or guaranties by of each open Credit Accommodation,
Lender): payable monthly on the first day of
each month
(j) Fees for other Credit
Accommodations: As specified by the issuer thereof.
7. Initial Maturity Date: April __, 2000
8. Financial Covenants:
(a) Capital Expenditure
Limitation: Not applicable
(b) Minimum Net Worth
Requirement: Not applicable
(c) Minimum Working Capital
Requirement: Not applicable
(d) Limitation on Purchase
Money Security Interests: Not applicable
(e) Limitation on Equipment
Leases: Not applicable
(f) Additional Financial
Covenants: None
9. Borrower Information:
(a) Prior Names of Borrower: Southwest Producer's, Inc. (until
1982)
(b) Prior Trade Names of
Borrower: None
(c) Existing Trade Names of
Borrower: None
(d) Inventory/Equipment ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(e) Other Locations: None
(f) Litigation: None
(g) Ownership of Borrower: 100 shares outstanding, all owned
by Northwest Teleproductions, Inc.
(h) Subsidiaries (and
ownership thereof): None
(i) Facsimile Numbers:
Borrower: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: (▇▇▇) ▇▇▇-▇▇▇▇
10. Description of Real Property: The real property located at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
11. Lender's Bank: The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
12. Other Covenants: None
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as of
the date set forth in the heading to the Agreement.
Borrower: Lender:
SOUTHWEST TELEPRODUCTIONS, INC. NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Chief Financial Officer Its Authorized Signatory
Schedule B
Definitions
This Schedule is an integral part of the Loan and Security Agreement
between SOUTHWEST TELEPRODUCTIONS, INC. and NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING (the "Agreement").
As used in the Agreement, the following terms have the following meanings:
"Account" means any right to payment for Goods sold or leased or for
services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.
"Account Debtor" means the obligor on an Account or Chattel Paper.
"Account Proceeds" has the meaning set forth in Section 4.1.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, member, manager, director, officer, or employee of such Person, any
parent or subsidiary of such Person, or any Person controlling, controlled by or
under common control with such Person or any other Person affiliated, directly
or indirectly, by virtue of family membership, ownership, management or
otherwise.
"Agreement" and "this Agreement" mean the Loan and Security Agreement of
which this Schedule B is a part and the Schedules thereto.
"Availability" has the meaning set forth in Section 1.1(a)
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. ss.
101 et seq.).
"Blocked Account" has the meaning set forth in Section 4.1.
"Borrower" has the meaning set forth in the heading to the Agreement.
"Borrower's Address" has the meaning set forth in the heading to the
Agreement.
"Business Day" means a day other than a Saturday or Sunday or any other day
on which Lender or banks in New York are authorized to close.
"Chattel Paper" has the meaning set forth in the UCC.
"Collateral" means all of Borrower's property and interests in property in
or upon which a security interest or other Lien is granted pursuant to this
Agreement or the other Loan Documents.
"Companies" means Borrower, Northwest Teleproductions, Inc. and Northwest
Teleproductions/Chicago, Inc.
"Credit Accommodation" has the meaning set forth in Section 1.1(a).
"Credit Accommodation Balance" means, with respect to each Company the sum
of (i) the aggregate undrawn face amount of all outstanding Credit
Accommodations of such Company and (ii) all interest, fees and costs due or, in
Lender's estimation, likely to become due in connection therewith.
"Default" means any event which with notice or passage of time, or both,
would constitute an Event of Default.
"Default Rate" has the meaning set forth in Section 2.1.
"Deposit Account" has the meaning set forth in the UCC.
"Dilution Percentage" means the gross amount of all returns, allowances,
discounts, credits, write-offs and similar items relating to Borrower's Accounts
computed as a percentage of Borrower's gross sales, calculated on a ninety (90)
day rolling average.
"Document" has the meaning set forth in the UCC.
"Early Termination Fee" has the meaning set forth in Section 7.2.
