Exhibit 10.1
LOAN AND SECURITY AGREEMENT
MADE BETWEEN
NATIONAL R.V. HOLDINGS, INC.,
NATIONAL R.V., INC.
AND
COUNTRY COACH, INC.,
AS CO-BORROWERS
AND
UPS CAPITAL CORPORATION,
AS LENDER
CLOSING DATE: AUGUST 28, 2002
TABLE OF CONTENTS
PAGE
1. DEFINITIONS, TERMS AND REFERENCES.........................................1
1.1. Certain Definitions..............................................1
1.2. Use of Defined Terms.............................................8
1.3. Accounting Terms.................................................8
1.4. UCC Terms........................................................8
2. THE FINANCING.............................................................8
2.1. Extensions of Credit.............................................8
2.1.1. Line of Credit..........................................8
2.1.2. Letters of Credit.......................................9
2.2. Interest and Other Charges......................................10
2.2.1. Interest...............................................10
2.2.2. Fees...................................................11
2.2.3. Usury Savings Provisions...............................12
2.3. General Provisions as to Payments...............................12
2.3.1. Method of Payment......................................12
2.3.2. Application of Payment.................................12
2.3.3. Crediting of Payments..................................13
3. SECURITY INTEREST........................................................13
3.1. Grant of Security Interest......................................13
3.2. Representations, Warranties and Covenants Applicable
to Collateral................................................13
3.2.1. Good Title.............................................13
3.2.2. Right to Pledge........................................13
3.2.3. Sale of Collateral.....................................13
3.2.4. Insurance..............................................14
3.2.5. Location...............................................14
3.2.6. Further Assurances.....................................14
4. GENERAL REPRESENTATIONS AND WARRANTIES...................................14
4.1. Existence and Qualification.....................................14
4.2. Authority; and Validity and Binding Effect......................15
4.3. Incumbency and Authority of Signing Officers....................15
4.4. No Material Litigation..........................................15
4.5. Taxes...........................................................15
4.6. Capital.........................................................15
4.7. Organization....................................................15
4.8. No Insolvency...................................................15
4.9. No Violations...................................................15
4.10. Financial Statements............................................15
4.11. Compliance with Laws............................................16
4.12. Subsidiaries....................................................16
4.13. Federal Taxpayer Identification Number..........................16
5. AFFIRMATIVE COVENANTS....................................................16
5.1. Records Respecting Collateral...................................16
5.2. Right to Inspect and Conduct Audits.............................16
5.3. Borrowing Base Certificates.....................................16
5.4. Collateral Status Certificates..................................16
5.5. Periodic Financial Statements...................................17
5.6. Annual Financial Statements.....................................17
5.7. Compliance Certificate..........................................17
5.8. Payment of Taxes................................................17
5.9. Change of Principal Place of Business, Etc......................17
5.10. Waivers.........................................................17
5.11. Preservation of Existence.......................................17
5.12. Compliance With Laws............................................17
5.13. Certain Required Notices........................................18
5.14. Inventory Appraisals............................................18
5.15. Compensation....................................................18
6. NEGATIVE COVENANTS.......................................................18
6.1. Encumbrances....................................................18
6.2. Debt............................................................18
6.3. Contingent Liabilities..........................................18
6.4. Redemption......................................................18
6.5. Investments.....................................................18
6.6. Mergers.........................................................19
6.7. Business Locations..............................................19
6.8. Affiliate Transactions..........................................19
6.9. Subsidiaries....................................................19
6.10. Fiscal Year.....................................................19
6.11. Disposition of Assets...........................................19
6.12. Federal Taxpayer Identification Number..........................19
6.13. Subordinated Debt...............................................19
6.14. Restrictions on Subsidiaries....................................19
6.15. Different Business..............................................19
7. FINANCIAL COVENANTS......................................................19
7.1. Minimum Tangible Net Worth......................................19
7.2. Capital Expenditures............................................20
8. EVENTS OF DEFAULT........................................................20
8.1. Obligations.....................................................20
8.2. Misrepresentations..............................................20
8.3. Certain Covenants...............................................20
8.4. Other Covenants.................................................20
8.5. Other Debts.....................................................20
8.6. Voluntary Bankruptcy............................................20
8.7. Involuntary Bankruptcy..........................................21
8.8. Damage, Loss, Theft or Destruction of Collateral................21
8.9. Judgments.......................................................21
8.10. Disavowal of Certain Obligations................................21
8.11. Material Adverse Change.........................................21
8.12. Change of Control, Etc..........................................21
8.13. Change in Management, Etc.......................................21
9. REMEDIES.................................................................21
9.1. Acceleration of the Obligations.................................22
9.2. Default.........................................................22
9.3. Remedies of a Secured Party.....................................22
9.4. Repossession of the Collateral..................................22
9.5. Direct Notification.............................................22
9.6. Other Remedies..................................................22
10. MISCELLANEOUS............................................................22
10.1. Waiver..........................................................23
10.2. GOVERNING LAW...................................................23
10.3. Survival........................................................23
10.4. Assignments.....................................................23
10.5. Counterparts....................................................23
10.6. Reimbursement...................................................23
10.7. Successors and Assigns..........................................23
10.8. Severability....................................................23
10.9. Notices.........................................................24
10.10. Entire Agreement; Amendments....................................24
10.11. Time of Essence.................................................24
10.12. Interpretation..................................................24
10.13. Lender Not a Joint Venturer.....................................24
10.14. JURISDICTION....................................................24
10.15. ACCEPTANCE......................................................24
10.16. Payment on Non-Business Days....................................24
10.17. Cure of Defaults by Lender......................................24
10.18. Attorney-in-Fact................................................24
10.19. Sole Benefit....................................................25
10.20. Indemnification.................................................25
10.21. JURY TRIAL WAIVER...............................................25
10.22. Terminology.....................................................25
10.23. Publicity.......................................................25
10.24. Counterclaims...................................................26
10.25. TM Services.....................................................26
11. CONDITIONS PRECEDENT.....................................................26
11.1. Loan Documents..................................................26
11.2. No Default......................................................27
11.3. No Material Change..............................................27
LOAN AND SECURITY AGREEMENT
PREAMBLE. THIS LOAN AND SECURITY AGREEMENT (as it may be amended or
modified from time to time, and together with all Schedules, Riders and Exhibits
attached hereto, called herein this "Agreement") is made by UPS CAPITAL
CORPORATION, a Delaware corporation ("Lender"), with NATIONAL R.V. HOLDINGS,
INC., a Delaware corporation ("Holdings"); NATIONAL R.V., INC., a California
corporation ("NRV"); and COUNTRY COACH, INC., an Oregon corporation ("CCI")
(each, and all, as more particularly defined below, "Borrower") as of the
"Closing Date" specified below (the "Closing Date"), for the purpose of
evidencing the terms and conditions on which Lender will extend certain
financing accommodations to Borrower, as described more particularly below.
Holdings is the sole shareholder and parent company of NRV and CCI. Holdings,
NRV and CCI are engaged in a common business enterprise in which extensions of
credit to any one of them will result in direct and indirect substantive
economic benefit to each of them. Accordingly, Holdings, NRV and CCI have
applied jointly to Lender for credit extensions in the form of a revolving line
of credit, accessible by each, and secured by liens on all, or substantially
all, assets and properties of each (excluding real property, on which a negative
pledge is being issued to Lender's benefit). NRV and CCI have authorized and
directed Holdings to act as their agent (and as agent for itself) hereunder, and
Holdings has accepted such appointment. As used herein, "Borrower Agent" shall
mean and refer to Holdings acting in such agency capacity. Any actions by
Holdings as Borrower Agent shall bind itself and each of NRV and CCI. Further,
as used herein, "Borrower" shall mean and refer to each of Holdings, NRV and
CCI, jointly and severally, and to all of them, collectively, as the context
shall require or suggest.
NOW, THEREFORE, to induce Lender to extend the financing provided for
herein, and for other good and valuable consideration, the sufficiency and
receipt of which are mutually acknowledged, Borrower agrees with Lender as
follows:
1. DEFINITIONS, TERMS AND REFERENCES
1.1. Certain Definitions. In addition to such other terms as elsewhere
defined herein, as used in this Agreement and in any
Exhibit or Schedule attached hereto, the following terms shall have the
following meanings:
"Accounts Receivable Collateral" shall mean and include all of
Borrower's accounts, accounts receivable, contract rights, instruments,
investment property, chattel paper and payment intangibles, including, without
limitation, all rights of Borrower to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered, howsoever
evidenced or incurred, together with all letters of credit, letter of credit
rights and supporting obligations, all returned or repossessed goods and all
books, records, computer tapes, software, programs and ledger books arising
therefrom or relating thereto, all whether now owned or hereafter acquired and
howsoever arising.
