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Exhibit 10.15
REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
RENT-WAY, INC.
and
THE BANKS PARTY HERETO
and
NATIONAL CITY BANK OF PENNSYLVANIA, As Agent
Dated as of November 22, 1996
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TABLE OF CONTENTS
Section Page
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1. CERTAIN DEFINITIONS-------------------------------------------------------- 1
1.1 CERTAIN DEFINITIONS.--------------------------------------------------- 1
1.2 CONSTRUCTION.----------------------------------------------------------19
1.2.1 Number; Inclusion.----------------------------------------------19
1.2.2 Determination.--------------------------------------------------19
1.2.3 Agent's Discretion and Consent.---------------------------------19
1.2.4 Documents Taken as a Whole.-------------------------------------19
1.2.5 Headings.-------------------------------------------------------20
1.2.6 Implied References to this Agreement.---------------------------20
1.2.7 Persons.--------------------------------------------------------20
1.2.8 Modifications to Documents.-------------------------------------20
1.2.9 From, To and Through.-------------------------------------------20
1.2.10 Shall; Will.----------------------------------------------------20
1.3 ACCOUNTING PRINCIPLES.-------------------------------------------------20
2. REVOLVING CREDIT FACILITY--------------------------------------------------21
2.1 REVOLVING CREDIT COMMITMENTS.------------------------------------------21
2.2 NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO REVOLVING CREDIT LOANS.---21
2.3 COMMITMENT FEES.-------------------------------------------------------21
2.4 REVOLVING CREDIT FACILITY FEE.-----------------------------------------22
2.5 REVOLVING CREDIT LOAN REQUESTS.----------------------------------------22
2.6 MAKING REVOLVING CREDIT LOANS.-----------------------------------------22
2.7 REVOLVING CREDIT NOTES.------------------------------------------------23
2.8 USE OF PROCEEDS.-------------------------------------------------------23
2.9 LETTER OF CREDIT SUBFACILITY.------------------------------------------23
2.9.1 Issuance of Letters of Credit.-----------------------------------23
2.9.2 Letter of Credit Fees.-------------------------------------------23
2.9.3 Disbursements, Reimbursement.------------------------------------24
2.9.4 Repayment of Participation Advances.-----------------------------25
2.9.5 Documentation.---------------------------------------------------25
2.9.6 Determinations to Honor Drawing Requests.------------------------26
2.9.7 Nature of Participation and Reimbursement Obligations.-----------26
2.9.8 Indemnity.-------------------------------------------------------27
2.9.9 Liability for Acts and Omissions.--------------------------------28
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TABLE OF CONTENTS
Section Page
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3. [INTENTIONALLY OMITTED]----------------------------------------------------28
4. INTEREST RATES-------------------------------------------------------------28
4.1 INTEREST RATE OPTIONS.-------------------------------------------------28
4.1.1 Revolving Credit Interest Rate Options.--------------------------29
4.1.2 Rate Quotations.-------------------------------------------------29
4.2 INTEREST PERIODS.------------------------------------------------------29
4.2.1 Ending Date and Business Day.------------------------------------30
4.2.2 Amount of Borrowing Tranche.-------------------------------------30
4.2.3 Termination Before Expiration Date.------------------------------30
4.2.4 Renewals.--------------------------------------------------------30
4.3 INTEREST AFTER DEFAULT.------------------------------------------------30
4.3.1 Letter of Credit Fees, Interest Rate.----------------------------30
4.3.2 Other Obligations.-----------------------------------------------30
4.3.3 Acknowledgment.--------------------------------------------------30
4.4 EURO-RATE UNASCERTAINABLE; ILLEGALITY; INCREASED COSTS;
DEPOSITS NOT AVAILABLE-------------------------------------------------31
4.4.1 Unascertainable.-------------------------------------------------31
4.4.2 Illegality; Increased Costs; Deposits Not Available.-------------31
4.4.3 Agent's and Bank's Rights.---------------------------------------31
4.5 SELECTION OF INTEREST RATE OPTIONS.------------------------------------32
5. PAYMENTS-------------------------------------------------------------------32
5.1 PAYMENTS.--------------------------------------------------------------32
5.2 PRO RATA TREATMENT OF BANKS.-------------------------------------------33
5.3 INTEREST PAYMENT DATES.------------------------------------------------33
5.4 VOLUNTARY REPAYMENTS.--------------------------------------------------33
5.4.1 Right to Repay.--------------------------------------------------33
5.4.2 Commitment Reductions.-------------------------------------------34
5.4.3 Replacement of a Bank.-------------------------------------------34
5.4.4 Change of Lending Office.----------------------------------------35
5.5 MANDATORY REPAYMENTS.--------------------------------------------------35
5.5.1 Sale of Assets.--------------------------------------------------35
5.5.2 Borrowing Base Exceeded.-----------------------------------------36
5.5.3 Application Among Interest Rate Options.-------------------------36
5.6 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.----------------------36
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TABLE OF CONTENTS
Section Page
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5.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc.--------------------36
5.6.2 Indemnity.-------------------------------------------------------37
6. REPRESENTATIONS AND WARRANTIES---------------------------------------------38
6.1 REPRESENTATIONS AND WARRANTIES.----------------------------------------38
6.1.1 Organization and Qualification.----------------------------------38
6.1.2 Capitalization and Ownership.------------------------------------38
6.1.3 Subsidiaries.----------------------------------------------------38
6.1.4 Power and Authority.---------------------------------------------39
6.1.5 Validity and Binding Effect.-------------------------------------39
6.1.6 No Conflict.-----------------------------------------------------39
6.1.7 Litigation.------------------------------------------------------39
6.1.8 Title to Properties.---------------------------------------------40
6.1.9 Financial Statements.--------------------------------------------40
6.1.10 Use of Proceeds; Margin Stock.----------------------------------41
6.1.11 Full Disclosure.------------------------------------------------41
6.1.12 Taxes.----------------------------------------------------------41
6.1.13 Consents and Approvals.-----------------------------------------42
6.1.14 No Event of Default; Compliance with Instruments.---------------42
6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.-----------------42
6.1.16 Security Interests.---------------------------------------------42
6.1.17 Mortgage Liens.-------------------------------------------------43
6.1.18 Status of the Pledge Collateral.--------------------------------43
6.1.19 Insurance.------------------------------------------------------43
6.1.20 Compliance with Laws.-------------------------------------------44
6.1.21 Material Contracts; Burdensome Restrictions.--------------------44
6.1.22 Investment Companies; Regulated Entities.-----------------------44
6.1.23 Plans and Benefit Arrangements.---------------------------------44
6.1.24 Employment Matters.---------------------------------------------46
6.1.25 Environmental Matters.------------------------------------------46
6.1.26 Senior Debt Status.---------------------------------------------48
6.2 UPDATES TO SCHEDULES.--------------------------------------------------48
7. CONDITIONS OF LENDING------------------------------------------------------48
7.1 FIRST LOANS.-----------------------------------------------------------49
7.1.1 Officer's Certificate.-------------------------------------------49
7.1.2 Secretary's Certificate.-----------------------------------------49
7.1.3 Delivery of Loan Documents.--------------------------------------50
7.1.4 Opinion of Counsel.----------------------------------------------50
7.1.5 Legal Details.---------------------------------------------------50
7.1.6 Payment of Fees.-------------------------------------------------50
7.1.7 Environmental Audit.---------------------------------------------50
7.1.8 Appraisals.------------------------------------------------------51
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TABLE OF CONTENTS
Section Page
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7.1.9 Consents.--------------------------------------------------------51
7.1.10 Officer's Certificate Regarding MACs.---------------------------51
7.1.11 No Violation of Laws.-------------------------------------------51
7.1.12 No Actions or Proceedings.--------------------------------------51
7.1.13 Insurance Policies; Certificates of Insurance; Endorsements.----52
7.1.14 Title Insurance.------------------------------------------------52
7.1.15 Filing Receipts.------------------------------------------------52
7.1.16 Equipment Description.------------------------------------------52
7.1.17 Termination of Existing Loan Agreement.-------------------------52
7.2 EACH ADDITIONAL LOAN.--------------------------------------------------53
8. COVENANTS------------------------------------------------------------------53
8.1 AFFIRMATIVE COVENANTS.-------------------------------------------------53
8.1.1 Preservation of Existence, Etc.----------------------------------53
8.1.2 Payment of Liabilities, Including Taxes, Etc.--------------------53
8.1.3 Maintenance of Insurance.----------------------------------------54
8.1.4 Maintenance of Properties and Leases.----------------------------55
8.1.5 Maintenance of Patents, Trademarks, Etc.-------------------------55
8.1.6 Visitation Rights.-----------------------------------------------55
8.1.7 Keeping of Records and Books of Account.-------------------------56
8.1.8 Plans and Benefit Arrangements.----------------------------------56
8.1.9 Compliance with Laws.--------------------------------------------56
8.1.10 Use of Proceeds.------------------------------------------------56
8.1.11 Further Assurances.---------------------------------------------57
8.1.12 Subordination of Intercompany Loans.----------------------------57
8.1.13 Continuation of Landlords' Waivers.-----------------------------57
8.2 NEGATIVE COVENANTS.----------------------------------------------------58
8.2.1 Indebtedness.----------------------------------------------------58
8.2.2 Liens.-----------------------------------------------------------58
8.2.3 Guaranties.------------------------------------------------------58
8.2.4 Loans and Investments.-------------------------------------------59
8.2.5 Dividends and Related Distributions.-----------------------------59
8.2.6 Liquidations, Mergers, Consolidations, Acquisitions.-------------59
8.2.7 Dispositions of Assets or Subsidiaries.--------------------------61
8.2.8 Affiliate Transactions.------------------------------------------62
8.2.9 Subsidiaries, Partnerships and Joint Ventures.-------------------62
8.2.10 Continuation of or Change in Business.--------------------------63
8.2.11 Plans and Benefit Arrangements.---------------------------------63
8.2.12 Fiscal Year.----------------------------------------------------64
8.2.13 Issuance of Stock.----------------------------------------------64
8.2.14 Changes in Organizational Documents.----------------------------64
8.2.15 Capital Expenditures and Leases.--------------------------------64
8.2.16 Maximum Leverage Ratio (Total Funded Debt).---------------------65
8.2.17 Maximum Leverage Ratio (Senior Funded Debt).--------------------65
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TABLE OF CONTENTS
Section Page
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8.2.18 Minimum Interest Coverage Ratio.--------------------------------65
8.2.19 Minimum Tangible Net Worth.-------------------------------------65
8.2.20 Subordinated Loan Document Covenants; Amendment.----------------65
8.2.21 Interest Rate Protection.---------------------------------------65
8.2.22 Rental Merchandise Usage.---------------------------------------66
8.2.23 Prepayments on Subordinated Debt.-------------------------------66
8.2.24 Landlord's Waivers.---------------------------------------------66
8.3 REPORTING REQUIREMENTS.------------------------------------------------66
8.3.1 Monthly Financial Statements.------------------------------------66
8.3.2 Quarterly Financial Statements.----------------------------------67
8.3.3 Annual Financial Statements.-------------------------------------67
8.3.4 Certificate of the Borrower.-------------------------------------68
8.3.5 Monthly Inventory Report.----------------------------------------68
8.3.6 Notice of Default.-----------------------------------------------68
8.3.7 Notice of Litigation.--------------------------------------------69
8.3.8 Certain Events.--------------------------------------------------69
8.3.9 Budgets, Forecasts, Other Reports and Information.---------------69
8.3.10 Notices Regarding Plans and Benefit Arrangements.---------------70
9. DEFAULT--------------------------------------------------------------------71
9.1 EVENTS OF DEFAULT.-----------------------------------------------------71
9.1.1 Payments Under Loan Documents.-----------------------------------72
9.1.2 Breach of Warranty.----------------------------------------------72
9.1.3 Breach of Negative Covenants or Visitation Rights.---------------72
9.1.4 Breach of Other Covenants.---------------------------------------72
9.1.5 Defaults in Other Agreements or Indebtedness.--------------------72
9.1.6 Final Judgments or Orders.---------------------------------------73
9.1.7 Loan Document Unenforceable.-------------------------------------73
9.1.8 Uninsured Losses; Proceedings Against Assets.--------------------73
9.1.9 Notice of Lien or Assessment.------------------------------------73
9.1.10 Insolvency.-----------------------------------------------------73
9.1.11 Events Relating to Plans and Benefit Arrangements.--------------73
9.1.12 Cessation of Business.------------------------------------------74
9.1.13 Change of Control.----------------------------------------------74
9.1.14 Involuntary Proceedings.----------------------------------------74
9.1.15 Voluntary Proceedings.------------------------------------------75
9.2 CONSEQUENCES OF EVENT OF DEFAULT.--------------------------------------75
9.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.--------------------------------------75
9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.------------75
9.2.3 Set-off.---------------------------------------------------------76
9.2.4 Suits, Actions, Proceedings.-------------------------------------76
9.2.5 Application of Proceeds.-----------------------------------------76
9.2.6 Other Rights and Remedies.---------------------------------------77
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TABLE OF CONTENTS
Section Page
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9.3 NOTICE OF SALE.--------------------------------------------------------77
10. THE AGENT-----------------------------------------------------------------77
10.1 APPOINTMENT.----------------------------------------------------------77
10.2 DELEGATION OF DUTIES.-------------------------------------------------78
10.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION.-------------------78
10.4 ACTIONS IN DISCRETION OF AGENT; INSTRUCTIONS FROM THE BANKS.----------78
10.5 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY THE BORROWER.-----------79
10.6 EXCULPATORY PROVISIONS; LIMITATION OF LIABILITY.----------------------80
10.7 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY BANKS.------------------80
10.8 RELIANCE BY AGENT.----------------------------------------------------81
10.9 NOTICE OF DEFAULT.----------------------------------------------------81
10.10 NOTICES.-------------------------------------------------------------81
10.11 BANKS IN THEIR INDIVIDUAL CAPACITIES.--------------------------------82
10.12 HOLDERS OF NOTES.----------------------------------------------------82
10.13 EQUALIZATION OF BANKS.-----------------------------------------------82
10.14 SUCCESSOR AGENT.-----------------------------------------------------83
10.15 AGENT'S FEE.---------------------------------------------------------83
10.16 AVAILABILITY OF FUNDS.-----------------------------------------------83
10.17 CALCULATIONS.--------------------------------------------------------84
10.18 BENEFICIARIES.-------------------------------------------------------84
11. MISCELLANEOUS-------------------------------------------------------------84
11.1 MODIFICATIONS, AMENDMENTS OR WAIVERS.---------------------------------84
11.1.1 Increase of Commitment; Extension or Expiration Date.-----------84
11.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment.-------------------------------85
11.1.3 Release of Collateral or Guarantor.-----------------------------85
11.1.4 Miscellaneous---------------------------------------------------85
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TABLE OF CONTENTS
Section Page
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11.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.------------85
11.3 REIMBURSEMENT AND INDEMNIFICATION OF BANKS BY THE BORROWER; TAXES.----86
11.4 HOLIDAYS.-------------------------------------------------------------86
11.5 FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.---------------------------87
11.5.1 Notional Funding.-----------------------------------------------87
11.5.2 Actual Funding.-------------------------------------------------87
11.6 NOTICES.--------------------------------------------------------------87
11.7 SEVERABILITY.---------------------------------------------------------88
11.8 GOVERNING LAW.--------------------------------------------------------88
11.9 PRIOR UNDERSTANDING.--------------------------------------------------88
11.10 DURATION; SURVIVAL.--------------------------------------------------88
11.11 SUCCESSORS AND ASSIGNS.----------------------------------------------89
11.12 CONFIDENTIALITY.-----------------------------------------------------90
11.13 COUNTERPARTS.--------------------------------------------------------90
11.14 AGENT'S OR BANK'S CONSENT.-------------------------------------------90
11.15 EXCEPTIONS.----------------------------------------------------------91
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.------------------------------91
11.17 TAX WITHHOLDING CLAUSE.----------------------------------------------91
11.18 JOINDER OF GUARANTORS.-----------------------------------------------92
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 6.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2 - CAPITALIZATION
SCHEDULE 6.1.3 - SUBSIDIARIES
SCHEDULE 6.1.7 - LITIGATION
SCHEDULE 6.1.8 - OWNED AND LEASED REAL PROPERTY
SCHEDULE 6.1.13 - CONSENTS AND APPROVALS
SCHEDULE 6.1.15 - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 6.1.18 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 6.1.19 - INSURANCE POLICIES
SCHEDULE 6.1.21 - MATERIAL CONTRACTS
SCHEDULE 6.1.23 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.25 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.2.1 - PERMITTED INDEBTEDNESS
SCHEDULE 8.2.10 - BUSINESSES OF LOAN PARTIES
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C) - COLLATERAL ASSIGNMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1) - INDEMNITY AGREEMENT
EXHIBIT 1.1(I)(2) - INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(L) - LANDLORD'S WAIVER
EXHIBIT 1.1(M) - MORTGAGE
EXHIBIT 1.1(P)(1) - PATENT, TRADEMARK AND COPYRIGHT ASSIGNMENT
EXHIBIT 1.1(P)(2) - PLEDGE AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S) - SECURITY AGREEMENT
EXHIBIT 2.5 - LOAN REQUEST
EXHIBIT 7.1.4 - OPINION OF COUNSEL
EXHIBIT 8.3.1 - BORROWING BASE CERTIFICATE
EXHIBIT 8.3.4 - QUARTERLY COMPLIANCE CERTIFICATE
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of November 22, 1996 and is made by and
among RENT-WAY, INC., a Pennsylvania corporation (the "Borrower"), each of the
Guarantors (as hereinafter defined), the BANKS (as hereinafter defined), and
NATIONAL CITY BANK OF PENNSYLVANIA, in its capacity as agent for the Banks
under this Agreement (hereinafter referred to in such capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower in an aggregate principal amount not to exceed
$40,000,000; and
WHEREAS, the revolving credit facility shall be used for repayment of
certain existing indebtedness of the Borrower, for financing certain
acquisitions by the Borrower, for the development of additional retail
locations, for working capital purposes and for general corporate purposes of
the Borrower and its Subsidiaries; and
WHEREAS, National City is willing to provide up to $20,000,000 of such
credit upon the terms and conditions hereinafter set forth and to use its
reasonable efforts to cause additional Banks to provide up to $20,000,000 of
additional revolving credit loans upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS.
In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
ACQUIRING PERSON shall mean any Person or group of two or more Persons
(excluding the Management Group) acting as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or disposing of
Voting Stock of the Borrower, together with all affiliates and associates (as
defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as
amended) of such Person or Persons
AFFILIATE as to any Person shall mean any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with such
Person, (ii) which
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beneficially owns or holds 5% or more of any class of the voting or other
equity interests of such Person, or (iii) 5% or more of any class of voting
interests or other equity interests of which is beneficially owned or held,
directly or indirectly, by such Person. Control, as used in this definition,
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 ownership of voting securities, by contract or otherwise, including the
power to elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
AGENT shall mean National City Bank of Pennsylvania, and its successors
and assigns.
AGENT'S FEE shall have the meaning assigned to that term in Section 10.15.
AGENT'S LETTER shall have the meaning assigned to that term in Section
10.15.
AGREEMENT shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and
exhibits.
ANNUAL STATEMENTS shall have the meaning assigned to that term in Section
6.1.9(i).
APPLICABLE MARGIN shall mean, as applicable:
(A) the percentage spread to be added to the Base Rate under the Base Rate
Option based upon the Loans outstanding and the Average Monthly Revenue as of
the end of each fiscal quarter of the Borrower, as certified by the Loan
Parties pursuant to Sections 8.3.2 and 8.3.3, as set forth below:
if Loans outstanding are less than Base Rate Spread equals
three times Average Monthly Revenue one half percent (1/2%),
if Loans outstanding are equal to or greater Base Rate Spread equals
than three times Average Monthly Revenue one percent (1%),
or
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(B) the percentage spread to be added to the Euro-Rate under the Euro-Rate
Option based upon the Loans outstanding and the Average Monthly Revenue as of
the end of each fiscal quarter of the Borrower, as certified by the Loan
Parties pursuant to Sections 8.3.2 and 8.3.3, as set forth below:
if Loans outstanding are less than Euro-Rate Spread equals
three times Average Monthly Revenue two and three-fourths percent
(2-3/4%)
if Loans outstanding are equal to or greater Euro-Rate Spread equals
than three times Average Monthly Revenue three and one-fourth percent
(3-1/4).
The Applicable Margin initially shall be based upon the Average Monthly
Revenue calculated as of the fiscal quarter ended September 30, 1996.
Thereafter, the Applicable Margin shall be calculated at the time of delivery
of the financial statements and compliance certificates provided pursuant to
Sections 8.3.2 and 8.3.3. Any change in the Applicable Margin shall become
effective as of the first day of the fiscal quarter following the fiscal
quarter upon which the change is based.
ASSIGNMENT AND ASSUMPTION AGREEMENT shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks, substantially in the form
of Exhibit 1.1(A).
AUTHORIZED OFFICER shall mean those individuals, designated by written
notice to the Agent from the Borrower, authorized to execute notices, reports
and other documents on behalf of the Loan Parties required hereunder. The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Agent.
AVERAGE MONTHLY REVENUE shall mean the average monthly consolidated
revenue of the Loan Parties derived from the Rental Contracts and determined in
accordance with GAAP, calculated as of the end of month for the three months
then ended, as certified by the Loan Parties pursuant to Section 8.3.1. In the
event that the sum of reinstatement fees, liability waiver fees, late fees and
processing fees for the Rental Contracts exceeds eighteen percent (18%) of the
total consolidated revenue of the Loan Parties in any month, such excess amount
for such month shall be excluded in the calculation of Average Monthly Revenue.
BANKS shall mean the financial institutions named on SCHEDULE 1.1(B) and
their respective successors and assigns as permitted hereunder, each of which
is referred to herein as a Bank.
BASE NET WORTH shall mean the sum of 90% of the Consolidated Tangible Net
Worth as of September 30, 1996, plus the amounts set forth in (i) and (ii)
below which occur
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during the period from October 1, 1996, through the date of determination: (i)
75% of consolidated net income without regard to extraordinary items of gain or
loss of the Borrower and its Subsidiaries for each fiscal year in which net
income was earned (as opposed to a net loss), and (ii) 90% of any increase in
the Consolidated Tangible Net Worth resulting from a Permitted Acquisition.
BASE RATE shall mean the greater of (i) the interest rate per annum
announced from time to time by the Agent at its Principal Office as its then
prime rate, which rate may not be the lowest rate then being charged commercial
borrowers by the Agent, or (ii) the Federal Funds Effective Rate plus one half
percent (1/2%) per annum.
BASE RATE OPTION shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms and conditions set forth in Section
4.1.1(i).
BENEFIT ARRANGEMENT shall mean at any time an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.
BORROWER shall mean Rent-Way, Inc., a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania.
BORROWING BASE shall mean the product obtained by multiplying the Average
Monthly Revenue by four (4). The Borrowing Base shall be computed as of the end
of each month and at the time of a request for a Loan pursuant to Section 2.5
or a Letter of Credit pursuant to Section 2.9.1 and shall be set forth in the
Loan Request and in the certificates to be delivered by the Loan Parties
pursuant to Section 8.3.1
BORROWING BASE CERTIFICATE shall mean the certification delivered by the
Borrower and included in each of the Loan Request and in the certificates
delivered pursuant to Section 8.3.1 in the form of Exhibit 8.3.1 which
evidences that the sum of the outstanding Loans plus the Letters of Credit
Outstanding does not exceed the Borrowing Base.
