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EXHIBIT 10.2
FINANCING AGREEMENT
DATED AS OF
JUNE 27, 2000
AMONG
CANNONDALE CORPORATION,
AS BORROWER,
THE LENDERS PARTY HERETO
AND
THE CIT GROUP/
BUSINESS CREDIT, INC.,
AS AGENT
$60 MILLION
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms....................................................................................-1-
SECTION 1.02. Term Generally..................................................................................-22-
SECTION 1.03. Accounting Terms; GAAP..........................................................................-22-
ARTICLE II
Conditions Precedent
SECTION 2.01. Conditions to Closing...........................................................................-23-
SECTION 2.02. Conditions to Each Extension of Credit .........................................................-27-
ARTICLE III
Revolving Loans
SECTION 3.01. Revolving Loans Generally.......................................................................-28-
SECTION 3.02. Notice of Borrowing Request.....................................................................-29-
SECTION 3.03. Agent May Fund Revolving Loans..................................................................-29-
SECTION 3.04. Agent's Assumptions.............................................................................-29-
SECTION 3.05. Settlement Procedure............................................................................-30-
SECTION 3.06. Defaulting Lenders..............................................................................-30-
SECTION 3.07. Revolving Loan Account..........................................................................-31-
SECTION 3.08. Statement of Account............................................................................-31-
ARTICLE IV
The Term Loan
SECTION 4.01. The Term Loan; Amortization.....................................................................-31-
SECTION 4.02. Mandatory Prepayments...........................................................................-31-
SECTION 4.03. Voluntary Prepayments...........................................................................-33-
SECTION 4.04. Application of Payments.........................................................................-33-
SECTION 4.05. Authorization to Charge Revolving Loan Account..................................................-33-
ARTICLE V
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Letters of Credit
SECTION 5.01. Letters of Credit Generally.....................................................................-34-
SECTION 5.02. Authorization to Charge Revolving Loan Account..................................................-34-
SECTION 5.03. Indemnification.................................................................................-34-
SECTION 5.04. Participation,..................................................................................-34-
SECTION 5.05. Limitation on Agent's Responsibility............................................................-35-
SECTION 5.06. Further Provisions..............................................................................-35-
SECTION 5.07. Licenses; Risk..................................................................................-36-
SECTION 5.08. Subrogation.....................................................................................-36-
ARTICLE VI
Collateral
SECTION 6.01. Grant of Security Interest......................................................................-36-
SECTION 6.02. Security Interest Generally.....................................................................-37-
SECTION 6.03. Collection of Trade Accounts Receivable.........................................................-37-
SECTION 6.04. Delivery of Information Concerning Trade Accounts Receivable and Inventory......................-38-
SECTION 6.05. Representations and Covenants With Respect to Trade Accounts Receivable and Inventory...........-38-
SECTION 6.06. Additional Representations and Covenants With Respect to Trade Accounts Receivable
and Inventory..............................................................................-39-
SECTION 6.07. Representations and Covenants With Respect to Equipment.........................................-40-
SECTION 6.08. Representations and Covenants with Respect to General Intangibles...............................-40-
SECTION 6.09. Continuing Security Interest....................................................................-40-
SECTION 6.10. No Marshalling..................................................................................-41-
SECTION 6.11. Credit Balances. ...............................................................................-41-
SECTION 6.12. Mortgages.......................................................................................-41-
ARTICLE VII
Representations and Warranties
SECTION 7.01. Organization; Powers............................................................................-41-
SECTION 7.02. Authorization; Enforceability...................................................................-41-
SECTION 7.03. Governmental Approvals; No Conflicts............................................................-42-
SECTION 7.04. Financial Condition; No Material Adverse Change.................................................-42-
SECTION 7.05. Properties......................................................................................-42-
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SECTION 7.06. Litigation and Environmental Matters............................................................-43-
SECTION 7.07. Compliance with Laws and Agreements.............................................................-43-
SECTION 7.08. Investment and Holding Company Status...........................................................-43-
SECTION 7.09. Taxes. .........................................................................................-43-
SECTION 7.10. ERISA...........................................................................................-43-
SECTION 7.11. Disclosure......................................................................................-44-
SECTION 7.12. Security Interest...............................................................................-44-
SECTION 7.13. Use of Proceeds.................................................................................-44-
SECTION 7.14. Subsidiaries....................................................................................-44-
SECTION 7.15. Solvency........................................................................................-44-
SECTION 7.16. Permits, Etc....................................................................................-45-
ARTICLE VIII
Affirmative Covenants
SECTION 8.01. Financial Statements, Projections, Borrowing Base Certificates and Other Information...........-45-
SECTION 8.02. Notices of Material Events......................................................................-47-
SECTION 8.03. Existence; Conduct of Business..................................................................-48-
SECTION 8.04. Payment of Obligations..........................................................................-48-
SECTION 8.05. Maintenance of Properties; Insurance............................................................-48-
SECTION 8.06. Books and Records; Inspection Rights............................................................-48-
SECTION 8.07. Compliance with Laws............................................................................-49-
SECTION 8.08. Use of Proceeds and Letters of Credit...........................................................-49-
SECTION 8.09. Lock Boxes and Blocked Account Agreements.......................................................-49-
SECTION 8.10. New Subsidiaries................................................................................-49-
SECTION 8.11. Notarial Deed of Pledge.........................................................................-50-
SECTION 8.12. Foreign Counsel Opinions........................................................................-50-
SECTION 8.13. Warehouseman's Waiver ........................................................................-50-
SECTION 8.14. [intentionally deleted].........................................................................-50-
SECTION 8.15. Blocked Account Agreement with Scotia Bank......................................................-50-
ARTICLE IX
Negative Covenants and Financial Covenants
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SECTION 9.01. Indebtedness....................................................................................-51-
SECTION 9.02. Liens...........................................................................................-52-
SECTION 9.03. Fundamental Changes.............................................................................-53-
SECTION 9.04. Investments, Loans, Advances, Guarantees and Acquisitions.......................................-53-
SECTION 9.05. Restricted Payments.............................................................................-54-
SECTION 9.06. Transactions with Subsidiaries and Affiliates...................................................-54-
SECTION 9.07. Restrictive Agreements..........................................................................-54-
SECTION 9.08. Capital Expenditures............................................................................-55-
SECTION 9.09. Net Worth.......................................................................................-55-
SECTION 9.10. Fixed Charge Coverage Ratio.....................................................................-56-
SECTION 9.11. Consolidated Fixed Charge Coverage Ratio........................................................-57-
SECTION 9.12. EBITDA..........................................................................................-58-
SECTION 9.13. Adjusted EBITDA.................................................................................-58-
SECTION 9.14. Senior Leverage Ratio...........................................................................-59-
SECTION 9.15. Availability....................................................................................-60-
SECTION 9.16. Elimination of Certain Financial Covenants......................................................-60-
ARTICLE X
Interest, Fees and Expenses; LIBOR Provisions
SECTION 10.01. Interest Generally.............................................................................-60-
SECTION 10.02. Overadvance Rate...............................................................................-60-
SECTION 10.03. Default Charges................................................................................-61-
SECTION 10.04. Letter of Credit Fees..........................................................................-61-
SECTION 10.05. Authorization to Charge Revolving Loan Account for Letter of Credit Fees, etc..................-61-
SECTION 10.06. Reimbursement of Out-of-Pocket Expenses; Documentation Fee.....................................-61-
SECTION 10.07. Line of Credit Fee.............................................................................-61-
SECTION 10.08. Loan Facility Fee..............................................................................-61-
SECTION 10.09. Administrative Management Fee..................................................................-61-
SECTION 10.10. Field Examination Fees.........................................................................-61-
SECTION 10.11. Authorization to Charge Revolving Loan Account for all Payments................................-62-
SECTION 10.12. Changes In Law.................................................................................-62-
SECTION 10.13. Increased Costs................................................................................-62-
SECTION 10.14. LIBOR Provisions Generally.....................................................................-63-
SECTION 10.15. LIBOR Unascertainable..........................................................................-64-
SECTION 10.16. Extension For Payment..........................................................................-65-
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SECTION 10.17. Unlawfullness..................................................................................-65-
SECTION 10.18. Indemnification................................................................................-65-
SECTION 10.19. Regulatory Changes.............................................................................-66-
ARTICLE XI
Powers ........................................................................................................-66-
ARTICLE XII-
Events of Default and Remedies
SECTION 12.01. Events of Default..............................................................................-67-
SECTION 12.02. Termination of Commitments; Acceleration.......................................................-69-
SECTION 12.03. Exercise of Remedies...........................................................................-69-
ARTICLE XIII
Termination....................................................................................................-71-
ARTICLE XIV-
The Agent
SECTION 14.01. Appointment....................................................................................-71-
SECTION 14.02. Agent as a Lender..............................................................................-71-
SECTION 14.03. Scope of Duties................................................................................-72-
SECTION 14.04. Reliance.......................................................................................-72-
SECTION 14.05. Sub-Agents.....................................................................................-72-
SECTION 14.06. Successors.....................................................................................-73-
SECTION 14.07. Independent Credit Analysis of Lenders.........................................................-73-
ARTICLE XV
Miscellaneous
SECTION 15.01. Notices........................................................................................-73-
SECTION 15.02. Waivers; Amendments............................................................................-75-
SECTION 15.03. Expenses; Indemnity; Damage Waiver.............................................................-75-
SECTION 15.04. Successors and Assigns.........................................................................-77-
SECTION 15.05. Survival.......................................................................................-77-
SECTION 15.06. Counterparts; Integration; Effectiveness.......................................................-78-
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SECTION 15.07. Severability...................................................................................-78-
SECTION 15.08. Right of Setoff................................................................................-78-
SECTION 15.09. Governing Law; Jurisdiction; Consent to Service of Process.....................................-79-
SECTION 15.10. Waiver of Jury Trial...........................................................................-79-
SECTION 15.11. Headings.......................................................................................-80-
SECTION 15.12. Confidentiality................................................................................-80-
SECTION 15.13. Interest Rate Limitation.......................................................................-81-
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EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Term Note
Exhibit C - Form of Assignment and Transfer Agreement
Exhibit D - Form of Borrowing Base Certificate
Exhibit E - 1 - Form of Warehouseman's Waiver
Exhibit E - 2 - Form of Processor's Waiver
SCHEDULES
Schedule 9.01 - existing Indebtedness
Schedule 9.02 - existing Liens
Schedule 9.04 - existing investments
Schedule 9.07 - restrictive agreements
ANNEXES
Annex I - Commitments
Annex II - Lien Perfection Information
Annex III - Closing Document Checklist
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FINANCING AGREEMENT dated as of June 27, 2000 among CANNONDALE CORPORATION,
a Delaware corporation, as Borrower (the "Borrower"), the LENDERS
party hereto (each a "Lender" and collectively the "Lenders") and
THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"),
in its capacity as agent for the Lenders (in such capacity, the "Agent").
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Financing
Agreement, the following terms shall have the following meanings:
ACCOUNTS shall mean all of the Borrower's now existing and future: (a) accounts
(as defined in the UCC), and any and all other receivables (whether or not
specifically listed on schedules furnished to the Agent), including, without
limitation, all accounts created by, or arising from, all of the Borrower's
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of the Borrower's
trade names or styles, or through any of the Borrower's divisions; (b) any and
all instruments, documents, chattel paper (including electronic chattel paper)
(all as defined in the UCC); (c) unpaid seller's or lessor's rights (including
rescission, replevin, reclamation, repossession and stoppage in transit)
relating to the foregoing or arising therefrom; (d) rights to any goods
represented by any of the foregoing, including rights to returned, reclaimed or
repossessed goods; (e) reserves and credit balances arising in connection with
or pursuant hereto; (f) guarantees, supporting obligations, payment intangibles
and letter of credit rights (all as defined in the UCC); (g) insurance policies
or rights relating to any of the foregoing; (h) general intangibles pertaining
to any and all of the foregoing (including all rights to payment, including
those arising in connection with bank and non-bank credit cards), and including
books and records and any electronic media and software thereto; (i) notes,
deposits or property of account debtors securing the obligations of any such
account debtors to the Borrower; and (j) cash and non-cash proceeds (as defined
in the UCC) of any and all of the foregoing.
ADJUSTED EBITDA shall mean, for any period, EBITDA of the Borrower for such
period, calculated without giving effect to the financial performance or the
results of operations of the Borrower's motorcycle division, in a manner
consistent with the set of forecasts, prepared by the Borrower and dated May 10,
2000, of the Borrower's projected financial performance and results of
operations, which forecasts exclude the financial performance and the results of
operations of such motorcycle division.
ADMINISTRATIVE MANAGEMENT FEE shall mean the fee payable to the Agent for its
own account in accordance with Section 10.09 hereof to offset the costs and
expenses (excluding Out-of-Pocket Expenses and auditor fees) of the Agent in
connection with administration, record keeping, analysis and evaluation of the
Collateral.
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AFFILIATE shall mean, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
ANNIVERSARY DATE shall mean the date occurring five (5) years from the Closing
Date and the same date in every year thereafter.
APPLICABLE INCREMENT shall mean on any date of determination, with respect to
any Revolving Loan bearing interest based on the Base Rate or LIBOR, or any
portion of the Term Loan bearing interest based on the Base Rate or LIBOR, the
applicable rate per annum set forth below under the applicable caption, based
upon the Fixed Charge Coverage Ratio corresponding thereto for the period of
four consecutive Fiscal Quarters ending immediately prior to such date of
determination. The Applicable Increment shall apply during the period commencing
on the first day of the month following the month during which the Agent shall
have received the financial statements required to be delivered pursuant to
Section 8.01 for any referenced Fiscal Quarter, and ending on the last day of
the month during which the Agent shall have received such financial statements
for the next succeeding Fiscal Quarter, provided however, that until such time
as the Agent receives such financial statements for the Fiscal Quarter ending in
September, 2000, the Applicable Increment shall be those set forth below
opposite Case 1.
Fixed Charge Applicable Increment Applicable Increment Applicable Increment Applicable Increment
Coverage Ratio for Revolving Loans for Revolving Loans for Term Loan based for Term Loan based
based on the Base based on LIBOR on the Base Rate on LIBOR
Rate
----
Case 1 1.00% N/A 1.50% N/A
Case 2 .75% 2.50% 1.25% 3.00%
Case 3 .50% 2.25% 1.00% 2.75%
Case 4 .25% 2.00% .75% 2.50%
Case 5 .00% 1.75% .50% 2.25%
Case 6 .00% 1.75% .25% 2.00%
ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and Transfer
Agreement in the form of Exhibit C hereto.
AUTHORIZED OFFICER shall mean the Chief Executive Officer or Chief Financial
Officer of the Borrower, or any other officer of the Borrower duly authorized by
its Board of Directors to discharge some or all of the responsibilities of the
Chief Financial Officer.
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AVAILABILITY shall mean at any time the amount by which: (a) the lesser of the
Revolving Line of Credit or the Borrowing Base exceeds (b) the sum of (i) the
aggregate principal amount of all outstanding Revolving Loans and (ii) the
Availability Reserve.
AVAILABILITY RESERVE shall mean the sum of: (a) any reserve in such amount and
with respect to such risks as the Agent may reasonably require from time to time
pursuant to this Financing Agreement, including without limitation, for Letter
of Credit Exposure pursuant to Section 5.01; and (b) a reserve in an amount
equal to the product of (x) Eligible Accounts Receivable, as of any date of
determination, multiplied by (y) the historic dilution for the period of six
months preceding such date of determination of Trade Accounts Receivable,
expressed as a percentage, as determined and adjusted from time to time by the
Agent in its reasonable discretion, pursuant to its periodic examination of the
Borrower's books and records, minus four percent (4%) during the months of July,
August and September, 2000, and three per cent (3%) at all times thereafter.
BASE RATE shall mean the rate of interest per annum announced by The Chase
Manhattan Bank, or its successors, from time to time as its prime rate in effect
at its principal office in New York City. (The prime rate is not intended to be
the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers).
BASE RATE LOANS shall mean any loans or advances pursuant to this Financing
Agreement made or maintained at a rate of interest based upon the Base Rate.
BLOCKED ACCOUNT AND BLOCKED ACCOUNT AGREEMENT shall have the meanings given to
such terms in Section 6.03.
BORROWING BASE shall mean the sum of (a) eighty-five percent (85%) of the
Borrower's aggregate outstanding Eligible Accounts Receivable, plus (b) the
lesser of (i) forty percent (40%) of the aggregate value of the Borrower's
Eligible Inventory consisting of raw materials and sixty percent (60%) of the
aggregate value of the Borrower's Eligible Inventory consisting of finished
goods, where value in each such case shall be based on the lower of cost, on a
basis consistent with the costing standards established by the Borrower at the
beginning of each Fiscal Year (provided such standards are commercially
reasonable and are applied consistently), or market, or (ii) the Inventory Loan
Cap.
BORROWING BASE CERTIFICATE means a certificate of an Authorized Officer
substantially in the form of Exhibit D hereto appropriately completed.
BREAKAGE COSTS shall mean the costs and expenses described in Section 10.18.
BUSINESS DAY shall mean any day on which both the Agent and The Chase Manhattan
Bank are open for business in New York City.
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CAPITAL EXPENDITURES shall mean, for any period, the aggregate expenditures of
the Borrower during such period on account of, property, plant, equipment or
similar fixed assets that, in conformity with GAAP, are required to be reflected
in the balance sheet of the Borrower, including without limitation the portion
of each Capital Lease that is or should be capitalized in accordance with GAAP.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure on the balance sheet of the Borrower.
CASE 1 shall mean a Fixed Charge Coverage Ratio of less than 1.00 to 1.00.
CASE 2 shall mean a Fixed Charge Coverage Ratio of equal to or greater than 1.00
to 1.00, and less than 1.50 to 1.00.
CASE 3 shall mean a Fixed Charge Coverage Ratio of equal to or greater than 1.50
to 1.00, and less than 2.00 to 1.00.
CASE 4 shall mean a Fixed Charge Coverage Ratio of equal to or greater than 2.00
to 1.00, and less than 2.25 to 1.00.
CASE 5 shall mean a Fixed Charge Coverage Ratio of equal to or greater than 2.25
to 1.00, and less than 2.50 to 1.00.
CASE 6 shall mean a Fixed Charge Coverage Ratio of equal to or greater than 2.50
to 1.00.
CLOSING DATE shall mean the date that this Financing Agreement has been duly
executed by the parties hereto and delivered to the Agent.
COLLATERAL shall mean all present and future Accounts, Documents of Title,
Equipment, General Intangibles, Intellectual Property, Inventory, Diamond M.
Ranch Collateral, Pledged Stock, Real Estate and Other Collateral.
COLLATERAL ASSIGNMENT OF SHAREHOLDER MORTGAGE shall mean the Collateral
Assignment of Deed of Trust and Financing Statements dated the Closing Date,
made by the Borrower to the Agent , in recordable form substantially in the form
of Exhibit B to the Collateral Assignment of Shareholder Note, that collaterally
assigns the Shareholder Mortgage to the Agent for the benefit of the Lenders.
COLLATERAL ASSIGNMENT OF SHAREHOLDER NOTE shall mean the Collateral Assignment
of Shareholder Note dated the Closing Date, made by the Borrower to the Agent
that collaterally assigns the Shareholder Note, together with all agreements
related thereto and all security therefor (including without limitation the
Shareholder Pledge Agreement and the Shareholder Mortgage), to the Agent for the
benefit of the Lenders.
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COLLATERAL ASSIGNMENTS shall mean the Collateral Assignment of Shareholder
Mortgage and the Collateral Assignment of Shareholder Note.
COMMITMENT shall mean each Lender's commitment in accordance with this Financing
Agreement to make Revolving Loans and to purchase a participation interest in
Letters of Credit (the "Revolving Credit Commitment") and to make the Term Loan
(the "Term Loan Commitment"), in each case in the amount of such Lender's pro
rata share, as set forth in Annex I to this Financing Agreement, as such Annex I
may be amended from time to time by the Agent.
COMMITMENT LETTER shall mean the Commitment Letter, dated June 7, 2000, issued
by CIT to, and accepted by, the Borrower.
consolidated shall mean, with respect to any financial statement of the
Borrower, the preparation of such financial statement on a consolidated basis
for the Borrower and its consolidated subsidiaries, eliminating all
inter-company transactions and prepared in accordance with GAAP.
consolidating shall mean, with respect to any financial statement of the
Borrower, the preparation of such financial statement on a consolidated basis
plus individual balance sheets for the Borrower and its consolidated
subsidiaries, showing all eliminations of inter-company transactions, including
a balance sheet for the Borrower exclusively, all prepared in accordance with
GAAP.
CONTROL shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
COPYRIGHTS shall mean all present and hereafter acquired copyrights, copyright
registrations, recordings, applications, designs, styles, licenses, marks,
prints and labels bearing any of the foregoing, goodwill, any and all general
intangibles, intellectual property and rights pertaining thereto, and all cash
and non-cash proceeds thereof.
DEFAULT shall mean any event specified in Article XII, or which, with the giving
of notice, the lapse of time, or both, or any other condition, event or act,
would become an Event of Default.
DEFAULT CHARGES shall mean (i) with respect to Loans, a rate of interest per
annum equal to the sum of two percent (2%) plus the Applicable Increment over
the Base Rate plus the Base Rate, in the case of Base Rate Loans, or two percent
(2%) plus the Applicable Increment over the LIBOR Rate plus the LIBOR Rate, in
the case of LIBOR Loans, and (ii) with respect to Letters of Credit, a rate of
interest per annum equal to the sum of two percent (2%) plus the applicable
Letter of Credit Fee.
DIAMOND M. RANCH shall mean the real estate, and the improvements thereon,
located in Rio ▇▇▇▇▇▇ County, Colorado and more particularly described in the
Diamond M Ranch Deed of Trust.