"Account Debtor" shall mean any Person who is obligated on any of the
Accounts Receivable Collateral or otherwise is obligated as a purchaser or
lessee of any of the Inventory Collateral.
"Advances" shall mean advances of borrowed funds made by Lender to
Borrower under the Line of Credit.
"Affiliate" shall mean, with respect to any Person, any Subsidiary,
Controlling shareholder, director or officer of such Person.
"Agreement" - see Preamble.
"Applicable Margin" shall have the meaning given to such term in
Section 2.2.1.
"Applicable Rate" shall have the meaning given to such term in Section
2.2.1.
"Assignment of Claims Act" shall mean the federal Assignment of Claims
Act of 1940, as it may be amended from time to time; together with all
regulations promulgated from time to time in respect thereof.
"Balances Collateral" shall mean all deposit accounts together with all
cash or other property of Borrower which may be left with Lender or in Lender's
possession, custody or control now or at any time hereafter, including any
escrow deposits, security deposits or ▇▇▇▇▇▇▇ money. The foregoing term shall
include funds from time to time on deposit in any Concentration Account.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as it
may be amended from time to time.
"Blocked Account Agreement" shall have the meaning given to such term
in Section 2.3.4.
"Booked Cost," in respect of Inventory Collateral, shall mean the
inventory cost accounting method employed by Borrower as of the Closing Date.
"Borrower" -- see Preamble.
"Borrower Agent" -- see Preamble.
"Borrower Information Schedule" -- see Schedule "A" annexed hereto.
"Borrowing Base" shall mean a sum determined by Lender, in its credit
judgment, from time to time, equal to: (i) up to eighty-five percent (85%) of
the net dollar amount of Eligible Accounts as at the date of determination; plus
(ii) up to fifty percent (50%) of the dollar amount of the Eligible Inventory,
valued at the lower of its Booked Cost or market value, at the date of
determination, not to exceed, in any event, as to Eligible Inventory, the lesser
of (A) Seven Million Five Hundred Thousand Dollars ($7,500,000), or (B) then
current borrowing availability under the Line of Credit determined by reference
to Eligible Accounts under clause (i) above without regard to Eligible
Inventory; minus (iii) an ongoing availability reserve of Four Million Five
Hundred Thousand Dollars ($4,500,000), at all times; minus (iv) Other Reserves.
"Borrowing Base Certificate" shall mean a certificate, in form and
substance satisfactory to Lender, submitted by Borrower to Lender demonstrating
compliance with the Borrowing Base Requirement, as provided in Section 5.3.
"Borrowing Base Requirement" shall have the meaning ascribed to such
term in Section 2.1.1.
"Borrowings" shall mean total Advances outstanding from time to time.
"Business Day" shall mean a day on which Lender is open for the conduct
of its business at its principal office in Atlanta, Georgia.
"CCI" -- see Preamble.
"Clearing Bank" shall have the meaning given to such term in Section
2.3.4.
"Closing Date" shall mean the date specified in the signature page of
this Agreement as the Closing Date.
"Collateral" shall mean the property, or interests in property, of
Borrower described as such in Article 3, plus any other property, or interests
in property, of Borrower in which Lender has, or hereafter obtains or claims, a
Lien as security for the payment of the Obligations.
"Collateral Location" shall mean the Executive Office and each
additional location, if any, set forth and described as such on the Borrower
Information Schedule.
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"Collateral Status Certificate" shall mean a certificate, attached
hereto, submitted by Borrower, reflecting the status of the Collateral, as
provided in Section 5.4.
"Collection Days" shall mean two (2) days.
"Compliance Certificate" shall mean a certificate, in form and
substance satisfactory to Lender issued by a duly authorized officer of
Borrower, confirming Borrower's continuing compliance with this Agreement, as
provided in Section 5.7.
"Concentration Account" shall have the meaning given to such term in
Section 2.3.4.
"Consolidated Subsidiaries" shall mean those Subsidiaries of Borrower
(if any) existing from time to time which, for purposes of GAAP, are required to
be consolidated for financial reporting purposes.
"Control," "Controlled" or "Controlling" shall mean, with respect to
any Person, the power to direct the management and policies of such Person,
directly, indirectly, whether through the ownership of voting securities or
otherwise.
"Debt" means all liabilities, obligations and indebtedness of a Person,
of any kind or nature, whether now or hereafter owing, arising, due or payable,
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise, and whether initiated,
assumed or acquired by such Person.
"Default Condition" shall mean the occurrence of any event which, after
satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
"Default Rate" shall mean that interest rate per annum equal to two
percent (2%) per annum in excess of the otherwise Applicable Rate payable on any
Obligation.
"Dollars" or "$" shall mean United States Dollars.
"Eligible Accounts" shall mean that portion of Borrower's Accounts
Receivable Collateral consisting of trade accounts receivable actually billed
to, and owing to Borrower by, its Account Debtors in the ordinary course of its
business, which Lender, in its credit judgment, has determined to be eligible
for credit extensions hereunder excluding, however, in any event, unless
otherwise approved by Lender, in its credit judgment, any such account: (i) with
respect to which any portion thereof is more than ninety (90) days past invoice
date; (ii) which is owing by any Affiliate of Borrower; (iii) which is owing by
any Account Debtor having twenty-five percent (25%) or more in face value of its
then existing accounts with Borrower ineligible hereunder pursuant to the
operation and effect of clause (i) above; (iv) which arises from any contract on
which Borrower's performance is assured by a performance, completion or other
bond; (v) constituting retainage which has been withheld from Borrower pending
contract completion, to the extent thereof; (vi) constituting a service,
warranty or similar charge, to the extent thereof; (vii) which is evidenced by a
promissory note, other instrument or chattel paper; (viii) which represents an
accord and satisfaction in respect of any prior account receivable; (ix) the
assignment of which is subject to any requirements set forth in the Assignment
of Claims Act (unless and except to the extent that Borrower has complied
therewith to Lender's satisfaction); (x) which does not conform in any respect
to the warranties and representations set forth in the Loan Documents in respect
of Accounts Receivable Collateral; (xi) which is owing by any Account Debtor
(excepting, however, Lazydays RV) whose accounts in face amount with Borrower
exceed ten percent (10%) of Borrower's Eligible Accounts, but only to the extent
of such excess; (xii) which is owing by, billed to or paid by any Account Debtor
not located in the United States of America (unless and except to the extent
that it is backed by a letter of credit issued to Borrower as beneficiary by or
through a bank headquartered in the United States which is acceptable to
Lender); (xiii) as to which a duly perfected, first priority security interest
does not exist at any time in favor of Lender; (xiv) as to which any
counterclaim, defense, setoff, deduction or contra-account exists, to the extent
thereof; or (xv) which has otherwise been determined by Lender in its credit
judgment not to be an "Eligible Account" for purposes hereof.
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"Eligible Inventory" shall mean that portion of the Inventory
Collateral consisting of (A) raw materials, (B) chassis and (C) new, saleable
finished goods inventory of Borrower which Lender, in its credit judgment, has
determined to be eligible for credit extensions hereunder, excluding, however,
in any event, unless otherwise approved by Lender, in its credit judgment, any
such inventory which (i) is not at all times subject to a duly perfected, first
priority security interest in favor of Lender; (ii) is not in good and saleable
condition; (iii) is on consignment from, or is subject to any purchase money
security interest in favor of, any supplier (unless and except to the extent
that an Other Reserve has been imposed in respect of, and in the amount of, such
supplier's claim); (iv) constitutes returned, repurchased, repossessed, damaged
or slow-moving goods (inventory that is more than twelve (12) months old); (v)
does not conform in all respects to the warranties and representations set forth
in the Loan Documents in respect of Inventory Collateral; (vi) is subject to a
negotiable document of title (unless issued or endorsed to Lender); (vii) is
subject to any license or other agreement that limits or restricts Borrower's or
Lender's right to sell or otherwise dispose of such inventory; (viii) is located
at a Collateral Location with respect to which, if leased by Borrower, Lender
has not received from the landlord at such location a Landlord's Agreement; and
(ix) has otherwise been determined by Lender in its credit judgment to be
excluded from "Eligible Inventory" for purposes hereof.