BORROWING DATE shall mean, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
BORROWING TRANCHE shall mean specified portions of Loans outstanding as
follows: (i) any Loans to which a Euro-Rate Option applies which become subject
to the same Interest Rate Option under the same Loan Request by the Borrower
and which have the same Interest Period shall constitute one Borrowing Tranche,
and (ii) all Loans to which the Base Rate Option applies shall constitute one
Borrowing Tranche.
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BUSINESS DAY shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania.
CLOSING DATE shall mean the Business Day on which the first Loan shall be
made, which shall be November 22, 1996 or, if all the conditions specified in
Section 7 have not been satisfied or waived by such date, not later than
November 30, 1996, as designated by the Borrower by at least three (3) Business
Days' advance notice to the Agent at its Principal Office, or such other date
as the parties agree. The closing shall take place at 9:00 a.m., Pittsburgh
time, on the Closing Date at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional
Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
time and place as the parties agree.
COLLATERAL shall mean the Pledge Collateral, the UCC Collateral, the
Intellectual Property Collateral and the Real Property.
COLLATERAL ASSIGNMENTS shall mean the Collateral Assignments in the form
of Exhibit 1.1(C).
COMMITMENT shall mean, as to any Bank at any time, the amount initially
set forth opposite its name on SCHEDULE 1.1(B) in the column labeled "Amount of
Commitment for Revolving Credit Loans," and thereafter on Schedule I to the
most recent Assignment and Assumption Agreement, and COMMITMENTS shall mean the
aggregate Commitments of all of the Banks.
COMMITMENT FEE shall have the meaning assigned to that term in Section
2.3.
CONSIDERATION shall mean with respect to any Permitted Acquisition, the
aggregate of (i) the cash paid by any of the Loan Parties, directly or
indirectly, to the seller in connection therewith, (ii) the capital stock of
the Borrower or any Loan Party issued to the seller in connection therewith
(iii) the Indebtedness incurred or assumed by any of the Loan Parties, whether
in favor of the seller or otherwise and whether fixed or contingent, (iv) any
Guaranty given or incurred by any Loan Party in connection therewith, and (v)
any other consideration given or obligation incurred by any of the Loan Parties
in connection therewith.
CONSOLIDATED ADJUSTED CASH FLOW FROM OPERATIONS for any period of
determination shall mean (i) the sum of net income, amortization, interest
expense and income tax expense minus (ii) non-cash credits to net income, in
each case of the Borrower and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.
CONSOLIDATED CASH FLOW FROM OPERATIONS for any period of determination
shall mean (i) the sum of net income, depreciation, amortization, other
non-cash charges to net income (excluding charge-offs of Rental Merchandise),
interest expense and income tax expense
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minus (ii) non-cash credits to net income, in each case of the Borrower and its
Subsidiaries for such period determined and consolidated in accordance with
GAAP.
CONSOLIDATED FUNDED DEBT shall mean as of any date of determination, the
sum of Indebtedness for borrowed money (including capitalized leases) and
Letters of Credit Outstanding, in each case of the Borrower and its
Subsidiaries determined and consolidated in accordance with GAAP.
CONSOLIDATED FUNDED SENIOR DEBT shall mean as of any date of
determination, the principal amount outstanding on the Loans and other
Indebtedness which is pari passu with the Loans and Letters of Credit
Outstanding, in each case of the Borrower and its Subsidiaries determined and
consolidated in accordance with GAAP.
CONSOLIDATED TANGIBLE NET WORTH shall mean as of any date of determination
total stockholders' equity plus preferred stock to the extent it is not already
included in the stockholders' equity less intangible assets of the Borrower and
its Subsidiaries as of such date determined and consolidated in accordance with
GAAP.
DOLLAR, DOLLARS, U.S. DOLLARS and the symbol $ shall mean lawful money of
the United States of America.
DRAWING DATE shall have the meaning assigned to that term in Section
2.9.3.2.
ENVIRONMENTAL COMPLAINT shall mean any written complaint setting forth a
cause of action for personal or property damage or natural resource damage or
equitable relief, order, notice of violation, citation, request for information
issued pursuant to any Environmental Laws by an Official Body, subpoena or
other written notice of any type relating to, arising out of, or issued
pursuant to, any of the Environmental Laws or any Environmental Conditions, as
the case may be.
ENVIRONMENTAL CONDITIONS shall mean any conditions of the environment,
including the workplace, the ocean, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking
water supply sources, substrata or the ambient air, relating to or arising out
of, or caused by, the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the use of,
or operations on, any Property.
ENVIRONMENTAL LAWS shall mean all federal, state, local and foreign Laws
and regulations, including permits, licenses, authorizations, bonds, orders,
judgments, and consent decrees issued, or entered into, pursuant thereto,
relating to pollution or protection of human health or the environment or
employee safety in the workplace.
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16
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
ERISA GROUP shall mean, at any time, the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
EURO-RATE shall mean, with respect to any Loan comprising any Borrowing
Tranche to which the Euro-Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by dividing (i) the rate of
interest determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the eurodollar
rate at 11:00 a.m. Pittsburgh time two (2) Business Days prior to the first day
of such Interest Period for an amount comparable to such Loan and having a
borrowing date and a maturity comparable to such Interest Period by (ii) a
number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate
shall be adjusted with respect to any Euro-Rate Option outstanding on the
effective date of any change in the Euro-Rate Reserve Percentage as of such
effective date. The Agent shall give prompt notice to the Borrower and the
Banks of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
EURO-RATE OPTION shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms and conditions set forth in Section
4.1.1(ii).
EURO-RATE RESERVE PERCENTAGE shall mean the maximum percentage (expressed
as a decimal rounded upward to the nearest 1/100 of 1%) as determined by the
Agent which is in effect during any relevant period, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the reserve requirements (including supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently referred
to as "Eurocurrency Liabilities") of a member bank in such System.
EVENT OF DEFAULT shall mean any of the events described in Section 9.1 and
referred to therein as an "Event of Default."
EXPIRATION DATE shall mean, with respect to the Commitments, November 22,
1999.
FACILITY FEES shall mean the fees referred to in Sections 2.4.
FEDERAL FUNDS EFFECTIVE RATE for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by
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17
federal funds brokers on the previous trading day, as computed and announced by
such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such rate
was announced.
FINANCIAL PROJECTIONS shall have the meaning assigned to that term in
Section 6.1.9(ii).
FIRST SOURCE shall mean First Source Financial LLP, an Illinois registered
limited liability partnership.
GAAP shall mean generally accepted accounting principles as are in effect
from time to time, subject to the provisions of Section 1.3, and applied on a
consistent basis both as to classification of items and amounts.
GOVERNMENTAL ACTS shall have the meaning assigned to that term in Section
2.9.8.
GUARANTOR shall mean each of the parties to this Agreement which is
designated as a "Guarantor" on the signature page hereof and each other Person
which joins this Agreement as a Guarantor after the date hereof pursuant to
Section 11.18.
GUARANTOR JOINDER shall mean a joinder by a Person as a Guarantor under
this Agreement, the Guaranty Agreement and the other Loan Documents in the form
of Exhibit 1.1(G)(1).
GUARANTY of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement
to indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.
GUARANTY AGREEMENT shall mean the Guaranty and Suretyship Agreement in
substantially the form of Exhibit 1.1(G)(2) executed and delivered by each of
the Guarantors to the Agent for the benefit of the Banks.
HISTORICAL STATEMENTS shall have the meaning assigned to that term in
Section 6.1.9(i).
INDEBTEDNESS shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or
- 8 -
18
unliquidated, direct or indirect, absolute or contingent, or joint or several)
of such Person for or in respect of: (i) borrowed money, (ii) amounts raised
under or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit, currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, (iv) any other
transaction (including forward sale or purchase agreements, capitalized leases
and conditional sales agreements) having the commercial effect of a borrowing
of money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than thirty (30) days
past due), or (v) any Guaranty of Indebtedness for borrowed money.
INDEMNITY AGREEMENT shall mean the Indemnity Agreement in the form of
Exhibit 1.1(I)(1) among the Banks, the Agent and the Loan Parties relating to
possible environmental liabilities associated with any of the Property.
INELIGIBLE SECURITY shall mean any security which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
INSOLVENCY PROCEEDING shall mean, with respect to any Person, (a) case,
action or proceeding with respect to such Person (i) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to liquidation,
dissolution, winding-up or relief of such Person, or (b) any general assignment
for the benefit of creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of such Person's creditors generally
or any substantial portion of its creditors; undertaken under any Law.
INTELLECTUAL PROPERTY COLLATERAL shall mean all of the property described
in the Patent, Trademark and Copyright Assignment.
INTERCOMPANY SUBORDINATION AGREEMENT shall mean a Subordination Agreement
among the Loan Parties in the form attached hereto as Exhibit 1.1(I)(2).
INTEREST COVERAGE RATIO for any period of determination shall mean the
ratio of Consolidated Adjusted Cash Flow from Operations to interest expense,
in each case of the Borrower and its Subsidiaries for such period determined
and consolidated in accordance with GAAP.
INTEREST PERIOD shall have the meaning assigned to such term in Section
4.2.
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INTEREST RATE OPTION shall mean any Euro-Rate Option or the Base Rate
Option.
INTERIM STATEMENTS shall have the meaning assigned to that term in Section
6.1.9(i).
INTERNAL REVENUE CODE shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
LABOR CONTRACTS shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any Loan
Party or Subsidiary of a Loan Party and its employees.
LANDLORD'S WAIVER shall mean the Landlord's Waiver in the form Exhibit
1.1(L).
LAW shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
LETTER OF CREDIT shall have the meaning assigned to that term in Section
2.9.1.
LETTER OF CREDIT BORROWING shall mean an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on the date when made and shall not have been converted into a Loan under
Section 2.9.3.2.
LETTER OF CREDIT FEE shall have the meaning assigned to that term in
Section 2.9.2.
LETTERS OF CREDIT OUTSTANDING shall mean at any time the sum of (i) the
aggregate undrawn face amount of outstanding Letters of Credit and (ii) the
aggregate amount of all unpaid and outstanding Reimbursement Obligations.
LIEN shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the
filing).
LLC INTERESTS shall have the meaning given to such term in Section 6.1.3.
- 10 -
20
LOAN DOCUMENTS shall mean this Agreement, the Agent's Letter, the
Collateral Assignment, the Guaranty Agreement, the Indemnity Agreement, the
Intercompany Subordination Agreement, the Mortgage, the Notes, the Patent,
Trademark and Copyright Assignment, the Pledge Agreement, the Security
Agreement, and any other instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith, and LOAN DOCUMENT shall mean any of the Loan
Documents.
LOAN PARTIES shall mean the Borrower and the Guarantors.
LOAN REQUEST shall have the meaning given to such term in Section 2.5.
LOANS shall mean collectively and LOAN shall mean separately all revolving
credit loans or any revolving credit loan made by the Banks or one of the Banks
to the Borrower pursuant to Section 2.1 or 2.9.3.
Management Group shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and all other members
of the board of directors of the Borrower and their respective Spouses,
descendants, Spouses of descendants and trustees of trusts established for the
benefit of such Persons, and the executors of estates of such Persons.
"Spouses" shall include widows and widowers until first remarried.
MATERIAL ADVERSE CHANGE shall mean any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b) is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Loan Parties taken as a whole, (c) impairs
materially or could reasonably be expected to impair materially the ability of
the Loan Parties taken as a whole to duly and punctually pay or perform its
Indebtedness, or (d) impairs materially or could reasonably be expected to
impair materially the ability of the Agent or any of the Banks, to the extent
permitted, to enforce their legal remedies pursuant to this Agreement or any
other Loan Document.
MMLIC shall mean Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation, its successors and assigns.
MONTH, with respect to an Interest Period under the Euro-Rate Option,
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
Euro-Rate Interest Period begins on a day of a calendar month for which there
is no numerically corresponding day in the month in which such Interest Period
is to end, the final month of such Interest Period shall be deemed to end on
the last Business Day of such final month.
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21
MORTGAGE shall mean the Mortgage in substantially the form of Exhibit
1.1(M) with respect to the Real Property executed and delivered by the Borrower
to the Agent for the benefit of the Banks.
MULTIEMPLOYER PLAN shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
MULTIPLE EMPLOYER PLAN shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
NATIONAL CITY shall mean National City Bank of Pennsylvania, a national
banking association, its successors and assigns.
NOTES shall mean collectively and NOTE shall mean separately all the
Revolving Credit Notes of the Borrower in the form of Exhibit 1.1(R) evidencing
the Loans together with all amendments, extensions, renewals, replacements,
refinancings or refundings thereof in whole or in part.
NOTICES shall have the meaning assigned to that term in Section 11.6.
OBLIGATIONS shall mean collectively and OBLIGATION shall mean separately
any obligation or liability of any of the Loan Parties to the Agent or any of
the Banks, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due,
under or in connection with this Agreement, the Notes, the Letters of Credit,
the Agent's Letter or any other Loan Document.
OCCUPANCY EXPENSE for any period of determination shall mean the
consolidated rental expense under operating leases for the retail store sites
(including common area maintenance charges, taxes and other amounts payable
under lease agreements) of the Borrower and its Subsidiaries as lessees,
determined and consolidated in accordance with GAAP.
OFFICIAL BODY shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
PARTICIPATION ADVANCE shall mean, with respect to any Bank, such Bank's
payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.4.
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PARTNERSHIP INTERESTS shall have the meaning given to such term in Section
6.1.3.
PATENT, TRADEMARK AND COPYRIGHT ASSIGNMENT shall mean the Patent,
Trademark and Copyright Collateral Assignment in substantially the form of
Exhibit 1.1(P)(1) executed and delivered by each of the Loan Parties to the
Agent for the benefit of the Banks.
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
PERMITTED ACQUISITIONS shall have the meaning assigned to such term in
Section 8.2.6.
PERMITTED INVESTMENTS shall mean:
(i) direct obligations of the United States of America or any agency
or instrumentality thereof or obligations backed by the full faith and credit
of the United States of America maturing in twelve (12) months or less from the
date of acquisition;
(ii) commercial paper maturing in 180 days or less rated not lower
than A-1 by Standard & Poor's or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. on the
date of acquisition;
(iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks whose obligations are rated A-1, A
or the equivalent or better by Standard & Poor's on the date of acquisition;
(iv) repurchase agreements collaterized by securities described in
(i) above with any registered broker/dealer or any commercial bank described in
(iii) above; and
(v) investments in money market funds registered under the Investment
Company Act of 1940 whose shares are registered under the Securities Act of
1933 and rated AAAm or AAAm-G by Standard & Poor's on the date of acquisition.
PERMITTED LIENS shall mean:
(i) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs;
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(iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
(iv) Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course
of business;
(v) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially
impairs the use of such property or the value thereof, and none of which is
violated in any material respect by existing or proposed structures or land
use;
(vi) Liens, security interests and mortgages in favor of the Agent
for the benefit of the Banks;
(vii) Liens on property leased by any Loan Party or Subsidiary of a
Loan Party under capital and operating leases permitted in Section 8.2.15
securing obligations of such Loan Party or Subsidiary to the lessor under such
leases;
(viii) Any Lien existing on the date of this Agreement and described
on SCHEDULE 1.1(P), provided that the principal amount secured thereby is not
hereafter increased, and no additional assets become subject to such Lien;
(ix) Purchase Money Security Interests, provided that the aggregate
amount of loans and deferred payments secured by such Purchase Money Security
Interests shall not exceed $100,000 (excluding for the purpose of this
computation any loans or deferred payments secured by Liens described on
SCHEDULE 1.1(P)); and
(x) The following, (A) if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue
to be stayed or (B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and in either case they do not
affect the Collateral or, in the aggregate, materially impair the ability of
any Loan Party to perform its Obligations hereunder or under the other Loan
Documents:
(1) Claims or Liens for taxes, assessments or charges due and payable
and subject to interest or penalty, provided that the applicable Loan
Party maintains such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose any such Lien;
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(2) Claims, Liens or encumbrances upon, and defects of title to, real
or personal property other than the Collateral, including any attachment
of personal or real property or other legal process prior to adjudication
of a dispute on the merits; or
(3) Claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens.
(4) Liens resulting from final judgments or orders described in
Section 9.1.6.
(xi) Liens consented to by the Agent pursuant to Section 8.2.21.
PERSON shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
PLAN shall mean at any time an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards under Section 412 of
the Internal Revenue Code and either (i) is maintained by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained by any entity which was at
such time a member of the ERISA Group for employees of any entity which was at
such time a member of the ERISA Group.
PLEDGE AGREEMENT shall mean the Pledge Agreement in substantially the form
of Exhibit 1.1(P)(2) to be executed and delivered by the Loan Parties to the
Agent for the benefit of the Banks.
PLEDGE COLLATERAL shall mean the property of the Loan Parties in which
security interests are to be granted under the Pledge Agreement or the
Collateral Assignment.
POTENTIAL DEFAULT shall mean any event or condition which with notice,
passage of time or a determination by the Agent or the Required Banks, or any
combination of the foregoing, would constitute an Event of Default.
PRINCIPAL OFFICE shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania.
PRIOR SECURITY INTEREST shall mean a valid and enforceable perfected
first-priority security interest under the Uniform Commercial Code in the UCC
Collateral and the Pledge Collateral which is subject only to Liens for taxes
not yet due and payable to the extent such prospective tax payments are given
priority by statute or Purchase Money Security Interests as permitted
hereunder.
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PROHIBITED TRANSACTION shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United
States Department of Labor.
PROPERTY shall mean all real property, both owned and leased, of any Loan
Party or Subsidiary of a Loan Party.
PURCHASE MONEY SECURITY INTEREST shall mean Liens upon tangible personal
property securing loans to any Loan Party or Subsidiary of a Loan Party or
deferred payments by such Loan Party or Subsidiary for the purchase of such
tangible personal property, provided that the Liens are limited to the property
acquired with the proceeds of the loan.
PURCHASING BANK shall mean a Bank which becomes a party to this Agreement
by executing an Assignment and Assumption Agreement.
RATABLE SHARE shall mean the proportion that a Bank's Commitment bears to
the Commitments of all of the Banks.
REAL PROPERTY shall mean the real estate owned by the Borrower and located
in Millcreek Township, Erie County, Pennsylvania, which shall be encumbered by
the Mortgage.
REGULATED SUBSTANCES shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse,
garbage, wastes, chemicals, petroleum products, by-products, coproducts,
impurities, dust, scrap, heavy metals, defined as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic substance,"
"extremely hazardous substance," "toxic chemical," "toxic waste," "hazardous
waste," "industrial waste," "residual waste," "solid waste," "municipal waste,"
"mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste,"
or "regulated substance" or any related materials, substances or wastes as now
or hereafter defined pursuant to any Environmental Laws, ordinances, rules,
regulations or other directives of any Official Body, the generation,
manufacture, extraction, processing, distribution, treatment, storage,
disposal, transport, recycling, reclamation, use, reuse, spilling, leaking,
dumping, injection, pumping, leaching, emptying, discharge, escape, release or
other management or mismanagement of which is regulated by the Environmental
Laws.
REGULATION U shall mean Regulation U, T, G or X as promulgated by the
Board of Governors of the Federal Reserve System, as amended from time to time.
REIMBURSEMENT OBLIGATION shall have the meaning assigned to such term in
Section 2.9.3.2.
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RENTAL CONTRACTS shall mean all rental and rental-purchase contracts of
the Loan Parties made in the ordinary course of business providing for the
rental to customers of Rental Merchandise.
RENTAL MERCHANDISE shall mean the furniture, appliances, electronic
equipment and other personal property of the Loan Parties acquired for the
purpose of lease or sale under the Rental Contracts.
RENTAL MERCHANDISE ADJUSTMENT shall mean the number used in the
calculation of the financial covenants set forth in Sections 8.2.16 and 8.2.17
to reduce Consolidated Cash Flow from Operations. For the fiscal quarter ended
December 31, 1996 and each fiscal quarter thereafter, the Rental Merchandise
Adjustment shall equal the capital expenditures of the Loan Parties for Rental
Merchandise for such fiscal quarter. For the fiscal quarters ended March 31,
1996, June 30, 1996 and September 30, 1996, the Rental Merchandise Adjustment
shall equal the amount of depreciation relating to Rental Merchandise for such
quarter, computed in accordance with GAAP.
REPORTABLE EVENT shall mean a reportable event described in Section 4043
of ERISA and regulations thereunder with respect to a Plan or Multiemployer
Plan.
REQUIRED BANKS shall mean
(i) if there are no Loans, Reimbursement Obligations or Letter of
Credit Borrowings outstanding, Banks whose Commitments aggregate at least
66-2/3% of the Commitments of all of the Banks, or
(ii) if there are Loans, Reimbursement Obligations, or Letter of
Credit Borrowings outstanding, any Bank or group of Banks if the sum of the
Loans , Reimbursement Obligations and Letter of Credit Borrowings of such Banks
then outstanding aggregates at least 66-2/3% of the total principal amount of
all of the Loans , Reimbursement Obligations and Letter of Credit Borrowings
then outstanding. Reimbursement Obligations and Letter of Credit Borrowings
shall be deemed, for purposes of this definition, to be in favor of the Agent
and not a participating Bank if such Bank has not made its Participation
Advance in respect thereof and shall be deemed to be in favor of such Bank to
the extent of its Participation Advance if it has made its Participation
Advance in respect thereof.
REVOLVING FACILITY USAGE shall mean at any time the sum of the Loans
outstanding and the Letters of Credit Outstanding.
SECTION 20 SUBSIDIARY shall mean the Subsidiary of the bank holding
company controlling any Bank, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
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27
SECURITY AGREEMENT shall mean the Security Agreement in substantially the
form of Exhibit 1.1(S) executed and delivered by each of the Loan Parties to
the Agent for the benefit of the Banks.
SHARES shall have the meaning assigned to that term in Section 6.1.2.
STANDARD & POOR'S shall mean Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
STANDBY LETTER OF CREDIT shall mean a Letter of Credit issued to support
obligations of one or more of the Loan Parties, contingent or otherwise, which
finance the working capital and business needs of the Loan Parties incurred in
the ordinary course of business.
SUBORDINATED DEBT shall mean (i) Indebtedness of the Borrower to MMLIC,
the other Purchasers (as such term is defined in the Subordinated Loan
Documents) and their successors and assigns, evidenced by the Subordinated Loan
Documents and subject to the subordination terms set forth in Section 8
thereof, and (ii) Indebtedness of the Loan Parties to Persons which sell
ownership interests or assets to the Loan Parties under a Permitted Acquisition
in accordance with Section 8.2.6.
SUBORDINATED LOAN DOCUMENTS shall mean (i) the Subordinated Note Agreement
dated as of July 15, 1995 between the Borrower, MMLIC and the Purchasers (as
such term is defined therein) and any and all other documents evidencing or
relating to the obligations of the Borrower or any Loan Party to the
Purchasers, and (ii) all agreements evidencing the Subordinated Debt owed to
Persons which sell ownership interests or assets to the Loan Parties under a
Permitted Acquisition in accordance with Section 8.2.6.