DIAMOND M. RANCH COLLATERAL shall mean (i) the Mortgaged Property (as defined in
the Diamond M Ranch Deed of Trust), (ii) the Collateral (as defined in the
Diamond M, LLC Pledge Agreement), (iii) the Assigned Collateral (as defined in
the Collateral Assignment of Shareholder Note), (iv) the
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Assigned Collateral (as defined in the Collateral Assignment of Shareholder
Mortgage), and (v) all right, title and interest of the Borrower, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ and Diamond M, LLC in and to the property and all interests in
property relating to the Diamond M Ranch and the financing and refinancing of
the purchase thereof as described in the foregoing documents.
DIAMOND M RANCH DEED OF TRUST shall mean the Deed of Trust and Security
Agreement, dated the Closing Date, made by Diamond M, LLC, as trustor, to the
Public Trustee of Rio ▇▇▇▇▇▇ County, Colorado, as trustee for the benefit of the
Agent.
DIAMOND M RANCH INTERCREDITOR AGREEMENT shall mean the Intercreditor Agreement,
dated the Closing Date, among the Borrower, the Public Trustee of Rio ▇▇▇▇▇▇
County, Colorado, Diamond M, LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, the Mezzanine Agent and
the Agent.
DIAMOND M RANCH LOAN DOCUMENTS shall mean the Collateral Assignments, the
▇▇▇▇▇▇▇▇▇▇ Guaranty, the Diamond M, LLC Pledge Agreement, the Diamond M, LLC
Guaranty, the Diamond M Ranch Deed of Trust and the Diamond M Ranch
Intercreditor Agreement.
DIAMOND M, LLC GUARANTY shall mean the Guaranty, dated the Closing Date, made by
Diamond M, LLC in favor of the Agent for the Benefit of the Lenders.
DIAMOND M, LLC PLEDGE AGREEMENT shall mean the Pledge and Security Agreement,
dated the Closing Date, made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ in favor of the Agent for the benefit of the Lenders.
DOCUMENTATION FEE shall mean the Agent's standard fees relating to any and all
modifications, waivers, releases or amendments with respect to this Financing
Agreement, the Collateral and/or the Obligations, or the perfection of the
Agent's security interest in additional collateral, in each case after the
Closing Date.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Borrower terminates this
Financing Agreement or the Revolving Line of Credit, and which is prior to the
third anniversary of the Closing Date.
EARLY TERMINATION FEE shall: (i) mean the fee chargeable to the Borrower by the
Agent in the event the Borrower terminates the Revolving Line of Credit or this
Financing Agreement on a date prior to the third anniversary of the Closing
Date; and (ii) be determined by multiplying the Revolving Line of Credit by (x)
one percent (1%) if the Early Termination Date occurs on or before one (1) year
from the Closing Date, (y) one-half of one percent (.50%) if the Early
Termination Date occurs after one (1) year from the Closing Date but on or
before two (2) years from the Closing Date; and (z) one
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quarter of one percent (.25%) if the Early Termination Date occurs after two (2)
years from the Closing Date but on or before three (3) years from the Closing
Date.
EBITDA shall mean, for any period, Net Income for such period plus, to the
extent deducted in determining Net Income for such period, the aggregate amount
of Interest Expense and income tax expense for such period, and all
depreciation, amortization and other non-cash charges for such period, minus, to
the extent included in determining Net Income for such period, the aggregate
amount of interest income for such period that has been deferred or has not been
paid in cash, all determined in accordance with GAAP on a consistent basis, but
excluding (i) the effect of extraordinary or non-reoccurring gains or losses for
such period, and (ii) all amounts paid in cash to the Borrower during such
period resulting from the unwinding of any Hedging Obligation of the Borrower.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the Borrower's Trade
Accounts Receivable that are subject to a valid, first priority and fully
perfected security interest in favor of the Agent, on behalf of the Lenders,
which conform to the warranties contained herein and which, at all times,
continue to be acceptable to the Agent in the exercise of its reasonable
business judgment, less, without duplication, any returns, discounts, claims,
credits and allowances of any nature (whether issued, owing, granted, claimed or
outstanding). Trade Accounts Receivable that arise from or are subject to or
include any of the following shall not be considered Eligible Accounts
Receivable:
(i) sales to the United States of America, any state or other
governmental entity or to any agency, department or division thereof, except for
any such sales as to which the Borrower has complied with the Assignment of
Claims Act of 1940 or any other applicable statute, rules or regulation, to the
Agent's satisfaction in the exercise of its reasonable business judgment;
(ii) foreign sales, other than sales which otherwise comply with all
of the other criteria for eligibility hereunder and are (x) secured by letters
of credit (in form and substance satisfactory to the Agent) issued or confirmed
by, and payable at, banks having a place of business in the United States of
America, or (y) to customers residing in Canada, provided that the Accounts on
which such customers are obligated are by their terms payable in U.S. Dollars,
or payable in Canadian dollars and the risk in fluctuation of currency value
between Canadian and U.S. Dollars is hedged in a manner that is reasonably
satisfactory to the Agent;
(iii) Trade Accounts Receivable that remain unpaid beyond the sooner
to occur of the date which is sixty (60) days from due date or (A) in the case
of all Trade Accounts Receivable other than those described in the following
clause (B), one hundred eighty (180) days from invoice date and (B) in the case
of those Trade Accounts Receivable arising from sales made on extended terms
during the month of October, two hundred ten (210) days from invoice date,
provided that (1) the payment of each such Trade Account Receivable is secured
by a perfected Lien on the inventory, the sale of which gave rise to such Trade
Account Receivable, and (2) the face amount of all such Trade Accounts
Receivable does not exceed $1,000,000 in the aggregate at any one time
outstanding;
(iv) contra accounts;
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(v) sales to any employee, Affiliate or Subsidiary of the Borrower;
(vi) ▇▇▇▇ and hold (deferred shipment) or consignment sales;
(vii) sales to any customer which is: (A) insolvent, (B) the debtor in
any bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, (C) negotiating, or has called a
meeting of its creditors for purposes of negotiating, a compromise of its debts,
(D) financially unacceptable to the Agent or has a credit rating unacceptable to
the Agent;
(viii) all sales to any customer if fifty percent (50%) or more of the
aggregate dollar amount of all outstanding invoices to such customer are unpaid
beyond the sooner to occur of the date which is sixty (60) days from due date or
one hundred eighty (180) days (or two hundred ten (210) days, if applicable)
from invoice date;
(ix) pre-billed Trade Accounts Receivable and Trade Accounts Receivable
arising from progress billing;
(x) an amount representing, historically, returns, warranty reserves,
discounts, claims, credits, allowances and applicable terms, samples, and an
amount representing late charges or finance charges;
(xi) sales not payable in United States currency, other than as
provided in clause (ii) (y) above; and
(xii) any other reasons deemed necessary by the Agent in its
reasonable judgment, including without limitation those which are customary
either in the commercial finance industry or in the lending practices of the
Agent and/or the Lenders.
ELIGIBLE INVENTORY shall mean the gross amount of the Borrower's Inventory that
is subject to a valid, first priority and fully perfected security interest in
favor of the Agent, on behalf of the Lenders, and which conforms to the
warranties contained herein and which, at all times, continues to be acceptable
to the Agent in the exercise of its reasonable business judgment, less, without
duplication, any (a) work-in-process, (b) supplies (other than raw materials),
(c) Inventory not present in the United States of America, other than Inventory
imported pursuant to a Letter of Credit, (d) Inventory repossessed by the
Borrower or returned or rejected by the Borrower's customers (other than goods
that are undamaged and resalable in the normal course of business) and goods to
be returned to the Borrower's suppliers, (e) Inventory in transit to third
parties (other than the Borrower's agents or warehouses), or in the possession
of a warehouseman, bailee, third party processor, or other third party, unless
such warehouseman, bailee or third party has executed a notice of security
interest agreement in substantially the form of Exhibit E-1 or E-2 hereto (as
applicable), or is otherwise in form and substance satisfactory to the Agent,
(f) Inventory which does not meet standards imposed by any applicable
Governmental Authority, and (g) any reserves required by the Agent in its
reasonable discretion, including without limitation for special order goods,
discontinued, slow-moving
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and obsolete Inventory, market value declines, ▇▇▇▇ and hold (deferred
shipment), consignment sales, shrinkage and any applicable customs, freight,
duties and Taxes.
ENVIRONMENTAL LAW shall mean all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material.
ENVIRONMENTAL LIABILITY shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed by or imposed upon, the Borrower with respect to any of the
foregoing.
EQUIPMENT shall mean all present and hereafter acquired equipment (as defined in
the UCC) including, without limitation, all machinery, equipment, furnishings
and fixtures, and all additions, substitutions and replacements thereof,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
ERISA AFFILIATE shall mean any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Internal Revenue Code of 1986 (the "Code") as amended from
time to time or, solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of the Code.
ERISA EVENT shall mean (a) any "reportable event", as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any material liability with
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respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR Loan, shall
mean the aggregate (without duplication) of the maximum rates of reserve
requirements (expressed as a decimal) in effect with respect to the Agent and/or
any present or future Lender or participant on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under
Regulation D or any other applicable regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having jurisdiction
with respect thereto, as now and from time to time in effect, dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by the
Agent and/or any such Lenders or participants (such rate to be adjusted to the
nearest one sixteenth of one percent (1/16 of 1%) or, if there is not a nearest
one sixteenth of one percent (1/16 of 1%), to the next higher one sixteenth of
one percent (1/16 of 1%)).
EVENT(S) OF DEFAULT shall have the meaning provided for in Article XII.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
FISCAL QUARTER shall mean, with respect to the Borrower, each three (3) month
period ending on the Saturday closest to September 30, December 31, March 31 and
June 30 of each Fiscal Year.
FISCAL YEAR shall mean, with respect to the Borrower, the period of four
consecutive Fiscal Quarters commencing on the Sunday closest to July 1 of each
year and ending on the Saturday closest to June 30 of the following year,
determined in a manner consistent with the Borrower's past practices.
FIXED CHARGE COVERAGE RATIO shall mean, for the relevant period, the ratio
determined by dividing (i) EBITDA for such period, by (ii) the sum of (a)
Interest Expense paid or due, in cash, during such period, plus (b) the amount
of principal of the Term Loan and of any other Indebtedness (other than the
Revolving Loans and Letters of Credit) repaid or scheduled to be repaid during
such period (including the portion of payments made during such period under
Capitalized Leases that are allocable to the repayment of principal), plus (c)
Capital Expenditures made by the Borrower during such period which were not
financed, plus (d) all dividends and other distributions of a similar nature
made in cash during such period, plus (e) all federal, state and local income
tax expenses due and payable by the Borrower during such period.
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GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply.
GENERAL INTANGIBLES shall mean all present and hereafter acquired general
intangibles (as defined in the UCC), and shall include, without limitation, all
present and future right, title and interest in and to: (a) all Trademarks,
tradenames, corporate names, business names, logos and any other designs or
sources of business identities, (b) Patents, together with any improvements on
said Patents, utility models, industrial models, and designs, (c) Copyrights,
(d) trade secrets, (e) licenses, permits and franchises, (f) all applications
with respect to the foregoing, (g) all right, title and interest in and to any
and all extensions and renewals, (h) goodwill with respect to any of the
foregoing, (i) any other forms of similar intellectual property, (j) all
customer lists, distribution agreements, supply agreements, blueprints,
indemnification rights and tax refunds, together with all monies and claims for
monies now or hereafter due and payable in connection with any of the foregoing
or otherwise, and all cash and non-cash proceeds thereof, including, without
limitation, the proceeds or royalties of any licensing agreements between the
Borrower and any licensee of any of the Borrower's General Intangibles.
GOVERNMENTAL AUTHORITY shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
HAZARDOUS MATERIALS shall mean all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls or radon gas and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
HEDGING OBLIGATIONS shall mean any obligation or liability arising under or
relating to an interest rate protection agreement, foreign currency exchange
agreement, commodity price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement, or any arrangement which
is derivative thereof.
INDEBTEDNESS of any Person shall mean, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business and
excluding installments of premiums payable with respect to policies of insurance
contracted for in the ordinary course
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of business), (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all guarantees by
such Person of Indebtedness of others, (h) all obligations under Capital Leases
of such Person attributable to the payment of principal, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTELLECTUAL PROPERTY shall mean all property and all interests in property
described in the Intellectual Property Agreements in which the Borrower has
granted security interests to the Agent for the benefit of the Lenders.
INTELLECTUAL PROPERTY AGREEMENTS shall mean, collectively, the Trademark
Security Agreement and the Patent Security Agreement, in each case dated as of
the Closing Date and executed by the Borrower in favor of the Agent, pursuant to
which the Borrower shall have granted to the Agent for the benefit of the
Lenders a Lien on and security interest in the property, and interests in
property, described in each such Agreement as security for the payment and
performance of the Obligations. Interest Expense shall mean the total interest
obligations (paid or accrued) of the Borrower, determined on a non-consolidated
basis in accordance with GAAP, consistently applied.
INTEREST PERIOD shall mean:
(a) with respect to any initial request by the Borrower for a LIBOR Loan, a one
month, two month, three month or six month period commencing on the borrowing or
conversion date with respect to a LIBOR Loan and ending one, two, three or six
months thereafter, as applicable; and
(b) thereafter with respect to any continuation of, or conversion to, a LIBOR
Loan, at the option of the Borrower, any one month, two month, three month or
six month period commencing on the last day of the immediately preceding
Interest Period applicable to such LIBOR Loan and ending one, two, three or six
months thereafter, as applicable;
provided that, the foregoing provisions relating to Interest Periods are subject
to the following:
(i) if any Interest Period would otherwise end on a day which is not a Working
Day, that Interest Period shall be extended to the next succeeding Working Day,
unless the result of such extension
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would extend such payment into another calendar month, in which event such
Interest Period shall end on the immediately preceding Working Day;
(ii) any Interest Period that begins on the last Working Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month, at the end of such Interest Period) shall end on the last Working Day of
a calendar month; and
(iii) for purposes of determining the availability of Interest Periods, such
Interest Periods shall be deemed available if (x) Chase Manhattan Bank quotes an
applicable rate or the Agent determines LIBOR, as provided in the definition of
LIBOR, (y) the LIBOR determined by Chase Manhattan Bank or the Agent will
adequately and fairly reflect the cost of maintaining or funding Loans bearing
interest at LIBOR, for such Interest Period, and (z) such Interest Period will
end on or before the earlier of Anniversary Date or the last day of the then
current term of this Financing Agreement. If a requested Interest Period shall
be unavailable in accordance with the foregoing sentence, the Borrower shall
continue to pay interest on the Obligations at the applicable per annum rate
based upon the Base Rate.
INVENTORY shall mean all of the Borrower's present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production-from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
INVENTORY LOAN CAP shall mean, as of any date of determination, the product of
.75 multiplied by the amount obtained after the subtraction of (i) the sum
calculated pursuant to clause (b) of the term Availability Reserve from (ii) the
sum calculated pursuant to clause (a) of the term Borrowing Base.
ISSUING BANK shall mean the bank issuing Letters of Credit.
LC DISBURSEMENT shall mean (i) a payment made by the Issuing Bank pursuant to a
Letter of Credit, or (ii) a payment made by the Agent pursuant to any
indemnification agreement described in clause (ii) of the defined term Letter of
Credit Guaranty.
LETTER OF CREDIT EXPOSURE shall mean, as of any date of determination, without
duplication, the sum of (i) the aggregate undrawn amount of all outstanding
Letters of Credit, (ii) the aggregate unreimbursed amount of all drawn Letters
of Credit and (iii) any other unreimbursed LC Disbursement.
LETTER OF CREDIT FEE shall mean the fee chargeable to the Borrower by the Agent,
for the ratable benefit of the Lenders, pursuant to Section 10.04, for: (a)
issuing a Letter of Credit Guaranty, and/or (b) otherwise aiding the Borrower in
obtaining Letters of Credit.
LETTER OF CREDIT GUARANTY shall mean (i) the guaranty delivered by the Agent, on
behalf of the Lenders, to the Issuing Bank of the Borrower's reimbursement
obligations under the Issuing Bank's reimbursement agreement, application for
Letter of Credit or other like document and (ii) the
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indemnification by the Agent, on behalf of the Lenders, of The Chase Manhattan
Bank and Bank of America, N.A. for the undrawn principal amount as of the
Closing Date of, and fees and expenses payable in respect of, documentary
letters of credit and stand-by letters of credit issued respectively by such
banks under the Old Credit Agreement, pursuant to separate Indemnity Agreements,
each dated on or about the Closing Date, executed by the Agent and each of such
banks.
LETTER OF CREDIT SUB-LINE shall mean the commitment of the Lenders, pursuant to
Section 5.01, to assist the Borrower in obtaining Letters of Credit having an
aggregate undrawn amount ,together with an aggregate drawn but unreimbursed
amount, not to exceed $10,000,000.
LETTERS OF CREDIT shall mean all letters of credit issued by the Issuing Bank,
for or on behalf of the Borrower, with the assistance of the Agent, on behalf of
the Lenders, in accordance with Article V.
LIBOR shall mean, at any time of determination, and subject to availability, for
each applicable Interest Period, a variable rate of interest equal to: (a) at
the Agent's election (i) the applicable LIBOR quoted to the Agent by The Chase
Manhattan Bank (or any successor thereof), or (ii) the rate of interest
determined by the Agent at which deposits in U.S. dollars are offered for the
relevant Interest Period based on information presented on Telerate Systems at
Page 3750 as of 11:00 A.M. (London time) on the day which is two (2) Business
Days prior to the first day of such Interest Period, provided that, if at least
two such offered rates appear on the Telerate System at Page 3750 in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Agent) will be the rate used; divided by (b) a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal) of
Eurocurrency Reserve Requirements in effect on the day which is two (2) Business
Days prior to the beginning of such Interest Period.
LIBOR LENDING OFFICE shall mean, with respect to the Agent, the office of The
Chase Manhattan Bank, or any successor thereof, maintained at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
LIBOR LOAN shall mean any Loans made pursuant to this Financing Agreement which
are made or maintained at a rate of interest based upon LIBOR, provided that (i)
no Default or Event of Default has occurred hereunder, which has not been waived
in writing by the Required Lenders, and (ii) no LIBOR Loan shall be made with an
Interest Period that ends subsequent to an Anniversary Date or any applicable
Early Termination Date.
LIEN shall mean with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
LINE OF CREDIT shall mean, as of any relevant date, the sum of the Commitments
of the Lenders which, as of the Closing Date, shall equal $60,000,000.
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LINE OF CREDIT FEE shall: (a) mean the fee payable to the Agent, for the ratable
benefit of the Lenders, due at the end of each month for the Line of Credit, and
(b) be determined by multiplying the difference between (i) the Revolving Line
of Credit and (ii) the sum, for such month, of (x) the average daily balance of
Revolving Loans plus (y) the average daily undrawn balance of Letters of Credit,
in each case outstanding during such month, by three-eighths of one percent
(.375%) per annum for the number of days in such month.
LOAN shall mean a Revolving Loan or the Term Loan.
LOAN DOCUMENTS shall mean this Financing Agreement, the Promissory Notes, the
Intellectual Property Agreements, the Diamond M Ranch Loan Documents, the Stock
Pledge Agreement, the Mortgages, the other closing documents and any other
ancillary documents, instruments and agreements executed from time to time in
connection with this Financing Agreement, all as may be renewed, amended,
extended, increased or supplemented from time to time.
LOAN FACILITY FEE shall mean the fee payable to the Agent and the Lenders (as
applicable) in accordance with, and pursuant to, the provisions of Section
10.08.
LOCK BOX shall have the meaning given such term in Section 6.03.
MATERIAL ADVERSE CHANGE shall mean a material adverse change in the business,
assets, operations, prospects or condition, financial or otherwise, of the
Borrower, or of the Borrower and the Subsidiaries, taken as a whole.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower, or of the Borrower and the Subsidiaries, taken as a whole, (b) the
ability of the Borrower to perform any of its material obligations under this
Financing Agreement or any of the other Loan Documents or (c) the rights of or
benefits available to the Lenders under this Financing Agreement or any of the
other Loan Documents.
MATERIAL INDEBTEDNESS shall mean any Indebtedness (other than the Loans, Letters
of Credit and other Obligations) of any one or more of the Borrower and its
Subsidiaries in a principal amount, as of any date of determination, exceeding
$5,000,000.
MEZZANINE AGENT shall mean Ableco Finance LLC, in its capacity as agent for the
Mezzanine Lenders, and any successor agent for the Mezzanine Lenders under the
Mezzanine Debt Documents.
MEZZANINE DEBT shall mean the Indebtedness of the Borrower incurred pursuant to
the Mezzanine Debt Documents.
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MEZZANINE DEBT DOCUMENTS shall mean the "Loan Documents" as defined in the
Mezzanine Financing Agreement.
MEZZANINE FINANCING AGREEMENT shall mean the Financing Agreement, dated as of
June 27, 2000 among Cannondale Corporation, as Borrower, the Lenders party
thereto and Ableco Finance LLC, as agent.
MEZZANINE LENDERS shall mean those financial institutions, funds, and other
entities which are or which become lenders under the Mezzanine Financing
Agreement.
▇▇▇▇▇▇▇▇▇▇ DEBT shall mean the Indebtedness owing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, an
individual, to the Borrower, evidenced by the Shareholder Note.
▇▇▇▇▇▇▇▇▇▇ GUARANTY shall mean the Limited Recourse Guaranty, dated as of the
Closing Date, made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ in favor of the Agent for the benefit
of the Lenders.
MORTGAGES shall mean those mortgages, each dated as of the Closing Date,
executed by the Borrower, as mortgagor, in favor of the Agent, as mortgagee, to
secure the Borrower's payment and performance of the Obligations and encumbering
those certain parcels of land, and the improvements thereon, owned by the
Borrower and located in (i) Bethel, Connecticut and captioned "Open-End First
Mortgage Deed and Security Agreement" and "Open-End Fourth Mortgage Deed and
Security Agreement", and (ii) Bedford, Pennsylvania, and captioned "Open-End
Mortgage and Security Agreement".