"Equipment Collateral" shall mean all equipment and fixtures of
Borrower, whether now owned or hereafter acquired, wherever located, including,
without limitation, all machinery, furniture, furnishings, leasehold
improvements, computer hardware, motor vehicles, forklifts, rolling stock, dies
and tools, used or useful in Borrower's business operations.
"Equity Interests" shall mean all capital stock, warrants and other
securities evidencing ownership of equity interests in a Person. In the case of
(i) a partnership, the foregoing includes partnership interests or shares; and
(ii) a limited liability company, the foregoing includes members' interests or
shares.
"Event of Default" shall mean any of the events or conditions described
in Article 8, provided that any requirement for the giving of notice or the
lapse of time, or both, has been satisfied.
"Executive Office" shall mean the address of Borrower's chief executive
office and principal place of business, as designated on the Borrower
Information Schedule.
"Fiscal Year", in respect of a Person, shall mean the fiscal year of
such Person, as employed by such Person as of the Closing Date, and designated
as such on the Borrower Information Schedule, as to Borrower. The terms "Fiscal
Quarter" and "Fiscal Month" shall correspond accordingly thereto.
"GAAP" shall mean generally accepted accounting principles consistently
applied for the fiscal period(s) in question.
"Gross Uncapped Excess Availability" shall mean a sum determined by
Lender, from time to time, equal to (i) up to eighty-five percent (85%) of the
net dollar amount of Eligible Accounts as at the date of determination; plus
(ii) up to fifty percent (50%) of the dollar amount of Eligible Inventory,
valued at the lower of its Booked Cost or market value, at the date of
determination, minus (iii) the amount of any Other Reserves then in effect
relative to the Borrowing Base.
"Guaranty" shall mean an agreement or other writing executed by a
Guarantor, in form and substance satisfactory to Lender, guaranteeing payment of
any of the Obligations or otherwise giving assurances to Lender in respect
thereof.
"Guarantor" shall mean, individually and collectively, any and all
Persons who either, as of the Closing Date, or thereafter, join in the execution
of any Guaranty.
"Holdings" -- see Preamble.
"Home State" shall mean the State in which Borrower is incorporated or
otherwise organized (if Borrower is not a corporation), as set forth on the
Borrower Information Schedule.
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"Initial Term", in reference to the Line of Credit, shall mean a period
of three (3) years, ending on the third (3rd) anniversary of the Closing Date.
"Insolvent", in respect of a Person, shall mean that (i) such Person is
not able to pay its Debts generally as and when they become due; or (ii) such
Person has an unreasonably small capital with which to operate; or (iii) the
total Debts and other liabilities of such Person, including contingent
liabilities, exceed the fair saleable value of the assets of such Person.
"Intangibles Collateral" shall mean all general intangibles of
Borrower, whether now existing or hereafter acquired or arising, including,
without limitation, all copyrights, royalties, tax refunds, rights to tax
refunds, trademarks, trade names, service marks, patent and proprietary rights,
blueprints, drawings, designs, trade secrets, plans, diagrams, schematics and
assembly and display materials relating thereto, all customer lists, all books
and records, all computer software and programs, and all rights of Borrower as
purchaser, lessee, licensee or indemnitee under any contract.
"Inventory Collateral" shall mean all inventory of Borrower, whether
now owned or hereafter acquired, wherever located, including, without
limitation, all goods of Borrower held for sale or lease or furnished or to be
furnished under contracts of service, all goods held for display or
demonstration, goods on lease or consignment, spare parts, repair parts,
returned and repossessed goods, all raw materials, work-in-process, finished
goods, catalysts and supplies used or consumed in Borrower's business, together
with all documents, documents of title, dock warrants, dock receipts, warehouse
receipts, bills of lading or orders for the delivery of all, or any portion, of
the foregoing, and any letters of credit issued in respect thereof, and all
letter of credit rights arising therefrom.
"IP Security Agreements" shall mean, individually or collectively, as
applicable, in form and substance satisfactory to Lender, (i) a security
agreement for Trademarks, and/or (ii) a security agreement for Patents; each to
be executed by Borrower in favor of Lender on the Closing Date.
"Landlord's Agreement" shall mean an agreement from the landlord (or
any warehouse operator, as the case may be), of any Collateral Location pursuant
to which such landlord (or warehouse operator) has waived, released or
subordinated in favor of Lender any rights it has in respect of the Collateral.
"Lender" - see Preamble.
"Letter of Credit" shall have the mean given to such term in Section
2.1.2.
"LIBOR" shall mean the interest rate published under the "Money Rates"
section of The Wall Street Journal (on each date on which LIBOR is to be
determined in accordance with this definition) as the one-month London Interbank
Offered Rate (LIBOR) on such day. If The Wall Street Journal shall cease to
publish such rate (or itself to be published) then "LIBOR" shall be determined
by such comparable method as Lender shall select. For purposes of this
Agreement, the Applicable Rate determined by reference to LIBOR shall be
determined by Lender initially on the Closing Date based on LIBOR on the date
two (2) Business Days prior to the Closing Date and thereafter shall be adjusted
by Lender (if applicable) effective as of the opening of business on the first
Business Day of each calendar month based on LIBOR on the date two (2) Business
Days prior to the first Business Day of each calendar month.
"LIBOR Borrowings" shall mean Borrowings in which the Applicable Rate
payable thereon is determined by reference to LIBOR.
"Lien" shall mean any deed to secure debt, deed of trust, mortgage or
similar instrument, and any lien, security interest, preferential arrangement
which has the practical effect of constituting a security interest, security
title, pledge, charge, encumbrance or servitude of any kind, whether by
consensual agreement or by operation of statute or other law, and whether
voluntary or involuntary, including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof.
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"Line of Credit" shall refer to the line of credit in the Maximum
Amount opened by Lender in favor of Borrower pursuant to the provisions of
Section 2.1.
"Loan Documents" shall mean this Agreement, each Note, any IP Security
Agreements, any financing statements covering portions of the Collateral, and
any and all other documents, instruments, certificates and agreements executed
and/or delivered by Borrower in connection herewith, or any one, more, or all of
the foregoing, as the context shall require.
"Master Note" shall mean a master promissory note in form and substance
satisfactory to Lender, dated of even date herewith, as amended or supplemented
from time to time, in a principal amount equal to the maximum amount of the Line
of Credit, evidencing Advances to be obtained by Borrower under the Line of
Credit, together with any renewals or extensions thereof in whole or in part.
"Material Adverse Change" shall mean with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether occurring singly or in conjunction with any other event or events, act
or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business, properties or prospects of
Holdings and its Consolidated Subsidiaries, taken as a whole, (b) the rights and
remedies of the Lender under any of the Loan Documents or the ability of
Borrower to perform its obligations under any of the Loan Documents, or (c) the
legality, validity or enforceability of any of the Loan Documents.
"Materiality Threshold" shall mean Two Hundred Fifty Thousand Dollars
($250,000).
"Maximum Amount" shall mean the maximum amount which is available for
borrowing under the Line of Credit (determined without regard to the Borrowing
Base Requirement), which, as of the Closing Date, is equal to Fifteen Million
Dollars ($15,000,000).
"Note" shall mean any instrument at any time evidencing all or any
portion of any Obligations, including, particularly, the Master Note.
"Notice of Borrowing" shall mean a notice in form and substance
satisfactory to Lender of intended Borrowing, executed by a duly authorized
officer of Borrower Agent.
"NRV" -- see Preamble.
"Obligations" shall mean any and all Debts of Borrower to Lender (or
any Affiliate of Lender), including, without limiting the generality of the
foregoing, any Debt of Borrower to Lender (or any Affiliate of Lender) under any
loan made to Borrower by Lender prior to the date hereof and any and all
extensions or renewals thereof in whole or in part; any Debt of Borrower to
Lender arising hereunder or as a result hereof, whether evidenced by any Note,
or constituting Advances or otherwise, including all Reimbursement Obligations,
and any and all extensions or renewals thereof in whole or in part; any Debt of
Borrower to Lender (or any Affiliate of Lender) under any later or future
advances or loans made by Lender (or any Affiliate of Lender) to Borrower, and
any and all extensions or renewals thereof in whole or in part; and any and all
future or additional Debts of Borrower to Lender (or any Affiliate of Lender)
whatsoever and in any event, whether existing as of the date hereof or hereafter
arising, whether arising under a loan, lease, credit card arrangement, line of
credit, letter of credit or other type of financing, whether initiated, assumed
or acquired by Lender, and whether direct, indirect, absolute or contingent, as
maker, endorser, guarantor, surety or otherwise, howsoever evidenced.