SUBSIDIARY of any Person at any time shall mean (i) any corporation or
trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such
Person's Subsidiaries, (ii) any partnership of which such Person is a general
partner or of which 50% or more of the partnership interests is at the time
directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, (iii) any limited liability company of which such Person is a
member or of which 50% or more of the limited liability company interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person's Subsidiaries.
SUBSIDIARY SHARES shall have the meaning assigned to that term in Section
6.1.3.
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SYNDICATIONS PERIOD shall mean the period between the Closing Date and the
date which is the earlier of (i) the date the Commitments of the Banks equal
$40,000,000, or (ii) one hundred twenty (120) days after the Closing Date.
TRANSFEROR BANK shall mean the selling Bank pursuant to an Assignment and
Assumption Agreement.
UCC COLLATERAL shall mean the property of the Loan Parties in which
security interests are to be granted under the Security Agreement.
UNIFORM COMMERCIAL CODE shall have the meaning assigned to that term in
Section 6.1.16.
Voting Stock shall mean any class or classes the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a majority of
the corporate directors (or persons performing similar functions).
1.2 CONSTRUCTION.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 NUMBER; INCLUSION.
references to the plural include the singular, the plural, the part
and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";
1.2.2 DETERMINATION.
references to "determination" of or by the Agent or the Banks shall
be deemed to include good-faith estimates by the Agent or the Banks (in the
case of quantitative determinations) and good-faith beliefs by the Agent or the
Banks (in the case of qualitative determinations) and such determination shall
be conclusive absent manifest error;
1.2.3 AGENT'S DISCRETION AND CONSENT.
whenever the Agent or the Banks are granted the right herein to act
in its or their sole discretion or to grant or withhold consent such right
shall be exercised in good faith;
1.2.4 DOCUMENTS TAKEN AS A WHOLE.
the words "hereof," "herein," "hereunder," "hereto" and similar terms
in this Agreement or any other Loan
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Document refer to this Agreement or such other Loan Document as a whole and not
to any particular provision of this Agreement or such other Loan Document;
1.2.5 HEADINGS.
the section and other headings contained in this Agreement or such
other Loan Document and the Table of Contents (if any), preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;
1.2.6 IMPLIED REFERENCES TO THIS AGREEMENT.
article, section, subsection, clause, schedule and exhibit references
are to this Agreement or other Loan Document, as the case may be, unless
otherwise specified;
1.2.7 PERSONS.
reference to any Person includes such Person's successors and assigns
but, if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to a
Person in a particular capacity excludes such Person in any other capacity;
1.2.8 MODIFICATIONS TO DOCUMENTS.
reference to any agreement (including this Agreement and any other
Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
1.2.9 FROM, TO AND THROUGH.
relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through" means
"through and including"; and
1.2.10 SHALL; WILL.
references to "shall" and "will" are intended to have the same
meaning.
1.3 ACCOUNTING PRINCIPLES.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and
prepared in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have
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the meanings ascribed to such terms by GAAP; provided, HOWEVER, that all
accounting terms used in Section 8.2 (and all defined terms used in the
definition of any accounting term used in Section 8.2) shall have the meaning
given to such terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the Annual
Statements referred to in Section 6.1.9(i).
2. REVOLVING CREDIT FACILITY
2.1 REVOLVING CREDIT COMMITMENTS.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Loans to the Borrower at any time or from time to time on or after the
date hereof to the Expiration Date provided that after giving effect to such
Loan (i) the aggregate amount of Loans from such Bank shall not exceed such
Bank's Commitment minus such Bank's Ratable Share of the Letters of Credit
Outstanding and (ii) the aggregate amount of the Loans of all the Banks plus
the Letters of Credit Outstanding shall not exceed the Borrowing Base. Within
such limits of time and amount and subject to the other provisions of this
Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section
2.1.
2.2 NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO REVOLVING CREDIT LOANS.
Each Bank shall be obligated to participate in each request for Loans
pursuant to Section 2.5 in accordance with its Ratable Share. The aggregate of
each Bank's Loans outstanding hereunder to the Borrower at any time shall never
exceed its Commitment minus its Ratable Share of the Letter of Credit
Outstandings. The obligations of each Bank hereunder are several. The failure
of any Bank to perform its obligations hereunder shall not affect the
Obligations of the Borrower to any other party nor shall any other party be
liable for the failure of such Bank to perform its obligations hereunder. The
Banks shall have no obligation to make Loans hereunder on or after the
Expiration Date.
2.3 COMMITMENT FEES.
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Bank, as consideration for
such Bank's Commitment hereunder, a nonrefundable commitment fee (the
"Commitment Fee") equal to one-fourth percent (1/4%) per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) on the average daily difference between the amount of (i) such Bank's
Commitment as the same may be constituted from time to time and the (ii) the
principal amount of such Bank's Ratable Share of Loans and Letters of Credit
Outstanding. All Commitment Fees shall be payable in arrears on the first
Business Day of each January, April, July and October after the date hereof and
on the Expiration Date or upon acceleration of the Notes.
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2.4 REVOLVING CREDIT FACILITY FEE.
The Borrower agrees to pay to the Agent for the account of each Bank, as
consideration for such Bank's Commitment, a nonrefundable Facility Fee equal to
three-fourths percent (3/4%) of such Bank's Commitment, payable on the Closing
Date, or if such Bank is not a party to this Agreement on the Closing Date, at
the time such Bank joins in this Agreement.
2.5 REVOLVING CREDIT LOAN REQUESTS.
Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request the Banks to make Loans, or renew or
convert the Interest Rate Option applicable to existing Loans pursuant to
Section 4.2, by delivering to the Agent, not later than 10:00 a.m., Pittsburgh
time, (i) three (3) Business Days prior to the proposed Borrowing Date with
respect to the making of Loans to which the Euro-Rate Option applies or the
conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii)
one (1) Business Day prior to either the proposed Borrowing Date with respect
to the making of a Loan to which the Base Rate Option applies or the last day
of the preceding Interest Period with respect to the conversion to the Base
Rate Option for any Loan, of a duly completed request therefor substantially in
the form of Exhibit 2.5, which includes a Borrowing Base Certificate (each, a
"Loan Request"). Each Loan Request shall be irrevocable and shall specify (i)
the proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans
comprising each Borrowing Tranche, which shall be in integral multiples of
$250,000 and not less than $1,000,000 for each Borrowing Tranche to which the
Euro-Rate Option applies and not less than the lesser of $250,000 or the
maximum amount available for Borrowing Tranches to which the Base Rate Option
applies; (iii) whether the Euro-Rate Option or Base Rate Option shall apply to
the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the
case of a Borrowing Tranche to which the Euro-Rate Option applies, an
appropriate Interest Period for the proposed Loans comprising such Borrowing
Tranche.
2.6 MAKING REVOLVING CREDIT LOANS.
The Agent shall, promptly after receipt by it of a Loan Request pursuant
to Section 2.5, notify the Banks of its receipt of such Loan Request
specifying: (i) the proposed Borrowing Date and the time and method of
disbursement of the Loans requested thereby; (ii) the amount and type of each
such Loan and the applicable Interest Period (if any); and (iii) the
apportionment among the Banks of such Loans as determined by the Agent in
accordance with Section 2.2. Each Bank shall remit the principal amount of each
Loan to the Agent such that the Agent is able to, and the Agent shall, to the
extent the Banks have made funds available to it for such purpose and subject
to Section 7.2, fund such Loans to the Borrower in U.S. Dollars and immediately
available funds at the Principal Office prior to 2:00 p.m., Pittsburgh time, on
the applicable Borrowing Date, provided that if any Bank fails to remit such
funds to the Agent in a timely manner, the Agent may elect in its sole
discretion to fund
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with its own funds the Loans of such Bank on such Borrowing Date, and such Bank
shall be subject to the repayment obligation in Section 10.16.
2.7 REVOLVING CREDIT NOTES.
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Loans made to it by each Bank, together with interest thereon,
shall be evidenced by a Note dated the Closing Date (or if such Bank is not a
party to this Agreement on the Closing Date, the date that such Bank joins in
this Agreement), payable to the order of such Bank in a face amount equal to
the Commitment of such Bank.
2.8 USE OF PROCEEDS.
The proceeds of the Loans shall be used for the repayment of existing
Indebtedness of the Borrower, acquisition of stock or assets of Persons engaged
in the business of the Borrower and its Subsidiaries described in Schedule
8.2.10, for the development of additional retail locations in connections with
such business, and for working capital and general corporate purposes, all in
accordance with Section 8.1.10.
2.9 LETTER OF CREDIT SUBFACILITY.
2.9.1 ISSUANCE OF LETTERS OF CREDIT.
Borrower may request the issuance of one or more letters of credit
(each a "Letter of Credit") on behalf of itself or another Loan Party by
delivering to the Agent (i) a completed application and agreement for letters
of credit in such form as the Agent may specify from time to time by no later
than 10:00 a.m., Pittsburgh time, at least three (3) Business Days, or such
shorter period as may be agreed to by the Agent, in advance of the proposed
date of issuance and (ii) a Loan Request with the Borrowing Base portion
completed. Each Letter of Credit shall be a Standby Letter of Credit. Subject
to the terms and conditions hereof and in reliance on the agreements of the
other Banks set forth in this Section 2.9, the Agent will issue a Letter of
Credit provided that each Letter of Credit shall (A) have a maximum maturity of
twelve (12) months from the date of issuance, and (B) in no event expire later
than one Business Day prior to the Expiration Date and providing that in no
event shall (i) the Letters of Credit Outstanding exceed, at any one time,
$1,000,000 or (ii) the Revolving Facility Usage exceed, at any one time, the
lesser of the Commitments or the Borrowing Base.
2.9.2 LETTER OF CREDIT FEES.
The Borrower shall pay (i) to the Agent for the ratable account of
the Banks a fee (the "Letter of Credit Fee") equal to the Applicable Margin for
the Euro-Rate Option per annum, and (ii) to the Agent for its own account a
fronting fee equal to one-eighth percent (1/8%) per annum, which fees shall be
computed on the daily average Letters of Credit Outstanding and shall be
payable quarterly in arrears commencing with the first Business Day of
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each January, April, July and October following issuance of each Letter of
Credit and on the Expiration Date. The Borrower shall also pay to the Agent for
the Agent's sole account the Agent's then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the
Agent may generally charge or incur from time to time in connection with the
issuance, maintenance, modification (if any), assignment or transfer (if any),
negotiation, and administration of Letters of Credit.
2.9.3 DISBURSEMENTS, REIMBURSEMENT.
2.9.3.1 Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Agent a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such Bank's Ratable Share of the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively.
2.9.3.2 In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Agent will promptly notify
the Borrower. Provided that it shall have received such notice, the Borrower
shall reimburse (such obligation to reimburse the Agent shall sometimes be
referred to as a "Reimbursement Obligation") the Agent prior to 11:00 a.m.,
Pittsburgh time on each date that an amount is paid by the Agent under any
Letter of Credit (each such date, an "Drawing Date") in an amount equal to the
amount so paid by the Agent. In the event the Borrower fails to reimburse the
Agent for the full amount of any drawing under any Letter of Credit by 11:00
a.m., Pittsburgh time, on the Drawing Date, the Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that Loans be
made by the Banks under the Base Rate Option to be disbursed on the Drawing
Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Commitment and the Borrowing Base and subject to the conditions
set forth in Section 7.2 other than any notice requirements. Any notice given
by the Agent pursuant to this Section 2.9.3.2 may be oral if immediately
confirmed in writing; provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
2.9.3.3 Each Bank shall upon any notice pursuant to Section 2.9.3.2
make available to the Agent an amount in immediately available funds equal to
its Ratable Share of the amount of the drawing, whereupon the participating
Banks shall (subject to Section 2.9.3.4) each be deemed to have made a Loan
under the Base Rate Option to the Borrower in that amount. If any Bank so
notified fails to make available to the Agent for the account of the Agent the
amount of such Bank's Ratable Share of such amount by no later than 3:30 p.m.,
Pittsburgh time on the Drawing Date, then interest shall accrue on such Bank's
obligation to make such payment, from the Drawing Date to the date on which
such Bank makes such payment, at a rate per annum equal to the Federal Funds
Effective Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Drawing Date, but failure of the
Agent to give any such notice on the Drawing Date or in
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sufficient time to enable any Bank to effect such payment on such date shall
not relieve such Bank from its obligation under this Section 2.9.3.3.
2.9.3.4 With respect to any unreimbursed drawing that is not
converted into Loans under the Base Rate Option to the Borrower in whole or in
part as contemplated by Section 2.9.3.2, because of the Borrower's failure to
satisfy the conditions set forth in Section 7.2 other than any notice
requirements or for any other reason, the Borrower shall be deemed to have
incurred from the Agent a Letter of Credit Borrowing in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to the Loans under the Base Rate Option. Each Bank's payment to the
Agent pursuant to Section 2.9.3.3 shall be deemed to be a payment in respect of
its participation in such Letter of Credit Borrowing and shall constitute a
Participation Advance from such Bank in satisfaction of its participation
obligation under this Section 2.9.3.
2.9.4 REPAYMENT OF PARTICIPATION ADVANCES.
2.9.4.1 Upon (and only upon) receipt by the Agent for its account of
immediately available funds from the Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which any
Bank has made a Participation Advance to the Agent, or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Bank, in the same funds as those received by the Agent,
the amount of such Bank's Ratable Share of such funds, except the Agent shall
retain the amount of the Ratable Share of such funds of any Bank that did not
make a Participation Advance in respect of such payment by Agent.
2.9.4.2 If the Agent is required at any time to return to any Loan
Party, or to a trustee, receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by any Loan Party to
the Agent pursuant to Section 2.9.4.1 in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Bank shall, on demand of
and one day's notice by the Agent, forthwith return to the Agent the amount of
its Ratable Share of any amounts so returned by the Agent plus interest thereon
from the date such demand is made to the date such amounts are returned by such
Bank to the Agent, at a rate per annum equal to the Federal Funds Effective
Rate in effect from time to time.
2.9.5 DOCUMENTATION.
Each Loan Party agrees to be bound by the terms of the Agent's
application and agreement for letters of credit and the Agent's written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from the such Loan Party's own. In the event of
a conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence
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and/or mistakes, whether of omission or commission, in following any Loan
Party's instructions or those contained in the Letters of Credit or any
modifications, amendments or supplements thereto.
2.9.6 DETERMINATIONS TO HONOR DRAWING REQUESTS.
In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Agent shall be responsible
only to determine that the documents and certificates required to be delivered
under such Letter of Credit have been delivered and that they comply on their
face with the requirements of such Letter of Credit.
2.9.7 NATURE OF PARTICIPATION AND REIMBURSEMENT OBLIGATIONS.
Each Bank's obligation in accordance with this Agreement to make the
Loans or Participation Advances, as contemplated by Section 2.9.3, as a result
of a drawing under a Letter of Credit, and the Obligations of the Borrower to
reimburse the Agent upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Section 2.9 under all circumstances, including the
following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against the Agent, the Borrower or any other
Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to
comply, in connection with a Letter of Credit Borrowing, with the conditions
set forth in Section 2.1, 2.5, 2.6 or 7.2 or as otherwise set forth in this
Agreement for the making of a Loan, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Banks to make Participation Advances under Section 2.9.3;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) the existence of any claim, set-off, defense or other right
which any Loan Party or any Bank may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the Agent or any Bank or any other Person or,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between any
Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any
Letter of Credit was procured);
(v) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in
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any respect or any statement therein being untrue or inaccurate in any respect
even if the Agent has been notified thereof;
(vi) payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Loan Party or
Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any other Loan Document by any
party thereto;
(ix) the occurrence or continuance of an Insolvency Proceeding with
respect to any Loan Party;
(x) the fact that an Event of Default or a Potential Default shall
have occurred and be continuing;
(xi) the fact that the Expiration Date shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; and
(xii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; provided that each Bank's obligation to make
Loans under Section 2.9.3.3 is subject to the conditions set forth in Section
7.2.
2.9.8 INDEMNITY.
In addition to amounts payable as provided in Section 10.5, the Borrower
hereby agrees to protect, indemnify, pay and save harmless the Agent from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable fees, expenses and disbursements of
counsel and allocated costs of internal counsel) which the Agent may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit, other than as a result of (A) the gross negligence or willful
misconduct of the Agent as determined by a final judgment of a court of
competent jurisdiction or (B) subject to the following clause (ii), the
wrongful dishonor by the Agent of a proper demand for payment made under any
Letter of Credit, or (ii) the failure of the Agent to honor a drawing under any
such Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").
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2.9.9 LIABILITY FOR ACTS AND OMISSIONS.
As between any Loan Party and the Agent, such Loan Party assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Agent shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit
may be transferred, to comply fully with any conditions required in order to
draw upon such Letter of Credit or any other claim of any Loan Party against
any beneficiary of such Letter of Credit, or any such transferee, or any
dispute between or among any Loan Party and any beneficiary of any Letter of
Credit or any such transferee; (iv) errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the control of
the Agent, including any Governmental Acts, and none of the above shall affect
or impair, or prevent the vesting of, any of the Agent's rights or powers
hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by the Agent under or
in connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not
put the Agent under any resulting liability to the Borrower or any Bank.
3. [INTENTIONALLY OMITTED]
4. INTEREST RATES
4.1 INTEREST RATE OPTIONS.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option or
Euro-Rate Option set forth below applicable to the Loans, it being understood
that, subject to the provisions of this
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Agreement, the Borrower may select different Interest Rate Options and
different Interest Periods to apply simultaneously to the Loans comprising
different Borrowing Tranches and may convert to or renew one or more Interest
Rate Options with respect to all or any portion of the Loans comprising any
Borrowing Tranche, provided that there shall not be at any one time outstanding
more than seven (7) Borrowing Tranches in the aggregate among all of the Loans
accruing interest at a Euro-Rate Option. If at any time the designated rate
applicable to any Loan made by any Bank exceeds such Bank's highest lawful
rate, the rate of interest on such Bank's Loan shall be limited to such Bank's
highest lawful rate.
4.1.1 REVOLVING CREDIT INTEREST RATE OPTIONS.
The Borrower shall have the right to select from the following Interest
Rate Options applicable to the Loans:
(i) BASE RATE OPTION: A fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate
to change automatically from time to time effective as of the effective date of
each change in the Base Rate or Applicable Margin; or
(ii) EURO-RATE OPTION: A rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) equal to the Euro-Rate plus the
Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Applicable Margin.
4.1.2 RATE QUOTATIONS.
The Borrower may call the Agent on or before the date on which a Loan
Request is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on the
Agent or the Banks nor affect the rate of interest which thereafter is actually
in effect when the election is made.
4.2 INTEREST PERIODS.
At any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower shall notify the Agent thereof at least three
(3) Business Days prior to the effective date of such Euro-Rate Option by
delivering a Loan Request. The notice shall specify an interest period (the
"Interest Period") during which such Interest Rate Option shall apply, such
Interest Period to be (i) one Month if the Borrower selects the Euro-Rate
Option during the Syndications Period, and (ii) one, two, three or six Months
in the event Borrower selects the Euro-Rate Option after the Syndications
Period has ended. Notwithstanding the preceding sentence, the following
provisions shall apply to any selection of, renewal of, or conversion to a
Euro-Rate Option:
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4.2.1 ENDING DATE AND BUSINESS DAY.
any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
4.2.2 AMOUNT OF BORROWING TRANCHE.
each Borrowing Tranche of Euro-Rate Loans shall be in integral multiples
of $250,000 and not less than $1,000,000;
4.2.3 TERMINATION BEFORE EXPIRATION DATE.
the Borrower shall not select, convert to or renew an Interest Period for
any portion of the Loans that would end after the Expiration Date; and
4.2.4 RENEWALS.
in the case of the renewal of a Euro-Rate Option at the end of an Interest
Period, the first day of the new Interest Period shall be the last day of the
preceding Interest Period, without duplication in payment of interest for such
day.
4.3 INTEREST AFTER DEFAULT.
To the extent permitted by Law, upon the occurrence of an Event of Default
and until such time such Event of Default shall have been cured or waived:
4.3.1 LETTER OF CREDIT FEES, INTEREST RATE.
the Letter of Credit Fees and the rate of interest for each Loan otherwise
applicable pursuant to Section 2.9.2 or Section 4.1, respectively, shall be
increased by two percent (2%) per annum; and
4.3.2 OTHER OBLIGATIONS.
each other Obligation hereunder if not paid when due shall bear interest
at a rate per annum equal to the sum of the rate of interest applicable under
the Base Rate Option plus an additional two percent (2%) per annum from the
time such Obligation becomes due and payable and until it is paid in full.
4.3.3 ACKNOWLEDGMENT.
The Borrower acknowledges that the increase in rates referred to in this
Section 4.3 reflects, among other things, the fact that such Loans or other
amounts have become
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a substantially greater risk given their default status and that the Banks are
entitled to additional compensation for such risk; and all such interest shall
be payable by Borrower upon demand by Agent.
4.4 EURO-RATE UNASCERTAINABLE; ILLEGALITY; INCREASED COSTS; DEPOSITS NOT
AVAILABLE
4.4.1 UNASCERTAINABLE.
If on any date on which a Euro-Rate would otherwise be determined, the
Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such
Euro-Rate, or
(ii) a contingency has occurred which materially and adversely
affects the London interbank eurodollar market relating to the Euro-Rate, the
Agent shall have the rights specified in Section 4.4.3.
4.4.2 ILLEGALITY; INCREASED COSTS; DEPOSITS NOT AVAILABLE.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any Loan to which a
Euro-Rate Option applies has been made impracticable or unlawful by compliance
by such Bank in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly reflect the
cost to such Bank of the establishment or maintenance of any such Loan, or
(iii) after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Loan to which a
Euro-Rate Option applies are not available to such Bank in the London interbank
market, then the Agent shall have the rights specified in Section 4.4.3.
4.4.3 AGENT'S AND BANK'S RIGHTS.
In the case of any event specified in Section 4.4.1 above, the Agent shall
promptly so notify the Banks and the Borrower thereof, and in the case of an
event specified in Section 4.4.2 above, such Bank shall promptly so notify the
Agent and endorse a certificate to such notice as to the specific circumstances
of such notice, and the Agent shall promptly send copies of such notice and
certificate to the other Banks and the Borrower. Upon such date as
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shall be specified in such notice (which shall not be earlier than the date
such notice is given), the obligation of (A) the Banks, in the case of such
notice given by the Agent, or (B) such Bank, in the case of such notice given
by such Bank, to allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Agent shall have later notified the
Borrower, or such Bank shall have later notified the Agent, of the Agent's or
such Bank's, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the Agent
makes a determination under Section 4.4.1 and the Borrower has previously
notified the Agent of its selection of, conversion to or renewal of a Euro-Rate
Option and such Interest Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such Loans.
If any Bank notifies the Agent of a determination under Section 4.4.2, the
Borrower shall, subject to the Borrower's indemnification Obligations under
Section 5.6.2, as to any Loan of the Bank to which a Euro-Rate Option applies,
on the date specified in such notice either convert such Loan to the Base Rate
Option otherwise available with respect to such Loan or prepay such Loan in
accordance with Section 5.4. Absent due notice from the Borrower of conversion
or prepayment, such Loan shall automatically be converted to the Base Rate
Option otherwise available with respect to such Loan upon such specified date.