NET CASH PROCEEDS shall mean, with respect to any property, the aggregate amount
of all proceeds, payable in cash, arising from the sale, transfer or other
disposition of such property, minus the usual and customary out-of-pocket costs
and expenses payable by the seller of such property, the principal amount of
Indebtedness that is mandatorily payable by such seller upon the disposition of
such property (other than Indebtedness incurred under this Financing Agreement),
and the amount of taxes paid (or reasonably estimated to be payable) by such
seller in connection with such disposition.
NET INCOME shall mean, for any period, the net after tax income (or loss) of the
Borrower for such period, determined on a non-consolidated basis in accordance
with GAAP.
NET WORTH shall mean, at any date of determination, an amount equal to (a) Total
Assets of the Borrower minus (b) Total Liabilities of the Borrower, and shall be
determined on a non-consolidated basis in accordance with GAAP, consistently
applied.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by the Agent and/or the Lenders to the Borrower, or to others for the
Borrower's account, pursuant to this Financing Agreement (including, without
limitation, all Revolving Loans, Letter of Credit Guaranties, and the Term
Loan); and any and all indebtedness, liabilities and obligations which may at
any time be owing by the Borrower to the Agent and/or the Lenders
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arising under or relating to this Financing Agreement, whether now in existence
or incurred by the Borrower from time to time hereafter; whether principal,
interest, fees, costs, expenses (including reasonable attorney's fees and
disbursements) or otherwise; whether secured by Lien upon any of the Borrower's
Collateral, assets or property or the assets or property of any other Person;
whether such indebtedness is absolute or contingent, joint or several, matured
or unmatured, direct or indirect and whether the Borrower is liable to the Agent
and/or the Lenders for such indebtedness as principal, surety, endorser,
guarantor or otherwise. Obligations shall also include indebtedness, obligations
and liabilities owing to the Agent and/or the Lenders by the Borrower under any
Loan Document or under any other agreement or arrangement now or hereafter
entered into between the Borrower and the Agent and/or the Lenders pursuant to
or in connection with the transactions contemplated to occur under or in respect
of this Financing Agreement; and all Out-of-Pocket Expenses.
OLD CREDIT AGREEMENT shall mean the Amended and Restated Credit Agreement dated
as of January 22, 1999, by and among Cannondale Corporation, Certain
Subsidiaries of Cannondale Corporation, the Banks signatory thereto, Nations
Bank, N.A., as Administrative Agent, Documentation Agent, Fronting Bank, and
Swingline Bank and Fleet National Bank, as Syndication Agent, as the same may be
renewed, amended, extended, increased or supplemented from time to time.
OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
blocked account and any other deposit accounts maintained with any bank or
financial institutions into which the proceeds of Collateral are or may be
deposited; all cash and other monies and property in the possession or control
of the Agent and/or any of the Lenders; all books, records, ledger cards, disks
and related data processing software at any time evidencing or containing
information relating to any of the Collateral described herein or otherwise
necessary or helpful in the collection thereof or realization thereon; and all
cash and non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of the out-of-pocket costs and expenses
incurred pursuant to this Financing Agreement or any other Loan Documents by the
Agent, and, at any time after the occurrence of an Event of Default which has
occurred and is continuing, the Lenders, whether incurred heretofore or
hereafter, which expenses shall include, without being limited to: the cost of
record searches, all costs and expenses incurred by the Agent in opening bank
accounts, depositing checks, receiving and transferring funds, and wire transfer
charges, any charges imposed on the Agent due to returned items and
"insufficient funds" of deposited checks and the Agent's standard fees relating
thereto, any amounts paid by, incurred by or charged to, the Agent and/or the
Lenders by the Issuing Bank under a Letter of Credit Guaranty or the Borrower's
reimbursement agreement, application for Letters of Credit or other like
document which pertain either directly or indirectly to such Letters of Credit,
and the Agent's standard fees relating to the Letters of Credit and any drafts
thereunder, travel, lodging and similar expenses of the Agent's personnel in
connection with inspecting and monitoring the Collateral from time to time
hereunder, any applicable
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reasonable counsel fees and disbursements, fees and taxes relative to the filing
of financing statements, all expenses, costs and fees set forth in Section
12.03, and title insurance premiums, real estate survey costs, costs of
preparing and recording the Mortgages.
OVERADVANCE RATE shall mean a rate equal to one-half of one percent (1/2%) per
annum in excess of the applicable contract rate of interest determined in
accordance with Section 10.02.
OVERADVANCES shall mean, as of any date of determination, the amount by which
(a) the sum of all Revolving Loans and the Letter of Credit Exposure exceeds (b)
the lesser of (i) the Revolving Line of Credit and (ii) the Borrowing Base minus
the Availability Reserve, in each case as of such date.
PATENTS shall mean all of the Borrower's present and hereafter acquired patents,
patent applications, registrations, any reissues or renewals thereof, licenses,
any inventions and improvements claimed thereunder, and all general intangible,
intellectual property and patent rights with respect thereto of the Borrower,
and all income, royalties, cash and non-cash proceeds thereof.
PERMITS shall have the meaning given to such term in Section 7.16.
PERMITTED ENCUMBRANCES shall mean: (a) liens of local or state authorities for
franchise or other like Taxes, provided that the aggregate amounts of such liens
shall not exceed $500,000 in the aggregate at any one time; (b) statutory liens
of landlords and liens of carriers, warehousemen, bailees, mechanics,
materialmen and other like liens imposed by law, created in the ordinary course
of business and for amounts not yet due (or which are being contested in good
faith, by appropriate proceedings or other appropriate actions which are
sufficient to prevent imminent foreclosure of such liens) and with respect to
which adequate reserves or other appropriate provisions are being maintained by
the Borrower in accordance with GAAP; (c) pledges or deposits made (and the
liens thereon) in the ordinary course of business of the Borrower (including,
without limitation, security deposits for leases, indemnity bonds, surety bonds
and appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits and deposits securing
liability to insurance carriers under insurance or self-insurance arrangements
or to secure the performance of tenders, bids, contracts (other than for the
repayment or guarantee of borrowed money or purchase money obligations),
statutory obligations and other similar obligations; (d) easements (including,
without limitation, reciprocal easement agreements and utility agreements),
encroachments, minor defects or irregularities in title, variation and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
Real Estate, if applicable, and which in the aggregate (i) do not materially
interfere with the occupation, use or enjoyment by the Borrower of its business
or property so encumbered and (ii) in the reasonable business judgment of the
Agent do not materially and adversely affect the value of such Real Estate; (e)
tax liens which are not yet due and payable or which are being diligently
contested in good faith by the Borrower by appropriate proceedings; (f) liens
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created in favor of a bank at which a deposit account, other than a Blocked
Account, is maintained, including set off rights in favor of such bank; and (g)
the items identified in Schedules A, B and C of each of the Mortgages.
PERMITTED INVESTMENTS shall mean (a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof; (b)
investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from ▇▇▇▇▇'▇; (c) investments in certificates of
deposit, banker's acceptances and time deposits maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000; and (d) fully collateralized repurchase agreements
with a term of not more than 30 days for securities described in clause (a)
above and entered into with a financial institution satisfying the criteria
described in clause (c) above.
PERSON shall mean any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, or other entity.
PLAN shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
PLEDGED STOCK shall mean the securities pledged pursuant to the Stock Pledge
Agreement by the Borrower to the Agent, for the benefit of the Lenders, as
security for the payment and performance of all Obligations.
PREPAYMENT PREMIUM shall: (a) mean the amount payable by the Borrower to the
Agent for the ratable benefit of the Lenders which shall be due upon any
voluntary prepayment, in whole or in part, of the Term Loan, and (b) be computed
by multiplying the amount so prepaid by : (i) one percent (1%) if such
prepayment occurs on or before the expiration of one (1) year from the Closing
Date; (ii) one-half of one percent (.50%) if such prepayment occurs after one
(1) from the Closing Date but on or before the expiration of two (2) years from
the Closing Date; and (iii) one-quarter of one percent (.25%) if such prepayment
occurs after two (2) years from the Closing Date but on or before three (3)
years from the Closing Date.
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PROPORTIONATE SHARE shall mean a fraction, the denominator of which shall equal,
as of any date of determination, the sum of the aggregate unpaid principal
balance of the Term Loan and the Mezzanine Debt, and the numerator of which
shall equal as of such date, in the case of the Lenders, the aggregate unpaid
principal balance of the Term Loan, and in the case of the Mezzanine Lender, the
unpaid principal balance of the Mezzanine Debt.
PRO RATA SHARE shall mean, with respect to each Lender, the percentage of the
total Commitments represented by such Lender's Commitment.
PROMISSORY NOTES shall mean the Revolving Notes and the Term Notes, delivered by
the Borrower to the each Lender to evidence such Lender's pro rata share of the
Revolving Loans and the Term Loan, in accordance with such Lender's Commitment,
pursuant to, and repayable in accordance with, the provisions of this Financing
Agreement.
REAL ESTATE shall mean the Borrower's fee and/or leasehold interests in the real
property described in the Mortgages.
REQUIRED LENDERS shall mean the Lenders holding aggregate Commitments under this
Financing Agreement in an amount of 66 2/3% or more of the total Commitments.
RESTRICTED PAYMENT shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Borrower
or any option, warrant or other right to acquire any such shares of capital
stock of the Borrower.
REVOLVING LINE OF CREDIT shall mean the aggregate Commitments of the Lenders to
make Revolving Loans pursuant to Article III, and to purchase participation
interests in Letters of Credit Guaranties pursuant to Article V, in the combined
amount of $45,000,000.
REVOLVING LOAN ACCOUNT shall mean the account on the Agent's books, in the
Borrower's name, against which the Borrower will be charged with all Obligations
under this Financing Agreement, as and when payable.
REVOLVING LOANS shall mean the loans and advances, from time to time made to or
for the account of the Borrower pursuant to the provisions of Section 3.01.
REVOLVING NOTE shall mean a promissory note of the Borrower in the form of
Exhibit A to this Financing Agreement.
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SENIOR LEVERAGE RATIO shall mean, for the relevant period, the ratio determined
by dividing (i) the aggregate outstanding principal balance of the Revolving
Loans, the Term Loan and the Mezzanine Debt, and the aggregate undrawn principal
amount of outstanding Letters of Credit, in each as of the last day of such
period by (ii) EBITDA for such period.
SETTLEMENT PERIOD shall have the meaning given to such term in Section 3.05.
SHAREHOLDER MORTGAGE shall mean the Collateral Assignment of Note and Deed of
Trust, dated as of September 15, 1998, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the
Borrower, and the Deed of Trust and Security Agreement dated September 15, 1998
from Diamond M, LLC to the Public Trustee of Rio ▇▇▇▇▇▇ County, as Trustee f/b/o
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ assigned thereby.
SHAREHOLDER NOTE shall mean the amended and restated promissory note, originally
dated September 15, 1998, in the original principal amount of $12,000,000, made
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to the order of the Borrower evidencing loans made by the
Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
SHAREHOLDER PLEDGE AGREEMENT shall mean the Amended and Restated Pledge
Agreement dated September 15, 1998 entered into by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the
Borrower.
STOCK PLEDGE AGREEMENT shall mean the Stock Pledge Agreement, dated as of the
Closing Date, executed by the Borrower in favor of the Agent, pursuant to which
the Borrower shall have pledged and collaterally assigned the Pledged Stock as
security for the payment and performance of the Obligations.
SUBSIDIARY shall mean with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
SUBSIDIARY shall mean any subsidiary of the Borrower.
SURPLUS CASH shall mean, for any Fiscal Year, (a) EBITDA for such Fiscal Year
less (b) the sum of (i) all cash Interest Expense for such Fiscal Year, (ii) the
aggregate scheduled amount of principal of the Term Loan, and the "Term Loan" as
defined in the Mezzanine Financing Agreement, repaid during such Fiscal Year,
(iii) Capital Expenditures actually made during such Fiscal Year and not
financed (iv) cash expenditures made in respect of Hedging
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OBLIGATIONS (to the extent not reflected in such EBITDA or Interest Expense) and
(v) all income tax expense for such Fiscal Year.
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due by the Borrower
with respect to its business, operations, Collateral or otherwise.
TERM NOTE shall mean a promissory note of the Borrower in the form of Exhibit B
to this Financing Agreement.
TERM LOAN shall mean the term loans in the original principal amount of
$15,000,000, in the aggregate, made to the Borrower pursuant to, and repayable
in accordance with, the provisions of Sections 4.01 and 4.02.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP,
consistently applied.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, consistently applied.
TRADE ACCOUNTS RECEIVABLE shall mean the accounts (as defined in the UCC) of the
Borrower which arise from the sale of Inventory or the rendition of services in
the ordinary course of the Borrower's business.
TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications, tradenames, trade styles, service
marks, prints and labels (on which any of the foregoing may appear), licenses,
reissues, renewals, and any other intellectual property and trademark rights
pertaining to any of the foregoing, together with the goodwill associated
therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the state of New York.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
SECTION 1.02 Term Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments,
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supplements or modifications set forth herein), (b) any reference herein to any
Person shall be construed to include such Person's successors and assigns, (c)
the words "herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Financing Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Financing Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.01. Conditions to Closing. The Commitment of each
Lender to fund its pro rata share of the initial Revolving Loan and the Term
Loan, and to purchase a participation in the initial Letter of Credit, is
subject to the satisfaction, extension or waiver (in writing), on or prior to
the Closing Date, of each of the following conditions precedent:
(a) LIEN SEARCHES - The Agent shall have received and reviewed to its
satisfaction, as of a recent date, tax, judgment and Uniform Commercial Code
searches for all locations presently occupied or used by the Borrower.
(b) CASUALTY INSURANCE - The Borrower shall have delivered to the Agent evidence
satisfactory to the Agent that casualty insurance policies listing the Agent as
additional insured, loss payee or mortgagee, as the case may be, are in full
force and effect, provided that any certificate that evidences such insurance
shall be in the form of "Accord 27".
(c) UCC FILINGS - All financing statements required to be filed in order to
perfect, in favor of the Agent, on behalf of the Lenders, a first priority
security interest in the Collateral, subject only to the Permitted Encumbrances,
shall have been properly filed in each such office in each jurisdiction. The
Agent shall have received acknowledgment copies of all such filings (or, in lieu
thereof, the Agent shall have received other evidence satisfactory to the Agent
that
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all such filings have been made) and the Agent shall have received evidence that
all necessary filing fees and all taxes or other expenses related to such
filings have been paid in full.
(d) BOARD RESOLUTIONS - The Agent shall have received a copy of the resolutions
of the Board of Directors of the Borrower authorizing the execution, delivery
and performance of this Financing Agreement, and all other Loan Documents to
which the Borrower is a party, and the consummation of the transactions
contemplated to occur hereunder and thereunder, in each case certified by the
Secretary or Assistant Secretary of the Borrower as of the date hereof, together
with a certificate of the Secretary or Assistant Secretary of the Borrower as to
the incumbency and validity of the signature of the officers of the Borrower
executing this Financing Agreement and such other Loan Documents and any
certificate or other documents to be delivered by them pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary.
(e) CORPORATE ORGANIZATION, GOOD STANDING AND QUALIFICATION - The Agent shall
have received (i) a copy of the Certificate of Incorporation of the Borrower
certified by the Secretary of State of the state of its incorporation, (ii) a
copy of the By-Laws of the Borrower certified by the Secretary or Assistant
Secretary thereof, all as amended through the date hereof, (iii) a Certificate
of Good Standing from the Secretary of State of the state of the Borrower's
incorporation and (iv) a Certificate of Qualification from the Secretary of
State of each other state in which the Borrower is doing business, except where
the failure to be so qualified would not have a Material Adverse Effect.
(f) SOLVENCY CERTIFICATE AND OFFICER'S CERTIFICATE - The Agent shall have
received (x) an executed Solvency Certificate of the Borrower, satisfactory in
form and substance to the Agent, certifying the Borrower's Solvency as of the
Closing Date and such related matters as the Agent shall deem necessary and (y)
an executed Officer's Certificate of the Borrower, satisfactory in form and
substance to the Agent, certifying that (i) the representations and warranties
contained herein are true and correct in all material respects on and as of the
Closing Date; (ii) the Borrower is in compliance with all of the terms and
provisions set forth herein; and (iii) no Default or Event of Default has
occurred.
(g) OPINIONS - the Agent on behalf of the Lenders shall have received and
reviewed to its satisfaction legal opinions from (i) the law firm of ▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇ LLP, as general counsel to the Borrower and special counsel to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, an individual, and Diamond M, LLC, (ii) the law firm of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, as special Pennsylvania counsel to the Borrower, (iii) the law firm of
▇▇▇▇▇▇▇▇▇ Law Offices, as special Colorado counsel to the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, an individual and Diamond M, LLC and (iv) the law firm of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ P.C. as Connecticut special counsel to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, an
individual, and Diamond M, LLC.
(h) ABSENCE OF DEFAULT; NO MATERIAL ADVERSE CHANGE - No Default or Event of
Default shall have occurred and no Material Adverse Change shall have occurred
since April 1, 2000.
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(i) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there shall be no:
(x) litigation, investigation or proceeding (judicial or administrative) pending
or threatened against the Borrower or its assets, by any agency, division or
department of any county, city, state or federal government arising out of this
Financing Agreement; (y) injunction, writ or restraining order restraining or
prohibiting the financing arrangements contemplated under this Financing
Agreement; or (z) suit, action, investigation or proceeding (judicial or
administrative) pending against the Borrower or the or its assets, which, in the
opinion of the Agent, if adversely determined, would be reasonably likely to
have a Material Adverse Effect.
(j) CANNONDALE EUROPE - Cannondale Europe B.V., a Subsidiary organized under the
laws of Netherlands, shall have consummated its financing arrangements, the
terms and conditions of which shall be satisfactory to the Agent.
(k) GUARANTEES OF SUBSIDIARY DEBT - The Agent and its legal counsel shall have
received and reviewed to their satisfaction all documents and agreements
pursuant to which the Borrower shall have guaranteed or in any manner agreed to
be liable or responsible for the payment of the indebtedness of any Subsidiary.
(l) FLOOR PLANNING - The Agent and its legal counsel shall have received and
reviewed to their satisfaction any document or agreement between a customer of
the Borrower and the bank or other financial institution which provides
inventory or floor planning financing to such customer, to the extent the
Borrower is a party to any such document or agreement.
(m) CASH BUDGET PROJECTIONS - The Agent shall have received and reviewed to its
satisfaction a twelve (12) month cash budget projection prepared by the Borrower
on the form provided by the Agent, which projection shall indicate that the
Borrower will have a level of Availability at all times during such twelve month
period of not less than $3,000,000.
(n) FINANCING AGREEMENT AND ADDITIONAL DOCUMENTS - The Borrower shall have
executed and delivered to the Agent this Financing Agreement and all other Loan
Documents to which it is a party.
(o) PLEDGED STOCK - The Borrower shall have delivered to the Agent, on behalf of
the Lenders, possession of the stock certificates evidencing all of the
certificated shares of Pledged Stock required to be pledged and collaterally
assigned to the Agent pursuant to the Stock Pledge Agreement, together with duly
executed stock powers (undated and in-blank) with respect thereto, all in form
and substance satisfactory to the Agent.
(p) DIAMOND M RANCH LOAN DOCUMENTS - The Agent shall have received a counterpart
of each Diamond M Loan Document, duly executed by each party thereto, together
with such additional agreements, instruments and other documents as the Agent
may reasonably request in connection therewith.
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(q) BLOCKED ACCOUNTS AND BLOCKED ACCOUNT AGREEMENTS - The Borrower shall have
established a system of lockboxes and Blocked Accounts with respect to the
collection of Trade Accounts Receivable and the deposit of proceeds of
Collateral, and the Agent, the Borrower and each bank at which a Blocked Account
is maintained shall have entered into a Blocked Account Agreement in form and
substance satisfactory to the Agent.
(r) DISBURSEMENT AUTHORIZATION - The Borrower shall have delivered to the Agent
all information necessary for the Agent and the Lenders to issue wire transfer
instructions on behalf of the Borrower for the initial and subsequent loans
and/or advances to be made under this Financing Agreement including, but not
limited to, disbursement authorizations in form acceptable to the Agent.
(s) EXAMINATION AND VERIFICATION; OPENING AVAILABILITY - The Agent and each of
the Lenders shall have completed, to their respective satisfaction, an
examination and verification of the Trade Accounts Receivable, Inventory,
financial statements, and books and records of the Borrower, which examination
shall indicate that, after giving effect to all Revolving Loans, advances and
extensions of credit to be made at closing, the Borrower shall have an opening
additional Availability of at least $10,000,000, as evidenced by a Borrowing
Base Certificate delivered by the Borrower to the Agent as of the Closing Date.
It is understood that such requirement contemplates that all debts and
obligations are current, and that all payables are being handled in the normal
course of the Borrower's business and consistent with the practice in the
Borrower's industry.
(t) OLD CREDIT ARRANGEMENTS - The Old Credit Agreement shall have been
terminated, all loans and obligations of the Borrower thereunder shall have been
paid or satisfied in full, including through utilization of the proceeds of the
initial Revolving Loans and the Term Loan to be made under this Financing
Agreement and all liens or security interests in favor of the lenders thereunder
(or the agent on their behalf) and otherwise in connection therewith shall have
been terminated and/or released upon such payment.
(u) PAYMENT OF FEES - The Agent and the Lenders shall have received payment in
full, in cash, of all fees for which the Borrower is obligated to make payment
on or before the Closing Date.
(v) MORTGAGES AND INTERCREDITOR AGREEMENTS - The Borrower shall have executed
and delivered to the Agent, an agent of the Agent or to a title insurance
company acceptable to the Agent, all of the Mortgages. In addition, the Borrower
shall have caused each Person named as mortgagee in each mortgage of record, as
of the Closing Date, that encumbers Real Estate to execute an intercreditor
agreement with the Agent, the terms and conditions of which shall be
substantially similar to the intercreditor agreements between such Persons and
the lenders party to the Old Credit Agreement, or the agent on behalf of such
lenders.