"Organization Documents" shall mean the formation and governing
documents of a Person, as applicable. In the case of (i) a corporation, the
foregoing shall include its charter and bylaws; (ii) a partnership, the
foregoing shall include its partnership agreement; and (iii) a limited liability
company, the foregoing shall include its operating agreement.
-6-
"Other Reserves" shall mean such reserves against the Borrowing Base
and borrowing availability under the Line of Credit, in addition to the reserve
described in clause (iii) of the definition of Borrowing Base, as Lender may
establish from time to time in its credit judgment.
"Permitted Encumbrances" shall mean: (i) Liens for taxes not yet due
and payable or being actively contested as permitted by this Agreement, but only
if such Liens do not adversely affect Lender's rights or the priority of
Lender's security interest in the Collateral; (ii) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business, payment for which is not yet due or such payment is
being Properly Contested; (iii) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation; (iv)
deposits to secure the performance of utilities, leases, statutory obligations
and surety and appeal bonds and other obligations of a like nature arising by
statute or under customary terms regarding depository relationships on deposits
held by financial institutions with whom Borrower has a banker-customer
relationship; (v) typical restrictions imposed by licenses and leases of
software (including location and transfer restrictions); (vi) Liens in favor of
Lender; (vii) Liens granted by Borrower or any Subsidiary to vendors or
financiers of capital assets i.e., equipment, machinery or real property, to
secure the payment of Purchase Money Debt so long as (A) such Debt is permitted
to be incurred hereunder, (B) such Liens extend only to the specific assets so
purchased, secure only such deferred payment obligation and related interest,
fees and charges and no other Debt, and (C) such Liens are promptly released
upon the payment in full of such Debt, (viii) those Liens if any listed on
Schedule B attached hereto and made a part hereof; (ix) any Lien arising
pursuant to an order of attachment, distraint or similar legal process arising
in connection with legal proceedings, but only if and so long as such proceeding
is being Properly Contested; (x) any Lien existing on real property (but not on
any Collateral) at the time such real property is acquired by Borrower or a
Subsidiary, but only for so long as such Lien is and will remain confined to the
real property subject to such Lien at the time such real property is acquired
and (xi) any Lien constituting a renewal, replacement or extension of a Lien
constituting a Permitted Lien by virtue of clause (vii), (viii), (ix) or (x).
"Permitted Temporary Collateral Locations" has the meaning given to
such term in Section 3.2.5.
"Person" shall mean any individual, partnership, corporation, limited
liability company, joint venture, joint stock company, trust, governmental unit
or other entity.
"Prime Rate" shall mean the interest rate published under the "Money
Rates" section of The Wall Street Journal (on each day on which it is published)
as the "prime rate" on such day, as such rate may change from time to time;
provided, however, that if The Wall Street Journal shall cease to publish such
rate (or itself to be published); then, the "Prime Rate" shall be the highest
among the prime or base rates then publicly announced by Bank of America, N.A.,
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ Bank and Wachovia Bank, N.A. (or their respective
successors-in-interest). For purposes of this Agreement the Applicable Rate
determined by reference to the Prime Rate shall be determined by Lender on each
Business Day based on the Prime Rate on such Business Day and shall be effective
as of the opening of business on such day.
"Prime Rate Borrowings" shall mean Borrowings in which the Applicable
Rate payable thereon is determined by reference to the Prime Rate.
"Properly Contested" shall mean, in respect of any tax or similar claim
the non-payment of which has or may by virtue of any legal proceeding undertaken
in regard thereto give rise to the imposition of a Lien on any property of
Borrower, the contesting of the payment thereof by Borrower (i) in good faith
and by appropriate proceedings, as to which Borrower maintains reasonable
reserves on its books therefor at all pertinent times, (ii) the enforcement or
execution of any such Lien arising therefrom is stayed at all times pending
resolution of such contest, (iii) Borrower pays any amount (with interest and
any penalties, as applicable) determined to be owing upon resolution of such
contest promptly and in any event prior to enforcement or execution of any such
Lien, and (iv) if Lender determines that any such Lien may adversely affect
Lender's rights in or the priority of Lender's security interest in the
Collateral, then, pending resolution of such contest, Lender has imposed
reserves within the Borrowing Base equivalent to the amount in dispute.
"Purchase Money Debt" shall mean Debt incurred by Borrower or any
Subsidiary in connection with the acquisition of capital assets for the cost
thereof (including any for the deferred payment of any purchase price).
-7-
"Reimbursement Obligations" has the meaning given to such term in
Section 2.1.2.
"Securities Collateral" shall mean all securities and investment
property of Borrower, whether now owned or hereafter acquired, including all
Equity Interests owned in any Subsidiary at any time.
"Subordinated Debt" shall mean any Debt owing by Borrower from time to
time which has been subordinated to the Obligations pursuant to a Subordination
Agreement.
"Subordination Agreement" shall mean an agreement in form and substance
satisfactory to Lender between or among Borrower, Lender and any other creditor
of Borrower pursuant to which such other creditor shall agree to subordinate
Debt of Borrower owing to it to the Obligations.
"Subsidiary" shall mean any corporation, partnership, business
association or other entity (including any Subsidiary of any of the foregoing)
of which Borrower owns, directly or indirectly through one or more Subsidiaries,
more than fifty percent (50%) of the capital stock or other Equity Interest
having ordinary power for the election of directors or others performing similar
functions.
"Telephone Instruction Letter" shall mean a letter, dated the Closing
Date, issued by a duly authorized officer of Borrower.
"Termination Date" shall mean the earlier to occur of the following
dates: (i) that date on which, pursuant hereto, Lender terminates the Line of
Credit (or the Line of Credit is deemed automatically terminated) subsequent to
the occurrence of an Event of Default; (ii) the last day of the Initial Term.
"UCC" shall mean the Uniform Commercial Code of Georgia, as in effect
from time to time.
1.2. Use of Defined Terms. All terms defined in this Agreement and the
Exhibits shall have the same defined meanings when used in any other Loan
Documents, unless the context shall require otherwise.
1.3. Accounting Terms. All accounting terms not specifically defined herein
shall have the meanings generally attributed to such terms
under GAAP.
1.4. UCC Terms. Any terms defined in Articles 8 or 9 of the UCC, including
"accounts", "chattel paper", "investment property," "instruments", "general
intangibles", "inventory," "equipment," "fixtures," "securities" and "investment
property" shall have the same meanings given to such terms thereunder as and
when used in the Loan Documents.
2. THE FINANCING.
2.1. Extensions of Credit.
2.1.1. Line of Credit. On the Closing Date, subject to fulfillment of all
conditions precedent set forth herein, Lender agrees to open the Line of Credit
in favor of Borrower so that, during the period from the Closing Date to, but
not including, the Termination Date, so long as there is not in existence any
Event of Default and the requested Borrowing, if made, will not cause an Event
of Default to exist, Borrower may borrow and repay and reborrow Advances under
the Line of Credit; subject, however, to the requirement that at no time shall
the sum of (i) the aggregate principal amount of outstanding Advances under the
Line of Credit plus (ii) the amount available for drawing under each outstanding
Letter of Credit plus (iii) all outstanding Reimbursement Obligations exceed the
lesser of: (A) the Maximum Amount or (B) the Borrowing Base (such requirement
being generally referred to herein as the "Borrowing Base Requirement"); and
subject, further, to the requirement that if, at any time hereafter, the
Borrowing Base Requirement is not satisfied, Borrower will immediately repay the
then principal balance of the Master Note by that amount necessary to satisfy
the Borrowing Base Requirement. All proceeds so obtained under the Line of
Credit shall be used by Borrower to refinance existing Debt or for working
capital in such manner as Borrower may elect in the ordinary course of its
business operations. The Debts arising from Advances made to or on behalf of
Borrower under the Line of Credit shall be evidenced by the Master Note, which
shall be executed by Borrower and delivered to Lender on the Closing Date. The
outstanding principal amount of the Master Note may fluctuate from time to time,
but shall be due and payable in full on the Termination Date, and shall bear
interest from the date of each disbursement of principal until paid in full at
the Applicable Rate, payable in the manner described in Section 2.2.1. Borrower
may request Advances under the Line of Credit by giving to Lender a Notice of
Borrowing not later than 1:00 p.m. (Atlanta, Georgia time) on the date of the
requested Advance; provided, however, that, in accordance with the Telephone
Instruction Letter, Borrower may provide such instructions by telephone,
provided, further, that any such telephone request shall be confirmed in writing
not later than the Business Day following the disbursement of the requested
Advance. The Line of Credit shall terminate on the Termination Date, but may be
terminated earlier by Borrower, upon its giving at least ten (10) days advance
written notice to Lender, subject, however, to Borrower's payment of any early
termination fee then due (if so specified in Section 2.2.2).