4.5 SELECTION OF INTEREST RATE OPTIONS.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an
existing Interest Period applicable to such Borrowing Tranche in accordance
with the provisions of Section 4.2, the Borrower shall be deemed to have
converted such Borrowing Tranche to the Base Rate Option commencing upon the
last day of the existing Interest Period.
5. PAYMENTS
5.1 PAYMENTS.
All payments and prepayments to be made in respect of principal, interest,
Commitment Fees, Facility Fees, Letter of Credit Fees, Agent's Fee or other
fees or amounts due from the Borrower hereunder shall be payable prior to 11:00
a.m., Pittsburgh time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrower, and without set-off, counterclaim or other deduction of any nature,
and an action therefor shall immediately accrue. Such payments shall be made to
the Agent at the Principal Office for the ratable accounts of the Banks with
respect to the Loans in U.S. Dollars and in immediately available funds, and
the Agent shall promptly distribute such amounts to the Banks in immediately
available funds, provided that in the event payments are received by 11:00
a.m., Pittsburgh time, by the Agent with respect to the Loans and such payments
are not distributed to the Banks on the same day received by the Agent, the
Agent shall pay the Banks the Federal Funds Effective Rate with respect to the
amount of such payments for
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each day held by the Agent and not distributed to the Banks. The Agent's and
each Bank's statement of account, ledger or other relevant record shall, in the
absence of manifest error, be conclusive as the statement of the amount of
principal of and interest on the Loans and other amounts owing under this
Agreement and shall be deemed an "account stated."
5.2 PRO RATA TREATMENT OF BANKS.
Each borrowing shall be allocated to each Bank according to its Ratable
Share, and each selection of, conversion to or renewal of any Interest Rate
Option and each payment or prepayment by the Borrower with respect to
principal, interest, Commitment Fees, Facility Fees, Letter of Credit Fees, or
other fees (except for the Agent's Fee) or amounts due from the Borrower
hereunder to the Banks with respect to the Loans, shall (except as provided in
Section 4.4.3 in the case of an event specified in Section 4.4 [Euro-Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available], 5.4.3
[Voluntary Prepayments] or 5.4 [Additional Compensation in Certain
Circumstances]) be made in proportion to the applicable Loans outstanding from
each Bank and, if no such Loans are then outstanding, in proportion to the
Ratable Share of each Bank.
5.3 INTEREST PAYMENT DATES.
Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the first Business Day of each January, April, July and
October after the date hereof and on the Expiration Date or upon acceleration
of the Notes. Interest on Loans to which the Euro-Rate Option applies shall be
due and payable on the last day of each Interest Period for those Loans and, if
such Interest Period is longer than three (3) Months, also on the 90th day of
such Interest Period. Interest on the principal amount of each Loan or other
monetary Obligations shall be due and payable on demand after such principal
amount or other monetary Obligations become due and payable (whether on the
stated maturity date, upon acceleration or otherwise).
5.4 VOLUNTARY REPAYMENTS.
5.4.1 RIGHT TO REPAY.
The Borrower shall have the right at its option from time to time to
pay the Loans in whole or part without premium or penalty (except as provided
in Section 5.4.3 below or in Section 5.6):
(i) at any time with respect to any Loan to which the Base Rate
Option applies,
(ii) on the last day of the applicable Interest Period with respect
to Loans to which a Euro-Rate Option applies,
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(iii) on the date specified in a notice by any Bank pursuant to
Section 4.4 [Euro-Rate Unascertainable] with respect to any Loan to which a
Euro-Rate Option applies.
Whenever the Borrower desires to repay any part of the Loans, it shall
provide a repayment notice to the Agent at least one (1) Business Day prior to
the date of repayment of Loans setting forth the following information:
(y) the date, which shall be a Business Day, on which the proposed
repayment is to be made; and
(z) the total principal amount of such repayment, which shall not be
less than $100,000.
All repayment notices shall be irrevocable. The principal amount of
the Loans for which a repayment notice is given, together with interest on such
principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such repayment
notice as the date on which the proposed repayment is to be made. Except as
provided in Section 4.4.3, if the Borrower repays a Loan but fails to specify
the applicable Borrowing Tranche which the Borrower is repaying, the repayment
shall be applied first to Loans to which the Base Rate Option applies, then to
Loans to which the Euro-Rate the Option applies. Any repayment hereunder shall
be subject to the Borrower's Obligation to indemnify the Banks under Section
5.6.2.
5.4.2 COMMITMENT REDUCTIONS.
The Borrower may at any time and from time to time terminate in whole
or reduce in part the Commitment by giving the Agent and the Banks not less
than seven (7) days prior written notice to such effect. Notice of termination
or reduction, having once been given by the Borrower, shall be irrevocable on
the part of the Borrower. Each reduction of the Commitments shall be in the
aggregate amount of at least $5,000,000 and in multiples of $500,000. After
each such reduction of the Commitments, the fee payable pursuant to Section 2.3
shall be calculated upon the Commitments as so reduced. Upon any such
reduction, the Commitments of the Banks shall be reduced proportionately based
upon each Bank's Ratable Share.
5.4.3 REPLACEMENT OF A BANK.
In the event any Bank (i) gives notice under Section 4.4 or Section
5.6.1, (ii) does not fund Loans because the making of such Loans would
contravene any Law applicable to such Bank, (iii) does not approve any action
as to which consent of the Required Banks is requested by the Borrower and
obtained hereunder, or (iv) becomes subject to the control of an Official Body
(other than normal and customary supervision), then the Borrower shall have the
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right at its option, with the consent of the Agent, which shall not be
unreasonably withheld, to prepay the Loans of such Bank in whole, together with
all interest accrued thereon, and terminate such Bank's Commitment within
ninety (90) days after (w) receipt of such Bank's notice under Section 4.4 or
5.6.1, (x) the date such Bank has failed to fund Loans because the making of
such Loans would contravene Law applicable to such Bank, (y) the date of
obtaining the consent which such Bank has not approved, or (z) the date such
Bank became subject to the control of an Official Body, as applicable; provided
that the Borrower shall also pay to such Bank at the time of such prepayment
any amounts required under Section 5.6 and any accrued interest due on such
amount and any related fees; provided, however, that the Commitment of such
Bank shall be provided by one or more of the remaining Banks or a replacement
bank acceptable to the Agent; provided, further, the remaining Banks shall have
no obligation hereunder to increase their Commitments. Notwithstanding the
foregoing, the Agent may only be replaced subject to the requirements of
Section 10.14 and provided that all Letters of Credit have expired or been
terminated or replaced.
5.4.4 CHANGE OF LENDING OFFICE.
Each Bank agrees that upon the occurrence of any event giving rise to
increased costs or other special payments under Section 4.4.2 [Illegality,
etc.] or 5.6.1 [Increased Costs, etc.] with respect to such Bank, it will if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Loans
or Letters of Credit affected by such event, provided that such designation is
made on such terms that such Bank and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequence
of the event giving rise to the operation of such Section. Nothing is this
Section 5.4.4 shall affect or postpone any of the Obligations of the Borrower
or any other Loan Party or the rights of the Agent or any Bank provided in this
Agreement.
5.5 MANDATORY PREPAYMENTS.
5.5.1 SALE OF ASSETS.
Within five (5) Business Days of any sale of assets authorized
by Section 8.2.7(v) which involves the sale of assets having a market value or
book value in an amount equal to or greater than $1,500,000, the Borrower shall
make a mandatory prepayment of principal on the Loans equal to the after-tax
proceeds of such sale (as estimated in good faith by the Borrower), together
with accrued interest on such principal amount. All prepayments pursuant to
this Section 5.5.1 shall constitute a permanent reduction of the Commitments of
the Banks. Notwithstanding the foregoing, to the extent that the after-tax
proceeds of such sale are used by the applicable Loan Party prior to the due
date of the mandatory prepayment to acquire substitute assets in the ordinary
course of business of such Loan Party and such substitute assets are subject to
a Prior Security Interest in favor of the Agent for the benefit of the Banks,
then the mandatory prepayment shall be correspondingly reduced or terminated,
as the case may be.
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5.5.2 BORROWING BASE EXCEEDED.
Whenever the outstanding principal balance of the Loans plus the
Letters of Credit Outstanding exceeds the Borrowing Base, the Borrower shall
make, with one (1) Business Day after the Borrower learns of such excess and
whether or not the Agent has given notice to such effect, a mandatory
prepayment of principal equal to the excess of the outstanding principal
balance of the Loans over the Borrowing Base, together with accrued interest on
such principal amount.
5.5.3 APPLICATION AMONG INTEREST RATE OPTIONS.
All prepayments required pursuant to this Section 5.5 shall first be
applied among the Interest Rate Options to the principal amount of the Loans
subject to the Base Rate Option, then to Loans subject to a Euro-Rate Option.
In accordance with Section 5.6.2, the Borrower shall indemnify the Banks for
any loss or expense, including loss of margin, incurred with respect to any
such prepayments applied against Loans subject to a Euro-Rate Option on any day
other than the last day of the applicable Interest Period.
5.6 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
5.6.1 INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES,
RESERVES, CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC.
If any Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application thereof by any Official Body charged
with the interpretation or administration thereof or compliance with any
request or directive (whether or not having the force of Law) of any central
bank or other Official Body:
(i) subjects any Bank to any tax or changes the basis of
taxation with respect to this Agreement, the Notes, the Loans or payments by
the Borrower of principal, interest, Commitment Fees, or other amounts due from
the Borrower hereunder or under the Notes (except for taxes on the overall net
income of such Bank),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any capital adequacy
or similar requirement (A) against assets (funded or contingent) of, or letters
of credit, other credits or commitments to extend credit extended by, any Bank,
or (B) otherwise applicable to the obligations of any Bank under this
Agreement,
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and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Bank's capital, taking into consideration such Bank's customary policies with
respect to capital adequacy) by an amount which such Bank in its sole
discretion deems to be material, such Bank shall from time to time notify the
Borrower and the Agent of the amount determined in good faith (using any
averaging and attribution methods employed in good faith) by such Bank to be
necessary to compensate such Bank for such increase in cost, reduction of
income, additional expense or reduced rate of return. Such notice shall set
forth in reasonable detail the basis for such determination. Such amount shall
be due and payable by the Borrower to such Bank ten (10) Business Days after
such notice is given.
5.6.2 INDEMNITY.
In addition to the compensation required by Section 5.6.1, the
Borrower shall indemnify each Bank against all liabilities, losses or expenses
(including loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Loans subject to a
Euro-Rate Option) which such Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any Loan to
which a Euro-Rate Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or not such payment or prepayment
is then due),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.5 or Section 4.2 or notice relating to prepayments under Section 5.4,
or
(iii) default by the Borrower in the performance or observance
of any covenant or condition contained in this Agreement or any other Loan
Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Commitment Fee or any other
amount due hereunder.
If any Bank sustains or incurs any such loss or expense, it shall
from time to time notify the Borrower of the amount determined in good faith by
such Bank (which determination may include such assumptions, allocations of
costs and expenses and averaging or attribution methods as such Bank shall deem
reasonable) to be necessary to indemnify such Bank for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Bank ten (10) Business Days after such notice is given.
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6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES.
The Loan Parties, jointly and severally, represent and warrant to the
Agent and each of the Banks as follows:
6.1.1 ORGANIZATION AND QUALIFICATION.
Each Loan Party and each Subsidiary of each Loan Party is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Loan Party and each Subsidiary of each Loan Party has the
lawful power to own or lease its properties and to engage in the business it
presently conducts or proposes to conduct. Each Loan Party and each Subsidiary
of each Loan Party is duly licensed or qualified and in good standing in each
jurisdiction listed on SCHEDULE 6.1.1 and in all other jurisdictions where the
property owned or leased by it or the nature of the business transacted by it
or both makes such licensing or qualification necessary.
6.1.2 CAPITALIZATION AND OWNERSHIP.
The authorized capital stock of the Borrower consists of 10,000,000
shares of common stock and 1,000,000 shares of preferred stock, of which
6,659,180 shares of common stock and 11,207 shares of Series A preferred stock
(collectively referred to herein as the "Shares") are issued and outstanding
and are owned as indicated on SCHEDULE 6.1.2. All of the Shares have been
validly issued and are fully paid and nonassessable. There are no options,
warrants or other rights outstanding to purchase any such shares except as
indicated on SCHEDULE 6.1.2.
6.1.3 SUBSIDIARIES.
SCHEDULE 6.1.3 states the name of each of the Borrower's
Subsidiaries, its jurisdiction of incorporation, its authorized capital stock,
the issued and outstanding shares (referred to herein as the "Subsidiary
Shares") and the owners thereof if it is a corporation, its outstanding
partnership interests (the "Partnership Interests") if it is a partnership and
its outstanding limited liability company interests, interests assigned to
managers thereof and the voting rights associated therewith (the "LLC
Interests") if it is a limited liability company. The Borrower and each
Subsidiary of the Borrower has good and marketable title to all of the
Subsidiary Shares, Partnership Interests and LLC Interests it purports to own,
free and clear in each case of any Lien. All Subsidiary Shares, Partnership
Interests and LLC Interests have been validly issued, and all Subsidiary Shares
are fully paid and nonassessable. All capital contributions and other
consideration required to be made or paid in connection with the issuance of
the Partnership Interests and LLC Interests have been made or paid, as the case
may be. There are no options, warrants or other rights outstanding to purchase
any such Subsidiary Shares, Partnership Interests or LLC Interests except as
indicated on SCHEDULE 6.1.3.
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6.1.4 POWER AND AUTHORITY.
Each Loan Party has full power to enter into, execute, deliver and
carry out this Agreement and the other Loan Documents to which it is a party,
to incur the Indebtedness contemplated by the Loan Documents and to perform its
Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part.
6.1.5 VALIDITY AND BINDING EFFECT.
This Agreement has been duly and validly executed and delivered by
each Loan Party, and each other Loan Document which any Loan Party is required
to execute and deliver on or after the date hereof will have been duly executed
and delivered by such Loan Party on the required date of delivery of such Loan
Document. This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Loan Party which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of any of such Loan Document may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance.
6.1.6 NO CONFLICT.
Neither the execution and delivery of this Agreement or the other
Loan Documents by any Loan Party nor the consummation of the transactions
herein or therein contemplated or compliance with the terms and provisions
hereof or thereof by any of them will conflict with, constitute a default under
or result in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii) any Law or any
material agreement or instrument or order, writ, judgment, injunction or decree
to which any Loan Party or any of its Subsidiaries is a party or by which it or
any of its Subsidiaries is bound or to which it is subject, or result in the
creation or enforcement of any Lien, charge or encumbrance whatsoever upon any
property (now or hereafter acquired) of any Loan Party or any of its
Subsidiaries (other than Liens granted under the Loan Documents).
6.1.7 LITIGATION.
Except as set forth in SCHEDULE 6.1.7, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan Party at law
or equity before any Official Body. None of such actions, suits, proceedings or
investigations, which determined adversely to the Loan Parties, would
individually or in the aggregate result in any Material Adverse Change. Except
as set forth on Schedule 6.1.7. none of the Loan Parties or any Subsidiaries of
any Loan
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Party is in violation of any order, writ, injunction or any decree of any
Official Body. No such violations may result in any Material Adverse Change
6.1.8 TITLE TO PROPERTIES.
The real property owned or leased by each Loan Party and each
Subsidiary of each Loan Party is described on SCHEDULE 6.1.8. Each Loan Party
and each Subsidiary of each Loan Party has good and marketable title to or
valid leasehold interest in all properties, assets and other rights which it
purports to own or lease or which are reflected as owned or leased on its books
and records, free and clear of all Liens and encumbrances except Permitted
Liens, and subject to the terms and conditions of the applicable leases. All
leases of property are in full force and effect without the necessity for any
consent which has not previously been obtained upon consummation of the
transactions contemplated hereby.
6.1.9 FINANCIAL STATEMENTS.
(i) HISTORICAL STATEMENTS. The Borrower has delivered to the Agent
copies of its audited consolidated year-end financial statements for and as of
the end of the four fiscal years ended September 30, 1995 (the "Annual
Statements"). In addition, the Borrower has delivered to the Agent copies of
its unaudited consolidated interim financial statements for the fiscal year to
date and as of the end of the fiscal quarter ended June 30, 1996 (the "Interim
Statements"), and a copy of the preliminary unaudited consolidated year-end
financial statements for and as of the fiscal year ended September 30, 1996
(the "Preliminary Statements") (the Annual, Interim and Preliminary Statements
being collectively referred to as the "Historical Statements"). The Historical
Statements were compiled from the books and records maintained by the
Borrower's management, are correct and complete and fairly represent the
consolidated financial condition of the Borrower and its Subsidiaries as of
their dates and the results of operations for the fiscal periods then ended and
have been prepared in accordance with GAAP consistently applied, subject (in
the case of the Interim Statements and the Preliminary Statements) to normal
year-end audit adjustments.
(ii) FINANCIAL PROJECTIONS. The Borrower has delivered to the Agent
financial projections of the Borrower and its Subsidiaries for the three fiscal
years ended September 30, 1997, 1998 and 1999 derived from various assumptions
of the Borrower's management (the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results in light of the
history of the business, present and foreseeable conditions and the intentions
of the Borrower's management. The Financial Projections accurately reflect the
liabilities of the Borrower and its Subsidiaries upon consummation of the
transactions contemplated hereby as of the Closing Date.
(iii) ACCURACY OF FINANCIAL STATEMENTS. Neither the Borrower nor any
Subsidiary of the Borrower has any liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the Historical
Statements or in the notes thereto, and except as disclosed therein there are
no unrealized or anticipated losses from
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any commitments of the Borrower or any Subsidiary of the Borrower which may
cause a Material Adverse Change. Since September 30, 1995, no Material Adverse
Change has occurred.
6.1.10 USE OF PROCEEDS; MARGIN STOCK.
The Loan Parties intend to use the proceeds of the Loans in
accordance with Sections 2.8 and 8.1.10. None of the Loan Parties or any
Subsidiaries of any Loan Party engages or intends to engage principally, or as
one of its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or carrying
margin stock (within the meaning of Regulation U). No part of the proceeds of
any Loan has been or will be used, immediately, incidentally or ultimately, to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock or to refund Indebtedness
originally incurred for such purpose, or for any purpose which entails a
violation of or which is inconsistent with the provisions of the regulations of
the Board of Governors of the Federal Reserve System. None of the Loan Parties
or any Subsidiary of any Loan Party holds or intends to hold margin stock in
such amounts that more than 25% of the reasonable value of the assets of any
Loan Party or Subsidiary of any Loan Party are or will be represented by margin
stock.
6.1.11 FULL DISCLOSURE.
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished to the Agent or
any Bank in connection herewith or therewith, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to any Loan
Party which materially adversely affects the business, property, assets,
financial condition, results of operations or prospects of any Loan Party or
Subsidiary of any Loan Party which has not been set forth in this Agreement or
in the certificates, statements, agreements or other documents furnished in
writing to the Agent and the Banks prior to or at the date hereof in connection
with the transactions contemplated hereby.
6.1.12 TAXES.
All federal, state, local and other tax returns required to have been
filed with respect to each Loan Party and each Subsidiary of each Loan Party
have been filed, and payment or adequate provision has been made for the
payment of all taxes, fees, assessments and other governmental charges which
have or may become due pursuant to said returns or to assessments received,
except to the extent that such taxes, fees, assessments and other charges are
being contested in good faith by appropriate proceedings diligently conducted
and for which such reserves or other appropriate provisions, if any, as shall
be required by GAAP shall have been made. There are no agreements or waivers
extending the statutory period of limitations
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applicable to any federal income tax return of any Loan Party or Subsidiary of
any Loan Party for any period.
6.1.13 CONSENTS AND APPROVALS.
Except for the filing of financing statements and the Mortgage in the
state and county filing offices, no consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents by any Loan Party, except as listed on SCHEDULE 6.1.13, all of which
shall have been obtained or made on or prior to the Closing Date except as
otherwise indicated on SCHEDULE 6.1.13.
6.1.14 NO EVENT OF DEFAULT; COMPLIANCE WITH INSTRUMENTS.
No event has occurred and is continuing and no condition exists or
will exist after giving effect to the borrowings or other extensions of credit
to be made on the Closing Date under or pursuant to the Loan Documents which
constitutes an Event of Default or Potential Default. None of the Loan Parties
or any Subsidiaries of any Loan Party is in violation of (i) any term of its
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any material agreement or
instrument to which it is a party or by which it or any of its properties may
be subject or bound where such violation would constitute a Material Adverse
Change.
6.1.15 PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
Each Loan Party and each Subsidiary of each Loan Party owns or
possesses all the material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises, permits and rights necessary
to own and operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party or Subsidiary, without
known possible, alleged or actual conflict with the rights of others. All
material patents, trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises and permits of each Loan Party and each Subsidiary of
each Loan Party are listed and described on SCHEDULE 6.1.15.
6.1.16 SECURITY INTERESTS.
The Liens and security interests granted to the Agent for the benefit
of the Banks pursuant to the Collateral Assignment, the Patent, Trademark and
Copyright Assignment, the Pledge Agreement and the Security Agreement in the
Collateral (other than the Real Property) constitute and will continue to
constitute Prior Security Interests under the Uniform Commercial Code as in
effect in each applicable jurisdiction (the "Uniform Commercial Code") or other
applicable Law entitled to all the rights, benefits and priorities provided by
the Uniform
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Commercial Code or such Law. Upon the filing of financing statements relating
to said security interests in each office and in each jurisdiction where
required in order to perfect the security interests described above, taking
possession of any stock certificates or other certificates evidencing the
Pledge Collateral and recordation of the Patent, Trademark and Copyright
Assignment in the United States Patent and Trademark Office and United States
Copyright Office, as applicable, all such action as is necessary or advisable
to establish such rights of the Agent will have been taken, and there will be
upon execution and delivery of the Collateral Assignment, the Patent, Trademark
and Copyright Assignment, the Pledge Agreement and the Security Agreement, such
filings and such taking of possession, no necessity for any further action in
order to preserve, protect and continue such rights, except the filing of
continuation statements with respect to such financing statements within six
months prior to each five-year anniversary of the filing of such financing
statements. All filing fees and other expenses in connection with each such
action have been or will be paid by the Borrower.
6.1.17 MORTGAGE LIENS.
The Liens granted to the Agent for the benefit of the Banks pursuant
to the Mortgage constitute a valid first priority Lien under applicable law.
All such action as will be necessary or advisable to establish such Lien of the
Agent and its priority as described in the preceding sentence will be taken at
or prior to the time required for such purpose, and there will be as of the
date of execution and delivery of the Mortgage no necessity for any further
action in order to protect, preserve and continue such Lien and such priority.
6.1.18 STATUS OF THE PLEDGE COLLATERAL.
All the shares of capital stock, Partnership Interests or LLC
Interests included in the Pledge Collateral to be pledged pursuant to the
Pledge Agreement or the Collateral Assignment are or will be upon issuance
validly issued and nonassessable and owned beneficially and of record by the
pledgor free and clear of any Lien or restriction on transfer, except as
otherwise provided by the Pledge Agreement or the Collateral Assignment and
except as the right of the Banks to dispose of the Shares, Partnership
Interests or LLC Interests may be limited by the Securities Act of 1933, as
amended, and the regulations promulgated by the Securities and Exchange
Commission thereunder and by applicable state securities laws. There are no
shareholder, partnership, limited liability company or other agreements or
understandings with respect to the shares of capital stock, Partnership
Interests or LLC Interests included in the Pledge Collateral except for the
partnership agreements and limited liability company agreements described on
SCHEDULE 6.1.18. The Loan Parties have delivered true and correct copies of
such partnership agreements and limited liability company agreements to the
Agent.