(w) TITLE INSURANCE POLICIES - The Agent shall have received, in respect of
each Mortgage, a mortgagee's title policy or marked-up unconditional binder for
such insurance. Each such
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policy shall (i) be in an amount satisfactory to the Agent; (ii) insure that the
Mortgage insured thereby creates a valid lien on the Real Estate covered by such
Mortgage, subject only to those mortgages held by the parties identified in the
intercreditor agreements described in Section 2.01 (v), free and clear of all
defects and encumbrances except those acceptable to the Agent; (iii) name the
Agent on behalf of the Lenders as the insured thereunder; and (iv) contain such
endorsements and effective coverage as the Agent may reasonably request,
including, without limitation, a revolving line of credit endorsement. The Agent
shall also have received evidence that all premiums in respect of such policies
have been paid and that all charges for mortgage recording taxes, if any, shall
have been paid.
(x) SURVEYS - The Agent and the title insurance company issuing each policy
referred to in the immediately preceding paragraph (each, a "Title Insurance
Company") shall have received maps or plats of a perimeter or boundary of the
site of each of the properties covered by the Mortgages, dated a date
satisfactory to the Agent and the relevant Title Insurance Company, prepared by
an independent professional licensed land surveyor satisfactory to the Agent and
the relevant Title Insurance Company, which maps or plats and the surveys on
which they are based shall be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping. Without limiting the generality of the foregoing, there shall be
surveyed and shown on the maps or plats or surveys the following: (i) the
locations on such sites of all the buildings, structures and other improvements
and the established building setback lines insofar as the foregoing affect the
perimeter or boundary of such property; (ii) the lines of streets abutting the
sites and width thereof; (iii) all access and other easements appurtenant to the
sites or necessary or desirable to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the sites, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building, structures and
improvements on the sites; and (vi) if the site is designated as being on a
filed map, a legend relating the survey to said map. Further, each survey shall
(x) be certified to the Agent and the Title Insurance Company and (y) contain a
legend reciting as to whether or not the site is located in a flood zone.
(y) APPRAISALS - The Agent shall have received satisfactory appraisals of the
Borrower's Equipment and Real Estate, which appraisals: (i) shall be conducted
by an appraiser acceptable to the Agent, and (ii) shall indicate an orderly
liquidation value of not less than $10,000,000 with respect to Equipment and a
fair market value of not less than $12,000,000 with respect to Real Estate.
(z) ENVIRONMENTAL REPORT - The Agent shall have received environmental audit
reports on (i) all of the Real Estate and (ii) the Borrower's waste disposal
practices. The reports must (x) be satisfactory to the Agent and (y) not
disclose or indicate any material liability (real or potential) stemming from
the Borrower's premises, its operations, its waste disposal practices or waste
disposal sites used by Borrower.
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(aa) FEASIBILITY STUDY - The Agent shall have received and reviewed to its
satisfaction a report, prepared at the Borrower's expense by an independent
third party acceptable to the Agent, of the viability and feasibility of the
Borrower's motorcycle division.
(bb) VALUATIONS - The Agent shall have received and reviewed to its satisfaction
a report or reports, prepared at the Borrower's expense by an independent third
party acceptable to the Agent, of (i) the value of the Borrower's trade names,
which shall indicate that such value is not less than $25 million and (ii) the
overall business value of the Borrower's enterprise, which shall indicate a
value of an amount acceptable to the Agent.
(cc) MEZZANINE DEBT; INTERCREDITOR AGREEMENT WITH MEZZANINE LENDER - The Agent
shall have received and reviewed to its satisfaction all of the Mezzanine
Documents, the transactions contemplated to occur thereunder shall have been
consummated and all conditions precedent to the effectiveness of the Mezzanine
Documents shall have occurred; the Borrower shall have received in cash the
proceeds of the Mezzanine Debt, and the Agent on behalf of the Lenders and the
Mezzanine Lender shall have entered into an intercreditor agreement satisfactory
to the Lenders.
(dd) THE COMMITMENT LETTER; CLOSING DOCUMENT CHECKLIST - The Borrower shall have
fully complied, to the reasonable satisfaction of the Agent, with all of the
other terms and conditions contained in the Commitment Letter, and shall have
delivered to the Agent all documents listed on the Closing Document Checklist
attached to this Financing Agreement as Annex III for which the Borrower is
responsible.
Upon the execution of this Financing Agreement and the initial disbursement of
Loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as otherwise set forth hereinabove or as the Borrower, the
Required Lenders and the Agent shall otherwise agree in writing.
SECTION 2.02. Conditions to Each Extension of Credit . Subject
to the terms of this Financing Agreement, the Commitment of each Lender to fund
its pro rata share, after the Closing Date, of Revolving Loans, and to purchase
a participation in Letters of Credit, is subject to the satisfaction of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES - Each of the representations and warranties
made by the Borrower in or pursuant to this Financing Agreement shall be true
and correct in all material respects on and as of such date as if made on and as
of such date, except for any such representation or warranty which by its terms
speaks only as of an earlier date.
(b) NO DEFAULT - No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) BORROWING BASE - Except as may be otherwise agreed to from time to time by
the Lenders and the Borrower in writing, after giving effect to the extension of
credit requested
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to be made by the Borrower on such date, the aggregate outstanding balance of
the Revolving Loans and Letter of Credit Exposure will not exceed the lesser of
(i) the Revolving Line of Credit or (ii) the Borrowing Base, minus the amount
calculated pursuant to clause (b) of Availability Reserve.
Each borrowing of a Revolving Loan by the Borrower hereunder, and each request
by the Borrower for the issuance of a Letter of Credit, shall constitute a
representation and warranty by the Borrower as of the date of such borrowing or
request that each of the representations and warranties contained in this
Financing Agreement have been satisfied and are true and correct, except as the
Borrower and the Agent and/or the Required Lenders shall otherwise agree herein
or in a separate writing.
ARTICLE III
REVOLVING LOANS
SECTION 3.01. Revolving Loans Generally. The Agent and the
Lenders agree , subject to the terms and conditions of this Financing Agreement,
from time to time to make loans and advances to the Borrower on a revolving
basis (each a "Revolving Loan" and collectively the "Revolving Loans"). Subject
to the limitations set forth herein, the Borrower may borrow, repay and
re-borrow Revolving Loans. Requests for Revolving Loans shall be in amounts not
to exceed (a) the lesser of (i) the Borrowing Base or (ii) the Revolving Line of
Credit, minus, until such time as the Mezzanine Debt shall have been paid in
full or otherwise satisfied in a manner acceptable to the Mezzanine Lenders, the
sum of $1,500,000, minus (b) the aggregate principal amount of all the
outstanding Revolving Loans and minus the Availability Reserve. All requests for
Revolving Loans must be received by an officer of the Agent no later than (i)
1:00 p.m., New York time, of the Business Day on which any Revolving Loans based
on the Base Rate are required or (ii) 11:00 a.m., New York time, on the third
Business Day prior to the Business Day on which any Revolving Loans based on
LIBOR are required. Should the Agent for any reason honor requests for
Overadvances, any such Overadvances shall be made in the Agent's sole discretion
and subject to any additional terms the Agent and/or the Required Lenders deem
necessary. In the event that after making a requested Revolving Loan, such
Revolving Loan exceeds the Availability existing immediately prior to the making
of such Revolving Loan or the sum of (i) the outstanding balance of Revolving
Loans and (ii) outstanding Letter of Credit Exposure exceeds (x) the Borrowing
Base or (y) the Revolving Line of Credit, any such nonconsensual Overadvance
shall be due and payable to the Agent on behalf of the Lenders immediately upon
the Agent's demand therefor.
SECTION 3.02. Notice of Borrowing Request. Whenever the
Borrower requests the Agent, on behalf of the Lenders, to make a Revolving Loan
pursuant to Section 3.01, it shall give the Agent notice in writing or
irrevocable telephonic notice confirmed promptly in writing, specifying (A) the
amount to be borrowed, and (B) the requested borrowing date (which shall be a
Business Day and shall be prior to the Anniversary Date, and
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if applicable, any Early Termination Date, or prior to any effective termination
date of this Financing Agreement, all as further set forth herein), and (C)
specify whether the requested Revolving Loan shall bear interest at the Base
Rate or at LIBOR, as further set forth herein. Proceeds of Revolving Loans shall
be disbursed by the Agent to a bank account of the Borrower designated by it.
Requests for Revolving Loans shall be made solely by the Borrower and shall be
directed solely to the Agent.
SECTION 3.03. Agent May Fund Revolving Loans. Notwithstanding
any other provision of this Financing Agreement, in order to reduce the number
of fund transfers among the Borrower, the Lenders and the Agent, the Borrower,
the Lenders and the Agent agree that the Agent may, but shall not be obligated
to fund, and the Borrower and the Lenders hereby irrevocably authorize the Agent
to fund, on behalf of the Lenders, Revolving Loans pursuant to Section 3.01,
subject to the procedures for settlement set forth below, provided, however,
that (i) the Agent shall in no event fund such Revolving Loan or request that
any Lender so fund such Revolving Loan if the Agent shall have received written
notice from the Required Lenders on the Business Day prior to the date of the
proposed Revolving Loan that one or more of the conditions precedent contained
in Section 2.02 hereof will not be satisfied on the date of the proposed
Revolving Loan and (ii) the Agent shall not otherwise be required to determine
that, or take notice whether, the conditions precedent in Section 2.02 have been
satisfied. If the Agent elects not to fund a requested Revolving Loan on behalf
of the Lenders promptly after receipt of a request for a Revolving Loan pursuant
to this Section 3.03, the Agent shall so notify each Lender. If the Agent
notifies the Lenders that it will not fund a request for a Revolving Loan on
behalf of the Lenders, each Lender shall make its pro rata share of the
Revolving Loan so requested available to the Agent, in immediately available
funds, at the payment office of the Agent designated by it, no later than 2:00
p.m. (New York time) on the date of the Revolving Loan so requested, in which
case the Agent will then disburse to the Borrower the proceeds of all amounts so
received by the Agent in accordance with Sections 3.01 and 3.02.
SECTION 3.04. Agent's Assumptions. If the Agent has notified
the Lenders that the Agent will not fund a particular Revolving Loan pursuant to
Section 3.03 on behalf of the Lenders, the Agent may assume that each such
Lender will make such amount available to the Agent on such day and the Agent,
in its sole and absolute discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the Borrower on such day. If, in
such case, the Agent makes such corresponding amount available to the Borrower
and such corresponding amount is not in fact made available to the Agent by any
such Lender, such Lender and the Borrower agree to repay to the Agent forthwith
on demand such corresponding amount together with interest thereon for each day
from the date such amount is made available to the Borrower to and including the
date such amount is repaid to the Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Effective Rate during
such period as quoted by the Agent and the Base Rate then in effect and (ii) in
the case of such Lender, at the Federal Funds Effective Rate during such period
as quoted by the Agent for three Business Days and thereafter at the Base Rate
then in effect. If such Lender shall repay to the Agent such corresponding
amount such amount
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so repaid shall constitute such Lender's pro rata share of such Revolving Loan.
Nothing in this Section shall be deemed to relieve any Lender from its
obligation to fulfill its Revolving Credit Commitment or to prejudice any rights
that the Agent or the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
SECTION 3.05. Settlement Procedure. With respect to all
periods for which the Agent, on behalf of the Lenders, has funded Revolving
Loans pursuant to Section 3.03, on the first Business Day after the last day of
each week, or such shorter period as the Agent may from time to time select (any
such week or shorter period being herein called a "Settlement Period"), the
Agent shall notify each Lender of the unpaid principal amount of the Revolving
Loans outstanding at the close of business on the last Business Day of such
Settlement Period. In the event that such amount is greater than the unpaid
principal amount of the Revolving Loans outstanding at the close of business on
the last Business Day of the Settlement Period immediately preceding such
Settlement Period (or, if there has been no preceding Settlement Period, the
amount of the Revolving Loans made on the date of such Lender's initial funding)
each Lender shall promptly make available to the Agent such Lender's pro rata
share of the difference in immediately available funds. In the event that such
amount is less than such unpaid principal amount, the Agent shall promptly pay
over to each other Lender such Lender's pro rata share of the difference in
immediately available funds. In addition, if the Agent shall so request at any
time when a Default or an Event of Default shall have occurred and be continuing
or any other event shall have occurred as a result of which the Agent shall
determine that it is desirable to present claims against the Borrower for
repayment, each Lender shall promptly remit to the Agent or, as the case may be,
the Agent shall promptly remit to each Lender, sufficient funds to adjust the
interests of the Lenders in the then outstanding Revolving Loans to such an
extent that, after giving effect to such adjustment, each Lender's interest in
the then outstanding Revolving Loans will be equal to its pro rata share
thereof. The obligations of the Agent and each Lender under this Section shall
be absolute and unconditional. Each Lender shall only be entitled to receive
interest on its pro rata share of the Revolving Loans which have been actually
funded by such Lender.
SECTION 3.06. Defaulting Lenders. In the event that any Lender
fails to make any payment required to be made by it pursuant to Section 3.05,
the Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from the date such
payment was due to and including the date such amount is paid to the Agent, at
the Federal Funds Effective Rate during each period as quoted by the Agent for
three Business Days and thereafter at the Base Rate then in effect. During the
period in which such Lender has not paid such corresponding amount to the Agent,
notwithstanding anything to the contrary contained in this Financing Agreement
or any other Loan Document, the amount so advanced by the Agent to the Borrower
shall, for all purposes hereof, be deemed to be a Revolving Loan made by the
Agent for its own account. Upon any such failure by a Lender to pay the Agent,
the Agent shall promptly thereafter notify the Borrower of such failure and the
Borrower shall immediately pay such corresponding amount to the Agent for its
own account.
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SECTION 3.07. Revolving Loan Account. The Agent shall maintain
a Revolving Loan Account on its books in which the Borrower will be charged with
all Revolving Loans and with any other Obligations, as and when payable,
including any and all Out-of-Pocket Expenses which the Agent may incur in
connection with the exercise by or for the Agent of any of the rights or powers
herein conferred upon the Agent, or in the prosecution or defense of any action
or proceeding to enforce or protect any rights of the Agent in connection with
this Financing Agreement, the other Loan Documents or the Collateral assigned
hereunder, or any Obligations owing by the Borrower. The Borrower will be
credited with all amounts received by the Agent and/or the Lenders from the
Borrower or from others for the Borrower's account, including, as above set
forth, all amounts received by the Agent in payment of Accounts, and such
amounts will be applied to payment of the Obligations as set forth herein.
SECTION 3.08. Statement of Account. After the end of each
month, the Agent shall promptly send the Borrower a statement showing the
accounting for the charges, loans, advances and other transactions occurring
between the Agent and the Borrower during that month. The monthly statements
shall be deemed correct and binding upon the Borrower and shall constitute an
account stated between the Borrower and the Agent unless the Agent receives a
written statement of the exceptions within thirty (30) days after the Borrower's
receipt of the monthly statement (it being understood that the Borrower shall be
deemed to have received such monthly statement if it shall not have given the
Agent written notice of non-receipt within ten (10) days after the end of such
month).
ARTICLE IV
THE TERM LOAN
SECTION 4.01. The Term Loan; Amortization. The Borrower hereby
agrees to execute and deliver to each Lender a Term Note in an amount equal to
such Lender's Term Loan Commitment. Upon the satisfaction of the conditions
contained in Section 2.01 and its receipt of such Term Note, each Lender hereby
agrees to fund its pro rata share of the Term Loan. The principal amount of the
Term Loan shall be repaid by the Borrower in nineteen equal and consecutive
Quarterly Installments of $622,250 each (each a "Quarterly Installment"),
followed by a final installment of $2,417,250 (the "Balloon Installment"). The
first Quarterly Installment shall be due and payable on the first Business Day
in October, 2000, the subsequent Quarterly Installments shall be due and payable
on the first Business Day in each of the months of January, April, July and
October thereafter, and the Balloon Installment shall be due and payable on the
initial Anniversary Date, provided, however, that if this Financing Agreement or
the Line of Credit is terminated by either the Lenders or the Borrower for any
reason whatsoever the unpaid principal balance of the Term Loan, and all
interest accrued thereon, shall become due and payable on the effective date of
such termination notwithstanding any provision to the contrary in the Term Notes
or this Financing Agreement.
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SECTION 4.02. Mandatory Prepayments. (a) Subject to the terms
of Section 9.03, if the Borrower sells any Equipment or other tangible personal
property (other than Inventory in the ordinary course of business), or if any
Equipment or such other property is lost, destroyed, or taken by condemnation,
the Borrower shall pay to the Agent, for the ratable benefit of the Lenders,
unless otherwise agreed by the Required Lenders, or as otherwise set forth in
this Financing Agreement, as and when received by the Borrower and as a
mandatory prepayment of the Term Loan, until the Term Loan is paid in full and
then the Revolving Loans, a sum equal to the Net Cash Proceeds (including
Insurance Proceeds) received by the Borrower from such sale, loss, destruction
or condemnation, provided, however, that so long as no Event of Default has
occurred and is continuing, the proceeds of any Equipment or other such property
so lost, destroyed or taken by condemnation, to the extent such proceeds are
equal to or less than $250,000 in the aggregate, may be used to replace or
restore such Equipment or other property, as the case may be, so long as such
Net Cash Proceeds are so used within 60 days of receipt thereof, provided,
further, that if the nature of such Equipment or such other property precludes
the likelihood of such replacement or restoration within such 60 day period,
then the Borrower and the Agent shall meet and confer in good faith for the
purpose of determining a reasonable time period within which such replacement or
restoration shall occur, or such other application of such Net Cash Proceeds.
(b) Upon its receipt of each payment or prepayment of principal of or interest
on the ▇▇▇▇▇▇▇▇▇▇ Debt, the Borrower shall promptly pay to the Agent, for the
ratable benefit of the Lenders, as and when received by the Borrower and as a
mandatory prepayment of the Term Loan, in the case of any payment or prepayment
of principal, and for application against the then outstanding principal balance
of the Revolving Loans, in the case of any payment of interest, an amount equal
to each such payment or prepayment, provided, however, that if at the time of
such receipt of payment or prepayment of principal, any Mezzanine Debt shall be
outstanding and unpaid, then the Borrower shall first pay to the Mezzanine
Lender (prior to its payment to the Agent), for application against such
outstanding and unpaid Mezzanine Debt, an amount which is equal to the lesser of
such outstanding and unpaid Mezzanine Debt and the amount of such payment or
prepayment.
(c) Upon its receipt of any Net Cash Proceeds from the sale or other disposition
of any Diamond M Ranch Collateral, the Borrower shall promptly pay all such Net
Cash Proceeds, as and when received by the Borrower, (i) if any Mezzanine Debt
is then outstanding, to the Mezzanine Agent to be applied in accordance with
Section 2.8(b) or Section 2.9 of the Intercreditor Agreement (as applicable), as
in effect on the Closing Date and (ii) if the Mezzanine Debt has then been paid
in full, to the Agent as a mandatory prepayment of the Term Loan.
(d) Beginning with the Fiscal Year ending in June 2001, the Borrower shall make
a mandatory prepayment of the unpaid principal balance of the Term Loan no later
than ninety days after the end of each Fiscal Year, in an aggregate amount equal
to fifty percent (50%) of Surplus Cash for the Fiscal Year then ended (such
amount, the "referenced amount"), as
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calculated in accordance with and as set forth in the audited non-consolidated
financial statements of the Borrower for the Fiscal Year then ended, which
calculation shall be certified by an Authorized Officer, provided, however, that
if at the time any such mandatory prepayment shall be made, any portion of the
principal of the Mezzanine Debt shall be outstanding and unpaid, then the
Borrower shall instead pay to the Agent, as a mandatory prepayment of the unpaid
principal balance of the Term Loan, only the Lenders' Proportionate Share of the
referenced amount, and the Borrower shall concurrently make a prepayment of the
unpaid principal balance of the Mezzanine Debt in an amount equal to the
Mezzanine Lenders' Proportionate Share of such referenced amount.
SECTION 4.03. Voluntary Prepayments. Upon at least one
Business Day's prior notice, in the case of that portion of the Term Loan
bearing interest based on the Base Rate, and at least three Business Day's prior
notice, in the case of that portion of the Term Loan bearing interest based on
LIBOR, the Borrower may make voluntary prepayments, in whole or in part, of the
Term Loan, in each case together with the applicable Prepayment Premium,
provided that (a) no such voluntary prepayment may be made, in whole or in part,
unless the "Required Lenders", as defined in the Mezzanine Financing Agreement,
or the Mezzanine Agent, on their behalf, shall have given their prior written
consent thereto, or the Mezzanine Debt shall have been paid in full or otherwise
satisfied in a manner acceptable to the Mezzanine Lenders, (b) each partial
prepayment shall be in an amount equal to the lesser of (i) $25,000 or an
integral multiple of $5,000 in excess thereof or (ii) the amount necessary to
prepay in full the unpaid principal balance of the Term Loan, as the case may be
and (c) in the case of any prepayment of that portion of the Term Loan bearing
interest based on LIBOR, the Borrower shall pay all applicable Breakage Costs.
Notwithstanding anything contained in this Financing Agreement to the contrary,
no Prepayment Premium shall be required if such prepayment is funded with the
proceeds of a loan made to or for the benefit of the Borrower by a lender which
is not a bank or other financial institution and the Borrower shall not have
terminated this Financing Agreement, or given the Agent notice thereof, in
conjunction with the making of such prepayment, or substantially at the same
time of such prepayment.
SECTION 4.04. Application of Payments. All prepayments of the
Term Loan shall be applied first to the Balloon Installment, until paid in full,
and then pro rata against the remaining Quarterly Installments.
SECTION 4.05. Authorization to Charge Revolving Loan Account.
The Borrower hereby authorizes the Agent to charge its Revolving Loan Account
with the amount of all obligations owing under this Article IV as such amounts
become due. The Borrower confirms that any charges which the Agent may so make
to its Revolving Loan Account as herein provided will be made as an
accommodation to the Borrower and solely at the Agent's discretion.