"Eligible Account" means, at any time of determination, an Account of a
Company which satisfies the general criteria set forth below and which is
otherwise acceptable to Lender (provided, that Lender may, in its sole
discretion, change the general criteria for acceptability of Eligible Accounts
upon at least fifteen days' prior notice to Companies). An Account shall be
deemed to meet the current general criteria if (i) neither the Account Debtor
nor any of its Affiliates is an Affiliate, creditor or supplier of a Company;
(ii) it does not remain unpaid more than the number of days after the original
invoice date set forth in Section 5 of Schedule A; (iii) the Account Debtor or
its Affiliates are not past due on other Accounts owing to a Company comprising
more than 25% of all of the Accounts owing to a Company by such Account Debtor
or its Affiliates; (iv) all Accounts owing by the Account Debtor or its
Affiliates do not represent more than 20% of all otherwise Eligible Accounts
(provided, that Accounts which are deemed to be ineligible solely by this clause
(iv) shall be considered Eligible Accounts to the extent of the amount thereof
which does not exceed 20% of all otherwise Eligible Accounts); (v) no covenant,
representation or warranty contained in this Agreement with respect to such
Account (including any of the representations set forth in Section 5.4) has been
breached; (vi) the Account is not subject to any contra relationship,
counterclaim, dispute or set-off; (vii) the Account Debtor's chief executive
office or principal place of business is located in the United States or
Provinces of Canada which have adopted the Personal Property Security Act or a
similar act, unless (A) the sale is fully backed by a letter of credit, guaranty
or acceptance acceptable to Lender in its sole discretion, and if backed by a
letter of credit, such letter of credit has been issued or confirmed by a bank
satisfactory to Lender, is sufficient to cover such Account, and if required by
Lender, the original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the proceeds
of such letter of credit to Lender or (B) such Account is subject to credit
insurance payable to Lender issued by an insurer and on terms and in an amount
acceptable to Lender; (viii) it is absolutely owing to a Company and does not
arise from a sale on a ▇▇▇▇-and-hold, guarantied sale, sale-or-return,
sale-on-approval, consignment, retainage or any other repurchase or return basis
or consist of progress ▇▇▇▇▇▇▇▇; (ix) Lender shall have verified the Account in
a manner satisfactory to Lender; (x) the Account Debtor is not the United States
of America or any state or political subdivision (or any department, agency or
instrumentality thereof), unless the applicable Company has complied with the
Assignment of Claims Act of 1940 (31 U.S.C. ss.203 et seq.) or other applicable
similar state or local law in a manner satisfactory to Lender; (xi) it is at all
times subject to Lender's duly perfected, first priority security interest and
to no other Lien that is not a Permitted Lien, and the goods giving rise to such
Account (A) were not, at the time of sale, subject to any Lien except Permitted
Liens and (B) have been delivered to and accepted by the Account Debtor, or the
services giving rise to such Account have been performed by a Company and
accepted by the Account Debtor; (xii) the Account is not evidenced by Chattel
Paper or an Instrument of any kind and has not been reduced to judgment; (xiii)
the Account Debtor's total indebtedness to the Companies does not exceed the
amount of any credit limit established by a Company or Lender and the Account
Debtor is otherwise deemed to be creditworthy by Lender (provided, that Accounts
deemed to be ineligible solely by reason of this clause (xiii) shall be
considered Eligible Accounts to the extent the amount of such Accounts does not
exceed the lower of such credit limits); (xiv) there are no facts or
circumstances existing, or which could reasonably be anticipated to occur, which
might result in any adverse change in the Account Debtor's financial condition
or impair or delay the collectibility of all or any portion of such Account;
(xv) Lender has been furnished with all documents and other information
pertaining to such Account which Lender has requested, or which a Company is
obligated to deliver to Lender, pursuant to this Agreement or any other loan and
security agreement between Lender and a Company; and (xvi) no Company has made
an agreement with the Account Debtor to extend the time of payment thereof
beyond the time periods set forth in clause (ii) above.
"Eligible Equipment" means, at any time of determination, Equipment owned
by Borrower which Lender, in its sole discretion, deems to be eligible for
borrowing purposes.