6.1.19 INSURANCE.
SCHEDULE 6.1.19 lists all insurance policies and other bonds to which
any Loan Party or Subsidiary of any Loan Party is a party, all of which are
valid and in full force and effect. No notice has been given or claim made and
no grounds exist to cancel or avoid any of
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such policies or bonds or to reduce the coverage provided thereby. Such
policies and bonds provide adequate coverage from reputable and financially
sound insurers in amounts sufficient to insure the assets and risks of each
Loan Party and each Subsidiary of each Loan Party in accordance with prudent
business practice in the industry of the Loan Parties and their Subsidiaries.
6.1.20 COMPLIANCE WITH LAWS.
The Loan Parties and their Subsidiaries are in compliance in all
material respects with all applicable Laws (other than Environmental Laws which
are specifically addressed in Section 6.1.25) in all jurisdictions in which any
Loan Party or Subsidiary of any Loan Party is presently or will be doing
business except where the failure to do so would not constitute a Material
Adverse Change.
6.1.21 MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS.
SCHEDULE 6.1.21 lists all material contracts relating to the business
operations of each Loan Party and each Subsidiary of any Loan Party, including
all employee benefit plans and Labor Contracts. All such material contracts are
valid, binding and enforceable upon such Loan Party or Subsidiary and each of
the other parties thereto in accordance with their respective terms, and there
is no default thereunder, to the Loan Parties' knowledge, with respect to
parties other than such Loan Party or Subsidiary. None of the Loan Parties or
their Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
result in a Material Adverse Change.
6.1.22 INVESTMENT COMPANIES; REGULATED ENTITIES.
None of the Loan Parties or any Subsidiaries of any Loan Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment
company" as such terms are defined in the Investment Company Act of 1940 and
shall not become such an "investment company" or under such "control." None of
the Loan Parties or any Subsidiaries of any Loan Party is subject to any other
Federal state statute or regulation limiting its ability to incur Indebtedness
for borrowed money.
6.1.23 PLANS AND BENEFIT ARRANGEMENTS.
Except as set forth on SCHEDULE 6.1.23:
(i) The Borrower and each other member of the ERISA Group are
in compliance in all material respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There
has been no Prohibited Transaction with respect to any Benefit Arrangement or
any Plan or, to the best
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knowledge of the Borrower, with respect to any Multiemployer Plan or Multiple
Employer Plan, which could result in any material liability of the Borrower or
any other member of the ERISA Group. The Borrower and all other members of the
ERISA Group have made when due any and all payments required to be made under
any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or
any Law pertaining thereto. With respect to each Plan and Multiemployer Plan,
the Borrower and each other member of the ERISA Group (i) have fulfilled in all
material respects their obligations under the minimum funding standards of
ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not had
asserted against them any penalty for failure to fulfill the minimum funding
requirements of ERISA.
(ii) To the best of the Borrower's knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits
thereunder when due.
(iii) Neither the Borrower nor any other member of the ERISA
Group has instituted or intends to institute proceedings to terminate any Plan.
(iv) No event requiring notice to the PBGC under Section
302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with
respect to any Plan, and no amendment with respect to which security is
required under Section 307 of ERISA has been made or is reasonably expected to
be made to any Plan.
(v) The aggregate actuarial present value of all benefit
liabilities (whether or not vested) under each Plan, determined on a plan
termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Plan.
(vi) Neither the Borrower nor any other member of the ERISA
Group has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer
Plan or Multiple Employer Plan has been terminated within the meaning of Title
IV of ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan
or Multiple Employer Plan is reasonably expected to be reorganized or
terminated, within the meaning of Title IV of ERISA.
(vii) To the extent that any Benefit Arrangement is insured,
the Borrower and all other members of the ERISA Group have paid when due all
premiums required to be paid for all periods through the Closing Date. To the
extent that any Benefit Arrangement is funded other than with insurance, the
Borrower and all other members of the ERISA Group have made when due all
contributions required to be paid for all periods through the Closing Date.
(viii) All Plans, Benefit Arrangements and Multiemployer Plans
have been administered in accordance with their terms and applicable Law.
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6.1.24 EMPLOYMENT MATTERS.
Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts and all applicable federal, state and local
labor and employment Laws including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where
the failure to comply would constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom arising out of
the Labor Contracts or current or threatened strikes, picketing, handbilling or
other work stoppages or slowdowns at facilities of any of the Loan Parties or
any of their Subsidiaries which in any case would constitute a Material Adverse
Change. The Borrower has delivered to the Agent true and correct copies of each
of the Labor Contracts.
6.1.25 ENVIRONMENTAL MATTERS.
Except as disclosed on SCHEDULE 6.1.25:
(i) None of the Loan Parties or any Subsidiaries of any Loan
Party has received any Environmental Complaint from any Official Body or
private Person alleging that such Loan Party or Subsidiary or any prior or
subsequent owner of any of the Property is a potentially responsible party
under the Comprehensive Environmental Response, Cleanup and Liability Act, 42
U.S.C. Section 9601, ET SEQ., and none of the Loan Parties has any reason to
believe that such an Environmental Complaint might be received. There are no
pending or, to any Loan Party's knowledge, threatened Environmental Complaints
relating to any Loan Party or Subsidiary of any Loan Party or, to any Loan
Party's knowledge, any prior or subsequent owner of any of the Property
pertaining to, or arising out of, any Environmental Conditions.
(ii) There are no circumstances at, on or under any of the
Property owned by any Loan Party that constitute a breach of or non-compliance
with any of the Environmental Laws, and there are no past or present
Environmental Conditions at, on or under any of the Property owned by a Loan
Party or, to any Loan Party's knowledge, at, on or under adjacent property,
that prevent compliance with the Environmental Laws at any of the owned
Property. There are no circumstances at, on or under any of the Property
leased by any Loan Party that constitute a breach of or non-compliance with any
of the Environmental Laws where the failure to comply would constitute a
Material Adverse Change. There are no past or present Environmental Conditions
at, on or under any of the Property leased by a Loan Party or, to any Loan
Party's knowledge, at, on or under adjacent property, that prevent compliance
with the Environmental Laws at any of the leased Property, where the failure to
comply would constitute a Material Adverse Change.
(iii) Neither any of the Property owned by any Loan Party nor
any structures, improvements, equipment, fixtures, activities or facilities
thereon or thereunder contain or use Regulated Substances except in compliance
with Environmental Laws.
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There are no processes, facilities, operations, equipment or other activities
at, on or under any of the owned Property, or, to any Loan Party's knowledge,
at, on or under adjacent property, that currently result in the release or
threatened release of Regulated Substances onto any of the owned Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws. Neither any of the
Property leased by any Loan Party nor any structures, improvements, equipment,
fixtures, activities or facilities thereon or thereunder contain or use
Regulated Substances except in compliance with Environmental Laws where the
failure to comply would constitute a Material Adverse Change. There are no
processes, facilities, operations, equipment or other activities at, on or
under any of the leased Property, or, to any Loan Party's knowledge, at, on or
under adjacent property, that currently result in the release or threatened
release of Regulated Substances onto any of the leased Property, except to the
extent that such releases or threatened releases are not a breach of or
otherwise not a violation of the Environmental Laws where the failure to comply
would constitute a Material Adverse Change.
(iv) There are no aboveground storage tanks, underground
storage tanks or underground piping associated with such tanks, used for the
management of Regulated Substances at, on or under any of the Property owned by
any Loan Party that (a) do not have, to the extent required by Environmental
Laws, a full operational secondary containment system in place, and (b) are not
otherwise in compliance with all Environmental Laws. There are no abandoned
underground storage tanks or underground piping associated with such tanks,
previously used for the management of Regulated Substances at, on or under any
of the owned Property that have not either been closed in place in accordance
with Environmental Laws or removed in compliance with all applicable
Environmental Laws and no contamination associated with the use of such tanks
exists on any of the owned Property that is not in compliance with
Environmental Laws. There are no aboveground storage tanks, underground storage
tanks or underground piping associated with such tanks, used for the management
of Regulated Substances at, on or under any of the Property leased by any Loan
Party that (a) do not have, to the extent required by Environmental Laws, a
full operational secondary containment system in place, and (b) are not
otherwise in compliance with all Environmental Laws, where in the case of (a)
or (b), the failure to comply with such Environmental Laws would constitute a
Material Adverse Change. There are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Regulated Substances at, on or under any of the leased Property
that have not either been closed in place in accordance with Environmental Laws
or removed in compliance with all applicable Environmental Laws and no
contamination associated with the use of such tanks exists on any of the leased
Property that is not in compliance with Environmental Laws, where the failure
to comply would constitute a Material Adverse Change.
(v) Each Loan Party and each Subsidiary of any Loan Party has
all material permits, licenses, authorizations, plans and approvals necessary
under the Environmental Laws for the conduct of the business of such Loan Party
or Subsidiary as presently conducted. Each Loan Party and each Subsidiary of
any Loan Party has submitted all
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material notices, reports and other filings required by the Environmental Laws
to be submitted to an Official Body which pertain to past and current
operations on any of the Property.
(vi) All past and present on-site generation, storage,
processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated Substances at, on, or under any of the Property owned
by any Loan Party and all off-site transportation, storage, processing,
treatment, recycling, reclamation, disposal or other use or management of
Regulated Substances have been done in accordance with the Environmental Laws.
All past and present on-site generation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances at, on, or under any of the Property leased by any Loan Party and
all off-site transportation, storage, processing, treatment, recycling,
reclamation, disposal or other use or management of Regulated Substances have
been done in accordance with the Environmental Laws, except where to failure to
comply with such Environmental Laws would not constitute a Material Adverse
Change.
6.1.26 SENIOR DEBT STATUS.
The Obligations of each Loan Party under this Agreement, the Notes,
the Guaranty Agreement and each of the other Loan Documents to which it is a
party (i) do rank and will rank at least pari passu in priority of payment with
all other Indebtedness of such Loan Party except Indebtedness of such Loan
Party to the extent secured by Permitted Liens, and (ii) constitute "Senior
Debt" as such term is defined in the Subordinated Loan Documents. There is no
Lien upon or with respect to any of the properties or income of any Loan Party
or Subsidiary of any Loan Party which secures indebtedness or other obligations
of any Person except for Permitted Liens.
6.2 UPDATES TO SCHEDULES.
Should any of the information or disclosures provided on any of the
Schedules attached hereto become outdated or incorrect in any material respect,
the Borrower shall promptly provide the Agent in writing with such revisions or
updates to such Schedule as may be necessary or appropriate to update or
correct same; provided, however, that no Schedule shall be deemed to have been
amended, modified or superseded by any such correction or update, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby,
unless and until the Required Banks, in their sole and absolute discretion,
shall have accepted in writing such revisions or updates to such Schedule.
7. CONDITIONS OF LENDING
The obligation of each Bank to make Loans and of the Agent to issue
Letters of Credit hereunder is subject to the performance by each of the Loan
Parties of its Obligations to
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be performed hereunder at or prior to the making of any such Loans or issuance
of such Letters of Credit and to the satisfaction of the following further
conditions:
7.1 FIRST LOANS.
On the Closing Date:
7.1.1 OFFICER'S CERTIFICATE.
The representations and warranties of each of the Loan Parties
contained in Section 6 and in each of the other Loan Documents shall be true
and accurate on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties
shall have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Bank a certificate of each of the Loan Parties, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of each of the Loan Parties, to each such effect. The
certificate of the Loan Parties shall contain calculations in sufficient detail
to demonstrate compliance as of the Closing Date with all financial covenants
contained in Section 8.2.
7.1.2 SECRETARY'S CERTIFICATE.
There shall be delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Secretary or an Assistant
Secretary of each of the Loan Parties, certifying as appropriate as to:
(i) all action taken by each Loan Party in connection with this
Agreement and the other Loan Documents;
(ii) the names of the officer or officers authorized to sign
this Agreement and the other Loan Documents and the true signatures of such
officer or officers and specifying the Authorized Officers permitted to act on
behalf of each Loan Party for purposes of this Agreement and the true
signatures of such officers, on which the Agent and each Bank may conclusively
rely; and
(iii) copies of its organizational documents, including its
certificate or articles of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and limited
liability company agreement as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the
continued existence
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and good standing of each Loan Party in each state where organized or qualified
to do business and a bring-down certificate by facsimile dated the Closing
Date.
7.1.3 DELIVERY OF LOAN DOCUMENTS.
The Collateral Assignments, Indemnity Agreement, Landlord's Waivers,
initial Loan Request, Mortgage, Notes, Patent, Trademark and Copyright
Assignment, Pledge Agreement, and Security Agreement shall have been duly
executed and delivered to the Agent for the benefit of the Banks, together with
all appropriate financing statements.
7.1.4 OPINION OF COUNSEL.
There shall be delivered to the Agent for the benefit of each Bank a
written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & Goodyear, LLP, counsel for the
Loan Parties (who may rely on the opinions of such other counsel as may be
acceptable to the Agent), dated the Closing Date and in form and substance
satisfactory to the Agent and its counsel:
(i) as to the matters set forth in Exhibit 7.1.4; and
(ii) as to such other matters incident to the transactions
contemplated herein as the Agent may reasonably request.
7.1.5 LEGAL DETAILS.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in form
and substance satisfactory to the Agent and counsel for the Agent, and the
Agent shall have received all such other counterpart originals or certified or
other copies of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Agent and said counsel,
as the Agent or said counsel may reasonably request.
7.1.6 PAYMENT OF FEES.
The Borrower shall have paid or caused to be paid to the Agent for
itself and for the account of the Banks to the extent not previously paid the
Facility Fees, all other commitment and other fees accrued through the Closing
Date and the costs and expenses for which the Agent and the Banks are entitled
to be reimbursed.
7.1.7 ENVIRONMENTAL AUDIT.
The Loan Parties shall cause to be performed and completed an
environmental audit with respect to the Real Property by consultants
satisfactory to the Agent and shall provide all reports and results of such
audit in writing to the Agent. Such reports shall meet the Agent's minimum
requirements for phase I environmental assessments and any other requirements
of the Agent or the Banks. The environmental condition of the Loan Parties' and
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their Subsidiaries' assets, as substantiated by such audit, shall be
satisfactory to the Agent in all respects. On the Closing Date the appropriate
officers of the applicable Loan Parties shall have delivered to the Agent in
form and substance satisfactory to the Agent a certificate to the effect that
the Loan Parties have made known to the Agent all information known to them and
their Subsidiaries concerning Environmental Conditions and Environmental
Complaints and the Loan Parties and their Subsidiaries' compliance with the
Environmental Laws relating to any of the Property and any other site for which
any Loan Party or Subsidiary of a Loan Party has received notice that it is
potentially responsible for Environmental Conditions.
7.1.8 APPRAISALS.
The Agent shall have received appraisals or valuations of the Loan
Parties' and their Subsidiaries' assets as the Agent may require in form and
substance satisfactory to the Agent in all respects.
7.1.9 CONSENTS.
All material consents required to effectuate the transactions
contemplated hereby as set forth on SCHEDULE 6.1.13 shall have been obtained.
The Borrower, MMLIC and the other purchasers of notes under the Subordinated
Loan Documents shall have executed and delivered an amendment in connection
with this Agreement and the Loans wherein the Borrower, MMLIC and the other
note purchasers acknowledge and agree that the terms of subordination in the
Subordinated Loan Documents apply to this Agreement, the Loan Documents and the
Loans.
7.1.10 OFFICER'S CERTIFICATE REGARDING MACS.
Since September 30, 1995, no Material Adverse Change shall have
occurred; prior to the Closing Date, there shall have been no material change
in the management of any Loan Party or Subsidiary of any Loan Party; and there
shall have been delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of each Loan Party to each such effect.
7.1.11 NO VIOLATION OF LAWS.
The making of the Loans and the issuance of the Letters of Credit
shall not contravene any Law applicable to any Loan Party or any of the Banks.
7.1.12 NO ACTIONS OR PROCEEDINGS.
No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain
damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or
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which, in the Agent's sole discretion, would make it inadvisable to consummate
the transactions contemplated by this Agreement or any of the other Loan
Documents.
7.1.13 INSURANCE POLICIES; CERTIFICATES OF INSURANCE; ENDORSEMENTS.
The Loan Parties shall have delivered evidence acceptable to the
Agent that adequate insurance in compliance with Section 8.1.3 is in full force
and effect and that all premiums then due thereon have been paid, together with
a certified copy of each Loan Party's casualty insurance policy or policies
evidencing coverage satisfactory to the Agent, with additional insured,
mortgagee and lender loss payable special endorsements attached thereto in form
and substance satisfactory to the Agent and its counsel naming the Agent as
additional insured, mortgagee and lender loss payee.
7.1.14 TITLE INSURANCE.
The Loan Parties shall deliver a title insurance policy or policies
or binder or binders in favor of the Agent for the benefit of the Banks, in
customary ALTA current mortgagee's form, and in amounts not less than $930,000,
with premiums paid thereon, issued by a title insurance company acceptable to
the Agent and insuring the Mortgage as a valid first priority Lien upon the
applicable Loan Parties' fee simple title to the Real Property Collateral and
all improvements and all appurtenances thereto (including such easements and
appurtenances as may be required by the Agent), free and clear of any and all
defects and encumbrances whatsoever, subject only to such exceptions as may be
approved in writing by the Agent, with endorsements thereto as to such matters
as the Agent may designate.
7.1.15 FILING RECEIPTS.
The Agent shall have received (1) copies of all filing receipts and
acknowledgments issued by any governmental authority to evidence any
recordation or filing necessary to perfect the Lien of the Banks on the
Collateral or other satisfactory evidence of such recordation and filing and
(2) evidence in a form acceptable to the Agent that such Lien constitutes a
Prior Security Interest in favor of the Banks and, in the case of the Mortgage,
a valid and perfected first priority Lien.
7.1.16 EQUIPMENT DESCRIPTION.
The Loan Parties shall have delivered to the Agent a detailed
schedule of equipment and fixed assets of the Loan Parties, in form and content
acceptable to the Agent.
7.1.17 TERMINATION OF EXISTING LOAN AGREEMENT.
The loans and other obligations of the Loan Parties to First Source
under the Secured Credit Agreement dated as of July 21, 1995, among, inter
alia, the Borrower and First Source shall have been satisfied in full, and the
credit agreement and all related loan
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documents shall have been terminated. All Liens securing the Indebtedness of
the Loan Parties to First Source shall have been terminated.
7.2 EACH ADDITIONAL LOAN.
At the time of making any Loans or issuing any Letters of Credit
other than Loans made or Letters of Credit issued on the Closing Date and after
giving effect to the proposed extensions of credit: the representations and
warranties of the Loan Parties contained in Section 6 and in the other Loan
Documents shall be true on and as of the date of such additional Loan or Letter
of Credit with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time, which representations
and warranties shall be true and correct on and as of the specific dates or
times referred to therein) and the Loan Parties shall have performed and
complied with all covenants and conditions hereof; no Event of Default or
Potential Default shall have occurred and be continuing or shall exist; the
making of the Loans or issuance of such Letter of Credit shall not contravene
any Law applicable to any Loan Party or Subsidiary of any Loan Party or any of
the Banks; and the Borrower shall have delivered to the Agent a duly executed
and completed Loan Request or application for a Letter of Credit as the case
may be.
8. COVENANTS
8.1 AFFIRMATIVE COVENANTS.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings, and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations under the
Loan Documents and termination of the Commitments, the Loan Parties shall
comply at all times with the following affirmative covenants:
8.1.1 PRESERVATION OF EXISTENCE, ETC.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain its legal existence as a corporation, limited partnership or limited
liability company and its license or qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary, except as otherwise
expressly permitted in Section 8.2.6.
8.1.2 PAYMENT OF LIABILITIES, INCLUDING TAXES, ETC.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
duly pay and discharge all liabilities to which it is subject or which are
asserted against it, promptly as and
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when the same shall become due and payable, including all taxes, assessments
and governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made, but only
to the extent that failure to discharge any such liabilities would not result
in any additional liability which would adversely affect to a material extent
the financial condition of any Loan Party or Subsidiary of any Loan Party or
which would affect the Collateral, provided that the Loan Parties and their
Subsidiaries will pay all such liabilities forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.
8.1.3 MAINTENANCE OF INSURANCE.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
insure its properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire, extended
coverage, property damage, workers' compensation, public liability and business
interruption insurance) and against other risks (including errors and
omissions) in such amounts as similar properties and assets are insured by
prudent companies in similar circumstances carrying on similar businesses, and
with reputable and financially sound insurers, including self-insurance to the
extent customary, all as reasonably determined by the Agent. At the request of
the Agent, the Loan Parties shall deliver to the Agent and each of the Banks
(x) on the Closing Date and annually thereafter an original certificate of
insurance signed by the Loan Parties' independent insurance broker describing
and certifying as to the existence of the insurance on the Collateral required
to be maintained by this Agreement and the other Loan Documents, together with
a copy of the endorsement described in the next sentence attached to such
certificate and (y) from time to time a summary schedule indicating all
insurance then in force with respect to each of the Loan Parties. Such policies
of insurance shall contain special endorsements, in form and substance
acceptable to the Agent in its reasonable judgment, which shall (i) specify the
Agent as an additional insured, mortgagee and lender loss payee as its
interests may appear, with the understanding that any obligation imposed upon
the insured (including the liability to pay premiums) shall be the sole
obligation of the applicable Loan Parties and not that of the insured, (ii)
provide that the interest of the Banks shall be insured regardless of any
breach or violation by the applicable Loan Parties of any warranties,
declarations or conditions contained in such policies or any action or inaction
of the applicable Loan Parties or others insured under such policies, (iii)
provide a waiver of any right of the insurers to set off or counterclaim or any
other deduction, whether by attachment or otherwise, (iv) provide that any and
all rights of subrogation which the insurers may have or acquire shall be, at
all times and in all respects, junior and subordinate to the prior payment in
full of the Indebtedness hereunder and that no insurer shall exercise or assert
any right of subrogation until such time as the Indebtedness hereunder has been
paid in full and the Commitments have terminated, (v) provide, except in the
case of public liability insurance and workmen's compensation insurance, that
all insurance proceeds for losses of less than $100,000 shall be
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adjusted with and payable to the applicable Loan Parties and that all insurance
proceeds for losses of $100,000 or more shall be adjusted with and payable to
the Agent, (vi) include effective waivers by the insurer of all claims for
insurance premiums against the Agent, (vii) provide that no cancellation of
such policies for any reason (including non-payment of premium) nor any change
therein shall be effective until at least thirty (30) days after receipt by the
Agent of written notice of such cancellation or change, (viii) be primary
without right of contribution of any other insurance carried by or on behalf of
any additional insureds with respect to their respective interests in the
Collateral, and (ix) provide that inasmuch as the policy covers more than one
insured, all terms, conditions, insuring agreements and endorsements (except
limits of liability) shall operate as if there were a separate policy covering
each insured. The applicable Loan Parties shall notify the Agent promptly of
any occurrence causing a material loss or decline in value of the Collateral
and the estimated (or actual, if available) amount of such loss or decline. Any
monies received by the Agent constituting insurance proceeds or condemnation
proceeds (pursuant to the Mortgage) may, at the option of the Agent, (i) be
applied by the Agent to the payment of the Loans in such manner as the Agent
may reasonably determine, or (ii) be disbursed to the applicable Loan Parties
on such terms as are deemed appropriate by the Agent for the repair,
restoration and/or replacement of property in respect of which such proceeds
were received.