ARTICLE V
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LETTERS OF CREDIT
In order to assist the Borrower in establishing or opening Letters of Credit
with an Issuing Bank, the Borrower has requested the Agent, on behalf of the
Lenders, to join in the applications for such Letters of Credit, and/or
guarantee payment or performance of such Letters of Credit and any drafts or
acceptances thereunder through the issuance of the Letters of Credit Guaranty,
thereby lending the Agent's credit to the Borrower and the Agent has agreed to
do so. These arrangements shall be handled by the Agent subject to the terms and
conditions set forth below.
SECTION 5.01. Letters of Credit Generally. Within the
Revolving Line of Credit, the Agent on behalf of the Lenders shall assist the
Borrower in obtaining Letters of Credit from time to time, so long as after
giving effect to the issuance of any requested Letter of Credit, the Letter of
Credit Exposure shall not exceed the lesser of (a) the Letter of Credit Sub-Line
and (b) Availability. The Agent's assistance for amounts in excess of the
limitation set forth herein shall at all times and in all respects be in the
Agent's sole discretion. It is understood that the term, form and purpose of
each Letter of Credit and all documentation in connection therewith, and any
amendments, modifications or extensions thereof, must be mutually acceptable to
the Agent, the Issuing Bank and the Borrower, provided that Letters of Credit
shall not be used for the purchase of domestic Inventory or to secure present or
future debt of domestic Inventory suppliers. Any and all outstanding Letters of
Credit shall be reserved dollar for dollar from Availability as an Availability
Reserve.
SECTION 5.02. Authorization to Charge Revolving Loan Account.
The Agent shall have the right, without notice to the Borrower, to charge the
Borrower's Revolving Loan Account with the amount of any and all indebtedness,
liability or obligation of any kind incurred by the Agent and/or the Lenders
under the Letters of Credit Guaranty at the earlier of (a) payment by the Agent
under the Letters of Credit Guaranty; or (b) the occurrence of an Event of
Default which has not been waived in writing by the Required Lenders. Any amount
charged to Borrower's Revolving Loan Account shall be deemed a Revolving Loan
hereunder and shall incur interest at the Base Rate plus the Applicable
Increment.
SECTION 5.03. Indemnification. The Borrower unconditionally
indemnifies the Agent and the Lenders and holds the Agent and the Lenders
harmless from any and all loss, claim or liability incurred by the Agent arising
from any transactions or occurrences relating to Letters of Credit established
or opened for the Borrower's account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or willful misconduct by the Agent
and/or the Lenders under the Letters of Credit Guaranty. This indemnity shall
survive termination of this Financing Agreement. The Borrower agrees that any
charges incurred by the Agent and/or the Lenders for the Borrower account by the
Issuing Bank shall be conclusive on the Agent and may be charged to the
Borrower's Revolving Loan Account.
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SECTION 5.04. Participation. By the issuance by the Agent of a
Letter of Credit Guaranty, and without any further action on the part of the
Agent or the Lenders, the Agent hereby grants to each Lender, and each Lender
hereby acquires from the Agent, a participation in such Letter of Credit
Guaranty equal to such Lender's pro rata share of the aggregate amount available
to be drawn under all Letters of Credit and under the letters of credit
outstanding under the Old Credit Agreement as of the Closing Date. By the
payment by the Agent of an LC Disbursement pursuant to clause (ii) of the
definition thereof, or by the reimbursement by the Agent to the Issuing Bank of
an LC Disbursement pursuant to clause (i) of the definition thereof, and without
any further action on the part of the Lenders, the Agent hereby grants to each
Lender, and each Lender hereby acquires from the Agent, a participation in such
LC Disbursement, equal to such Lender's pro rata share of the amount of such LC
Disbursement. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Agent, without
duplication, (i) for its own account, such Lender's pro rata share of each LC
Disbursement made by the Agent and not reimbursed by the Borrower on the date
due as provided herein and (ii) for the account of the Issuing Bank, such
Lender's pro rata share of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Borrower on the date due as provided in herein, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of LC Disbursements and the
Letter of Credit Guaranty is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
SECTION 5.05. Limitation on Agent's Responsibility. The Agent
shall not be responsible for: (a) the existence, character, quality, quantity,
condition, packing, value or delivery of the goods purporting to be represented
by any documents; (b) any difference or variation in the character, quality,
quantity, condition, packing, value or delivery of the goods from that expressed
in the documents; (c) validity, sufficiency or genuineness of any documents or
of any endorsements thereon, even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged; (d) the
time, place, manner or order in which shipment is made; (e) partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; (f) any deviation from
instructions; (g) delay, default, or fraud by the shipper and/or anyone else in
connection with the goods or the shipping thereof; or (h) any breach of contract
between the shipper or vendors and the Borrower.
SECTION 5.06. Further Provisions. The Borrower agrees that any
action taken by the Agent and/or the Lenders, if taken in good faith, or any
action taken by any Issuing Bank, under or in connection with the Letters of
Credit, the Letter of Credit Guarantees, the drafts or acceptances, or the
Collateral, shall be binding on the Borrower and shall not result in any
liability whatsoever of the Issuing Bank, the Agent or the Lenders to
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the Borrower. In furtherance thereof, the Agent shall have the full right and
authority, in good faith, to: (a) clear and resolve any questions of
non-compliance of documents; (b) give any instructions as to acceptance or
rejection of any documents or goods; (c) (d) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances;
all in the Agent's sole name. The Issuing Bank shall be entitled to comply with
and honor any and all such documents or instruments executed by or received
solely from the Agent, all without any notice to or any consent from the
Borrower. Notwithstanding any prior course of conduct or dealing with respect to
the foregoing including amendments and non-compliance with documents and/or the
Borrower's instructions with respect thereto, the Agent may exercise its rights
hereunder in its sole and reasonable judgment. In addition, without the Agent's
express consent and endorsement in writing, the Borrower agrees: (a) not to
execute 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; or to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; and (b) after the occurrence of an
Event of Default which is not cured within any applicable grace period, if any,
or waived by the Required Lenders, not to (i) clear and resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptances or
rejection of any documents or goods or (iii) execute any and all steamship or
airways guaranties (and applications therefor), indemnities or delivery orders.
SECTION 5.07. Licenses; Risk. The Borrower agrees that: (a)
any necessary import, export or other licenses or certificates for the import or
handling of the Collateral will have been promptly procured;(b) all foreign and
domestic governmental laws and regulations in regard to the shipment and
importation of the Collateral, or the financing thereof will have been promptly
and fully complied with; and (c) any certificates in that regard that the Agent
may at any time request will be promptly furnished. In connection herewith, the
Borrower warrants and represents that all shipments made under any such Letters
of Credit are in accordance with the laws and regulations of the countries in
which the shipments originate and terminate, and are not prohibited by any such
laws and regulations. The Borrower assumes all risk, liability and
responsibility for, and agrees to pay and discharge, all present and future
local, state, federal or foreign Taxes, duties, or levies. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely the Borrower's risk, liability and responsibility.
SECTION 5.08. Subrogation. Upon any payments made to the
Issuing Bank under the Letter of Credit Guaranty, the Agent on behalf of the
Lenders shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by the Borrower to the Issuing Bank in any
application for Letters of Credit, any standing agreement
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relating to Letters of Credit or otherwise, all of which shall be deemed to have
been granted to the Agent on behalf of the Lenders and apply in all respects to
the Agent and shall be in addition to any rights, remedies, duties or
obligations contained herein.
ARTICLE VI
COLLATERAL
SECTION 6.01. Grant of Security Interest. As security for the
prompt payment in full of all Obligations, the Borrower hereby pledges and
grants to the Agent, on behalf of the Lenders, a continuing general lien upon,
and security interest in, all of its:
(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Other Collateral;
(f) Equipment; and
(g) Real Estate.
SECTION 6.02. SECURITY INTEREST GENERALLY.
The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is owned by the Borrower or in which the Borrower has
any interest, whether held by the Borrower or others for its account, and, if
any Collateral is Equipment, whether the Borrower's interest in such Equipment
is as owner, finance lessee or conditional vendee;
(b) All Equipment, whether the same constitutes personal property or fixtures,
including, but without limiting the generality of the foregoing, all dies, jigs,
tools, benches, molds, tables, accretions, component parts thereof and additions
thereto, as well as all accessories, motors, engines and auxiliary parts used in
connection with, or attached to, the Equipment; and
(c) All Inventory and any portion thereof which may be returned, rejected,
reclaimed or repossessed by either the Agent or the Borrower from the Borrower's
customers, as well as to all supplies, goods, incidentals, packaging materials,
labels and any other items which
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contribute to the finished goods or products manufactured or processed by the
Borrower, or to the sale, promotion or shipment thereof.
SECTION 6.03. Collection of Trade Accounts Receivable. The
Borrower shall establish and maintain, in its name and at its expense, a system
of lock boxes ("Lock Boxes") and deposit accounts ("Blocked Accounts"), in each
case with such banks as are acceptable to the Agent. The Borrower shall: (i)
indicate on all of its invoices that funds should be delivered to and deposited
to a Lock Box; (ii) direct all of its account debtors to deposit any and all
payments, remittances, checks, collections and proceeds of Trade Accounts
Receivable and other Collateral into a Lock Box; (iii) irrevocably authorize and
direct any bank which maintains a Lock Box or otherwise maintains the Borrower's
initial receipt of cash, checks and other items to promptly transfer all
available funds to a Blocked Account; and (iv) advise all such banks of the
Agent's security interest in such funds. The Borrower shall promptly cause to be
deposited into a Blocked Account all proceeds of Collateral received by the
Borrower. Each bank at which a Lock Box and Blocked Account are established
shall enter into a written agreement among the Borrower, the Agent and such
bank, in form and substance satisfactory to the Agent (the "Blocked Account
Agreements"), providing that all cash, checks and items received or deposited in
the Lock Box and Blocked Account are the property of the Agent, that the
depository bank has no lien upon, or right of set off against, the Lock Box and
Blocked Accounts or any cash, checks, items, wires or other funds from time to
time on deposit therein, except as otherwise provided in the Blocked Account
Agreements, and that automatically, on a daily basis the depository bank will
wire, or otherwise transfer, in immediately available funds, all funds received
or deposited into the Blocked Accounts to such bank account as the Agent may
from time to time designate for such purpose. The Borrower hereby confirms and
agrees that all amounts deposited in such Lock Box and Blocked Accounts and any
other funds received and collected by the Agent, whether as proceeds of
Inventory or other Collateral or otherwise, shall be the property of the Agent.
SECTION 6.04. Delivery of Information Concerning Trade
Accounts Receivable and Inventory. In furtherance of the continuing assignment
and security interest in the Borrower's Accounts and Inventory, the Borrower
will, upon the creation of Accounts and purchase or acquisition of Inventory,
execute and deliver to the Agent in such form and manner as the Agent may
reasonably require, solely for the Agent's convenience in maintaining records of
Collateral, such confirmatory schedules of Trade Accounts Receivable and
Inventory as the Agent may reasonably request, including, without limitation,
weekly schedules of Trade Accounts Receivable and monthly schedules of
Inventory, all in form and substance satisfactory to the Agent, and such other
appropriate reports designating, identifying and describing the Trade Accounts
Receivable and Inventory as the Agent may reasonably request, and provided
further that the Agent may request any such information more frequently, from
time to time, upon its reasonable prior request. In addition, upon the Agent's
request, the Borrower shall provide the Agent with copies of agreements with, or
purchase orders from, the Borrower's customers, and copies of invoices to
customers, proof of shipment or delivery, access to its computers, electronic
media and software programs associated therewith (including any electronic
records, contracts and signatures) and such
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other documentation and information relating to such Trade Accounts Receivable
and other Collateral as the Agent may reasonably require. Failure to provide the
Agent with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. The Borrower hereby
authorizes the Agent to regard the Borrower's printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a manual
signature by one of the Borrower's Authorized Officers or agents.
SECTION 6.05. Representations and Covenants With Respect to
Trade Accounts Receivable and Inventory. The Borrower hereby represents and
warrants that: each Trade Account Receivable is based on an actual and bona fide
sale and delivery of Inventory or rendition of services to its customers, made
by the Borrower in the ordinary course of its business; the Inventory being
sold, and the Trade Accounts Receivable created, are the exclusive property of
the Borrower and are not and shall not be subject to any Lien whatsoever, other
than Liens in favor of the Agent, Liens which secure the Mezzanine Debt and the
Permitted Encumbrances; the invoices evidencing such Trade Accounts Receivable
are in the name of the Borrower; and the customers of the Borrower have accepted
the Inventory or services, owe and are obligated to pay the full amounts stated
in the invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, except for disputes and other matters arising in the
ordinary course of business with respect to which the Borrower has complied with
the following notification requirements. The Borrower agrees to notify the Agent
promptly of: (a) any matters affecting the enforceability or collectibility of
any Trade Account Receivable; (b) with respect to any Trade Account Receivable
in the face amount of $200,000, or greater, all customer disputes, offsets,
defenses, counterclaims, returns, rejections, (c) all reclaimed or repossessed
merchandise or goods, (d) any adverse effect in the value of Inventory, or of
any matter which materially and adversely affects the Borrower's weekly and
monthly collateral reports (as applicable) provided to the Agent hereunder, in
such detail and format as the Agent may reasonably require from time to time and
(e) any such matters which are material, as a whole, to the Trade Accounts
Receivables and/or the Inventory. The Borrower agrees to issue credit memoranda
promptly (with duplicates to the Agent upon request after the occurrence of an
Event of Default) upon accepting returns or granting allowances. Upon the
occurrence of an Event of Default (which is not waived in writing by the
Required Lenders) and on notice from the Agent, the Borrower agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set aside by
the Borrower, marked with the Agent's name (as secured party) and held by the
Borrower for the Agent's account. The Borrower confirms to the Agent that any
and all Taxes or fees relating to its business, its sales, the Accounts or
Inventory relating thereto, are its sole responsibility and that same will be
paid by the Borrower when due, and that none of said Taxes or fees represent a
Lien on the Accounts. The Borrower hereby further represents and warrants that
(i) any Inventory it may acquire on a consignment basis shall be segregated and
set apart from all other Inventory, shall under no circumstances be included in
any Borrowing Base Certificate as Eligible Inventory or otherwise be deemed to
be Eligible Inventory, and is not subject to any Lien in favor of the consignor
of such Inventory, (ii) it shall not co-mingle its Inventory with the inventory
of any of its customers or the inventory of any other Person, including pursuant
to any ▇▇▇▇ and hold sale or otherwise, and (iii) its Inventory is marketable
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to its customers in the ordinary course of business of the Borrower, except as
it may otherwise report in writing to the Agent pursuant to this Section from
time to time. The Borrower agrees to maintain such books and records regarding
Accounts and Inventory as the Agent may reasonably require and agrees that the
books and records of the Borrower will reflect the Agent's interest in the
Accounts and Inventory.
SECTION 6.06. Additional Representations and Covenants With
Respect to Trade Accounts Receivable and Inventory. The Borrower agrees to
safeguard, protect and hold all Inventory for the Agent's account and make no
disposition thereof except in the ordinary course of its business of the
Borrower, as herein provided. The Borrower represents and warrants that
Inventory will be sold and shipped by the Borrower to its customers only in the
ordinary course of the Borrower's business, and then only on open account and on
terms currently being extended by the Borrower to its customers, and absent the
prior written consent of the Agent, the Borrower shall not sell Inventory on a
consignment basis. Upon the sale, exchange, or other disposition of Inventory,
as herein provided, the security interest in the Inventory provided for herein
shall, without break in continuity and without further formality or act,
continue in, and attach to, all proceeds, including any instruments for the
payment of money, Trade Accounts Receivable, documents of title, shipping
documents, chattel paper and all other cash and non-cash proceeds of such sale,
exchange or disposition. As to any such sale, exchange or other disposition, the
Agent shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation. The Borrower hereby agrees to
immediately forward any and all proceeds of Collateral to a Blocked Account, and
to hold any such proceeds (including any notes and instruments), in trust for
the Agent, on behalf of the Lenders, pending delivery to the Agent. Irrespective
of the Agent's perfection status in any and all of the General Intangibles,
including, without limitation, any Patents, Trademarks, Copyrights or licenses
with respect thereto, the Borrower hereby irrevocably grants the Agent a royalty
free license to sell, or otherwise dispose or transfer, in accordance with
Section 12.03, and the applicable terms hereof, any of the Inventory upon the
occurrence of an Event of Default which has not been waived in writing by the
Agent.
SECTION 6.07. Representations and Covenants With Respect to
Equipment. The Borrower agrees at its own cost and expense to keep the Equipment
in satisfactory operating condition, reasonable wear and tear excepted, making
any and all repairs and replacements when and where necessary. The Borrower also
agrees to safeguard, protect and hold all Equipment in accordance with the terms
hereof and subject to the Agent's security interest.
SECTION 6.08. Representations and Covenants with Respect to
General Intangibles. The Borrower possess all General Intangibles and rights
thereto necessary to conduct its business as conducted as of the Closing Date
and the Borrower shall maintain its rights in, and the value of, the foregoing
in the ordinary course of its business, including, without limitation, by making
timely payment with respect to any applicable licensed rights. The Borrower
shall deliver to the Agent, and/or shall cause the appropriate party to deliver
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to the Agent, from time to time such pledge or security agreements with respect
to General Intangibles (now or hereafter acquired) of the Borrower as the Agent
shall require to obtain valid first liens thereon. In furtherance of the
foregoing, the Borrower shall provide timely notice to the Agent of any
additional Patents, Trademarks, tradenames, service marks, Copyrights, brand
names, trade names, logos and other trade designations acquired or applied for
subsequent to the Closing Date and the Borrower shall execute such documentation
as the Agent may reasonably require to obtain and perfect its lien thereon. The
Borrower hereby confirms that it shall deliver, or cause to be delivered, any
Pledged Stock issued subsequent to the Closing Date to the Agent in accordance
with the applicable terms of the Stock Pledge Agreement and prior to such
delivery, shall hold any such stock in trust for the Agent. The Borrower hereby
irrevocably grants to the Agent a royalty-free, non-exclusive license in the
General Intangibles, including tradenames, Trademarks, Copyrights, Patents,
licenses, and any other proprietary and intellectual property rights and any and
all right, title and interest in any of the foregoing, for the sole purpose,
upon the occurrence of an Event of Default, of the right to: (i) advertise for
sale and sell or transfer any Inventory bearing any of the General Intangibles,
and (ii) make, assemble, prepare for sale or complete, or cause others to do so,
any applicable raw materials or Inventory bearing any of the General
Intangibles, including use of the Equipment and Real Estate for the purpose of
completing the manufacture of unfinished goods, raw materials or work-in-process
comprising Inventory, and apply the proceeds thereof to the Obligations
hereunder, all as further set forth in this Financing Agreement and irrespective
of the Agent's lien and perfection in any General Intangibles.
SECTION 6.09. Continuing Security Interest. The rights and
security interests granted to the Agent and the Lenders hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Revolving Loan Account may from time to
time be temporarily in a credit position, until the final payment in full to the
Lenders of all Obligations and the termination of this Financing Agreement. Any
delay, or omission by the Agent to exercise any right hereunder shall not be
deemed a waiver thereof, or be deemed a waiver of any other right, unless such
waiver shall be in writing and signed by the Agent. A waiver on any one occasion
shall not be construed as a bar to, or waiver of, any right or remedy on any
future occasion.
SECTION 6.10. No Marshalling. Notwithstanding the Agent's
security interest in the Collateral and to the extent that the Obligations are
now or hereafter secured by any assets or property other than the Collateral or
by the guarantee, endorsement, assets or property of any other person, the Agent
shall have the right in its sole discretion to determine which rights, liens,
security interests or remedies the Agent shall at any time pursue, foreclose
upon, relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or affecting any of them, or any of the Agent's
and/or the Lenders' rights hereunder.
SECTION 6.11. Credit Balances. Any balances to the credit of
the Borrower and any other property or assets of the Borrower in the possession
or control of the Agent
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and/or the Lenders may be held by the Agent as security for any Obligations and
applied in whole or partial satisfaction of such Obligations when due. The
security interests granted herein, and any other Lien the Agent and/or the
Lenders may have in any other assets of the Borrower, shall secure payment and
performance of all now existing and future Obligations. The Agent may, in its
discretion, charge any or all of the Obligations to the Revolving Loan Account
when due.
SECTION 6.12. Mortgages. The Borrower's Obligations are
further secured by Mortgages on the Real Estate.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 7.01. Organization; Powers. The Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted. Except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the Borrower is qualified to do business in, and is
in good standing in, every jurisdiction where such qualification is required, or
where the failure to so qualify would have a material adverse effect on the
ability of the Borrower to enforce collection of Trade Accounts Receivable due
from customers residing in that jurisdiction.
SECTION 7.02. Authorization; Enforceability. This Financing
Agreement, the other Loan Documents to which the Borrower is a party, and the
transactions contemplated to occur hereunder and thereunder are within the
Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Financing Agreement and
each such Loan Document has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 7.03. Governmental Approvals; No Conflicts. The
transactions contemplated to occur under this Financing Agreement and under the
other Loan Documents to which the Borrower is a party (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
its assets, or give rise
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to a right thereunder to require any payment to be made by the Borrower, and (d)
will not result in the creation or imposition of any Lien on any asset of the
Borrower other than Liens in favor of the Agent.
SECTION 7.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Agent its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended July 3, 1999, reported on by Ernst & Young,
independent public accountants, and (ii) as of and for the first nine fiscal
months (ended on April 1, 2000) of the fiscal year ending in June, 2000,
certified by an Authorized Officer. Such financial statements present fairly, in
all material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) Since April 1, 2000, there has been no Material Adverse
Change.
SECTION 7.05. Properties. (a) The Borrower has good title to,
or valid leasehold interests in, all its real and personal property material to
its business, except for the Permitted Encumbrances and minor defects or
encumbrances in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes.
(b) The Borrower owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Borrower does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) As of the Closing Date, the information contained in Annex
II to this Financing Agreement is true and correct in all respects.