-8-
2.1.2. Letters of Credit. Borrower has proposed that the Line of Credit be
utilized from time to time, at Borrower's request, to support the issuance of
one or more letters of credit for the account of Borrower (each, a "Letter of
Credit," and, collectively, "Letters of Credit"), either by Lender's making (or
joining with Borrower in making) application to the issuer(s) of such Letters of
Credit (the "Issuers" or an "Issuer") therefor, or otherwise by Lender's
issuance of a risk participation or similar agreement in favor of the Issuer(s)
in regard thereto (the foregoing herein called, generally, a "Risk Participation
Arrangement"). Lender has agreed to such proposal, subject, however, to the
following terms, covenants and conditions:
(a) Notice. Borrower shall give Lender at least five (5) Business Days
advance written notice of Borrower's request that Lender enter into a Risk
Participation Arrangement (a "Risk Participation Request") specifying the face
amount of the underlying Letter of Credit, its issuer, its expiry date, its
beneficiary and its purpose; e.g., whether "commercial" or "standby."
(b) Acceptance of Risk Participation. Lender may accept or reject any Risk
Participation Request. Without limitation of the foregoing, no Risk
Participation Request will be accepted if: (i) any Default Condition or Event of
Default then exists; (ii) the face amount of the Letter of Credit specified in
the Risk Participation Request, when added to the sum of (1) all Advances then
outstanding plus (2) the amount available for drawing under each outstanding
Letter of Credit plus (3) all outstanding Reimbursement Obligations, would cause
the Borrowing Base Requirement to be exceeded; (iii) the expiry date of the
Letter of Credit specified in the Risk Participation Request exceeds the earlier
of: (A) one (1) year, or (B) the Termination Date; (iv) the face amount of the
Letter of Credit specified in the Risk Participation Request, when aggregated
with the face amounts of all Letters of Credit for which Risk Participation
Arrangements are then outstanding, would exceed $7,000,000 or such greater sum
as Lender may establish from time to time as an absolute limit on the amount of
outstanding Letters of Credit issued pursuant hereto; (v) the Issuer has not
been selected by, or approved by, Lender; or (vi) Lender and the Issuer are
unable to reach agreement on the terms of the underlying Risk Participation
Arrangement.
(c) Accepted Risk Participations. Once Lender has entered into any Risk
Participation Arrangement with respect to a Letter of Credit, then: (i) pending
its expiry, the amount available for drawing under each Letter of Credit shall
be added to all outstanding Advances plus the amount available for drawing under
all other outstanding Letters of Credit plus all outstanding Reimbursement
Obligations for purposes of determining Borrower's ongoing compliance with the
Borrowing Base Requirement; i.e., the amount thereof shall be charged against
borrowing availability under the Line of Credit; and (ii) if Lender remits any
payment to the Issuer in respect of such Letter of Credit, whether upon a
drawing therefor, in settlement thereof or otherwise, the full amount of such
payment shall be automatically charged as an Advance (whether or not an Event of
Default then exists or would be caused thereby); and Lender shall reimburse
itself from the proceeds thereof; or, if such Advance cannot be made; i.e., if
the Line of Credit already has terminated, then, Borrower shall, on demand from
Lender, reimburse Lender for the full amount of such payment (the foregoing
herein called Borrower's "Reimbursement Obligations").
(d) Reimbursement Obligations. Borrower's Reimbursement Obligations arising
from time to time hereunder shall: (i) be continuing, absolute and
unconditional; (ii) constitute part of the Obligations and be secured by all
Collateral; (iii) if not paid in full when due, either by the making of an
Advance or otherwise, bear interest until fully paid at the Default Rate; and
(iv) survive termination of the Line of Credit.
-9-
(e) Cash Imposts. If any Default Condition or Event of Default exists at
any time while any such Risk Participation Arrangement is in effect, Lender may
require that cash equal in amount to 110% of the undrawn amount of each
underlying Letter of Credit be posted with Lender by Borrower as additional
Collateral for the payment of Borrower's Reimbursement Obligations in regard
thereto; or, if Lender is then or thereafter enforcing its rights and remedies
respecting Collateral, Lender may reserve from the proceeds thereof such cash in
order to assure that the Reimbursement Obligations then outstanding shall be
paid when due.
(f) Letter of Credit Fees. In consideration of Lender's entry into each
Risk Participation Arrangement, unless otherwise agreed to by Lender at or prior
to the issuance of any Letter of Credit, Borrower shall pay to Lender a fee (the
"Letter of Credit Fee"), equal in amount to two percent (2%) per annum, due and
payable monthly in arrears, on the first day of each calendar month, on the
amount of Letters of Credit outstanding on each day during the preceding month,
in addition to any administrative fees or administrative charges which Lender
pays to the Issuer in respect of such Letter of Credit, which also shall be
reimbursed to Lender by Borrower, upon demand.
(g) Indemnity. Borrower shall indemnify and save Lender and hold Lender
harmless from any loss, damage, cost or expense which Lender incurs in entering
into, or performing under, any Risk Participation Arrangement, other than those
resulting from the gross negligence or willful misconduct of Lender or its
Affiliates.
2.2. Interest and Other Charges.
2.2.1. Interest. Lender and Borrower agree that the interest rate payable
on the Borrowings shall be determined and paid as follows:
(a) Interest Charges. Outstanding Advances under the Line of Credit shall
bear interest at the Applicable Rate. As used herein, the term "Applicable Rate"
shall mean either (i) the Prime Rate plus the Applicable Margin (as hereinafter
defined) or (ii) LIBOR plus the Applicable Margin; in each case, as selected by
Borrower from time to time; subject, however, to the following terms and
conditions: (i) unless and until Lender receives written notice from Borrower,
subject to clauses (ii) and (iii) below, all Borrowings shall be made as LIBOR
Borrowings; (ii) if, subsequent to the Closing Date, it becomes illegal or
impracticable for Lender to use LIBOR in determining the Applicable Rate, then,
thenceforth, all Borrowings shall be made as (or converted to) Prime Rate
Borrowings; and (iii) during any time that an Event of Default exists, all
Borrowings shall be made as (or converted to) Prime Rate Borrowings. As used
herein, "Applicable Margin" shall mean, initially, (i) three-fourths of one
percent (3/4%) per annum, in respect of Prime Rate Borrowings; and (ii) three
and 75/100ths of one percent (3.75%) per annum, in respect of LIBOR Borrowings;
provided, however, that, notwithstanding the foregoing, commencing upon receipt
by Lender pursuant to Section 5.6 of Borrower's audited financial statements for
its Fiscal Year ending December 31, 2003, and continuing thereafter, the
Applicable Margin shall be determined quarterly, based upon Borrower's Debt
Service Coverage Ratio computed at the end of each Fiscal Quarter (beginning
with the Fiscal Quarter ending December 31, 2003), and then compared to the
following table:
-10-
---------------------------------------- -------------------------------------- --------------------------------------
If Debt Service Coverage Ratio is: Applicable Margin for LIBOR Applicable Margin for Prime Rate
Borrowings shall be: Borrowings shall be:
---------------------------------------- -------------------------------------- --------------------------------------
<1.00:1 3-3/4% 3/4%
-
---------------------------------------- -------------------------------------- --------------------------------------
>1.00:1; <2.00:1 3-1/2% 1/2%
-
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
>2.00:1; <3.00:1 3-1/4% 1/4%
-
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
>3.00:1 3% 0%
---------------------------------------- -------------------------------------- --------------------------------------
Except as set forth hereinabove in respect of Borrower's 2003 audited financial
statements, all determinations of Applicable Margin by Lender shall be made from
Borrower's unaudited quarterly financial statements delivered to Lender pursuant
to Section 5.5. If any financial statements (whether audited or unaudited) used
in making the foregoing determinations of Applicable Margin are not timely
delivered in accordance with Sections 5.5 and 5.6, then, unless and until such
financial statements are delivered to Lender (and without waiving any Event of
Default resulting from their non-delivery), the Applicable Margin shall be
determined based on a presumed Debt Service Coverage Ratio of less than 1.00:1.