8.1.4 MAINTENANCE OF PROPERTIES AND LEASES.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of
similar character and size, all of those properties useful or necessary to its
business, and from time to time, such Loan Party will make or cause to be made
all appropriate repairs, renewals or replacements thereof.
8.1.5 MAINTENANCE OF PATENTS, TRADEMARKS, ETC.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect all patents, trademarks, service marks, trade
names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material Adverse Change.
8.1.6 VISITATION RIGHTS.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
permit any of the officers or authorized employees or representatives of the
Agent or any of the Banks to visit and inspect any of its properties and to
examine and make excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such detail and at
such times and as often as any of the Banks may reasonably request, provided
that each Bank shall provide the Borrower and the Agent with reasonable notice
prior to any visit or
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inspection. In the event any Bank desires to conduct an audit of any Loan
Party, such Bank shall conduct such audit contemporaneously with any audit to
be performed by the Agent.
8.1.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Borrower shall, and shall cause each Subsidiary of the Borrower
to, maintain and keep proper books of record and account which enable the
Borrower and its Subsidiaries to issue financial statements in accordance with
GAAP and as otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all
its dealings and business and financial affairs.
8.1.8 PLANS AND BENEFIT ARRANGEMENTS.
The Borrower shall, and shall cause each other member of the ERISA
Group to, comply with ERISA, the Internal Revenue Code and other applicable
Laws applicable to Plans and Benefit Arrangements except where such failure,
alone or in conjunction with any other failure, would not result in a Material
Adverse Change. Without limiting the generality of the foregoing, the Borrower
shall cause all of its Plans and all Plans maintained by any member of the
ERISA Group to be funded in accordance with the minimum funding requirements of
ERISA and shall make, and cause each member of the ERISA Group to make, in a
timely manner, all contributions due to Plans, Benefit Arrangements and
Multiemployer Plans.
8.1.9 COMPLIANCE WITH LAWS.
Each Loan Party shall, and shall cause each of its Subsidiaries to,
comply with all applicable Laws, including all Environmental Laws, in all
respects, provided that it shall not be deemed to be a violation of this
Section 8.1.9 if any failure to comply with any Law would not result in fines,
penalties, remediation costs, other similar liabilities or injunctive relief
which in the aggregate would constitute a Material Adverse Change.
8.1.10 USE OF PROCEEDS.
8.1.10.1 GENERAL.
The Loan Parties will use the Letters of Credit and the proceeds of
the Loans only for (i) general corporate purposes and for working capital, (ii)
to finance Permitted Acquisitions, (iii) to repay and terminate Indebtedness
outstanding under credit facility with First Source, or (iv) to develop
additional retail locations in connection with the business of the Loan Parties
described in Schedule 8.2.10. The Loan Parties use of the Letters of Credit and
the proceeds of the Loans for any purposes which contravenes any applicable Law
or any provision hereof.
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8.1.10.2 MARGIN STOCK.
The Loan Parties shall not use the proceeds of the Loans to purchase
margin stock as more fully provided in Section 6.1.10.
8.1.10.3 SECTION 20 SUBSIDIARIES.
The Loan Parties will not, directly or indirectly, use any portion of
the proceeds of the Loans (i) knowingly to purchase any Ineligible Securities
from a Section 20 Subsidiary during any period in which such Section 20
Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities
being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten or
privately placed by as Section 20 Subsidiary and issued by or for the benefit
of any Loan Party or any Affiliate of any Loan Party.
8.1.11 FURTHER ASSURANCES.
Each Loan Party shall, from time to time, at its expense, faithfully
preserve and protect the Agent's Lien on and Prior Security Interest in the
Collateral as a continuing first priority perfected Lien, subject only to
Permitted Liens, and shall do such other acts and things as the Agent in its
sole discretion may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and to
exercise and enforce its rights and remedies thereunder with respect to the
Collateral.
8.1.12 SUBORDINATION OF INTERCOMPANY LOANS.
Each Loan Party shall cause any intercompany Indebtedness, loans or
advances owed by any Loan Party to any other Loan Party to be subordinated
pursuant to the terms of the Intercompany Subordination Agreement.
8.1.13 CONTINUATION OF LANDLORDS' WAIVERS.
Each Loan Party shall cause each Landlord's Waiver to remain in full
force and effect in connection with any extension of any lease and, subject to
the requirements of Section 8.2.24, shall cause the landlord of any additional
leased locations to execute and deliver a Landlord's Waiver in substantially
the form of Exhibit 1.1(L) prior to locating any property of such Loan Party
upon such premises.
8.1.14 SURVEY.
The Borrower shall, within forty-five (45) days after the Closing
Date, provide the Agent with an ALTA survey with respect to the Real Property
Collateral.
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8.2 NEGATIVE COVENANTS.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and termination of the Commitments, the Loan Parties shall comply with the
following negative covenants:
8.2.1 INDEBTEDNESS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on SCHEDULE 8.2.1
(including any extensions or renewals thereof, provided there is no increase in
the amount thereof or other significant change in the terms thereof unless
otherwise specified on SCHEDULE 8.2.1;
(iii) Capitalized and operating leases as and to the extent
permitted under Section 8.2.15;
(iv) Indebtedness secured by Purchase Money Security Interests
not exceeding $100,000;
(v) Indebtedness of a Loan Party to another Loan Party which is
subordinated in accordance with the provisions of Section 8.1.12; and
(vi) Indebtedness incurred in connection with Permitted
Acquisitions provided that after giving effect thereto, no Potential Default or
Event of Default exists.
8.2.2 LIENS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien
on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except Permitted Liens.
8.2.3 GUARANTIES.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person,
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except for (i) Guaranties of Indebtedness of the Loan Parties permitted
hereunder, (ii) Guaranties of Subordinated Debt in existence on the Closing
Date, and (iii) Guaranties of Indebtedness permitted under Section 8.2.1(vi).
8.2.4 LOANS AND INVESTMENTS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, at any time make or suffer to remain outstanding any loan or
advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain
liable to do any of the foregoing, except:
(i) trade credit extended on usual and customary terms in the
ordinary course of business;
(ii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business;
(iii) Permitted Acquisitions;
(iv) Permitted Investments; and
(v) loans, advances and investments in other Loan Parties.
8.2.5 DIVIDENDS AND RELATED DISTRIBUTIONS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, make or pay, or agree to become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its shares of
capital stock, partnership interests or limited liability company interests on
account of the purchase, redemption, retirement or acquisition of its shares of
capital stock (or warrants, options or rights therefor), partnership interests
or limited liability company interests, except dividends or other distributions
payable to another Loan Party.
8.2.6 LIQUIDATIONS, MERGERS, CONSOLIDATIONS, ACQUISITIONS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party
to any merger or consolidation, or acquire by purchase, lease or otherwise all
or substantially all of the assets or capital stock of any other Person,
provided that
(1) any Loan Party other than the Borrower may consolidate or merge
into another Loan Party which is wholly-owned by one or more of the other Loan
Parties, and
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(2) any Loan Party may acquire, whether by purchase or by merger, (A)
all of the ownership interests of another Person or (B) substantially all of
assets of another Person or of a business or division of another Person (each
an "Permitted Acquisition"), provided that each of the following requirements
is met:
(i) such Person shall be a corporation, limited liability
company or other entity with respect to applicable state law provided that the
owners of all stock or other ownership interests in such entity shall not be
liable for any obligations of such entity or for the claims of any creditors
thereof,
(ii) if the Loan Parties are acquiring the ownership interests
in such Person, such Person shall execute a Guarantor Joinder and join this
Agreement as a Guarantor pursuant to Section 11.18 and such Person and its
owners shall grant Liens in the assets and stock or other ownership interests
in such Person and otherwise comply with Section 11.18 on or before the date of
such Permitted Acquisition,
(iii) the board of directors or other equivalent governing body
of such Person shall have approved such Permitted Acquisition and the Loan
Parties shall have delivered to the Banks written evidence of such approval
prior to such Permitted Acquisition,
(iv) the business acquired, or the business conducted by the
Person whose ownership interests are being acquired, as applicable, shall be
substantially the same as one or more line or lines of business conducted by
the Loan Parties and shall comply with Section 8.2.10,
(v) no Potential Default or Event of Default shall exist
immediately prior to and after giving effect to such Permitted Acquisition,
(vi) the Borrower shall have given the Agent written notice of
the acquisition at least fourteen (14) days prior to its consummation, which
notice shall include a Borrowing Base Certificate which evidences that after
giving effect to the Permitted Acquisition and any Loans to be made in
connection therewith, the Loans and Letters of Credit Outstanding shall not
exceed the Borrowing Base (excluding from the Borrowing Base all Rental
Contracts to be acquired pursuant to the Permitted Acquisition),
(vii) any Consideration given by the Loan Parties in the form
of Indebtedness to be paid at a date after the closing date of the Permitted
Acquisition shall be subordinated to the Loans and other Obligations on terms
and conditions satisfactory to the Agent,
(viii) if the Consideration given by the Loan Parties for the
Permitted Acquisition is cash, preferred stock and/or other Consideration other
than common capital stock of the Borrower, the Consideration given by the Loan
Parties for such Permitted Acquisition shall not exceed $7,500,000, and after
giving effect to such Permitted Acquisition,
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the aggregate Consideration in cash, preferred stock and/or other Consideration
other than common capital stock of the Borrower given by the Loan Parties for
all Permitted Acquisitions made from the Closing Date through the date of the
Permitted Acquisition shall not exceed $30,000,000,
(ix) if the Consideration given by the Loan Parties for such
Permitted Acquisition is exclusively common capital stock of the Borrower, the
Consideration given by the Loan Parties shall not exceed $15,000,000 in value,
and after giving effect to such Permitted Acquisition, the Consideration given
in shares of common capital stock of the Borrower for all Permitted
Acquisitions made from the Closing Date through the date of the Permitted
Acquisition shall not exceed $50,000,000. For purposes of valuing the common
capital stock given as Consideration, each share shall be equal to the listed
closing market price per share on NASDAQ as of the closing date of the
Permitted Acquisition,
(x) if the Consideration given by the Loan Parties for such
Permitted Acquisition includes but is not exclusively common capital stock of
the Borrower, the Consideration other than shares of the common capital stock
Borrower shall not exceed $7,500,000, the aggregate Consideration for such
Permitted Acquisition shall not exceed $10,000,000, and after giving effect to
such Permitted Acquisition, the Consideration other than common capital stock
of the Borrower given by the Loan Parties for all Permitted Acquisitions made
from the Closing Date through the date of the Permitted Acquisition shall not
exceed the limitation set forth in subsection (viii) above, and the
Consideration in the form of common capital stock of the Borrower given by the
Loan Parties for all Permitted Acquisitions made from the Closing Date through
the date of the Permitted Acquisition shall not exceed the limitation set forth
in subsection (ix) above, and
(xi) the Loan Parties shall have delivered to the Banks such
opinions of counsel in form and substance satisfactory to the Agent or such
other evidence as shall be satisfactory to the Agent in its sole discretion
that the Loan Parties are in compliance with all applicable Law in any
additional states in which the Loan Parties do business after the consummation
of the Permitted Acquisition.
8.2.7 DISPOSITIONS OF ASSETS OR SUBSIDIARIES.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or
dispose of, voluntarily or involuntarily, any of its properties or assets,
tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares of beneficial
interest, partnership interests or limited liability company interests of a
Subsidiary of such Loan Party), except:
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(i) transactions involving the sale of inventory in the
ordinary course of business;
(ii) any sale, transfer, rental or lease of assets in the
ordinary course of business which are no longer necessary or required in the
conduct of such Loan Party's or such Subsidiary's business;
(iii) any sale, transfer or lease of assets by any wholly owned
Subsidiary of such Loan Party to another Loan Party;
(iv) any sale, transfer or lease of assets in the ordinary
course of business which does not cause the aggregate market value or the
aggregate book value of all such sales, transfers and leases in any fiscal year
to exceed $2,500,000 and which are replaced by substitute assets acquired or
leased within the parameters of Section 8.2.15, provided such substitute assets
are subject to the Banks' Prior Security Interest; or
(v) any sale, transfer or lease of assets, other than those
specifically excepted pursuant to clauses (i) through (iv) above, which is
approved by the Required Banks so long as the after-tax proceeds (as reasonably
estimated by the Borrower) are applied as a mandatory prepayment of the Loans
in accordance with the provisions of Section 5.5.1 above.
8.2.8 AFFILIATE TRANSACTIONS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, enter into or carry out any transaction (including purchasing
property or services from or selling property or services to any Affiliate of
any Loan Party or other Person) unless such transaction is not otherwise
prohibited by this Agreement, is entered into in the ordinary course of
business upon fair and reasonable arm's-length terms and conditions which are
fully disclosed to the Agent and is in accordance with all applicable Law.
8.2.9 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, own or create directly or indirectly any Subsidiaries other
than (i) any Subsidiary which has joined this Agreement as Guarantor on the
Closing Date; and (ii) any Subsidiary formed after the Closing Date which joins
this Agreement as a Guarantor pursuant to Section 11.18, provided that the
Required Banks shall have consented to such formation and joinder and that such
Subsidiary and the Loan Parties, as applicable, shall grant and cause to be
perfected first priority Liens to the Agent for the benefit of the Banks in the
assets held by, and stock of or other ownership interests in, such Subsidiary.
Each of the Loan Parties shall not become or agree to (1) become a general or
limited partner in any general or limited partnership, except that the Loan
Parties may be general or limited partners in other Loan Parties, (2) become a
member or manager of, or hold a limited liability company interest in, a
limited liability
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company, except that the Loan Parties may be members or managers of, or hold
limited liability company interests in, other Loan Parties, or (3) become a
joint venturer or hold a joint venture interest in any joint venture.
8.2.10 CONTINUATION OF OR CHANGE IN BUSINESS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, engage in any business other than as set forth on SCHEDULE
8.2.10, substantially as conducted and operated by such Loan Party or
Subsidiary during the present fiscal year, and such Loan Party or Subsidiary
shall not permit any material change in such business.
8.2.11 PLANS AND BENEFIT ARRANGEMENTS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to:
(i) fail to satisfy the minimum funding requirements of ERISA
and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal Revenue
Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with any Plan, Benefit
Arrangement or Multiemployer Plan which, alone or in conjunction with any other
circumstances or set of circumstances resulting in liability under ERISA, would
constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present value of all
benefit liabilities (whether or not vested) under each Plan, determined on a
plan termination basis, as disclosed in the most recent actuarial report
completed with respect to such Plan, to exceed, as of any actuarial valuation
date, the fair market value of the assets of such Plan;
(v) fail to make when due any contribution to any Multiemployer
Plan that the Borrower or any member of the ERISA Group may be required to make
under any agreement relating to such Multiemployer Plan, or any Law pertaining
thereto;
(vi) withdraw (completely or partially) from any Multiemployer
Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from
any Multiple Employer Plan, where any such withdrawal is likely to result in a
material liability of the Borrower or any member of the ERISA Group;
(vii) terminate, or institute proceedings to terminate, any
Plan, where such termination is likely to result in a material liability to the
Borrower or any member of the ERISA Group;
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(viii) make any amendment to any Plan with respect to which
security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all disclosures
and governmental filings required under ERISA or the Internal Revenue Code,
where such failure is likely to result in a Material Adverse Change.
8.2.12 FISCAL YEAR.
The Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, change its fiscal year from the twelve-month period beginning
October 1 and ending September 30.
8.2.13 ISSUANCE OF STOCK.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, issue any additional shares of its capital stock or any
options, warrants or other rights in respect thereof, except that the Borrower
may issue additional shares of capital stock (i) for Permitted Acquisitions in
accordance with the provisions of Section 8.2.6, (ii) for distribution to
employees as provided for under the stock option plans set forth on Schedule
6.1.21 as in effect on the Closing Date, or (iii) if the net proceeds of the
issuance are used by the Borrower to reduce (a) the Loans outstanding under
this Agreement, and (b) the Commitments of the Banks.
8.2.14 CHANGES IN ORGANIZATIONAL DOCUMENTS.
Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, amend in any respect its certificate or articles of
incorporation (including any provisions or resolutions relating to capital
stock), by-laws, certificate of limited partnership, partnership agreement,
certificate of formation, limited liability company agreement or other
organizational documents without providing at least thirty (30) calendar days'
prior written notice to the Agent and the Banks and, in the event such change
would be adverse to the Banks as determined by the Agent in its sole
discretion, obtaining the prior written consent of the Required Banks.
8.2.15 CAPITAL EXPENDITURES AND LEASES.
Excluding the purchase of Rental Merchandise, each of the Loan
Parties shall not, and shall not permit any of its Subsidiaries to, make any
payments exceeding $2,000,000 in the aggregate in any fiscal year on account of
the purchase or lease of any assets which if purchased would constitute fixed
assets or which if leased would constitute a capitalized lease, or any payments
exceeding $250,000 in the aggregate in any fiscal year on account of the rental
or lease of real or personal property of any other Person which does not
constitute a capitalized lease, and all such capital expenditures and leases
shall be made under usual and customary terms and in the ordinary course of
business.
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8.2.16 MAXIMUM LEVERAGE RATIO (TOTAL FUNDED DEBT).
The Loan Parties shall not permit the ratio of (a) Consolidated
Funded Debt as of the end of each fiscal quarter of the Borrower plus the
product obtained by multiplying Occupancy Expense by four (4) to (b)
Consolidated Cash Flow from Operations plus Occupancy Expense minus the Rental
Merchandise Adjustment to be greater than 3.5 to 1.0. For purposes of this
ratio, Consolidated Cash Flow from Operations, the Rental Merchandise
Adjustment and the calculation of Occupancy Expense shall be calculated as of
the end of each fiscal quarter of the Borrower for the four fiscal quarters
then ended.
8.2.17 MAXIMUM LEVERAGE RATIO (SENIOR FUNDED DEBT).
The Loan Parties shall not permit the ratio of (a) Consolidated
Funded Senior Debt as of the end of each fiscal quarter of the Borrower plus
the product obtained by multiplying Occupancy Expense by four (4) to (b)
Consolidated Cash Flow from Operations plus Occupancy Expense minus the Rental
Merchandise Adjustment to be greater than 3.0 to 1.0. For purposes of this
ratio, Consolidated Cash Flow from Operations, the Rental Merchandise
Adjustment and the calculation of Occupancy Expense shall be calculated as of
the end of each fiscal quarter of the Borrower for the four fiscal quarters
then ended.
8.2.18 MINIMUM INTEREST COVERAGE RATIO.
The Loan Parties shall not permit the Interest Coverage Ratio,
calculated as of the end of each fiscal quarter of the Borrower for the four
fiscal quarters then ended, to be less than 3.5 to 1.0.
8.2.19 MINIMUM TANGIBLE NET WORTH.
The Borrower shall not at any time permit Consolidated Tangible Net
Worth to be less than the Base Net Worth.
8.2.20 SUBORDINATED LOAN DOCUMENT COVENANTS; AMENDMENT.
The Loan Parties shall not be in default with respect to the Fixed
Charge Coverage Ratio as set forth in Section 4.6 of the Subordinated Loan
Documents with MMLIC or be in default of the covenant set forth in Section
4.5(c) of the such Subordinated Loan Documents. The Loan Parties shall not
amend the terms of the Subordinated Loan Documents with MMLIC without the prior
written consent of the Agent.
8.2.21 INTEREST RATE PROTECTION.
The Loan Parties shall not enter into any interest rate protection
agreement (the "Interest Rate Protection Agreement") without the prior written
consent of the Agent, which consent shall not be unreasonably withheld. Any
Interest Rate Protection Agreement shall be
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with a financial institution acceptable to the Agent and contain such terms and
conditions as shall be acceptable to the Agent. Documentation for the Interest
Rate Protection Agreement shall be in a standard International Swap Dealer
Association Agreement and shall provide for the method of calculating the
reimbursable amount of the provider's credit exposure in a reasonable and
customary manner. Such financial institution may be granted a security interest
in certain of the Collateral and receive a Lien pari passu with the Lien of the
Agent upon terms acceptable to the Agent in its reasonable judgment.
8.2.22 RENTAL MERCHANDISE USAGE.
The Loan Parties shall not permit at any time the value of the Rental
Merchandise under lease pursuant to Rental Contracts to be less than 75% of the
total value of Rental Merchandise. For purposes of this Section 8.2.22, the
value of the Rental Merchandise shall be as it is recorded on the books and
records of the Loan Parties, determined in accordance with GAAP
8.2.23 PREPAYMENTS ON SUBORDINATED DEBT.
The Loan Parties shall not make any voluntary prepayment, redemption
or repurchase on account of the Subordinated Debt.
8.2.24 LANDLORD'S WAIVERS.
The Loan Parties shall not fail to deliver to the Agent an executed
Landlord's Waiver in substantially the form of Exhibit 1.1(L) (i) from the
lessors of at least 50% of the leased Collateral locations, as listed on
Schedule A to the Security Agreement, within thirty days of the Closing Date,
and (ii) from the lessors of at least 50% of the Collateral locations to be
added pursuant to any Permitted Acquisition within thirty days of the closing
of such Permitted Acquisition.
8.3 REPORTING REQUIREMENTS.
The Loan Parties, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties' other Obligations
hereunder and under the other Loan Documents and termination of the
Commitments, the Loan Parties will furnish or cause to be furnished to the
Agent and each of the Banks:
8.3.1 MONTHLY FINANCIAL STATEMENTS.
As soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the Borrower's financial statements,
consisting of a consolidated
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and consolidating balance sheet as of the end of such month and related
consolidated and consolidating statements of income, stockholders' equity and
cash flows for the month then ended and the fiscal year through that date, all
in reasonable detail and certified (subject to normal year-end adjustments) by
the Chief Executive Officer, President or Chief Financial Officer of the
Borrower as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative form the respective financial statements for
the corresponding date and period in the previous fiscal year. Concurrently
with the financial statements of the Borrower furnished to the Agent pursuant
to this Section 8.3.1, the Borrower shall provide a Borrowing Base Certificate
in the form of Exhibit 8.3.1 containing calculations in sufficient detail to
demonstrate compliance with the Borrowing Base Requirements set forth in
Section 2.1.
8.3.2 QUARTERLY FINANCIAL STATEMENTS.
As soon as available and in any event within forty-five (45) calendar
days after the end of each of the first three fiscal quarters in each fiscal
year, the quarterly report of Form 10-Q for the Borrower and its consolidated
financial statements, consisting of a consolidated and consolidating balance
sheet as of the end of such fiscal quarter and related consolidated and
consolidating statements of income, stockholders' equity and cash flows for the
fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by the Chief Executive Officer, President or Chief Financial Officer of the
Borrower as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative form the respective financial statements for
the corresponding date and period in the previous fiscal year.