SECTION 7.06. Litigation and Environmental Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve this Financing
Agreement or the transactions contemplated to occur hereunder.
(b) Except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the Borrower (i) has not failed to comply with any
Environmental Law or to obtain, maintain or comply with any material and
necessary permit, license or other approval required under any Environmental
Law, (ii) has not become subject to any Environmental Liability, (iii) has not
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received notice of any claim with respect to any Environmental Liability or (iv)
does not know of any basis for any Environmental Liability.
SECTION 7.07. Compliance with Laws and Agreements. The
Borrower is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 7.08. Investment and Holding Company Status. The
Borrower is not (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 7.09. Taxes. The Borrower has timely filed or caused
to be filed all Tax returns and reports required to have been filed and has paid
or caused to be paid all Taxes required to have been paid by it, except (a)
Taxes that are being contested in good faith by appropriate proceedings and for
which the Borrower has set aside on its books adequate reserves or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 7.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan by an amount which could
reasonably be expected to result in a Material Adverse Effect, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans by an amount which could reasonably be expected to result in a
Material Adverse Effect.
SECTION 7.11. Disclosure. The Borrower has disclosed to the
Agent and the Lenders all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial
statements, certificates or other information furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 7.12. Security Interest. Each Loan Document that
purports to create or grant in favor of the Agent a security interest in or
other Lien on any property creates and grants to the Agent, for the benefit of
the Lenders, a legal and valid security interest in or other Lien on the
collateral identified therein. Such security interest or Lien will be a
perfected and, except as permitted hereby or by such Loan Document, first
priority security interest in or Lien on the collateral identified in such Loan
Document upon the filing of the financing statements in the filing offices, the
recording of such agreement or another instrument in the recording offices, or
the delivery of possession of a certificate or other writing to the Agent or its
designees, in each case as provided herein or in such Loan Document. Such
collateral or property is not subject to any other Liens whatsoever, except
Liens permitted by Section 9.02.
SECTION 7.13. Use of Proceeds. All proceeds of the Term Loan
and the Revolving Loans made on the Closing Date shall be used to refinance
existing Indebtedness under the Old Credit Agreement, to pay the transaction
costs and expenses relating to the consummation of the transactions contemplated
to occur under this Financing Agreement and the Mezzanine Financing Agreement,
and to provide for the working capital requirements of the Borrower. All
proceeds of Revolving Loans made after the Closing Date shall be used to provide
for the Borrower's ongoing working capital requirements, general operating
requirements and other proper corporate purposes of the Borrower not otherwise
prohibited by the terms hereof.
SECTION 7.14. Subsidiaries. As of the Closing Date, the
following are the exact names and respective countries of incorporation of each
Subsidiary: Cannondale Europe B.V. - Netherlands; Cannondale Japan K.K. - Japan;
Cannondale Australia Pty Limited - Australia; and Cannondale FSC, Inc. -
Barbados. As of the Closing Date, all of the outstanding shares of securities
having ordinary voting power issued by each Subsidiary are owned beneficially
and of record by the Borrower.
SECTION 7.15. Solvency. (a) The fair salable value of the
assets of the Borrower is not less than the amount that will be required to be
paid on or in respect of the probable liability on the existing debts and other
liabilities (including contingent liabilities) of the Borrower, as they become
absolute and mature.
(b) The assets of the Borrower do not constitute unreasonably
small capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted, including the capital needs of the Borrower, taking
into account the particular capital requirements of the business conducted by
the Borrower and projected capital requirements and capital availability
thereof.
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(c) The Borrower does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by the Borrower, and of amounts to be payable on
or in respect of the debts of the Borrower).
SECTION 7.16. Permits, Etc. The Borrower possesses all
material licenses, permits, approvals and consents, including, without
limitation, all environmental, health and safety licenses, permits, approvals
and consents (collectively, "Permits") of all Federal, state and local
governmental authorities as required to conduct properly its business, each such
Permit is and will be in full force and effect, and the Borrower is in
compliance in all material respects with all such Permits, and no event
(including, without limitation, any violation of any law, rule or regulation)
has occurred which allows the revocation or termination of any such Permit or
any restriction thereon, except where non-compliance or such revocation or
termination, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated, the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, all Letters of Credit shall have expired or terminated, all
LC Disbursements shall have been reimbursed and all other Obligations paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 8.01. Financial Statements, Projections, Borrowing
Base Certificates and Other Information. The Borrower will furnish to the Agent
(and upon its receipt thereof, the Agent will promptly furnish to each Lender):
(a) as soon as available but in any event within 90 days after
the end of each fiscal year of the Borrower, its audited consolidated
balance sheet, consolidating balance sheet and related audited
consolidated and consolidating statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth
in each case in comparative form the figures for the previous fiscal
year, all reported on by Ernst & Young or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
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(b) as soon as available but in any event within 45 days after
the end of the first, second and third Fiscal Quarters and within 90
days after the fourth Fiscal Quarter, the Borrower's consolidated
balance sheet, consolidating balance sheet and consolidated and
consolidating related statements of operations, stockholders' equity
and cash flows as of the end of and for such Fiscal Quarter, and the
then elapsed portion of the Fiscal Year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
Fiscal Year, all certified by an Authorized Officer as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of
footnotes;
(c) as soon as available but in any event within 30 days after
the end of each of the first eleven fiscal months of the Borrower
(except for the third fiscal month of each of the first three Fiscal
Quarters, which shall be within 45 days after the end of each such
fiscal month) and within 90 days after the end of the last fiscal month
of the Borrower, its consolidated balance sheet, consolidating balance
sheet and related consolidated and consolidating statements of
operations, stockholders' equity and cash flows as of the end of and
for such fiscal month, and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by an
Authorized Officer as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments
and the absence of footnotes;
(d) concurrently with any delivery of financial statements
under clause (a), (b) or (c) above, a certificate of an Authorized
Officer of the Borrower (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof
and any action taken or proposed to be taken with respect thereto, (ii)
setting forth reasonably detailed calculations (A) in the case of
quarterly financial statements, of the Fixed Charge Coverage Ratio for
the period of four Fiscal Quarters then ended and (B) demonstrating
compliance with Sections 9.09 through and including 9.11 and (iii)
stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to
in clause (a) and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such
certificate;
(e) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be
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limited to the extent required by accounting rules or guidelines),
together with a copy of such accounting firm's "management letter", if
any;
(f) promptly after the same become publicly available, copies
of all periodic and other reports, financial statements, proxy
statements and other materials filed by the Borrower or any Subsidiary
with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission,
or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be;
(g) no later than ten (10) days prior to the end of each
Fiscal Year, the Borrower's forecasted consolidated balance sheet,
consolidating balance sheet and related consolidated statements of
operations, stockholders' equity and cash flows (all prepared on a
consistent basis with the Borrower's historical consolidated financial
statements) together with appropriate supporting details and a
statement of underlying assumptions for the forthcoming Fiscal Year,
prepared on a month-by-month basis;
(h) (i) on Monday of each week (or on the next Business Day,
if such Monday is not a Business Day) (x) a report of the Borrower's
sales, collections, debit and credit adjustments for the preceding
week, such report to contain such level of detail and to otherwise be
in such scope, form and substance as the Agent may reasonably require,
(y) a Borrowing Base Certificate as of the last day of the preceding
week, which Borrowing Base Certificate shall reflect the Borrower's
total Eligible Inventory as of the last day of such preceding week and
(z) a reconciliation to the Trade Accounts Receivable outstanding as of
the prior Monday (or the next Business Day of the prior week, if such
prior Monday is not a Business Day), and (ii) within fifteen (15) days
after the end of each month, a Borrowing Base Certificate as of the
last day of such month, together with a report, in form and substance,
and in such detail, as shall be satisfactory to the Agent, of (w) the
amount and value, by location, of the Inventory as of the end of such
month, (x) an aging of the Trade Accounts Receivable as of the end of
such month, (y) an aging of the Borrower's accounts payable as of the
end of such month, and (z) a work-up of ineligible Trade Accounts
Receivable and ineligible Inventory as of the end of such month; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of this Financing Agreement, as the Agent or any Lender may
reasonably request.
SECTION 8.02. Notices of Material Events. The Borrower will
furnish to the Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
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(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect;
(d) the receipt of any material notice or other communication
from the Securities Exchange Commission; and
(e) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
an Authorized Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
SECTION 8.03. Existence; Conduct of Business. The Borrower
will do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, Permits,
privileges and franchises material to the conduct of its business.
SECTION 8.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 8.05. Maintenance of Properties; Insurance. The
Borrower will (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations, each policy in respect of which shall list the Agent as loss
payee and/or additional insured as applicable.
SECTION 8.06. Books and Records; Inspection Rights. The
Borrower will keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. The Borrower will permit any representatives designated
by the Agent or any Lender, upon reasonable prior
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notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested. If the Borrower reasonably believes that any
material interests of the Borrower or any of its Subsidiaries relating to any
non-public, confidential or proprietary information which could become available
to the Agent or any Lender during the course of such inspections or such
discussions are not adequately protected by any then existing confidentiality
agreements entered into by the Agent and such Lender with respect to the
Borrower and its Subsidiaries, then any such visit and examination or
discussions shall be performed in compliance with reasonable and customary
security procedures mutually agreeable to the Agent and the Lenders, as
applicable, and the Borrower.
SECTION 8.07. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where any single failure to do so, or any series of failures to do so,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 8.08. Use of Proceeds and Letters of Credit. The
proceeds of the Loans will be used only for the Borrower's working capital needs
and for the other purposes described in the last sentence of Section 7.13. No
part of the proceeds of any Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the
Federal Reserve Board, including Regulations U and X. Documentary or commercial
Letters of Credit will be issued only to support the Borrower's importation of
merchandise and inventory. Standby Letters of Credit will be issued only to
support the Borrower's insurance obligations and its Hedging Obligations.
SECTION 8.09. Lock Boxes and Blocked Account Agreements. The
Borrower will maintain at all times a Lock Box, Blocked Account and Blocked
Account Agreement, containing terms and conditions reasonably satisfactory to
the Agent, among the Borrower, the Agent, and each bank at which a Lock Box is
maintained to which the Borrower's customers remit their payments and
collections.
SECTION 8.10. New Subsidiaries. The Borrower shall give the
Agent and the Lenders not less than thirty (30) days prior written notice of the
Borrower's intention to create or acquire a Subsidiary. In connection with any
establishment, creation or acquisition of any Subsidiary, it is understood that
the Required Lenders may require that (a) any such new Subsidiary to execute and
deliver to the Agent promptly, and in any event within three (3) days after such
establishment, creation or acquisition thereof a guaranty in form and substance
satisfactory to the Agent, a security agreement in form and substance
satisfactory to the Agent and such other agreements, instruments and other
documents reasonably requested by the Agent and (b) each owner of the capital
stock or other equity interests of any such Subsidiary execute and deliver
promptly, and in any event within three (3) days after such establishment,
creation or acquisition thereof, (i) a pledge agreement in form and
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substance satisfactory to the Agent, (ii) certificates evidencing such capital
stock or other equity interests of such Subsidiary, (iii) undated stock powers
or other appropriate instruments of assignment executed in blank with signature
guaranteed and (iv) such other agreements, instruments and other documents
reasonably requested by the Agent, including without limitation an amendment to
this Financing Agreement, the primary purpose of which would be to effect a
modification of certain of the representations, warranties, covenants (including
financial covenants) and events of default contained herein so as to make such
time representations, warranties, covenants and events of default applicable to
such new Subsidiary.
SECTION 8.11. Notarial Deed of Pledge. As soon as possible,
and in any event no later than thirty (30) days from the Closing Date, the
Borrower shall execute and deliver and cause to be recorded with the appropriate
recording office under the laws of the Netherlands a notarial Deed of Pledge by
the Borrower in favor of the Agent pledging to the Agent for the benefit of the
Lenders certain Pledged Stock issued by Cannondale Europe B.V., and shall take
all other steps within such period necessary to the perfection of the Agent's
first priority security interest in such Pledged Stock.
SECTION 8.12. Foreign Counsel Opinions. As soon as possible,
and in any event no later than thirty (30) days after the Closing Date, the
Borrower shall deliver to the Agent, or cause to be delivered to the Agent,
opinions from the legal counsel to each of Cannondale Europe B.V., Cannondale
Japan K.K. and Cannondale Australia Pty Limited, in form and substance
satisfactory to the Agent.
SECTION 8.13. Warehouseman's Waiver. As soon as possible and
in any event no later than thirty (30) days from the Closing Date, the Borrower
shall deliver to the Agent, or cause to be delivered to the Agent, a
warehouseman's waiver agreement in substantially the form of Exhibit E-1 duly
executed by the lessor or owner of the premises located in Claysburg,
Pennsylvania, all or a portion of which is being leased to the Borrower for the
warehousing and storage of Inventory or Equipment.
SECTION 8.14. [intentionally deleted]
SECTION 8.15 Blocked Account Agreement with Scotia Bank. As
soon as possible, and in any event no later than thirty (30) days from the
Closing Date, the Borrower shall deliver, or cause to be delivered, to the
Agent, a Blocked Account Agreement duly executed by Scotia Bank, or, within such
time period, a Blocked Account Agreement with another financial institution
acceptable to the Agent, provided that in such case, the Borrower shall have
also established a Lock Box and Blocked Account with such financial institution
within such time period.
ARTICLE IX
NEGATIVE COVENANTS AND FINANCIAL COVENANTS
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Until the Commitments have expired or terminated, the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, all Letters of Credit have expired or terminated, all LC
Disbursements shall have been reimbursed and all other Obligations paid in full,
the Borrower covenants and agrees with the Lenders that:
SECTION 9.01. Indebtedness. The Borrower will not create,
incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 9.01, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof;
(c) Indebtedness of the Borrower to any Subsidiary, provided
that such Indebtedness is (i) unsecured, (ii) subordinated in right of
payment to the prior payment and satisfaction in full in cash of the
Obligations and (iii) incurred on terms and conditions satisfactory to
the Agent;
(d) Indebtedness of the Borrower arising under (i) that
certain Letter of Comfort dated February 17, 2000 executed by the
Borrower in favor of ABN AMRO Bank N.V. in respect of the Indebtedness
owing to such bank by Cannondale Europe B.V., a Subsidiary organized
under the laws of Netherlands, and (ii) that certain Guarantee
Agreement dated August 7, 1992 executed by the Borrower in favor of The
Dai-Ichi Kangyo Bank, Ltd. in respect of the Indebtedness owing to such
bank by Cannondale Japan K.K., a Subsidiary organized under the laws of
Japan, and any extension, renewal or replacement of such Letter of
Comfort or Guarantee Agreement, provided that the terms of any such
extension, renewal or replacement do not materially differ from the
terms contained in the original Letter of Comfort or Guarantee
Agreement, and provided further that the principal amount of the
revolving Indebtedness of the relevant Subsidiary is not increased
beyond the maximum amount originally incurred by it, and the principal
amount of the term Indebtedness of the relevant Subsidiary is not
increased beyond the unpaid principal balance thereof outstanding on
the date of such extension, renewal or replacement;
(e) Indebtedness of the Borrower arising under that certain
Vendor Agreement dated as of February 11, 1999 between the Borrower and
Deutsche Financial Services Corporation, and any extension or renewal
of such Vender Agreement, provided that the terms of such extension or
renewal do not materially differ from the terms contained in the
original Vender Agreement;
(f) Indebtedness of the Borrower incurred to finance the
acquisition, construction or improvement of any real property or the
fixed or capital assets,
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including pursuant to Capital Leases, and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien
on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (f) shall not exceed $3,000,000 at any time outstanding;
(g) Indebtedness consisting of Hedging Obligations, provided
that as of any date of determination, the notional amount of such
Indebtedness shall not exceed $8,000,000 in the aggregate;
(h) unsecured Indebtedness, the payment of which is
subordinated to the prior payment and satisfaction in full, in cash, of
all Obligations, provided that (i) the terms and conditions governing
such Indebtedness (including without limitation the amortization terms,
if any) are satisfactory to the Agent and (ii) the holder of such
Indebtedness and the Agent, on behalf of the Lenders, shall have
entered into a subordination agreement containing terms and conditions
satisfactory to the Agent; and
(i) Mezzanine Debt up to an aggregate principal amount of
$15,000,000, and any replacement or refinancing of the Mezzanine Debt,
provided that (i) the terms and conditions which govern the
Indebtedness, the proceeds of which are used to replace or refinance
the Mezzanine Debt, do not materially differ from the terms and
conditions contained in the Mezzanine Debt Documents, (ii) the
principal amount of such Indebtedness is no greater than the unpaid
principal balance of the Mezzanine Debt as of the date of such
replacement or refinancing and (iii) the holder of such Indebtedness
and the Agent, on behalf of the Lenders, shall have entered into an
intercreditor agreement containing terms and conditions satisfactory to
the Agent;
SECTION 9.02. Liens. The Borrower will not create, incur,
assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 9.02;
provided that (i) such Lien shall not apply to any other property or
asset of the Borrower and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;
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(c) Liens on fixed or capital assets acquired, leased,
constructed or improved by the Borrower; provided that (i) such
security interests secure Indebtedness permitted by clause (f) of
Section 9.01, (ii) such security interests and the Indebtedness secured
thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of
the Borrower;
(d) Liens that secure the Mezzanine Debt; and
(e) Liens in favor of the Agent.
SECTION 9.03. Fundamental Changes. (a) The Borrower will not
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, lease or otherwise dispose
of (in one transaction or in a series of transactions) all or any substantial
part of its assets, or any real property owned by it, or all or substantially
all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, provided, however, that during
each Fiscal Year, the Borrower may sell, transfer, or otherwise dispose of (i)
Inventory in the ordinary course of its business, (ii) Equipment no longer used
or useful in the conduct of its business and (iii) other Equipment, so long as
the fair market value of such Equipment does not exceed, in the aggregate,
$100,000 during any such Fiscal Year, and the Net Cash Proceeds received in
connection with any such disposition are promptly reinvested in the Borrower or,
within sixty (60) days from receipt thereof, is used to purchase Equipment in
replacement of such disposed Equipment.
(b) The Borrower will not engage to any material extent in any
business other than businesses of the type conducted by the Borrower on the date
of execution of this Agreement and businesses reasonably related thereto.
(c) Without the prior written consent of the Agent and, so
long as the Mezzanine Debt is outstanding and unpaid, the Mezzanine Agent, the
Borrower will not consent or agree to any material modification or amendment of,
or waive compliance with any material term or condition of, any Diamond M Ranch
Loan Document executed for its benefit or to which it is a party.
(d) Without the prior written consent of the Agent, the
Borrower will not consent to any amendment or other modification of any of the
Mezzanine Financing Agreement and the other Mezzanine Debt Documents resulting
in (i) an increase in the principal amount of the Mezzanine Debt, (ii) a change
(other than by postponement) in any scheduled payment or prepayment of the
Mezzanine Debt, (iii) an increase in any interest rate applicable to the
Mezzanine Debt, or (iv) the addition of new financial covenants or the
imposition of stricter levels or ratios with respect to existing financial
covenants applicable to the Mezzanine Debt.
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SECTION 9.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not purchase, hold or acquire (including
pursuant to any merger with any Person) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guaranty any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) endorsements of instruments for collection or deposit, in
the ordinary course of the Borrower's business;
(c) loans and advances in existence on the Closing Date in the
aggregate principal amount of $13,250,000 made by the Borrower to
employees of the Borrower or to employees of its Subsidiaries, but not
any refinancing or refunding of any such loans or advances, provided,
however, that the agreement to defer the payment in cash of, and the
addition instead to the principal amount of the ▇▇▇▇▇▇▇▇▇▇ Debt of, an
amount equal to the sum of (i) the aggregate amount of interest on the
principal amount of the ▇▇▇▇▇▇▇▇▇▇ Debt which is past due and owing as
of the Closing Date plus (ii) the amount of interest scheduled to be
paid on August 1, 2000 on such principal amount, shall not be a
violation of this clause (c);
(d) loans and advances made by the Borrower to employees of
the Borrower or to employees of its Subsidiaries (other than loans and
advances described in clause (c) above), provided that (i) each such
loan or advance is made in the ordinary course of the Borrower's
business and (ii) the principal amount of all such loans and advances
outstanding shall not exceed (x) $500,000 at any time during the period
from the Closing Date to the second anniversary thereof, or (y)
$750,000 at any time thereafter;
(e) guarantees constituting Indebtedness permitted by Section
9.01; and
(f) investments by the Borrower existing on the date hereof
and identified on Schedule 9.04.
SECTION 9.05. Restricted Payments. The Borrower will not
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except that the Borrower may declare and pay dividends with respect to
its capital stock payable solely in additional shares of its common stock, and
the Borrower may issue the "Warrant", as defined in the Mezzanine Financing
Agreement, in accordance with the terms thereof, and may consummate the
transactions contemplated to occur thereunder.
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SECTION 9.06. Transactions with Subsidiaries and Affiliates.
The Borrower will not sell, lease or otherwise transfer any property or assets
to, or purchase, lease or otherwise acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Subsidiaries and
Affiliates, except (i) as otherwise permitted under Section 9.04 and (ii) in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower than could be obtained on an arm's-length basis from
unrelated third parties, provided, however, that the Borrower may sell Inventory
from time to time to its Subsidiaries at prices less than prices charged to the
Borrower's regular customers, so long as such prices to such Subsidiaries are
(x) consistent with past practices and (y) not less than the net book value of
the item so sold.
SECTION 9.07. Restrictive Agreements. The Borrower will not
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a)
the ability of the Borrower to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrower or any other Subsidiary or
to guaranty Indebtedness of the Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by or in connection with this Agreement or the Mezzanine Documents, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 9.07 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (iv) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
SECTION 9.08. Capital Expenditures. The Borrower will not make
Capital Expenditures during any Fiscal Year (including those made in connection
with Indebtedness permitted to be incurred pursuant to Section 9.01 (f)) in an
aggregate amount in excess of (i) $6,000,000 during the fiscal year ending in
June,2001, (ii) $6,000,000 during the Fiscal Year ending in June, 2002 or (iii)
$8,000,000 during any Fiscal Year thereafter.