"Eligible Inventory" means, at any time of determination, Inventory (other
than packaging materials and supplies) which satisfies the general criteria set
forth below and which is otherwise acceptable to Lender (provided, that Lender
may, in its sole discretion, change the general criteria for acceptability of
Eligible Inventory upon at least fifteen days' prior written notice to
Borrower). Inventory shall be deemed to meet the current general criteria if (i)
it consists of raw materials or finished goods, or work-in-process that is
readily marketable in its current form; (ii) it is in good, new and saleable
condition; (iii) it is not slow-moving, obsolete, unmerchantable, returned or
repossessed; (iv) it is not in the possession of a processor, consignee or
bailee, or located on premises leased or subleased to Borrower, or subject to a
mortgage in favor of a Person other than Lender, unless such processor,
consignee, bailee or mortgagee or the lessor or sublessor of such premises, as
the case may be, has executed and delivered all documentation which Lender shall
require to evidence the subordination or other limitation or extinguishment of
such Person's rights with respect to such Inventory and Lender's right to gain
access thereto; (v) it meets all standards imposed by any governmental agency or
authority; (vi) it conforms in all respects to any covenants, warranties and
representations set forth in the Agreement; (vii) it is at all times subject to
Lender's duly perfected, first priority security interest and no other Lien
except a Permitted Lien; and (viii) it is situated at an Inventory Location
listed in Section 9(d) of Schedule A or other location of which Lender has been
notified as required by Section 5.6.
"Equipment" means all Goods which are used or bought for use primarily in
business (including farming or a profession) or by a Person who is a non-profit
organization or governmental subdivision or agency and which are not Inventory,
farm products or consumer goods, including all machinery, molds, machine tools,
motors, furniture, equipment, furnishings, fixtures, trade fixtures, motor
vehicles, tools, parts, dies and jigs, and all attachments, accessories,
accessions, replacements, substitutions, additions or improvements to, or spare
parts for, any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974 and all
rules, regulations and orders promulgated thereunder.
"Event of Default" has the meaning set forth in Section 8.1.
"Fee Letter" means that certain letter agreement regarding fees between the
Companies and Lender of even date herewith.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied.
"General Intangibles" has the meaning set forth in the UCC, and includes
all books and records pertaining to the Collateral and other business and
financial records in the possession of Borrower or any other Person, inventions,
designs, drawings, blueprints, patents, patent applications, trademarks,
trademark applications (other than "intent to use" applications until a verified
statement of use is filed with respect to such applications) and the goodwill of
the business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security and
other deposits, causes of action and other rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, internet addresses, proprietary
information, purchase orders, and all insurance policies and claims (including
life insurance, key man insurance, credit insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, letters of
credit, banker's acceptances and guaranties, computer programs, discs, tapes and
tape files in the possession of Borrower or any other Person, claims under
guaranties, security interests or other security held by or granted to Borrower,
all rights to indemnification and all other intangible property of every kind
and nature.
"Goods" means all things which are movable at the time the security
interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property, Accounts, Chattel Paper, General Intangibles,
or minerals or the like (including oil and gas) before extraction), including
standing timber which is to be cut and removed under a conveyance or contract
for sale, the unborn young of animals, and growing crops.
"Initial Term" has the meaning set forth in Section 7.1.
"Instrument" has the meaning set forth in the UCC.
"Inventory" means all Goods held for sale or lease or furnished or to be
furnished under contracts of service, including all raw materials, work in
process, finished goods, goods in transit and materials and supplies which are
or might be used or consumed in a business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such Goods,
and all products of the foregoing, and shall include interests in goods
represented by Accounts, returned, reclaimed or repossessed goods and rights as
an unpaid vendor.
"Investment Property" shall mean all of Borrower's securities, whether
certificated or uncertificated, securities entitlements, securities accounts,
commodity contracts and commodity accounts.
"Lender" has the meaning set forth in the heading to the Agreement.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on common law, statute or contract, including rights of sellers under
conditional sales contracts or title retention agreements and reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property. For the purpose of this Agreement, Borrower shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan Account" has the meaning set forth in Section 2.4.
"Loan Documents" means the Agreement, any other loan and security agreement
and all notes, guaranties, security agreements, certificates, landlord's
agreements, Lock Box and Blocked Account agreements and all other agreements,
documents and instruments now or hereafter executed or delivered by a Company or
any Obligor in connection with, or to evidence the transactions contemplated by,
this Agreement.
"Loan Limits" means, collectively, the Availability limits and all other
limits on the amount of Loans and Credit Accommodations set forth in this
Agreement.
"Loans" means, collectively, the Revolving Loans and any Term Loan.