8.3.3 ANNUAL FINANCIAL STATEMENTS.
As soon as available and in any event within ninety (90) days after
the end of each fiscal year of the Borrower, the annual report on Form 10-K for
the Borrower and its consolidated financial statements, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal year,
and related consolidated and consolidating statements of income, stockholders'
equity and cash flows for the fiscal year then ended, all in reasonable detail
and setting forth in comparative form the financial statements as of the end of
and for the preceding fiscal year, and certified by Coopers & ▇▇▇▇▇▇▇ L.L.P. or
such other independent certified public accountants of comparable nationally
recognized standing satisfactory to the Agent in its reasonable judgment. The
consolidating statement of income shall include a schedule detailing the income
by each retail location of the Loan Parties. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may result from a change in the method used to prepare the
financial statements as to which such accountants concur) and shall not
indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan Documents.
The Loan Parties shall
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deliver with such financial statements and certification by their accountants a
letter of such accountants to the Agent and the Banks substantially (i) to the
effect that, based upon their ordinary and customary examination of the affairs
of the Borrower, performed in connection with the preparation of such
consolidated financial statements, and in accordance with generally accepted
auditing standards, they are not aware of the existence of any condition or
event which constitutes an Event of Default or Potential Default or, if they
are aware of such condition or event, stating the nature thereof and confirming
the Borrower's calculations with respect to the certificate to be delivered
pursuant to Section 8.3.4 with respect to such financial statements and (ii) to
the effect that the Banks are intended to rely upon such accountant's
certification of the annual financial statements and that such accountants
authorize the Loan Parties to deliver such reports and certificate to the Banks
on such accountants' behalf.
8.3.4 CERTIFICATE OF THE BORROWER.
Concurrently with the financial statements of the Borrower furnished
to the Agent and to the Banks pursuant to Sections 8.3.2 and 8.3.3, a
certificate of the Borrower signed by the Chief Executive Officer, President or
Chief Financial Officer of the Borrower, in the form of Exhibit 8.3.4, to the
effect that, except as described pursuant to Section 8.3.6, (i) the
representations and warranties of the Borrower contained in Section 6 and in
the other Loan Documents are true on and as of the date of such certificate
with the same effect as though such representations and warranties had been
made on and as of such date (except representations and warranties which
expressly relate solely to an earlier date or time) and the Loan Parties have
performed and complied with all covenants and conditions hereof, (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate and (iii) containing calculations in sufficient detail to
demonstrate compliance as of the date of such financial statements with all
financial covenants contained in Section 8.2.
8.3.5 MONTHLY INVENTORY REPORT.
At the time of the delivery of the report described in Section 8.3.1,
a summary of the inventory of the Loan Parties subject to Rental Contracts and
the total inventory of the Loan Parties, in form and content acceptable to the
Agent
8.3.6 NOTICE OF DEFAULT.
Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential Default, a certificate signed by
the Chief Executive Officer, President or Chief Financial Officer of such Loan
Party setting forth the details of such Event of Default or Potential Default
and the action which the such Loan Party proposes to take with respect thereto.
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8.3.7 NOTICE OF LITIGATION.
Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any
other Person against any Loan Party or Subsidiary of any Loan Party which
relate to the Collateral, involve a claim or series of claims in excess of
$100,000 or which if adversely determined would constitute a Material Adverse
Change.
8.3.8 CERTAIN EVENTS.
Written notice to the Agent:
(i) at least thirty (30) calendar days prior thereto, with
respect to any proposed sale or transfer of assets pursuant to Section
8.2.7(iv) or (v),
(ii) within the time limits set forth in Section 8.2.14, any
amendment to the organizational documents of any Loan Party;
(iii) at least thirty (30) calendar days prior thereto, with
respect to any change in any Loan Party's locations from the locations set
forth in Schedule A to the Security Agreement, other than changes resulting
from the consummation of a Permitted Acquisition; and
(iv) at least fourteen (14) calendar days prior thereto, with
respect to any change in any Loan Party's locations from the locations set
forth in Schedule A to the Security Agreement resulting from the consummation
of a Permitted Acquisition.
8.3.9 BUDGETS, FORECASTS, OTHER REPORTS AND INFORMATION.
Promptly upon becoming available to the Borrower:
(i) the annual budget and any forecasts or projections of the
Borrower, to be supplied not later than sixty (60) days prior to commencement
of the fiscal year to which any of the foregoing may be applicable,
(ii) any reports including management letters submitted to the
Borrower by independent accountants in connection with any annual, interim or
special audit,
(iii) any reports, notices or proxy statements generally
distributed by the Borrower to its stockholders on a date no later than the
date supplied to such stockholders,
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(iv) regular or periodic reports, including Forms 10-K, 10-Q
and 8-K, registration statements and prospectuses, filed by the Borrower with
the Securities and Exchange Commission,
(v) a copy of any order in any proceeding to which the Borrower
or any of its Subsidiaries is a party issued by any Official Body, and
(vi) such other reports and information as any of the Banks may
from time to time reasonably request. The Borrower shall also notify the Banks
promptly of the enactment or adoption of any Law which may result in a Material
Adverse Change.
8.3.10 NOTICES REGARDING PLANS AND BENEFIT ARRANGEMENTS.
8.3.10.1 CERTAIN EVENTS.
Promptly upon becoming aware of the occurrence thereof, notice
(including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto)
of:
(i) any Reportable Event with respect to the Borrower or any
other member of the ERISA Group (regardless of whether the obligation to report
said Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could subject the
Borrower or any other member of the ERISA Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, any Benefit Arrangement or
any trust created thereunder,
(iii) any assertion of material withdrawal liability with
respect to any Multiemployer Plan,
(iv) any partial or complete withdrawal from a Multiemployer
Plan by the Borrower or any other member of the ERISA Group under Title IV of
ERISA (or assertion thereof), where such withdrawal is likely to result in
material withdrawal liability,
(v) any cessation of operations (by the Borrower or any other
member of the ERISA Group) at a facility in the circumstances described in
Section 4062(e) of ERISA,
(vi) withdrawal by the Borrower or any other member of the
ERISA Group from a Multiple Employer Plan,
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(vii) a failure by the Borrower or any other member of the
ERISA Group to make a payment to a Plan required to avoid imposition of a Lien
under Section 302(f) of ERISA,
(viii) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA, or
(ix) any change in the actuarial assumptions or funding methods
used for any Plan, where the effect of such change is to materially increase or
materially reduce the unfunded benefit liability or obligation to make periodic
contributions.
8.3.10.2 NOTICES OF INVOLUNTARY TERMINATION AND ANNUAL REPORTS.
Promptly after receipt thereof, copies of (a) all notices received
by the Borrower or any other member of the ERISA Group of the PBGC's intent to
terminate any Plan administered or maintained by the Borrower or any member of
the ERISA Group, or to have a trustee appointed to administer any such Plan;
and (b) at the request of the Agent or any Bank each annual report (IRS Form
5500 series) and all accompanying schedules, the most recent actuarial reports,
the most recent financial information concerning the financial status of each
Plan administered or maintained by the Borrower or any other member of the
ERISA Group, and schedules showing the amounts contributed to each such Plan by
or on behalf of the Borrower or any other member of the ERISA Group in which
any of their personnel participate or from which such personnel may derive a
benefit, and each Schedule B (Actuarial Information) to the annual report filed
by the Borrower or any other member of the ERISA Group with the Internal
Revenue Service with respect to each such Plan.
8.3.10.3 NOTICE OF VOLUNTARY TERMINATION.
Promptly upon the filing thereof, copies of any Form 5310, or any
successor or equivalent form to Form 5310, filed with the PBGC in connection
with the termination of any Plan.
9. DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
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9.1.1 PAYMENTS UNDER LOAN DOCUMENTS.
The Borrower shall fail to pay any principal of any Loan (including
mandatory prepayments or the payment due at maturity), Reimbursement Obligation
or Letter of Credit Borrowing or any other amount owing hereunder or under the
other Loan Documents after such principal or other amount becomes due in
accordance with the terms hereof or thereof, or the Borrower shall fail to pay
any interest on any Loan, Reimbursement Obligation or Letter of Credit
Borrowing within five calendar days after such interest becomes due in
accordance with the terms hereof;
9.1.2 BREACH OF WARRANTY.
Any representation or warranty made at any time by any of the Loan
Parties herein or by any of the Loan Parties in any other Loan Document, or in
any certificate, other instrument or statement furnished pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading in
any material respect as of the time it was made or furnished;
9.1.3 BREACH OF NEGATIVE COVENANTS OR VISITATION RIGHTS.
Any of the Loan Parties shall default in the observance or
performance of any covenant contained in Section 8.1.6 or Section 8.2;
9.1.4 BREACH OF OTHER COVENANTS.
Any of the Loan Parties shall default in the observance or
performance of any other covenant, condition or provision hereof or of any
other Loan Document and such default shall continue unremedied for a period of
ten (10) Business Days after any officer of any Loan Party becomes aware of the
occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Loan Parties as determined
by the Agent in its sole discretion);
9.1.5 DEFAULTS IN OTHER AGREEMENTS OR INDEBTEDNESS.
A default or event of default shall occur at any time under the terms
of any other agreement involving borrowed money or the extension of credit or
any other Indebtedness under which any Loan Party or Subsidiary of any Loan
Party may be obligated as a borrower or guarantor in excess of $100,000 in the
aggregate, and such breach, default or event of default consists of the failure
to pay (beyond any period of grace permitted with respect thereto, whether
waived or not) any indebtedness when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes the
acceleration of any indebtedness (whether or not such right shall have been
waived) or the termination of any commitment to lend;
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9.1.6 FINAL JUDGMENTS OR ORDERS.
Any final judgments or orders for the payment of money in excess of
$100,000 in the aggregate shall be entered against any Loan Party by a court
having jurisdiction in the premises, which judgment is not discharged, vacated,
bonded or stayed pending appeal within a period of thirty (30) days from the
date of entry;
9.1.7 LOAN DOCUMENT UNENFORCEABLE.
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
9.1.8 UNINSURED LOSSES; PROCEEDINGS AGAINST ASSETS.
There shall occur any material uninsured damage to or loss, theft or
destruction of any of the Collateral in excess of $250,000 or the Collateral or
any other of the Loan Parties' or any of their Subsidiaries' assets are
attached, seized, levied upon or subjected to a writ or distress warrant; or
such come within the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors and the same is not cured within thirty (30) days
thereafter;
9.1.9 NOTICE OF LIEN OR ASSESSMENT.
A notice of Lien or assessment in excess of $100,000 which is not a
Permitted Lien is filed of record with respect to all or any part of any of the
Loan Parties' or any of their Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes payable
and the same is not paid within thirty (30) days after the same becomes
payable;
9.1.10 INSOLVENCY.
Any Loan Party or any Subsidiary of a Loan Party ceases to be solvent
or admits in writing its inability to pay its debts as they mature;
9.1.11 EVENTS RELATING TO PLANS AND BENEFIT ARRANGEMENTS.
Any of the following occurs: (i) any Reportable Event, which the
Agent determines in good faith constitutes grounds for the termination of any
Plan by the PBGC or the
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appointment of a trustee to administer or liquidate any Plan, shall have
occurred and be continuing; (ii) proceedings shall have been instituted or
other action taken to terminate any Plan, or a termination notice shall have
been filed with respect to any Plan; (iii) a trustee shall be appointed to
administer or liquidate any Plan; (iv) the PBGC shall give notice of its intent
to institute proceedings to terminate any Plan or Plans or to appoint a trustee
to administer or liquidate any Plan; and, in the case of the occurrence of (i),
(ii), (iii) or (iv) above, the Agent determines in good faith that the amount
of the Borrower's liability is likely to exceed 10% of its Consolidated Net
Worth less intangibles; (v) the Borrower or any member of the ERISA Group shall
fail to make any contributions when due to a Plan or a Multiemployer Plan; (vi)
the Borrower or any other member of the ERISA Group shall make any amendment to
a Plan with respect to which security is required under Section 307 of ERISA;
(vii) the Borrower or any other member of the ERISA Group shall withdraw
completely or partially from a Multiemployer Plan; (viii) the Borrower or any
other member of the ERISA Group shall withdraw (or shall be deemed under
Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix)
any applicable Law is adopted, changed or interpreted by any Official Body with
respect to or otherwise affecting one or more Plans, Multiemployer Plans or
Benefit Arrangements and, with respect to any of the events specified in (v),
(vi), (vii), (viii) or (ix), the Agent determines in good faith that any such
occurrence would be reasonably likely to materially and adversely affect the
total enterprise represented by the Borrower and the other members of the ERISA
Group;
9.1.12 CESSATION OF BUSINESS.
Any Loan Party or Subsidiary of a Loan Party ceases to conduct its
business as contemplated, except as expressly permitted under Section 8.2.6 or
8.2.7, or any Loan Party or Subsidiary of a Loan Party is enjoined, restrained
or in any way prevented by court order from conducting all or any material part
of its business and such injunction, restraint or other preventive order is not
dismissed within thirty (30) days after the entry thereof;
9.1.13 CHANGE OF CONTROL.
(i) An Acquiring Person shall have acquired, or obtained the right to
acquire, legal or beneficial ownership of more than 20% of the outstanding
shares of the Voting Stock of the Borrower; or (ii) within a period of twelve
(12) consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a majority
of the board of directors of the Borrower;
9.1.14 INVOLUNTARY PROCEEDINGS.
A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
any Loan Party or Subsidiary of a Loan Party in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official)
of any Loan Party or Subsidiary of a Loan Party for any substantial part of its
property, or for the winding-up
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or liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) consecutive days or such
court shall enter a decree or order granting any of the relief sought in such
proceeding; or
9.1.15 VOLUNTARY PROCEEDINGS.
Any Loan Party or Subsidiary of a Loan Party shall commence a
voluntary case under any applicable bankruptcy, insolvency, reorganization or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar official) of
itself or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action in furtherance of any of the
foregoing.
9.2 CONSEQUENCES OF EVENT OF DEFAULT.
9.2.1 EVENTS OF DEFAULT OTHER THAN BANKRUPTCY, INSOLVENCY OR
REORGANIZATION PROCEEDINGS.
If an Event of Default specified under Sections 9.1.1 through 9.1.13
shall occur and be continuing, the Banks and the Agent shall be under no
further obligation to make Loans or issue Letters of Credit, as the case may
be, and the Agent may, and upon the request of the Required Banks, shall (i) by
written notice to the Borrower, declare the unpaid principal amount of the
Notes then outstanding and all interest accrued thereon, any unpaid fees and
all other Indebtedness of the Borrower to the Banks hereunder and thereunder to
be forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Agent for the benefit of each Bank without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and (ii) require the Borrower to, and the Borrower
shall thereupon, deposit in a non-interest bearing account with the Agent, as
cash collateral for its Obligations under the Loan Documents, an amount equal
to the maximum amount currently or at any time thereafter available to be drawn
on all outstanding Letters of Credit, and the Borrower hereby pledges to the
Agent and the Banks, and grants to the Agent and the Banks a security interest
in, all such cash as security for such Obligations. Upon the curing of all
existing Events of Default to the satisfaction of the Required Banks, the Agent
shall return such cash collateral to the Borrower; and
9.2.2 BANKRUPTCY, INSOLVENCY OR REORGANIZATION PROCEEDINGS.
If an Event of Default specified under Section 9.1.14 or 9.1.15 shall
occur, the Banks shall be under no further obligations to make Loans hereunder
and the unpaid principal amount of the Notes then outstanding and all interest
accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to
the Banks hereunder and thereunder shall be
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immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived; and
9.2.3 SET-OFF.
If an Event of Default shall occur and be continuing, any Bank to
whom any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Bank which has agreed in writing to be
bound by the provisions of Section 10.13 and any branch, Subsidiary or
Affiliate of such Bank or participant anywhere in the world shall have the
right, in addition to all other rights and remedies available to it, without
notice to such Loan Party, to set-off against and apply to the then unpaid
balance of all the Loans and all other Obligations of the Borrower and the
other Loan Parties hereunder or under any other Loan Document any debt owing
to, and any other funds held in any manner for the account of, the Borrower or
such other Loan Party by such Bank or participant or by such branch, Subsidiary
or Affiliate, including all funds in all deposit accounts (whether time or
demand, general or special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by the Borrower or such other Loan Party
for its own account (but not including funds held in custodian or trust
accounts) with such Bank or participant or such branch, Subsidiary or
Affiliate. Such right shall exist whether or not any Bank or the Agent shall
have made any demand under this Agreement or any other Loan Document, whether
or not such debt owing to or funds held for the account of the Borrower or such
other Loan Party is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, Guaranty or any other security, right or remedy
available to any Bank or the Agent; and
9.2.4 SUITS, ACTIONS, PROCEEDINGS.
If an Event of Default shall occur and be continuing, and whether or
not the Agent shall have accelerated the maturity of Loans pursuant to any of
the foregoing provisions of this Section 9.2, the Agent or any Bank, if owed
any amount with respect to the Notes, may proceed to protect and enforce its
rights by suit in equity, action at law and/or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement or the Notes, including as permitted by applicable Law the
obtaining of the ex parte appointment of a receiver, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of the Agent or such Bank; and
9.2.5 APPLICATION OF PROCEEDS.
From and after the date on which the Agent has taken any action
pursuant to this Section 9.2 and until all Obligations of the Loan Parties have
been paid in full, any and all proceeds received by the Agent from any sale or
other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy by the Agent, shall be applied as follows:
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(i) first, to reimburse the Agent and the Banks for
out-of-pocket costs, expenses and disbursements, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by the Agent or
the Banks in connection with realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents,
including advances made by the Banks or any one of them or the Agent for the
reasonable maintenance, preservation, protection or enforcement of, or
realization upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the Collateral;
(ii) second, to the repayment of all Indebtedness then due and
unpaid of the Loan Parties to the Banks incurred under this Agreement or any of
the other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Agent may determine in its discretion; and
(iii) the balance, if any, as required by Law.
9.2.6 OTHER RIGHTS AND REMEDIES.
In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents (including the Mortgage), the
Agent shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
The Agent may, and upon the request of the Required Banks shall, exercise all
post-default rights granted to the Agent and the Banks under the Loan Documents
or applicable Law.
9.3 NOTICE OF SALE.
Any notice required to be given by the Agent of a sale, lease, or
other disposition of the Collateral or any other intended action by the Agent,
if given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.
10. THE AGENT
10.1 APPOINTMENT.
Each Bank hereby irrevocably designates, appoints and authorizes National
City to act as Agent for such Bank under this Agreement and to execute and
deliver or accept on behalf of each of the Banks the other Loan Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of a Note shall be deemed irrevocably to authorize, the Agent to
take such action on its behalf under the provisions of this Agreement
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and the other Loan Documents and any other instruments and agreements referred
to herein, and to exercise such powers and to perform such duties hereunder as
are specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. National City
agrees to act as the Agent on behalf of the Banks to the extent provided in
this Agreement.
10.2 DELEGATION OF DUTIES.
The Agent may perform any of its duties hereunder by or through agents or
employees (provided such delegation does not constitute a relinquishment of its
duties as Agent) and, subject to Sections 10.5 and 10.6, shall be entitled to
engage and pay for the advice or services of any attorneys, accountants or
other experts concerning all matters pertaining to its duties hereunder and to
rely upon any advice so obtained.
10.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION.
The Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
a fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is
not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Bank expressly acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed to constitute
any representation or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto, whether coming into
its possession before the making of any Loan or at any time or times
thereafter.
10.4 ACTIONS IN DISCRETION OF AGENT; INSTRUCTIONS FROM THE BANKS.
The Agent agrees, upon the written request of the Required Banks, to take
or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall not
be required to take any action which exposes
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the Agent to personal liability or which is contrary to this Agreement or any
other Loan Document or applicable Law. In the absence of a request by the
Required Banks, the Agent shall have authority, in its sole discretion, to take
or not to take any such action, unless this Agreement specifically requires the
consent of the Required Banks or all of the Banks. Any action taken or failure
to act pursuant to such instructions or discretion shall be binding on the
Banks, subject to Section 10.6. Subject to the provisions of Section 10.6, no
Bank shall have any right of action whatsoever against the Agent as a result of
the Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Banks, or in the absence of such instructions, in
the absolute discretion of the Agent.
10.5 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY THE BORROWER.
The Borrower unconditionally agrees to pay or reimburse the Agent and hold
the Agent harmless against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses of
counsel (including the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other
Loan Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due
hereunder or thereunder or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or
receivership proceedings or otherwise, and (iv) in any workout or restructuring
or in connection with the protection, preservation, exercise or enforcement of
any of the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings, and (b) all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent, in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted by the
Agent hereunder or thereunder, provided that the Borrower shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements if the same results
from the Agent's gross negligence or willful misconduct, or if the Borrower was
not given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that the Borrower shall remain liable
to the extent such failure to give notice does not result in a loss to the
Borrower), or if the same results from a compromise or settlement agreement
entered into without the consent of the Borrower, which shall not be
unreasonably withheld. In addition, the Borrower agrees to reimburse and pay
all reasonable out-of-pocket expenses of the Agent's regular employees and
agents engaged periodically to perform audits of the Loan Parties' books,
records and business properties.
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10.6 EXCULPATORY PROVISIONS; LIMITATION OF LIABILITY.
Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates shall (a) be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith
including pursuant to any Loan Document, unless caused by its or their own
gross negligence or willful misconduct, (b) be responsible in any manner to any
of the Banks for the effectiveness, enforceability, genuineness, validity or
the due execution of this Agreement or any other Loan Documents or for any
recital, representation, warranty, document, certificate, report or statement
herein or made or furnished under or in connection with this Agreement or any
other Loan Documents, or (c) be under any obligation to any of the Banks to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions hereof or thereof on the part of the Loan
Parties, or the financial condition of the Loan Parties, or the existence or
possible existence of any Event of Default or Potential Default. No claim may
be made by any of the Loan Parties, any Bank, the Agent or any of their
respective Subsidiaries against the Agent, any Bank or any of their respective
directors, officers, employees, agents, attorneys or Affiliates, or any of
them, for any special, indirect or consequential damages or, to the fullest
extent permitted by Law, for any punitive damages in respect of any claim or
cause of action (whether based on contract, tort, statutory liability, or any
other ground) based on, arising out of or related to any Loan Document or the
transactions contemplated hereby or any act, omission or event occurring in
connection therewith, including the negotiation, documentation, administration
or collection of the Loans, and each of the Loan Parties, (for itself and on
behalf of each of its Subsidiaries), the Agent and each Bank hereby waive,
releases and agree never to ▇▇▇ upon any claim for any such damages, whether
such claim now exists or hereafter arises and whether or not it is now known or
suspected to exist in its favor. Each Bank agrees that, except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder or given to the Agent for the account of or with copies for
the Banks, the Agent and each of its directors, officers, employees, agents,
attorneys or Affiliates shall not have any duty or responsibility to provide
any Bank with an credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Loan Parties which may come into the possession of the
Agent or any of its directors, officers, employees, agents, attorneys or
Affiliates.
10.7 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY BANKS.