In addition, if and so long as any Event of Default then exists, no downward
adjustment to the Applicable Margin otherwise available to Borrower hereunder
shall be implemented. As used herein "Debt Service Coverage Ratio" shall mean
the ratio of: (i) Operating Cash Flow, to (ii) Fixed Charges, determined
quarterly, on a trailing four (4) Fiscal Quarters' basis, where: (i) "Operating
Cash Flow" shall mean the net income of Holdings and its Consolidated
Subsidiaries (excluding therefrom any extraordinary items of gain or loss) for
the four (4) Fiscal Quarters in question, plus, to the extent deducted from
revenue in determining such net income amount, the following expenses: interest,
taxes, depreciation and amortization; and (ii) "Fixed Charges" shall mean the
sum, for the same said fiscal period in question, of (i) all scheduled principal
amortization of funded Debt, (ii) all interest expense, and (iii) all operating
lease expense of Holdings and its Consolidated Subsidiaries.
(b) Payment of Interest. Accrued interest on Borrowings shall be due and
payable monthly in arrears, on the first day of each calendar month, for the
preceding calendar month (or portion thereof), commencing on the first day of
the first calendar month following the Closing Date; and after maturity, on
demand.
(c) Calculation of Interest and Fees. Interest on Borrowings (and any fees,
including Letter of Credit Fees, described in Section 2.2.2 computed on a per
annum basis) shall be calculated on the basis of a 360-day year and actual days
elapsed. The Applicable Rate for each Prime Rate Advance and LIBOR Advance shall
change with each change in the Prime Rate or LIBOR, as the case may be, as
determined by Lender in accordance with Section 1.1, effective as of the opening
of business on the Business Day of such change.
(d) Charging of Interest and Costs. Accrued and unpaid interest on any
Borrowings, any outstanding fees described in Section 2.2.2 and any reimbursable
costs and expenses specified in Section 10.6, may, when due and payable, be
paid, at Lender's option (without any obligation to do so), by Lender's charging
the Line of Credit for an Advance in the amount thereof; but Borrower shall be
and remain responsible for the payment of such sums to the extent not so paid by
Lender.
2.2.2. Fees. In addition to the payment of interest at the Applicable Rate
and the charging of Letter of Credit fees pursuant to Section 2.1.2, Borrower
shall also be obligated to pay Lender all fees and charges
specified below:
(a) Closing Fee and Annual Loan Fee. On the Closing Date, a fully earned,
non-refundable closing fee equal to one-half of one percent (1/2%) of the
Maximum Amount; and, annually on each anniversary of the Closing Date, a fully
earned, non-refundable annual fee equal to one-fourth of one percent (1/4%) of
the Maximum Amount.
-11-
(b) Early Termination/Prepayment Fee. If this Agreement is terminated prior
to the Termination Date, there shall be due and payable to Lender upon such
termination occurring, as liquidated damages for the loss of its bargain, and
not as a penalty, a sum equal to the product of (i) the Maximum Amount,
multiplied by (ii) a percentage, equal to (A) three percent (3%), if the early
termination occurs on or before the first anniversary of the Closing Date, (B)
one percent (1%), if the early termination occurs after the first anniversary of
the Closing Date, but on or before the second anniversary of the Closing Date;
and (C) one-half of one percent (1/2%), if the early termination occurs
thereafter. Notwithstanding the foregoing, no prepayment/early termination fee
shall be payable pursuant to this Section 2.2.2(b) in connection with any
prepayment of the Obligations in whole (and concurrent termination of this
Agreement) or in part using proceeds of another loan or loans obtained from
Lender or any of its Affiliates.
(c) Audit Fees. With respect to field audits conducted by Lender pursuant
to Section 5.2, based on a ninety (90) day audit cycle (which may be increased,
in Lender's discretion, whenever an Event of Default exists), Borrower shall
reimburse Lender on demand the sum of $850.00 per auditor per day (limited to
$15,000 per year unless an Event of Default then exists) plus out-of-pocket
expenses.
(d) Non-Usage Fee. Monthly, on the first day of each calendar month,
commencing on the first of such dates following the Closing Date, Borrower shall
pay to Lender a fee equal to (x) 375/1,000ths of one percent (.375% ) per annum,
times (y) the difference between (A) the Maximum Amount, and (B) the sum of (i)
the aggregate amount of outstanding Advances plus (ii) the amount available for
drawing under each outstanding Letter of Credit plus (iii) all outstanding
Reimbursement Obligations, determined on a daily average basis for the
immediately preceding calendar month (or portion thereof, as the case may be).
(e) Miscellaneous Fees. Borrower shall also reimburse Lender for returned
item fees and bank service charges levied by any financial institution on Lender
in connection with remittances made or received in furtherance hereof, plus
handling fees. Wire transfer fees incurred by Lender in such regards shall also
be reimbursed at cost plus handling fees.
2.2.3. Usury Savings Provisions. Lender and Borrower hereby further agree
that the only charge imposed by Lender upon Borrower for the use of money in
connection herewith is and shall be interest at the Applicable Rate, and that
all other charges imposed by Lender upon Borrower in connection herewith, are
and shall be deemed to be charges made to compensate Lender for underwriting and
administrative services and costs, and other services and costs performed and
incurred, and to be performed and incurred, by Lender in connection with making
credit available to Borrower hereunder, and shall under no circumstances be
deemed to be charges for the use of money. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest hereunder or under the Notes
and charged or collected pursuant to the terms of this Agreement or pursuant to
the Notes exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such a court determines that Lender has charged or received
interest hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
applicable law and Lender shall promptly refund to Borrower any interest
received by Lender in excess of the maximum lawful rate or, if so requested by
Borrower, shall apply such excess to the principal balance of the Obligations.
It is the intent hereof that Borrower not pay or contract to pay, and that
Lender not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrower under
applicable law.
2.3. General Provisions as to Payments.
2.3.1. Method of Payment. Unless and except to the extent otherwise
approved in writing by Lender from time to time, payments of interest, fees and
principal pursuant to this Agreement must be received by Lender at an account
designated by Lender for such purpose no later than 11:00 a.m. (Atlanta, Georgia
time) on the date when due, in federal or other funds immediately available to
Lender in Atlanta, Georgia, without setoff, discount or deduction.
2.3.2. Application of Payment. Except as otherwise expressly set forth
herein, all payments received by Lender hereunder shall be applied, in
accordance with the then current billing statement applicable to the Borrowing,
first to accrued interest, then to fees, and then to principal due. Any
remaining funds shall be applied to the further reduction of principal.
Notwithstanding the foregoing, upon the occurrence of an Event of Default,
payments shall be applied to the Obligations in such order as Lender, in its
sole discretion, may elect.
-12-
2.3.3. Crediting of Payments. The receipt of any item of payment by Lender
shall be applied to reduce the Obligations, as provided in Section 2.3.2, but,
for purposes of computing interest charges hereunder, each such item of payment
shall be deemed paid and applied the number of days after actual receipt thereof
specified as Collection Days in Section 1.1.
2.3.4. Collections. Effective not later than the Closing Date, Borrower
shall have established, and thereafter Borrower shall maintain, with Bank of
America, N.A. or one or more other banks acceptable to Lender ("Clearing
Banks"), deposit accounts into which all proceeds of Collateral, including,
particularly, payments on Accounts Receivable Collateral, shall be remitted
("Concentration Accounts"). Concentration Accounts shall be maintained in
Borrower's name, but for Lender's benefit, and Borrower, Clearing Bank and
Lender shall have entered into a tri-party agreement, in form and substance
satisfactory to Lender, (a "Blocked Account Agreement") pursuant to which, among
other things, Clearing Bank shall agree to remit all collected funds in its
Concentration Account directly to Lender for application to the Obligations as
prescribed below. All collected funds deposited into a Concentration Account
shall be remitted on a daily basis directly to Lender for application to Lender
as provided in Section 2.3.2. The foregoing shall be in addition to, and not in
limitation of, Lender's rights to collect Accounts Receivable Collateral
directly after an Event of Default has occurred and while it is continuing, as
provided hereinbelow.