SECTION 9.09. Net Worth. The Borrower shall maintain at all
times during and as of the end of each fiscal month set forth in subsections (a)
through (o) below, and during and as of the end of each Fiscal Quarter set forth
in subsections (p) through (x) below, a Net Worth of not less than the amount
set forth below opposite such fiscal month or Fiscal Quarter. For purposes of
calculating the Borrower's compliance with this covenant, Net Worth shall
exclude the unpaid principal balance of, and all accrued and unpaid interest on,
the ▇▇▇▇▇▇▇▇▇▇ Debt:
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FISCAL MONTH OR FISCAL QUARTER MINIMUM NET WORTH
------------------------------ -----------------
(a) June 2000 $ 27,400,000
(b) July 2000 25,200,000
(c) August 2000 23,465,000
(d) September 2000 23,900,000
(e) October 2000 24,125,000
(f) November 2000 24,135,000
(g) December 2000 25,250,000
(h) January 2001 25,230,000
(i) February 2001 25,425,000
(j) March 2001 26,435,000
(k) April 2001 26,955,000
(l) May 2001 27,900,000
(m) June 2001 29,265,000
(n) July 2001 29,265,000
(o) August 2001 29,265,000
(p) Fiscal Quarter ending in September 2001 33,450,000
(q) Fiscal Quarter ending in December 2001 36,085,000
(r) Fiscal Quarter ending in March 2002 38,850,000
(s) Fiscal Quarter ending in June 2002 42,145,000
(t) Fiscal Quarter ending in September 2002 44,865,000
(u) Fiscal Quarter ending in December 2002 49,165,000
(v) Fiscal Quarter ending in March 2003 53,750,000
(w) Fiscal Quarter ending in June 2003 59,035,000
(x) Fiscal Quarter ending in September 2003,
and each Fiscal Quarter thereafter, a Net
Worth in an amount equal to
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$59,035,000 plus fifty per cent
(50%) of Net Income for each
Fiscal Quarter (to the extent
Net Income for such Fiscal
Quarter is positive), commencing
with the Fiscal Quarter ending in
June 2003
SECTION 9.10. Fixed Charge Coverage Ratio. The Borrower shall
have a Fixed Charge Coverage Ratio, as of the end of each period of twelve
consecutive fiscal months ending on the last day of the fiscal month set forth
below, of not less than the ratio set forth below opposite such month:
MINIMUM FIXED
TWELVE FISCAL MONTHS ENDING CHARGE COVERAGE RATIO
--------------------------- ---------------------
(a) July 2000 .20 to 1.00
(b) August 2000 .20 to 1.00
(c) September 2000 .35 to 1.00
(d) October 2000 .35 to 1.00
(e) November 2000 .35 to 1.00
(f) December 2000 .55 to 1.00
(g) January 2001 .55 to 1.00
(h) February 2001 .55 to 1.00
(i) March 2001 .80 to 1.00
(j) April 2001 .80 to 1.00
(k) May 2001 .80 to 1.00
(l) June 2001 1.00 to 1.00
(m) September 2001 1.00 to 1.00
(n) December 2001 1.10 to 1.00
(o) March 2002 1.15 to 1.00
(p) June 2002 1.20 to 1.00
(q) September 2002 1.25 to 1.00
(r) December 2002 1.25 to 1.00
(s) March 2003 1.30 to 1.00
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(t) June 2003, and each fiscal month thereafter, 1.30 to 1.00
in each case together with the 11 preceding
fiscal months
SECTION 9.11. Consolidated Fixed Charge Coverage Ratio. The
Borrower shall have, on a consolidated basis with its consolidated Subsidiaries,
a Fixed Charge Coverage Ratio, as of the end of each period of twelve
consecutive fiscal months ending on the last day of the fiscal month set forth
below, of not less than the ratio set forth below opposite such period:
MINIMUM CONSOLIDATED FIXED CHARGE
TWELVE FISCAL MONTHS ENDING COVERAGE RATIO
--------------------------- --------------
(a) June 2000 .60 to 1.00
(b) July 2000 .60 to 1.00
(c) August 2000 .60 to 1.00
(d) September 2000 .65 to 1.00
(e) October 2000 .65 to 1.00
(f) November 2000 .65 to 1.00
(g) December 2000 .75 to 1.00
(h) January 2001 .75 to 1.00
(i) February 2001 .75 to 1.00
(j) March 2001 .90 to 1.00
(k) April 2001 .90 to 1.00
(l) May 2001 .90 to 1.00
(m) June 2001, and each fiscal month thereafter, 1.00 to 1.00
in each case together with the 11 preceding
fiscal months
SECTION 9.12. EBITDA. The Borrower shall have EBITDA, as of
the end of each period of four consecutive Fiscal Quarters set forth below, of
not less than the amount set forth below opposite such period:
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FOUR FISCAL QUARTERS ENDING IN MINIMUM EBITDA
------------------------------ --------------
(a) September 2000 $ 4,750,000
(b) December 2000 7,250,000
(c) March 2001 11,250,000
(d) June 2001 17,000,000
(e) September 2001 18,000,000
(f) December 2001 21,500,000
(g) March 2002 23,500,000
(h) June 2002, and each Fiscal Quarter thereafter, 25,000,000
in each case together with the three preceding
Fiscal Quarters
SECTION 9.13 Adjusted EBITDA. The Borrower shall have Adjusted
EBITDA, as of the end of each period of four consecutive Fiscal Quarters set
forth below, of not less than the amount set forth below opposite such period:
FOUR FISCAL QUARTERS ENDING IN MINIMUM ADJUSTED EBITDA
------------------------------ -----------------------
(a) September 2000 $11,580,000
(b) December 2000 12,000,000
(c) March 2001 11,915,000
(d) June 2001 13,380,000
(e) September 2001 13,370,000
(f) December 2001 12,290,000
(g) March 2002 12,100,000
(h) June 2002 11,325,000
(i) September 2002 11,400,000
(j) December 2002 11,515,000
(k) March 2003 11,675,000
(l) June 2003, and each Fiscal Quarter thereafter, 12,065,000
in each case together with the three preceding
Fiscal Quarters
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SECTION 9.14 Senior Leverage Ratio. The Borrower shall have a
Senior Leverage Ratio, as of the end of each period of four consecutive Fiscal
Quarters set forth below, of not greater than the ratio set forth below opposite
such period:
MAXIMUM SENIOR
FOUR FISCAL QUARTERS ENDING IN LEVERAGE RATIO
------------------------------ --------------
(a) September 2000 12.50 to 1.00
(b) December 2000 8.50 to 1.00
(c) March 2001 6.50 to 1.00
(d) June 2001 3.00 to 1.00
(e) September 2001 2.50 to 1.00
(f) December 2001 2.25 to 1.00
(g) March 2002 2.00 to 1.00
(h) June 2002 1.75 to 1.00
(i) September 2002 1.50 to 1.00
(j) December 2002 1.25 to 1.00
(k) March 2003 1.00 to 1.00
(l) June 2003,and each Fiscal Quarter thereafter, .75 to 1.00
in each case together with the three preceding
Fiscal Quarters
SECTION 9.15 Availability. The Borrower's average Availability
for the 30 or 31 day period (or 28 day period, in the case of the month of
February) ending at the end of each month shall not be less than $1,500,000.
SECTION 9.16 Elimination of Certain Financial Covenants. On
the later to occur of (i) June 30, 2001 and (ii) the date upon which the
Mezzanine Debt shall have been paid and satisfied in full (other than pursuant
to an assignment or a refinancing thereof), Section 9.12, 9.13 and 9.14 shall be
deemed deleted from this Financing Agreement and shall be of no further force or
effect.
ARTICLE X
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INTEREST, FEES AND EXPENSES; LIBOR PROVISIONS
SECTION 10.01. Interest Generally. Interest on all revolving
loans and on the term loan shall be payable monthly as of the end of each month.
Base rate loans shall bear interest at a variable per annum rate of the base
rate plus the applicable increment, and libor loans shall bear interest at a
fixed per annum rate of libor plus the applicable increment. Interest on
revolving loans shall be charged on the average of the net balances owing by the
borrower to the lenders in the revolving loan account at the close of each day
during such month, and interest on the term loan shall be payable on the unpaid
principal balance thereof. In the event of any change in the base rate, the rate
hereunder with respect to base rate loans shall change, as of the date of such
change, so as to remain equal to the applicable increment plus the new base rate
then in effect. The rate hereunder for base rate loans shall be calculated based
on a 360-day year, and for libor loans shall be calculated on the basis of a
365-day year.
SECTION 10.02. Overadvance Rate. Notwithstanding any provision
to the contrary contained in section 10.01, in the event that the sum of (i) the
outstanding revolving loans and (ii) the letter of credit exposure exceed the
lesser of either (x) the borrowing base or (y) the revolving line of credit: (A)
as a result of revolving loans made at the request of the borrower (herein
"requested overadvances"), for any one (1) or more days in any month, or (B) for
any other reason whatsoever (herein "other overadvances") and such other
overadvances continue for five (5) or more days in any month , the average net
balance of that portion of all revolving loans consisting of requested
overadvances or other overadvances, as the case may be, for such month shall
bear interest at the overadvance rate.
SECTION 10.03. Default Charges. Upon and after the occurrence
of an event of default and the giving of any required notice by the agent in
accordance with the terms of this financing agreement, all loans shall bear
interest at the rate set forth in clause (i) of the term default charges, and
fees shall be charged on all letters of credit based on the rate set forth in
clause (ii) of the term default charges.
SECTION 10.04. Letter of Credit Fees. In consideration of the
letter of credit guaranty of the agent, the borrower shall pay the agent, for
the ratable benefit of the lenders, the letter of credit fee which shall be an
amount equal to (a) one percent (1%) per annum on the face amount of each
documentary letter of credit payable monthly, commencing upon issuance thereof
and (b) two percent (2%) per annum, payable monthly, commencing upon issuance
thereof, on the face amount of each standby letter of credit less the amount of
any and all amounts previously drawn under such standby letter of credit.
SECTION 10.05. Authorization to Charge Revolving Loan Account
for Letter Of Credit Fees, etc. Any and all charges, fees, commissions, costs
and expenses charged to the agent for the borrower's account by any issuing bank
in connection with, or arising out of, letters of credit or out of transactions
relating thereto will be charged to the revolving loan
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Account in full when charged to, or paid by the agent, or as may be due upon any
termination of this Financing Agreement hereof, and when made by any such
Issuing Bank shall be conclusive on the Agent.
SECTION 10.06. Reimbursement of Out-of-Pocket Expenses;
Documentation Fee. The Borrower shall reimburse or pay the Agent, as the case
may be, for: (a) all Out-of-Pocket Expenses and (b) any applicable Documentation
Fee.
SECTION 10.07. Line of Credit Fee. Upon the last Business Day
of each month, commencing with the month of July, 2000, the Borrower shall pay
to the Agent the Line of Credit Fee, which shall be calculated based on a
360-day year.
SECTION 10.08. Loan Facility Fee. To induce the Lenders to
enter into this Financing Agreement and in consideration of the Lenders'
Agreement to extend the Commitments to the Borrower, the Borrower shall pay to
the Lenders party to this Financing Agreement as of the Closing Date a Loan
Facility Fee in the aggregate amount of $675,000 (less the amount of the
commitment fee, if any, paid by the Borrower pursuant to the Commitment Letter
or paid pursuant to the "April Agreement", as defined in the Commitment Letter),
which amount shall be payable upon execution of this Financing Agreement.
SECTION 10.09. Administrative Management Fee. On the Closing
Date and on each anniversary of the Closing Date thereafter, the Borrower shall
pay to the Agent for its own account an Administrative Management Fee in the
amount of $35,000, which shall be deemed fully earned when paid.
SECTION 10.10. Field Examination Fees. The Borrower shall pay
the Agent's standard charges and fees for any personnel engaged or employed by
the Agent for reviewing the books and records of the Borrower and for verifying,
testing, protecting, safeguarding, preserving or disposing of all or any part of
the Collateral (which fees shall be in addition to the Administrative Management
Fee and any Out-of-Pocket Expenses).
SECTION 10.11. Authorization to Charge Revolving Loan Account
for all Payments. The Borrower hereby authorizes the Agent to charge the
Revolving Loan Account with the amount of all payments due hereunder as such
payments become due. The Borrower confirms that any charges which the Agent may
so make to the Revolving Loan Account as herein provided will be made as an
accommodation to the Borrower and solely at the Agent's discretion.
SECTION 10.12. Changes in Law. In the event that the Agent or
any participant hereunder (or any financial institution which may from time to
time become a participant or Lender hereunder) shall have determined in the
exercise of its reasonable business judgment that, subsequent to the Closing
Date, any change in applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or
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administration thereof, or compliance by the Agent, such Lender or such
participant with any new request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Agent's, such Lender's or such participant's capital as a consequence of
its obligations hereunder to a level below that which the Agent, such Lender or
such participant could have achieved but for such adoption, change or compliance
(taking into consideration the policies of the Agent, such Lender or such
Participant with respect to capital adequacy) by an amount reasonably deemed by
the Agent or such participant to be material, then, from time to time, the
Borrower shall pay, no later than ten (10) days following demand and receipt of
the certificate described below, to the Agent, such Lender or such participant
such additional amount or amounts as will compensate the Agent, such Lender or
such participant for such reduction. In determining such amount or amounts, the
Agent, such Lender or such participant may use any reasonable averaging or
attribution methods. The protection of this Section 10.12 shall be available to
the Agent, such Lender or such participant regardless of any possible contention
of invalidity or inapplicability with respect to the applicable law, regulation
or condition. A certificate of the Agent, such Lender or such participant
setting forth such amount or amounts as shall be necessary to compensate the
Agent, such Lender or such participant with respect to this Section 10.12 and
the calculation thereof when delivered to the Borrower shall be conclusive on
the Borrower absent manifest error. Notwithstanding anything in this section, to
the contrary, in the event the Agent, such Lender or such participant has
exercised its rights pursuant to this section, and subsequent thereto determines
that the additional amounts paid by the Borrower in whole or in part exceed the
amount which the Agent, such Lender or such participant actually required to be
made whole, the excess, if any, shall be returned to the Borrower by the Agent,
such Lender or such participant.
SECTION 10.13. Increased Costs. In the event that any change
in (i) any applicable law, treaty or governmental regulation not in effect as of
the date of this Agreement, or as of the date a Lender becomes a party to this
Agreement, or, (ii) any existing law, treaty or governmental regulation, or in
the interpretation or application thereof, or compliance by the Agent or any
Lender (each an "Affected Party") with any request or directive (whether or not
having the force of law) from any central bank or other financial, monetary or
other authority, shall:
(a) subject the Affected Party to any tax of any kind whatsoever with respect to
this Financing Agreement or change the basis of taxation of payments to the
Affected Party of principal, fees, interest or any other amount payable
hereunder or under any other documents (except for changes in the rate of tax on
the overall net income of the Affected Party by the federal government or the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit, assessment
or similar requirement against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended by the Affected Party by
reason of or in respect to this Financing
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Agreement and the Loan Documents, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on the Affected Party any other condition with respect to this
Financing Agreement or any other document, and the result of any of the
foregoing is to increase the cost to the Affected Party of making, renewing or
maintaining its Loans hereunder by an amount that the Affected Party deems to be
material in the exercise of its reasonable business judgment or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the Loans by an amount that the Affected Party deems to be material in
the exercise of its reasonable business judgment, then, in any case the Borrower
shall pay the Affected Party, within five (5) days following its demand and
receipt of the certificate described below, such additional cost or such
reduction, as the case may be. In the event that such additional cost or such
reduction results from a change in tax law the effect of which can be mitigated
or eliminated by filing with the applicable tax authorities a form or
certificate, and the filing of such form or certificate is not, in the sole
determination of the Affected Party, unreasonably burdensome and will not have
any adverse consequence on the Affected Party, the affected party shall file
such form or certificate and provide a copy thereof to the Borrower. The
Affected Party shall certify the amount of such additional cost or reduced
amount to the Borrower and the calculation thereof and such certification shall
be conclusive upon the Borrower absent manifest error. Notwithstanding anything
in this paragraph to the contrary, in the event the Affected Party has exercised
its rights pursuant to this section, and subsequent thereto determine that the
additional amounts paid by the Borrower in whole or in part exceed the amount
which the Affected Party actually required pursuant hereto, the excess, if any,
shall be returned to the Borrower by the Affected Party.
SECTION 10.14. LIBOR Provisions Generally. The Borrower may
request LIBOR Loans on the following terms and conditions:
(a) The Borrower may elect from time to time (i) to request any Loan made
hereunder to be a LIBOR Loan as of the date of such Loan or (ii) to convert Base
Rate Loans to LIBOR Loans, and may elect from time to time to convert LIBOR
Loans to Base Rate Loans by giving the Agent at least three (3) Business Days'
prior irrevocable notice of such election, provided that any such conversion of
LIBOR Loans to Base Rate Loans shall only be made, subject to the second
following sentence, on the last day of an interest period with respect thereto.
should the Borrower elect to convert Base Rate Loans to LIBOR Loans, it shall
give the Agent at least four Business Days' prior irrevocable notice of such
election. If the last day of an Interest Period with respect to a Loan that is
to be converted is not a Business Day or Working Day, then such conversion shall
be made on the next succeeding Business Day or Working Day, as the case may be,
and during the period from such last day of an Interest Period to such
succeeding Business Day, as the case may be, such Loan shall bear interest as if
it were an Base Rate Loan. All or any part of outstanding Base Rate Loans then
outstanding with respect to Revolving Loans and the Term Loan may be converted
to LIBOR Loans as provided herein, provided that partial conversions shall be in
multiples in an aggregate principal amount of $1,000,000 or more.
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(b) Any LIBOR Loan may be continued as such upon the expiration of an Interest
Period, provided the Borrower so notifies the Agent, at least three (3) Business
Days' prior to the expiration of said Interest Period, and provided further that
no LIBOR Loan may be continued as such upon the occurrence of any Default or
Event of Default under this Financing Agreement, but shall be automatically
converted to a Base Rate Loan on the last day of the Interest Period during
which occurred such Default or Event of Default. Absent such notification, LIBOR
Rate Loans shall convert to Base Rate Loans on the last day of the applicable
Interest Period. Each notice of election, conversion or continuation furnished
by the Borrower pursuant hereto shall specify whether such election, conversion
or continuation is for a one, two, three or six month period. Absent such
specification, the Interest Period shall be a one month period. Notwithstanding
anything to the contrary contained herein, the Agent (or any Lender or
participant, if applicable) shall not be required to purchase United States
Dollar deposits in the London interbank market or from any other applicable
LIBOR Rate market or source or otherwise "match fund" to fund LIBOR Rate Loans,
but any and all provisions hereof relating to LIBOR Rate Loans shall be deemed
to apply as if the Agent (and such Lender and participant, if applicable) had
purchased such deposits to fund any LIBOR Rate Loans.
(c) The Borrower may request a LIBOR Loan, convert any Base Rate Loan or
continue any LIBOR Loan provided there is then no Default or Event of Default in
effect.
(d) If all or a portion of the outstanding principal amount of the Obligations
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such outstanding amount, to the extent it is a LIBOR Loan, shall be
converted to a Base Rate Loan at the end of the last Interest Period therefor.
(e) The Borrower may not have more than five (5) LIBOR Loans outstanding at any
given time.
SECTION 10.15. LIBOR Unascertainable. In the event that the
Agent or any other Affected Party shall have determined in the exercise of its
reasonable business judgment (which determination shall be conclusive and
binding upon the Borrower) that by reason of circumstances affecting the
interbank LIBOR market, adequate and reasonable means do not exist for
ascertaining LIBOR applicable for any Interest Period with respect to: (a) a
proposed Loan that the Borrower has requested be made as a LIBOR Loan; (b) a
LIBOR Loan that will result from the requested conversion of a Base Rate Loan
into a LIBOR Loan; or (c) the continuation of LIBOR Loans beyond the expiration
of the then current Interest Period with respect thereto, the Agent shall
forthwith give written notice of such determination to the Borrower at least one
day prior to, as the case may be, the requested borrowing date for such LIBOR
Loan, the conversion date of such Base Rate Loan or the last day of such
Interest Period. If such notice is given (i) any requested LIBOR Loan shall be
made as a Base Rate Loan, (ii) any Base Rate Loan that was to have been
converted to a LIBOR Loan shall be continued as a Base Rate Loan, and (iii) Any
outstanding LIBOR Loan shall be converted, on
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the last day of then current Interest Period with respect thereto, to a Base
Rate Loan. Until such notice has been withdrawn by the Agent, no further LIBOR
Loan shall be made nor shall the Borrower have the right to convert a Base Rate
Loan to a LIBOR Loan.
SECTION 10.16. Extension For Payment. If any payment on a
LIBOR Loan becomes due and payable on a day other than a Business Day or Working
Day, the maturity thereof shall be extended to the next succeeding Business Day
or Working Day unless the result of such extension would be to extend such
payment into another calendar month in which event such payment shall be made on
the immediately preceding Business Day or Working Day.
SECTION 10.17. Unlawfullness. Notwithstanding any other
provisions herein, if any law, regulation, treaty or directive or any change
therein or in the interpretation or application thereof, shall make it unlawful
for any lender to make or maintain LIBOR Loans as contemplated herein, the then
outstanding LIBOR Loans, if any, shall be converted automatically to Base Rate
Loans as of the end of the Interest Period applicable thereto, or within such
earlier period as required by law. The Borrower hereby agrees promptly to pay
the Agent, upon demand, any additional amounts necessary to compensate the
Lenders for any costs incurred by the Lenders in making any conversion in
accordance with this Section, including, but not limited to, any interest or
fees payable by the Agent to lenders of funds obtained by the Agent in order to
make or maintain LIBOR Loans hereunder.