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the Obligation of the Borrower
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, and
reasonable costs, expenses or disbursements, including reasonable attorneys'
fees and disbursements (including the allocated costs of staff counsel), and
costs of appraisers and environmental consultants, of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent,
in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken
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or omitted by the Agent hereunder or thereunder, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (a) if
the same results from the Agent's gross negligence or willful misconduct, or
(b) if such Bank was not given notice of the subject claim and the opportunity
to participate in the defense thereof, at its expense (except that such Bank
shall remain liable to the extent such failure to give notice does not result
in a loss to the Bank), or (c) if the same results from a compromise and
settlement agreement entered into without the consent of such Bank, which shall
not be unreasonably withheld. In addition, each Bank agrees promptly upon
demand to reimburse the Agent (to the extent not reimbursed by the Borrower and
without limiting the Obligation of the Borrower to do so) in proportion to its
Ratable Share for all amounts due and payable by the Borrower to the Agent in
connection with the Agent's periodic audit of the Loan Parties' books, records
and business properties.
10.8 RELIANCE BY AGENT.
The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution, notice, consent, certificate, letter, cablegram,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel
and other professional advisers selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.9 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrower referring to this
Agreement, describing such Potential Default or Event of Default and stating
that such notice is a "notice of default."
10.10 NOTICES.
The Agent shall promptly send to each Bank a copy of all notices received
from the Borrower pursuant to the provisions of this Agreement or the other
Loan Documents promptly upon receipt thereof. The Agent shall promptly notify
the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof. Upon the request of any Bank, the Agent shall provide
such Bank with any report provided by the Borrower to the Agent pursuant to the
provisions of this Agreement or the Loan Documents which are not required to be
provided to all the Banks.
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10.11 BANKS IN THEIR INDIVIDUAL CAPACITIES.
With respect to its Commitment and the Loans made by it and any other
rights and powers given to it as a Bank hereunder or under any of the other
Loan Documents, the Agent shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not the Agent, and
the term "Banks" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. National City and its Affiliates and each of
the Banks and their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any
kind of banking or trust business with, the Loan Parties and their Affiliates,
in the case of the Agent, as though it were not acting as Agent hereunder and
in the case of each Bank, as though such Bank were not a Bank hereunder. The
Banks acknowledge that, pursuant to such activities, the Agent or its
Affiliates may (i) receive information regarding the Loan Parties (including
information that may be subject to confidentiality obligations in favor of the
Loan Parties) and acknowledge that the Agent shall be under no obligation to
provide such information to them, and (ii) accept fees and other consideration
from the Loan Parties for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
10.12 HOLDERS OF NOTES.
The Agent may deem and treat any payee of any Note as the owner thereof
for all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority
or consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
10.13 EQUALIZATION OF BANKS.
The Banks and the holders of any participations in any Notes agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application on any Obligation hereunder or under any Note or under
any such participation, whether received by voluntary payment, by realization
upon security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all
such excess amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments under the Notes, except as otherwise
provided in Section 4.4.3, 5.4.3 or 5.6. The Banks or any such holder receiving
any such amount shall purchase for cash from each of the other Banks an
interest in such Bank's Loans in such amount as shall result in a ratable
participation by the Banks and each such holder in the aggregate unpaid amount
under the Notes, provided that if all or any portion of such excess amount is
thereafter recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price
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restored to the extent of such recovery, together with interest or other
amounts, if any, required by law (including court order) to be paid by the Bank
or the holder making such purchase.
10.14 SUCCESSOR AGENT.
The Agent (i) may resign as Agent or (ii) shall resign if such resignation
is requested by the Required Banks (if the Agent is a Bank, the Agent's Loans
and its Commitment shall be considered in determining whether the Required
Banks have requested such resignation) or required by Section 5.4.3, in either
case of (i) or (ii) by giving not less than thirty (30) days' prior written
notice to the Borrower. If the Agent shall resign under this Agreement, then
either (a) the Required Banks shall appoint from among the Banks a successor
agent for the Banks, subject to the consent of the Borrower, such consent not
to be unreasonably withheld, or (b) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following the Agent's
notice to the Banks of its resignation, then the Agent shall appoint, with the
consent of the Borrower, such consent not to be unreasonably withheld, a
successor agent who shall serve as Agent until such time as the Required Banks
appoint and the Borrower consents to the appointment of a successor agent. Upon
its appointment pursuant to either clause (a) or (b) above, such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent, effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement. After the resignation of any Agent
hereunder, the provisions of this Section 10 shall inure to the benefit of such
former Agent and such former Agent shall not by reason of such resignation be
deemed to be released from liability for any actions taken or not taken by it
while it was an Agent under this Agreement.
10.15 AGENT'S FEE.
The Borrower shall pay to the Agent a nonrefundable fee (the "Agent's
Fee") under the terms of a letter (the "Agent's Letter") between the Borrower
and Agent, as amended from time to time.
10.16 AVAILABILITY OF FUNDS.
The Agent may assume that each Bank has made or will make the proceeds of
a Loan available to the Agent unless the Agent shall have been notified by such
Bank on or before the later of (1) the close of Business on the Business Day
preceding the Borrowing Date with respect to such Loan or (2) 24 hours before
the time on which the Agent actually funds the proceeds of such Loan to the
Borrower (whether using its own funds pursuant to this Section 10.16 or using
proceeds deposited with the Agent by the Banks and whether such funding occurs
before or after the time on which Banks are required to deposit the proceeds of
such Loan with the Agent). The Agent may, in reliance upon such assumption (but
shall not be required to), make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank, the Agent shall be entitled to
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recover such amount on demand from such Bank (or, if such Bank fails to pay
such amount forthwith upon such demand from the Borrower) together with
interest thereon, in respect of each day during the period commencing on the
date such amount was made available to the Borrower and ending on the date the
Agent recovers such amount, at a rate per annum equal to the applicable
interest rate in respect of the Loan.
10.17 CALCULATIONS.
In the absence of gross negligence or willful misconduct, the Agent shall
not be liable for any error in computing the amount payable to any Bank whether
in respect of the Loans, fees or any other amounts due to the Banks under this
Agreement. In the event an error in computing any amount payable to any Bank is
made, the Agent, the Borrower and each affected Bank shall, forthwith upon
discovery of such error, make such adjustments as shall be required to correct
such error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate.
10.18 BENEFICIARIES.
Except as expressly provided herein, the provisions of this Section 10 are
solely for the benefit of the Agent and the Banks, and the Loan Parties shall
not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any of the Loan Parties.
11. MISCELLANEOUS
11.1 MODIFICATIONS, AMENDMENTS OR WAIVERS.
With the written consent of the Required Banks, the Agent, acting on
behalf of all the Banks, and the Borrower, on behalf of the Loan Parties, may
from time to time enter into written agreements amending or changing any
provision of this Agreement or any other Loan Document or the rights of the
Banks or the Loan Parties hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the Obligations of the
Loan Parties hereunder or thereunder. Any such agreement, waiver or consent
made with such written consent shall be effective to bind all the Banks and the
Loan Parties; provided, that, without the written consent of all the Banks, no
such agreement, waiver or consent may be made which will:
11.1.1 INCREASE OF COMMITMENT; EXTENSION OR EXPIRATION DATE.
Increase the amount of the Commitment of any Bank hereunder or extend
the Expiration Date;
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11.1.2 EXTENSION OF PAYMENT; REDUCTION OF PRINCIPAL INTEREST OR FEES;
MODIFICATION OF TERMS OF PAYMENT.
Whether or not any Loans are outstanding, extend the time for payment
of principal or interest of any Loan (excluding the due date of any mandatory
prepayment of a Loan or any mandatory Commitment reduction in connection with
such a mandatory repayment hereunder except for mandatory reductions of the
Commitments on the Expiration Date), the Commitment Fee or any other fee
payable to any Bank, or reduce the principal amount of or the rate of interest
borne by any Loan or reduce the Commitment Fee or any other fee payable to any
Bank, or otherwise affect the terms of payment of the principal of or interest
of any Loan, the Commitment Fee or any other fee payable to any Bank;
11.1.3 RELEASE OF COLLATERAL OR GUARANTOR.
Except for sales of assets permitted by Section 8.2.7, release any
Collateral, any Guarantor from its Obligations under the Guaranty Agreement or
any other security for any of the Loan Parties' Obligations; or
11.1.4 MISCELLANEOUS
Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6 [Exculpatory
Provisions, etc.] or 10.13 [Equalization of Banks] or this Section 11.1, alter
any provision regarding the pro rata treatment of the Banks, change the
definition of Borrowing Base or Required Banks, approve an acquisition of the
ownership interest of another Person or substantially all of the assets of
another Person or of a business or division of another Person which does not
constitute a Permitted Acquisition, or change any requirement providing for the
Banks or the Required Banks to authorize the taking of any action hereunder;
provided, further, that no agreement, waiver or consent which would modify
the interests, rights or obligations of the Agent in its capacity as Agent or
as the issuer of Letters of Credit shall be effective without the written
consent of the Agent
11.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.
No course of dealing and no delay or failure of the Agent or any Bank in
exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power,
remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege. The rights and remedies of the Agent and the
Banks under this Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have. Any
waiver, permit, consent or approval of any kind or character on the part of any
Bank of any breach or default under this Agreement or
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any such waiver of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in
such writing.
11.3 REIMBURSEMENT AND INDEMNIFICATION OF BANKS BY THE BORROWER; TAXES.
The Borrower agrees unconditionally upon demand to pay or reimburse to
each Bank (other than the Agent, as to which the Borrower's Obligations are set
forth in Section 10.5) and to save such Bank harmless against (i) liability for
the payment of all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel (including allocated costs of staff
counsel) for each Bank), incurred by such Bank (a) in connection with the
enforcement of this Agreement or any other Loan Document, or collection of
amounts due hereunder or thereunder or the proof and allowability of any claim
arising under this Agreement or any other Loan Document, whether in bankruptcy
or receivership proceedings or otherwise, and (b) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against such Bank, in its capacity as such, in any way relating to or arising
out of this Agreement or any other Loan Documents or any action taken or
omitted by such Bank hereunder or thereunder, provided that the Borrower shall
not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(A) if the same results from such Bank's gross negligence or willful
misconduct, or (B) if the Borrower was not given notice of the subject claim
and the opportunity to participate in the defense thereof, at its expense
(except that the Borrower shall remain liable to the extent such failure to
give notice does not result in a loss to the Borrower), or (C) if the same
results from a compromise or settlement agreement entered into without the
consent of the Borrower, which shall not be unreasonably withheld. The Banks
will attempt to minimize the fees and expenses of legal counsel for the Banks
which are subject to reimbursement by the Borrower hereunder by considering the
usage of one law firm to represent the Banks and the Agent if appropriate under
the circumstances. The Borrower agrees unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the Agent or any Bank to be payable in
connection with this Agreement or any other Loan Document, and the Borrower
agrees unconditionally to save the Agent and the Banks harmless from and
against any and all present or future claims, liabilities or losses with
respect to or resulting from any omission to pay or delay in paying any such
taxes, fees or impositions.
11.4 HOLIDAYS.
Whenever payment of a Loan to be made or taken hereunder shall be due on a
day which is not a Business Day such payment shall be due on the next Business
Day and such extension of time shall be included in computing interest and fee,
except that the Loans shall be due on the Business Day preceding the Expiration
Date if the Expiration Date is not a Business
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Day. Whenever any payment or action to be made or taken hereunder (other than
payment of the Loans) shall be stated to be due on a day which is not a
Business Day, such payment or action shall be made or taken on the next
following Business Day (except as provided in Section 4.2 with respect to
Interest Periods under the Euro-Rate Option), and such extension of time shall
not be included in computing interest or fees, if any, in connection with such
payment or action.
11.5 FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.
11.5.1 NOTIONAL FUNDING.
Each Bank shall have the right from time to time, without notice to
the Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 11.5 shall mean any corporation or association which
is directly or indirectly controlled by or is under direct or indirect common
control with any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or funded any Loan to
which the Euro-Rate Option applies at any time, provided that immediately
following (on the assumption that a payment were then due from the Borrower to
such other office), and as a result of such change, the Borrower would not be
under any greater financial obligation pursuant to Section 5.6 than it would
have been in the absence of such change. Notional funding offices may be
selected by each Bank without regard to such Bank's actual methods of making,
maintaining or funding the Loans or any sources of funding actually used by or
available to such Bank.
11.5.2 ACTUAL FUNDING.
Each Bank shall have the right from time to time to make or maintain
any Loan by arranging for a branch, Subsidiary or Affiliate of such Bank to
make or maintain such Loan subject to the last sentence of this Section 11.5.2.
If any Bank causes a branch, Subsidiary or Affiliate to make or maintain any
part of the Loans hereunder, all terms and conditions of this Agreement shall,
except where the context clearly requires otherwise, be applicable to such part
of the Loans to the same extent as if such Loans were made or maintained by
such Bank, but in no event shall any Bank's use of such a branch, Subsidiary or
Affiliate to make or maintain any part of the Loans hereunder cause such Bank
or such branch, Subsidiary or Affiliate to incur any cost or expenses payable
by the Borrower hereunder or require the Borrower to pay any other compensation
to any Bank (including any expenses incurred or payable pursuant to Section
5.6) which would otherwise not be incurred.
11.6 NOTICES.
All notices, requests, demands, directions and other communications (as
used in this Section 11.6, collectively referred to as "Notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
under
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their respective names on Schedule 1.1(B) hereof or in accordance with any
subsequent unrevoked written direction from any party to the others. All
Notices shall, except as otherwise expressly herein provided, be effective (a)
in the case of telex or facsimile, when received, (b) in the case of
hand-delivered Notice, when hand-delivered, (c) in the case of telephone, when
telephoned, provided, however, that in order to be effective, telephonic
Notices must be confirmed in writing no later than the next day by letter,
facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mail with first-class postage prepaid, return
receipt requested, and (e) if given by any other means (including by air
courier), when delivered; provided, that Notices to the Agent shall not be
effective until received. Any Bank giving any Notice to any Loan Party shall
simultaneously send a copy thereof to the Agent, and the Agent shall promptly
notify the other Banks of the receipt by it of any such Notice.
11.7 SEVERABILITY.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
11.8 GOVERNING LAW.
Each Letter of Credit and Section 2.9 shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, as the same may be revised or amended
from time to time, and to the extent not inconsistent therewith, the internal
laws of the Commonwealth of Pennsylvania without regard to its conflict of laws
principles and the balance of this Agreement shall be deemed to be a contract
under the Laws of the Commonwealth of Pennsylvania and for all purposes shall
be governed by and construed and enforced in accordance with the internal laws
of the Commonwealth of Pennsylvania without regard to its conflict of laws
principles.
11.9 PRIOR UNDERSTANDING.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
11.10 DURATION; SURVIVAL.
All representations and warranties of the Loan Parties contained herein or
made in connection herewith shall survive the making of Loans and issuance of
Letters of Credit and shall not be waived by the execution and delivery of this
Agreement, any investigation by the Agent or the Banks, the making of Loans,
issuance of Letters of Credit, or payment in full of the
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Loans. All covenants and agreements of the Loan Parties contained in Sections
8.1, 8.2 and 8.3 herein shall continue in full force and effect from and after
the date hereof so long as the Borrower may borrow or request Letters of Credit
hereunder and until termination of the Commitments and payment in full of the
Loans and expiration or termination of all Letters of Credit. All covenants and
agreements of the Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Section 5 and Sections
10.5, 10.7 and 11.3, shall survive payment in full of the Loans, expiration or
termination of the Letters of Credit and termination of the Commitments.
11.11 SUCCESSORS AND ASSIGNS.
(i) This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agent, the Loan Parties and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights and Obligations hereunder or any interest herein.
Each Bank may, at its own cost, make assignments of or sell participations in
all or any part of its Commitment and the Loans made by it to one or more banks
or other entities, subject to the consent of the Borrower and the Agent with
respect to any assignee, such consent not to be unreasonably withheld, provided
that (1) no consent of the Borrower shall be required in the case of an
assignment by a Bank to an Affiliate of such Bank, and (2) assignments may not
be made in amounts less than $5,000,000. In the case of an assignment, upon
receipt by the Agent of the Assignment and Assumption Agreement, the assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it had
been a signatory Bank hereunder, the Commitments shall be adjusted accordingly,
and the Assignor shall be relieved from all obligations and liabilities which
accrue after the Assignment and based upon the Commitment and related rights
assigned to the Assignee. Upon surrender of any Note subject to such
assignment, the Borrower shall execute and deliver a new Note to the assignee
in an amount equal to the amount of the Commitment assumed by it and a new Note
to the assigning Bank in an amount equal to the Commitment retained by it
hereunder. The assigning Bank shall pay to the Agent a service fee in the
amount of $3,000 for each assignment. In the case of a participation, the
participant shall only have the rights specified in Section 9.2.3 (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 11.1.1, 11.1.2, or
11.1.3, all of such Bank's obligations under this Agreement or any other Loan
Document shall remain unchanged, and all amounts payable by any Loan Party
hereunder or thereunder shall be determined as if such Bank had not sold such
participation.
(ii) Any assignee or participant which is not incorporated
under the Laws of the United States of America or a state thereof shall deliver
to the Borrower and the Agent the form of certificate described in Section
11.17 relating to federal income tax withholding. Each Bank may furnish any
publicly available information concerning any Loan
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Party or its Subsidiaries and any other information concerning any Loan Party
or its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 11.12.
(iii) Notwithstanding any other provision in this Agreement,
any Bank may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement, its Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or
consent of the Borrower or the Agent. No such pledge or grant of a security
interest shall release the transferor Bank of its obligations hereunder or
under any other Loan Document.
11.12 CONFIDENTIALITY.
The Agent and the Banks each agree to keep confidential all information
obtained from any Loan Party or its Subsidiaries which is nonpublic and
confidential or proprietary in nature (including any information the Borrower
specifically designates as confidential), except as provided below, and to use
such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. The Agent and the Banks
shall be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information
in connection with the administration and enforcement of this Agreement,
subject to agreement of such Persons to maintain the confidentiality, (ii) to
assignees and participants as contemplated by Section 11.11, (iii) to the
extent requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising
out of the transactions contemplated by this Agreement, (iv) if it becomes
publicly available other than as a result of a breach of this Agreement or
becomes available from a source not known to be subject to confidentiality
restrictions, or (v) if the Borrower shall have consented to such disclosure.
11.13 COUNTERPARTS.
This Agreement may be executed by different parties hereto on any number
of separate counterparts, each of which, when so executed and delivered, shall
be an original, and all such counterparts shall together constitute one and the
same instrument.
11.14 AGENT'S OR BANK'S CONSENT.
Whenever the Agent's or any Bank's consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to any
action, inaction, condition or event, the Agent and each Bank shall be
authorized to give or withhold such consent in its sole and absolute discretion
and to condition its consent upon the giving of additional collateral, the
payment of money or any other matter.
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100
11.15 EXCEPTIONS.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH
LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST
IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
11.17 TAX WITHHOLDING CLAUSE.
Each Bank or assignee or participant of a Bank that is not incorporated
under the Laws of the United States of America or a state thereof agrees that
it will deliver to each of the Borrower and the Agent two (2) duly completed
copies of the following: (i) Internal Revenue Service Form W-9, 4224 or 1001,
or other applicable form prescribed by the Internal Revenue Service, certifying
that such Bank, assignee or participant is entitled to receive payments under
this Agreement and the other Loan Documents without deduction or withholding of
any United States federal income taxes, or is subject to such tax at a reduced
rate under an applicable tax treaty, or (ii) Internal Revenue Service Form W-8
or other applicable form or a certificate of such Bank, assignee or participant
indicating that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank, assignee or participant required to deliver to the
Borrower and the Agent a form or certificate pursuant to the preceding sentence
shall deliver such form or certificate as follows: (A) each Bank which is a
party hereto on the Closing Date shall deliver such form or certificate at
least five (5) Business Days prior to the first date on which any interest or
fees are payable by the Borrower hereunder for the account of such Bank; (B)
each assignee or
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101
participant shall deliver such form or certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Agent in its sole discretion shall permit such assignee or participant to
deliver such form or certificate less than five (5) Business Days before such
date in which case it shall be due on the date specified by the Agent). Each
Bank, assignee or participant which so delivers a Form W-8, W-9, 4224 or 1001
further undertakes to deliver to each of the Borrower and the Agent two (2)
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that such Bank,
assignee or participant is entitled to receive payments under this Agreement
and the other Loan Documents without deduction or withholding of any United
States federal income taxes or is subject to such tax at a reduced rate under
an applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established
pursuant to the above provisions.
11.18 JOINDER OF GUARANTORS.
Any Subsidiary of the Borrower which is required to join this Agreement as
a Guarantor pursuant to Section 8.2.6 or Section 8.2.9 shall execute and
deliver to the Agent (i) a Guarantor Joinder in substantially the form attached
hereto as Exhibit 1.1(G)(1) pursuant to which it shall join as a Guarantor each
of the documents to which the Guarantors are parties; (ii) documents in the
forms described in Section 7.1 [First Loans] modified as appropriate to relate
to such Subsidiary; and (iii) documents necessary to grant and perfect Prior
Security Interests to the Agent for the benefit of the Banks in all assets held
by such Subsidiary and in the stock or other ownership interests of such
Subsidiary. The Loan Parties shall deliver such Guarantor Joinder and related
documents to the Agent within five (5) Business Days after the date of the
acquisition of the Subsidiary or the date of the filing of such Subsidiary's
articles of incorporation if the Subsidiary is a corporation, the date of the
filing of its certificate of limited partnership if it is a limited partnership
or the date of its organization if it is an entity other than a limited
partnership or corporation.
[SIGNATURES APPEAR ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: RENT-WAY, INC., "Borrower"
____________________________ By: ________________________________
Title: _____________________________
NATIONAL CITY BANK OF
PENNSYLVANIA, individually and as
Agent
By: ________________________________
Title: _____________________________
LASALLE NATIONAL BANK
By: ________________________________
Title: _____________________________
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▇▇▇▇▇▇ TRUST & SAVINGS BANK
By: ________________________________
Title: _____________________________
▇▇▇▇▇▇ FINANCIAL, INC.
By: ________________________________
Title: _____________________________
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SCHEDULE 1.1(B) - 2 SCHEDULE 1.1(B)COMMITMENTS OF BANKS
AND ADDRESSES FOR NOTICES
Page 1 of 2
PART 1 - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES TO BANKS
AMOUNT OF COMMITMENT FOR
BANK REVOLVING CREDIT LOANS RATABLE SHARE
---- ---------------------- -------------
Name: National City Bank of
Pennsylvania
Address: __________________
Attention: ________________
Telephone: (__) ___-_______ $20,000,000 __________%
Telecopy: (__) ___-_______
Name: _____________________
Address: __________________
Attention: ________________
Telephone: (__) ___-_______
Telecopy: (__) ___-_______ $__________ __________%
Name: _____________________
Address: __________________
Attention: ________________
Telephone: (__) ___-_______
Telecopy: (__) ___-_______ $__________ __________%
Total $ %
===========
SCHEDULE 1.1(B)
105
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 2 of 2
PART 2 - ADDRESSES FOR NOTICES TO BORROWER AND GUARANTORS:
AGENT
Name: _____________________
Address: __________________
Attention: ________________
Telephone: (__) ___-_______
Telecopy: (__) ___-_______
BORROWER:
Name: _____________________
Address: __________________
Attention: ________________
Telephone: (__) ___-_______
Telecopy: (__) ___-_______
GUARANTORS:
Name: _____________________
Address: __________________
Attention: ________________
Telephone: (__) ___-_______
Telecopy: (__) ___-_______
[REPEAT FOR EACH GUARANTOR]
SCHEDULE 1.1(B) - 2