3. SECURITY INTEREST.
3.1. Grant of Security Interest. As security for the payment of all
Obligations, Borrower hereby grants to Lender a continuing, general lien upon
and security interest and security title in and to all assets of Borrower,
wherever located (other than real property), whether now existing or hereafter
acquired or arising, including all of the following property, or interests in
property of Borrower, namely: (a) the Accounts Receivable Collateral; (b) the
Inventory Collateral; (c) the Equipment Collateral; (d) the Intangibles
Collateral; (e) the Securities Collateral; (f) the Balances Collateral; and (g)
all products and/or proceeds of any and all of the foregoing, including, without
limitation, insurance proceeds. All of the foregoing shall constitute part of
the Collateral.
3.2. Representations, Warranties and Covenants Applicable to Collateral.
Borrower represents, warrants and covenants
that:
3.2.1. Good Title. Borrower has marketable title to the Collateral, free
and clear of all Liens, other than any Permitted Encumbrances.
3.2.2. Right to Pledge. Borrower has full right, power and authority to
grant to Lender a security interest in the Collateral on the terms set forth
herein, and the grant of such security interest shall not result in Borrower
being in default of any other Debt or require Borrower to ▇▇▇▇▇ ▇ ▇▇▇▇ on any
Collateral to the holder of any such Debt.
3.2.3. Sale of Collateral. Borrower will not sell, lease, exchange, or
otherwise dispose of any of the Collateral without the prior written consent of
Lender or, in any event ▇▇▇▇▇ ▇ ▇▇▇▇ or permit a Lien to exist thereon, except
for a Permitted Encumbrance, except that: (i) Borrower may sell portions of its
inventory in the ordinary course of business for cash, or on open account or on
other terms of payment ordinarily extended to its customers (but any bulk sales
thereof shall be prohibited) and (ii) Borrower may sell, exchange or otherwise
dispose of portions of its equipment which are obsolete, worn-out or unsuitable
for continued use by Borrower if such equipment is replaced promptly upon its
disposition with equipment constituting equipment having a market value equal to
or greater than the equipment so disposed of and in which Lender shall obtain
and have a first priority security interest pursuant hereto, provided that
Borrower need not replace such equipment if it determines in its good faith
business judgment that replacement is not necessary and the aggregate market
value of such equipment which is sold, exchanged or otherwise disposed of and
not replaced in any Fiscal Year does not exceed the Materiality Threshold. Upon
the sale, exchange or other disposition of any Collateral permitted to be sold
hereunder, the security interest and lien created and provided for herein,
without break in continuity and without further formality or act, shall continue
in and attach to any proceeds thereof, including, without limitation, accounts,
contract rights, shipping documents, documents of title, bills of lading,
warehouse receipts, dock warrants, dock receipts and cash or noncash proceeds,
and in the event of any unauthorized sale or other disposition, shall continue
in the Collateral itself.
-13-
3.2.4. Insurance. Borrower will obtain and maintain insurance on that
portion of the Collateral consisting of tangible property with such companies,
in such amounts and against such risks as are customary in Borrower's industry
and as Lender may reasonably request, with loss payable to Lender as its
interests may appear. Such insurance shall not be cancelable by Borrower, unless
with the prior written consent of Lender, or by Borrower's insurer, unless with
at least thirty (30) days (or any lesser number of days otherwise approved by
Lender) advance written notice to Lender. In addition, Borrower shall cause its
insurer to provide Lender with at least thirty (30) days advance written notice
prior to insurer's nonrenewal of such insurance. Borrower shall provide to
Lender a copy of each such policy. All proceeds received by Lender as loss payee
of any such insurance shall be applied to the Obligations, unless otherwise
approved by Lender. Borrower shall file with Lender on the Closing Date and
annually thereafter a detailed list of such insurance as then in effect,
certified by Borrower's insurer, together with copies of all policies of such
insurance (if requested by Lender). Within thirty (30) days after being
requested by Lender to do so, Borrower will obtain such additional insurance (or
increase its existing coverage) as Lender may request (but not more frequently
than annually, unless an Event of Default then exists).
3.2.5. Location. As of the Closing Date, the Collateral is situated only at
one or more of the Collateral Locations, and Borrower covenants with Lender not
to locate the Collateral at any location other than a Collateral Location
without giving at least thirty (30) days prior written notice to Lender;
provided, however, as is customary in its industry, Borrower will be permitted
to transport to and from, and to temporarily store, finished goods inventory at
industry shows ("Permitted Temporary Collateral Location"), provided that
Borrower provides Lender with at least five (5) days prior written notice
thereof and (ii) this Section shall not apply to Collateral utilized by Borrower
as demonstration units.
3.2.6. Further Assurances. Borrower shall duly execute and/or deliver (or
cause to be duly executed and/or delivered) to Lender any instrument, letter of
credit, invoice, document, document of title, dock warrant, dock receipt,
warehouse receipt, ▇▇▇▇ of lading, order, financing statement, assignment,
waiver, consent or other writing which may be reasonably necessary to Lender to
carry out the terms of this Agreement and any of the other Loan Documents and to
perfect its security interest in and facilitate the collection of the
Collateral, the proceeds thereof, and any other property at any time
constituting security to Lender. Borrower shall perform or cause to be performed
such acts as Lender may request to establish and maintain for Lender a valid and
perfected security interest in and security title to the Collateral, free and
clear of any liens, encumbrances or security interests other than Permitted
Encumbrances. In addition to the foregoing, Borrower hereby irrevocably
authorizes Lender to complete and file initial or "in lieu of" financing
statements in each jurisdiction which now or hereafter has in effect revised
Article 9 of the Uniform Commercial Code, giving notice of Lender's security
interest in the Collateral and describing the Collateral generally; e.g., "all
personal property and fixtures," or particularly, all as Lender sees fit; and
Borrower agrees not to file any amendment to, or termination of, any such
financing statement without Lender's prior written consent unless all
Obligations have been fully paid and satisfied and this Agreement has been
terminated.
4. GENERAL REPRESENTATIONS AND WARRANTIES. In order to induce Lender to
enter into this Agreement, Borrower hereby represents and warrants to Lender
(which representations and warranties, together with any other representations
and warranties of Borrower contained elsewhere in this Agreement, shall be
deemed to be renewed as of the date of each Advance), as set forth below:
4.1. Existence and Qualification. Borrower is duly organized, validly
existing and in good standing under the laws of its Home State with its
principal place of business, chief executive office and office where it keeps
all of its books and records being located at the Executive Office, and Borrower
is duly qualified to do business in each other state in which a Collateral
Location is situated or wherein the conduct of its business or the ownership of
its property requires such qualification, except where the failure to be so
qualified could not reasonably be expected to result in a Material Adverse
Change. Borrower has as its official name, as registered with the secretary of
state of its Home State, the words inscribed on the signature page hereof as its
name, and, except as may be described on the Borrower Information Schedule, has
not done business under any other name within the five (5) years preceding the
Closing Date.
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4.2. Authority; and Validity and Binding Effect. Borrower has the power to
make, deliver and perform under the Loan Documents, and to borrow hereunder, and
has taken all necessary and appropriate action to authorize the execution,
delivery and performance of the Loan Documents. This Agreement constitutes, and
the remainder of the Loan Documents, as and when executed and delivered for
value received, will constitute, the valid obligations of Borrower, legally
binding upon it and enforceable against it in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
4.3. Incumbency and Authority of Signing Officers. Each undersigned officer
of Borrower holds the office specified hereinbelow and, in such capacity, is
duly authorized and empowered to execute, attest and deliver this Agreement and
the remainder of the Loan Documents for and on behalf of Borrower, and to bind
Borrower accordingly thereby.
4.4. No Material Litigation. On the Closing Date, except as may be set
forth on the Borrower Information Schedule, there are no legal proceedings
pending (or, so far as Borrower knows, threatened), before any court or
administrative agency which, if adversely determined, could reasonably be
expected to result in a Material Adverse Change.
4.5. Taxes. As of the Closing Date, Borrower has filed or caused to be
filed or has obtained valid extensions for the filing of all tax returns
required to be filed by it and has paid all taxes shown to be due and payable by
it on said returns or on any assessments made against it, except for taxes being
contested in good faith (with appropriate reserves shown on the financial
statements of Borrower).