SECTION 10.18. Indemnification. The Borrower agrees to
indemnify and to hold the Agent and all other Affected Parties harmless from any
loss or expense which such Affected Party may sustain or incur as a consequence
of: (a) Default by the Borrower in payment of the principal amount of or
interest on any LIBOR Loans, as and when the same shall be due and payable in
accordance with the terms of this Financing Agreement, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Affected Party to lenders of funds obtained by any of them in order to
maintain the Libor Loans hereunder; (b) default by the Borrower in making a
borrowing or conversion after the Borrower has given a notice in accordance with
Section 10.14; (c) any prepayment of LIBOR Loans on a day which is not the last
day of the Interest Period applicable thereto, including, without limitation,
prepayments arising as a result of the application of the proceeds of Collateral
to the Revolving Loans; and (d) default by the Borrower in making any prepayment
after the Borrower had given notice to the Agent thereof. The determination by
the Agent of the amount of any such loss or expense, when set forth in a written
notice to the Borrower, containing the Agent's calculations thereof in
reasonable detail, shall be conclusive on the Borrower in the absence of
manifest error. Calculation of all amounts payable under this paragraph with
regard to LIBOR Loans shall be made as though the Lenders had actually funded
the LIBOR Loans through the purchase of deposits in the relevant market and
currency, as the case may be, bearing interest at the rate applicable to such
LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a
maturity comparable to the relevant Interest Period; provided, however, that the
Lenders may fund each of the LIBOR Loans in any manner the Lenders sees fit and
the foregoing assumption shall be used
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only for calculation of amounts payable under this paragraph. In addition,
notwithstanding anything to the contrary contained herein, the Agent shall apply
all proceeds of Collateral and all other amounts received by it from or on
behalf of the Borrower (i) initially to the Base Rate Loans and (ii)
subsequently to LIBOR loans; provided, however, (x) upon the occurrence of an
Event of Default or (y) in the event the aggregate amount of outstanding LIBOR
Rate Loans exceeds Availability or the applicable maximum levels set forth
therefor, the Agent may apply all such amounts received by it to the payment of
Obligations in such manner and in such order as the Agent may elect in its
reasonable business judgment. In the event that any such amounts are applied to
Revolving Loans which are LIBOR Loans, such application shall be treated as a
prepayment of such Revolving Loans and the Lenders shall be entitled to
indemnification hereunder. This covenant shall survive termination of this
Financing Agreement and payment of the outstanding Obligations.
SECTION 10.19. Regulatory Changes. Notwithstanding anything to
the contrary in this Agreement, in the event that, by reason of any Regulatory
Change (for purposes hereof "Regulatory Change" shall mean, with respect to the
Lenders, any change after the date of this Financing Agreement in United States
federal, state or foreign law or regulations (including, without limitation,
Regulation D) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks including The lenders of or
under any United States federal, state or foreign law or regulations (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful), the Lenders, or any one of them, either (a) incurs any material
additional costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Financing Agreement or a category of extensions
of credit or other assets of the Agent which includes LIBOR Loans, or (b)
becomes subject to any material restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Lenders so elects by
notice to the Borrower, the obligation of such Lender to make or continue, or to
convert Base Rate Loans into LIBOR Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect.
ARTICLE XI
POWERS
The Borrower hereby constitutes the Agent, or any Person the Agent may
designate, as its attorney-in-fact, at the Borrower's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name of the
Agent or the Borrower, any and all checks, notes, drafts, and other documents or
instruments relating to the Collateral;
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(b) To receive, open and dispose of all mail addressed to the Borrower and to
notify postal authorities to change the address for delivery thereof to such
address as the Agent may designate;
(c) To request from customers indebted on Accounts at any time in the name of
the Agent information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time, in the name of
the Borrower, in the name of certified public accountant designated by the Agent
or in the name of the Agent's designee, information concerning the amounts owing
on the Accounts;
(e) To transmit to customers indebted on Accounts notice of the Agent's interest
therein and to notify customers indebted on Accounts to make payment directly to
the Agent for the Borrower's account; and
(f) To take or bring, in the name of the Agent or the Borrower, all steps,
actions, suits or proceedings deemed by the Agent necessary or desirable to
enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers set
forth in (b), (c), (e) and (f) above may only be exercised after the occurrence
and during the continuance of an Event of Default, or until such time as such
Event of Default is waived in writing by the Agent.
ARTICLE XII
Events of Default and Remedies
SECTION 12.01 Events of Default. Each of the following shall
be an Event of Default:
(a) the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any Letter of Credit when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee, other amount or other Obligation (other than an amount or
Obligation referred to in clause (a) of this Section) payable under
this Financing Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of
three days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with
this Financing Agreement or
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any amendment or modification hereof or waiver hereunder, or in any
other Loan Document, or under any report, certificate, financial
statement or other document furnished pursuant to or in connection with
this Financing Agreement or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material
respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 6.03 or 6.06,
Article VIII or Article IX;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Section), or
contained in any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Agent
to the Borrower (which notice will be given at the request of any
Lender);
(f) any "Event of Default", as such term is defined in the
Mezzanine Financing Agreement, Shall have occurred and be continuing,
or any event or condition occurs that results in (i) the Mezzanine
Debt, (ii) the Indebtedness secured by the CDA Mortgage, as defined in
the Mortgages described in clause (i) of the defined term Mortgages,
(iii) the Indebtedness secured by the Prior Mortgage, as defined in the
Mortgage described in clause (ii) of the defined term Mortgages, (iv)
Indebtedness owing by the Borrower to any Subsidiary, or (v) (without
duplication) any Material Indebtedness, in each case becoming due prior
to its scheduled maturity or that enables or permits (with or without
the giving of notice, the lapse of time or both) the holder or holders
of any Indebtedness described in clauses (i) through (v) hereof, or any
trustee or agent on its or their behalf, to cause such indebtedness to
become due, or to require the prepayment, repurchase, redemption or
defeasance thereof prior to its scheduled maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any
Subsidiary or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestration, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Section,
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(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestration, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they
become due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged or unsatisfied for a period of 30 consecutive days
during which execution shall not be effectively stayed or bonded
pending appeal, or for which such judgment is not covered by insurance
to an extent deemed adequate by the Agent, in its commercially
reasonable judgment, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment; or
(k) either of ▇▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall cease
for any reason whatsoever to be actively engaged in the management of
the Borrower's affairs, and such individual shall not have been
replaced immediately thereafter, on an interim basis and within 150
days thereafter, on a permanent basis, in each case by the Board of
Directors of the Borrower with an individual acceptable to the required
lenders.
SECTION 12.02 Termination of Commitments; Acceleration.
Upon the occurrence of any Event of Default (other than an event of
default with respect to the Borrower described in clause (g) or (h) of Section
12.01), and at any time thereafter during the continuance of such event, the
Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans and all other Obligations then
outstanding to be due and payable in whole (or in part, in which case any
principal or other Obligation not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans and all other Obligations so declared to be due and payable, together
with accrued interest thereon and all fees and other Obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower. in case of any Event of Default with respect to
the Borrower described in clause (g) or (h) of Section 12.01, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other Obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.
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SECTION 12.03 EXERCISE OF REMEDIES.
Immediately upon the occurrence of any Event of Default, the Agent may, to the
extent permitted by law: (a) remove from any premises where same may be located
any and all books and records, computers, electronic media and software programs
associated with any Collateral (including any electronic records, contracts and
signatures pertaining thereto), documents, instruments, files and records, and
any receptacles or cabinets containing same, relating to the Accounts, or the
Agent may use, at the Borrower's expense, such of the Borrower's personnel,
supplies or space at the Borrower's places of business or otherwise, as may be
necessary to properly administer and control the Accounts or the handling of
collections and realizations thereon; (b) bring suit, in the name of the
Borrower or the Agent, and generally shall have all other rights respecting said
accounts, including without limitation the right to: accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any accounts and issue credits in the name of the Borrower or the
Agent; (c) sell, assign and deliver the Collateral and any returned, reclaimed
or repossessed inventory, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at the Agent's sole option and
discretion, and the Agent may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by the
Borrower; (d) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any inventory and equipment and/or other Collateral may be located for the
purpose of taking possession of or removing the same; and (e) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise. the
Agent shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of the
Borrower or the Agent, or in the name of such other party as the Agent may
designate, either at public or private sale or at any broker's board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as the Agent in its sole discretion may
deem advisable, and the Agent shall have the right to purchase at any such sale.
if any Inventory and Equipment shall require rebuilding, repairing, maintenance
or preparation, the Agent shall have the right, at its option, to do such of the
aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment in such saleable form as the Agent shall deem appropriate and any such
costs shall be deemed an Obligation hereunder. the Borrower agrees, at the
request of the Agent, to assemble the inventory and equipment and to make it
available to the Agent at premises of the Borrower or elsewhere and to make
available to the Agent the premises and facilities of the Borrower for the
purpose of the Agent's taking possession of, removing or putting the Inventory
and Equipment in saleable form. the Agent agrees to give the Borrower ten (10)
days prior notice of intended disposition of any Collateral, and the Borrower
agrees that ten (10) days prior notice shall constitute reasonable notification
and full compliance with all applicable laws. the net cash proceeds
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resulting from the Agent's exercise of any of the foregoing rights, (after
deducting all charges, costs and expenses, including reasonable attorneys' fees)
shall be applied by the Agent to the payment of the Obligations, whether due or
to become due, in such order as the Agent may elect, and the Borrower shall
remain liable to the Agent for any deficiencies, and the Agent in turn agrees to
remit to the borrower or its successors or assigns, any surplus resulting
therefrom. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the exercise of any
other rights, all of which shall be cumulative. The Borrower hereby indemnifies
the Agent and holds the Agent harmless from any and all costs, expenses, claims,
liabilities, out-of-pocket expenses or otherwise, incurred or imposed on the
Agent by reason of the exercise of any of its rights, remedies and interests
hereunder, including, without limitation, from any sale or transfer of
Collateral, preserving, maintaining or securing the Collateral, defending its
interests in Collateral (including pursuant to any claims brought by the
Borrower, THE Borrower as debtor-in-possession, any secured or unsecured
creditors of the Borrower, any trustee or receiver in bankruptcy, or otherwise),
and the Borrower hereby agrees to so indemnify and hold the Agent harmless,
absent the Agent's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction. The foregoing indemnification shall
survive termination of this Financing Agreement until such time as all
obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof the Agent, may establish such reserves for
obligations hereunder (including any contingent obligations) as it may deem
advisable in its reasonable business judgment.
ARTICLE XIII
Termination
Except as otherwise permitted herein, the Agent, on behalf of the Lenders, may
terminate this Financing Agreement only as of the initial or any subsequent
Anniversary Date and then only by giving the Borrower at least one hundred and
twenty (120) days prior written notice of termination. Notwithstanding the
foregoing, the Agent may, and at the request of the Required Lenders shall, on
behalf of the Lenders, terminate the Financing Agreement immediately upon the
occurrence of an Event of Default. This Financing Agreement, unless terminated
as herein provided, shall automatically continue from Anniversary Date to
Anniversary Date. The Borrower may terminate this Financing Agreement at any
time upon sixty (60) days' prior written notice to the Agent, provided that the
Borrower pays to the Agent for the ratable benefit of the Lenders, on or before
the effective date of termination, an Early Termination Fee and/or the
Prepayment Premium, if applicable. All Obligations shall become due and payable
as of any termination hereunder or under Article XII hereof and, pending a final
accounting, the Agent may withhold any balances in the Borrower's account
(unless supplied with an indemnity satisfactory to the Agent) to cover all of
the Obligations, whether absolute or contingent, including, but not limited to,
cash reserves for any contingent Obligations, including an amount equal to 110%
of the undrawn face amount of any outstanding Letters of Credit. All of the
Agent's rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full, unless
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the Agent shall have received from or on behalf of the Borrower cash collateral
in aggregate amount equal to 110% of the amount of such Obligations.
ARTICLE XIV
The Agent
SECTION 14.01. Appointment. Each of the Lenders hereby
irrevocably appoints the Agent as its Agent and authorizes the Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
SECTION 14.02. Agent as a Lender. The financial institution
serving as the Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Agent, and such financial institution and its affiliates may lend
money to and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Agent hereunder.
SECTION 14.03. Scope of Duties. The Agent shall not have any
duties or obligations except those expressly set forth herein. Without limiting
the generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a default has occurred
and is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 15.02), and (c) except as expressly set forth herein, the Agent shall
not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the financial institution serving as
Agent or any of its affiliates in any capacity. The Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 15.02) or in the
absence of its own gross negligence or wilful misconduct. the Agent shall be
deemed not to have knowledge of any default unless and until written notice
thereof is given to the Agent by the Borrower or a Lender, and the Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
financing agreement, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants contained in this Financing Agreement or
other terms or conditions set forth herein, (iv) the validity, enforceability,
effectiveness or genuineness of this Financing Agreement or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article II or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Agent.
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SECTION 14.04. Reliance. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Agent may consult with legal counsel (who may
be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
SECTION 14.05. Sub-Agents. The Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Agent. The Agent and any such sub-agent may perform
any and all its duties and exercise its rights and powers through their
respective directors, officers, employees, agents and advisors. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
SECTION 14.06. Successors. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, the Agent may
resign at any time by notifying the Lenders, and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor from among the Lenders. If no successor shall
have been so appointed by the required Lenders or shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a financial institution with an office in New
York, New York, or an affiliate of any such financial institution, provided that
such financial institution is a financial institution organized under the laws
of the united states of America or any state thereof, and has a combined capital
and surplus and undivided profits of not less than $100,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After the Agent's
resignation hereunder, the provisions of this article and Section 15.3 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective directors, officers, employees, agents and advisors in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
SECTION 14.07. Independent credit analysis of Lenders. Each
Lender acknowledges that it has, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made
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its own credit analysis and decision to enter into this Financing Agreement.
Each Lender also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Financing
Agreement, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at:
Cannondale Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Agent, to:
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With A Copy To:
Wolf, Block, ▇▇▇▇▇▇ And ▇▇▇▇▇-▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(c) if to any other lender, to its address (or telecopy
number) as it may specify in writing to the agent, from time to time.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. all notices and
other communications given to any party hereto in accordance with the provisions
of this financing agreement shall be deemed to have been given on the date of
receipt.
SECTION 15.02. Waivers; Amendments. (a) No failure or delay by
the Agent, the Issuing Bank or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agent, and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Financing Agreement or consent to any departure by the Borrower therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan, or issuance of a Letter of
Credit, shall not be construed as a waiver of any Default, regardless of whether
the Agent, any Lender or the Issuing Bank may have had notice or knowledge of
such Default at the time.
(b) Neither this Financing Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agreement in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Agent with the consent of the Required Lenders, provided that no such agreement,
unless it shall have been agreed to by all of the Lenders, shall: (a) amend the
Financing Agreement so as to (i) increase the Line of Credit; (ii) reduce the
interest rates; (iii) reduce or waive (x) any fees in which the Lenders share
hereunder, or (y) the repayment of any Obligations due the Lenders; (iv) extend
the maturity of the Obligations; (v) alter or amend (x) this Section 15.02 (b)
or (y) the definitions of Eligible Accounts Receivable, Eligible Inventory,
Inventory Loan Cap, Collateral or Required Lenders, or (vi) increase the advance
percentages against Eligible Accounts
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Receivable or Eligible Inventory or alter or amend the Agent's criteria for
determining compliance with such definitions of Eligible Accounts Receivable
and/or Eligible Inventory if the effect thereof is to increase Availability; (b)
except as otherwise required in this Financing Agreement, release any guaranty
or Collateral in excess of $500,000 during any year, or (c) cause or permit the
agent or any Lender to knowingly make any Revolving Loan or assist in opening
any Letter of Credit hereunder if after giving effect thereto the total of
Revolving Loans and Letters of Credit hereunder for the Borrower would exceed
one hundred and ten percent (110%) of the maximum amount available under this
Financing Agreement (the portion in excess of 100% of such maximum available
amount shall be referred to herein as the "Agent Permitted Overadvances"),
provided that the agent shall not be entitled to continue to knowingly make any
such Agent Permitted overadvances for a period in excess of ninety (90) days
without the lenders' consent, and provided further that the foregoing
limitations shall not prohibit or restrict advances by the Agent to preserve and
protect Collateral.
SECTION 15.03. Expenses; Indemnity; Damage Waiver. (a) the
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Agent and its affiliates, including the reasonable fees, charges and
disbursements of counsel for the agent, in connection with the syndication of
the credit facilities provided for herein, the preparation and administration of
this Financing Agreement or any amendments, modifications or waivers of the
provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder, (iii)
all amounts paid by the Agent which constitute indemnity payments under the Old
Credit Agreement, and (iv) all reasonable out-of-pocket expenses incurred by the
Agent, the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel (including the allocated costs of internal
counsel) for the agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Financing
Agreement, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such reasonable
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) the Borrower shall indemnify the agent, the issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
indemnitee, incurred by or asserted against any indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Financing Agreement or any agreement or instrument contemplated hereby, the
performance by the parties hereto of their respective obligations hereunder or
the consummation of transactions contemplated hereby, (ii) any Loan, Letter of
Credit, or the use of the proceeds therefrom (including any refusal by the
Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms
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of such Letter of Credit), (iii) any actual presence or release of Hazardous
Materials from any property owned or operated by the Borrower or any of its
Subsidiaries in violation of applicable Environmental Laws and resulting in
Environmental Liability, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Agent or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the Agent or the
Issuing Bank, as the case may be, such Lender's pro rata share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent or the Issuing Bank in its
capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Financing Agreement or the transactions contemplated
hereby, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 15.04. Successors and Assigns. (a) The provisions of
this Financing Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
except that the Borrower may not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent shall
be null and void). Nothing in this Financing Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby) any legal or equitable
right, remedy or claim under or by reason of this Financing Agreement.
(b) CIT shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, its obligations under the Line of Credit, the
Term Loan, the Revolving Loans and its rights and obligations with respect to
Letters of Credit). Upon execution of an Assignment and Transfer Agreement, (a)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such assignment,
have the rights
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and obligations of CIT as the case may be hereunder and (b) CIT shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such assignment, relinquish its rights and be released from its obligations
under this Financing Agreement. The borrower shall, if necessary, execute any
documents reasonably required to effectuate the assignments. No other Lender may
assign its interest in the loans and advances and extensions of credit hereunder
without the prior written consent of CIT. In the event that CIT consents to any
such assignment by any other Lenders (i) the amount being assigned shall in no
event be less than the lesser of (x) $5,000,000 or (y) the entire interest of
such Lender hereunder, (ii) such assignment shall be of a pro-rata portion of
all of such assigning Lender's loans and commitments hereunder and (iii) the
parties to such assignment shall execute and deliver to CIT an Assignment and
Transfer Agreement, and, at CIT's election, a processing and recording fee of
$1,000 payable by the assigning Lender to CIT for its own account.
(c) The Borrower acknowledges that the Lenders with the prior
written consent of the Agent may sell participations in the Loans and extensions
of credit made and to be made to the Borrower hereunder. The Borrower further
acknowledge that in doing so, the Lenders may grant to any such participant
certain rights which would require such participant's consent to certain
waivers, amendments and other actions with respect to the provisions of this
Financing Agreement, provided that the consent of any such participant shall not
be required except for matters requiring the consent of all Lenders hereunder as
set forth in Section 15.02 (b).
SECTION 15.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Financing Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
Financing Agreement and the making of any Loans and issuance of any Letters of
Credit, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Agent, the Issuing Bank or any Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Financing Agreement is
outstanding and unpaid or any Letter of Credit is outstanding (unless such
Letter of Credit has been collateralized by cash pursuant to Article XIII) and
so long as the Commitments have not expired or terminated. Each provision
contained in this Financing Agreement pursuant to which the Borrower
indemnifies, or agrees to be liable for any loss suffered by, the Agent, the
Issuing Bank or any Lender, shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Financing Agreement or any
provision hereof.
SECTION 15.06. Counterparts; Integration; Effectiveness. This
financing agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together
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shall constitute a single contract. This Financing Agreement constitutes the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 2.01, this
Financing Agreement shall become effective when it shall have been executed by
the Agent and when the Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this financing agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Financing Agreement.
SECTION 15.07. Severability. Any provision of this Financing
Agreement held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 15.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all the obligations of the Borrower now or
hereafter existing under this Financing Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Financing Agreement and although such obligations may be unmatured. The rights
of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 15.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Financing Agreement shall be construed in accordance with
and governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Financing Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Financing Agreement shall affect any right that the
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Agent, the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Financing Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Financing Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Financing Agreement irrevocably
consents to service of process in the manner provided for notices in Section
15.01. Nothing in this Financing Agreement will affect the right of any party to
this Financing Agreement to serve process in any other manner permitted by law.
Section 15.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS FINANCING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
FINANCING AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 15.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Financing Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Financing Agreement.
SECTION 15.12. Confidentiality. Each of the Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Financing Agreement, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding
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relating to this Financing Agreement or the enforcement of rights hereunder, (f)
subject to a confidentiality agreement containing provisions substantially the
same as those of this Section, to any participant or prospective participant of
a Lender or to any assignee of, or any prospective assignee of, any of its
rights or obligations under this Financing Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Agent or any
Lender on a nonconfidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
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SECTION 15.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
loan Hereunder, together with all charges Payable in respect thereof, shall be
limited to the maximum Rate And, to the extent lawful, the interest and charges
That would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
CANNONDALE CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
THE CIT GROUP/ BUSINESS CREDIT, INC.,
as Agent and as a Lender
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
GMAC COMMERCIAL CREDIT LLC,
as a Lender
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
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ANNEX I
COMMITMENTS
REVOLVING CREDIT TERM LOAN
---------------- ---------
COMMITMENT COMMITMENT
---------- ----------
THE CIT GROUP/BUSINESS CREDIT, INC. $22,500,000 $ 7,500,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
GMAC COMMERCIAL CREDIT, LLC $22,500,000 $ 7,500,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------- -----------
$45,000,000 $15,000,000