"Lock Box" has the meaning set forth in Section 4.1.
"Maturity Date" has the meaning set forth in Section 7.1.
"Obligations" means, with respect to a Company, all present and future
Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties
and indebtedness at any time owing by such Company to Lender, whether evidenced
by this Agreement, any other loan and security agreement, or any note or other
instrument or document, whether arising from an extension of credit, opening of
a Credit Accommodation, guaranty, indemnification or otherwise (including all
fees, costs and other amounts which may be owing to issuers of Credit
Accommodations and all taxes, duties, freight, insurance, costs and other
expenses, costs or amounts payable in connection with Credit Accommodations or
the underlying goods), whether direct or indirect (including those acquired by
assignment and any participation by Lender in such Company's indebtedness owing
to others), whether absolute or contingent, whether due or to become due, and
whether arising before or after the commencement of a proceeding under the
Bankruptcy Code or any similar statute, including all interest, charges,
expenses, fees, attorney's fees, expert witness fees, audit fees, letter of
credit fees, loan fees, Early Termination Fees, minimum borrowing fees and any
other sums chargeable to such Company under this Agreement or under any other
Loan Document.
"Obligor" means any guarantor, endorser, acceptor, surety or other person
liable on, or with respect to, the Obligations of Borrower or who is the owner
of any property which is security for the Obligations of Borrower, other than
Borrower.
"Permitted Liens" means: (i) purchase money security interests in specific
items of Equipment in an aggregate amount not to exceed the limit set forth in
Section 8(d) of Schedule A; (ii) leases of specific items of Equipment in an
aggregate amount not to exceed the limit set forth in Section 8(e) of Schedule
A; (iii) Liens for taxes not yet due and payable; (iv) additional Liens which
are fully subordinate to the security interests of Lender and are consented to
in writing by Lender; (v) security interests being terminated concurrently with
the execution of this Agreement; (vi) Liens of materialmen, mechanics,
warehousemen or carriers arising in the ordinary course of business and securing
obligations which are not delinquent; (vii) Liens incurred in connection with
the extension, renewal or refinancing of the indebtedness secured by Liens of
the type described in clause (i) or (ii) above; provided, that any extension,
renewal or replacement Lien is limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (viii) Liens in favor of customs
and revenue authorities which secure payment of customs duties in connection
with the importation of goods. Lender will have the right to require, as a
condition to its consent under clause (iv) above, that the holder of the
additional Lien sign an intercreditor agreement in form and substance
satisfactory to Lender, in its sole discretion, acknowledging that the Lien is
subordinate to the security interests of Lender, and agreeing not to take any
action to enforce its subordinate Lien so long as any Obligations of Borrower
remain outstanding, and that Borrower agree that any uncured default in any
obligation secured by the subordinate Lien shall also constitute an Event of
Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"Prime Rate" means, at any given time, the prime rate as quoted in The Wall
Street Journal as the base rate on corporate loans posted as of such time by at
least 75% of the nation's 30 largest banks (which rate is not necessarily the
lowest rate offered by such banks).
"Real Property" means the real property described in Section 10 of Schedule
A.
"Released Parties" has the meaning set forth in Section 6.1.
"Renewal Term" has the meaning set forth in Section 7.1.
"Reserves" has the meaning set forth in Section 1.2.
"Revolving Loans" has the meaning set forth in Section 1.1(b).
"Sale" has the meaning set forth in Section 8.2.
"Subsidiary" means any corporation or other entity of which a Person owns,
directly or indirectly, through one or more intermediaries, more than 50% of the
capital stock or other equity interest at the time of determination.
"Term" means the period commencing on the date of this Agreement and ending
on the Maturity Date.
"Term Loan" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as adopted and
in effect at such time in the State of New York.
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term "including," whenever used in this Agreement, shall mean "including but not
limited to." The singular form of any term shall include the plural form, and
vice versa, when the context so requires. References to Sections, subsections
and Schedules are to Sections and subsections of, and Schedules to, this
Agreement. All references to agreements and statutes shall include all
amendments thereto and successor statutes in the case of statutes.
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule B as of
the date set forth in the heading to the Agreement.
Borrower: Lender:
SOUTHWEST TELEPRODUCTIONS, INC. NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Chief Financial Officer Its Authorized Signatory