4.6. Capital. All Equity Interests of Borrower issued and outstanding on
the Closing Date are validly and properly issued in accordance with all
applicable laws. Holdings owns all Equity Interests in each of NRV and CCI on
the Closing Date.
4.7. Organization. The Organization Documents of Borrower are in full force
and effect under the laws of the state of its Home State, and all amendments to
the Organization Documents have been duly and properly made under and in
accordance with all applicable laws.
4.8. No Insolvency. After giving effect to the execution and delivery of
the Loan Documents and the extension of any credit or other financial
accommodations hereunder, Borrower will not be Insolvent.
4.9. No Violations. The execution, delivery and performance by Borrower of
this Agreement and the other Loan Documents have been duly authorized by all
necessary organizational action on the part of Borrower and do not and will not
require any consent or approval of the Shareholders of Borrower, violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower or of any Organization Documents of Borrower, or result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower is a party or by which it
or its properties may be bound or affected; and Borrower is not in default under
any such indenture, agreement, lease or instrument or, to its knowledge, under
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award.
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4.10. Financial Statements. The financial statements of Holdings and its
Consolidated Subsidiaries (if any) for its most recently completed Fiscal Year
and for that portion of its current Fiscal Year ended with that Fiscal Month
ended closest to the Closing Date for which financial statements have been
prepared, including balance sheet, income statement and, if available, statement
of changes in cash flow, copies of which heretofore have been furnished to
Lender, are complete and accurately and fairly represent the financial condition
of Holdings and its Consolidated Subsidiaries (if any), the results of its
operations and the transactions in its equity accounts as of the dates and for
the periods referred to therein, and have been prepared in accordance with GAAP,
subject in the case of unaudited financial statements to year-end audit
adjustments and the completion of footnotes. There are no material liabilities,
direct or indirect, fixed or contingent, of Holdings or any such Consolidated
Subsidiaries as of the date of such financial statements which are not reflected
therein or in the notes thereto. No Material Adverse Change has occurred since
the date of the balance sheet contained in the annual audited financial
statement of Borrower described hereinabove.
4.11. Compliance with Laws. Borrower is in compliance with all applicable
laws, rules, regulations and orders of any governmental authority on the Closing
Date, where noncompliance therewith would or could reasonably be expected to
result in a Material Adverse Change. Borrower possesses all franchises,
certificates, licenses, permits and other authorizations from governmental
political subdivisions or regulatory authorities, and all patents, trademarks,
service marks, trade names, copyrights, licenses and other, similar rights, free
from burdensome restrictions, that are necessary for the ownership, maintenance
and operation of any of its properties and assets, except if and to the extent
that the failure to possess any of the foregoing could not reasonably be
expected to result in a Material Adverse Change; and Borrower is not in
violation of any thereof, except any thereof the violation of which could not
reasonably be expected to result in a Material Adverse Change. A complete and
accurate list of all such patents, trademarks, service marks, trade names,
copyrights, licenses and other, similar rights owned by Borrower in existence on
the Closing Date is set forth on the Borrower Information Schedule attached
hereto.
4.12. Subsidiaries. As of the Closing Date, Holdings has no Subsidiaries,
except NRV and CCI; and neither NRV nor CCI has any Subsidiaries.
4.13. Federal Taxpayer Identification Number. Borrower's federal taxpayer
identification number is as indicated on the Borrower Information Schedule.
5. AFFIRMATIVE COVENANTS. Borrower covenants to Lender that from and after
the Closing Date, and so long as any amounts remain unpaid on account of any of
the Obligations or this Agreement remains effective (whichever is the last to
occur), Borrower will comply (and cause each Subsidiary to comply) with the
affirmative covenants set forth below:
5.1. Records Respecting Collateral. All records of Borrower and each
Subsidiary with respect to the Collateral will be kept at its Executive Office
(or at the primary address of the Subsidiary) and will not be removed from such
address without the prior written consent of Lender.
5.2. Right to Inspect and Conduct Audits. Lender (or any Person or Persons
designated by it) shall have the continuing right to call at the Executive
Office or any Collateral Location during regular business hours of Borrower and,
without hindrance or delay, inspect, audit, check and make extracts from
Borrower's or any Subsidiary's books, records, journals, orders, receipts and
any correspondence and other data relating to the Collateral, to Borrower's or
any Subsidiary's business or to any other transactions between the parties
hereto. Any such Person or Persons conducting such inspections or audits shall
maintain the confidentiality of such records and other information in accordance
with Lender's customary practices relative to records and information of its
customers and will conduct such inspections or audits so as to avoid
unreasonable disruption of the normal operations of Borrower.
5.3. Borrowing Base Certificates. On a weekly basis, or more (or less)
frequently if required (or approved) by Lender from time to time, Borrower shall
prepare and deliver to Lender a Borrowing Base Certificate with respect to
satisfaction of the Borrowing Base Requirement as of the date of report
submission, the statements in which, in each instance, shall be certified as to
truth and accuracy by a duly authorized officer of Borrower Agent.
5.4. Collateral Status Certificates. Borrower Agent shall, as soon as
practicable, but in any event on or before twenty-five (25) days after the end
of each Fiscal Month, furnish or cause to be furnished to Lender a Collateral
Status Certificate, certified by a duly authorized officer of Borrower Agent,
showing (i) the aggregate dollar value of the items comprising the Accounts
Receivable Collateral and the age of each individual item thereof as of the last
day of the preceding Fiscal Month (segregating such items in such manner and to
such degree as Lender may request), plus (ii) the type, dollar value and
location of the Inventory Collateral as at the end of the preceding Fiscal
Month, valued at the lower of its Booked Cost or market value, plus (iii) an
accounts payable aging. Additionally, Lender may, from time to time, verify the
individual account balances of any individual Account Debtors. Further, upon
request from Lender, made at any time hereafter, and, in any event, with the
above-described Collateral Status Certificate for the month of December in each
year, Borrower Agent shall furnish Lender with a then current Account Debtor
name and address list.
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5.5. Periodic Financial Statements. Borrower Agent shall, as soon as
practicable, and in any event within twenty-five (25) days after the end of each
Fiscal Month, furnish to Lender unaudited financial statements of Holdings and
each Consolidated Subsidiary (if any), including balance sheets, income
statements and statements of cash flow, for the Fiscal Month ended, and for the
Fiscal Year to date, on a consolidated and, if requested by Lender,
consolidating basis. All such financial statements shall be certified by a duly
authorized officer of Borrower to present fairly the financial position and
results of operations of Holdings and its Consolidated Subsidiaries for the
period involved in accordance with GAAP (but for the omission of footnotes and
subject to year-end audit adjustments).
5.6. Annual Financial Statements. Borrower Agent shall, as soon as
practicable, and in any event within ninety (90) days after the end of each
Fiscal Year, furnish to Lender the annual audit report of Holdings and its
Consolidated Subsidiaries (if any), certified without material qualification by
independent certified public accountants selected by Borrower Agent and
acceptable to Lender, and prepared in accordance with GAAP, together with
relevant financial statements of Holdings and such Subsidiaries for the Fiscal
Year then ended, on a consolidating and a consolidated basis, if applicable.
Borrower Agent shall cause said accountants to furnish Lender with a statement
that in making their examination of such financial statements, they obtained no
knowledge of any Event of Default or Default Condition which pertains to
accounting matters relating to this Agreement or the Notes, or, in lieu thereof,
a statement specifying the nature and period of existence of any such Event of
Default or Default Condition disclosed by their examination.
5.7. Compliance Certificate. Borrower Agent shall, on a monthly basis not
later than twenty-five (25) days after the close of each of its first eleven
Fiscal Months and not later than ninety (90) days after the close of its Fiscal
Year, certify to Lender, in a Compliance Certificate, that no Event of Default
and no Default Condition exists or has occurred, or, if an Event of Default or
Default Condition exists, specifying the nature and period of existence thereof.
Each such Compliance Certificate shall include a computation showing compliance
with all financial covenants set forth in Article 7.
5.8. Payment of Taxes. Borrower shall pay and discharge all taxes,
assessments and governmental charges upon it, its income and its properties
prior to the date on which penalties attach thereto, unless and to the extent
only that the payment thereof is being Properly Contested.
5.9. Change of Principal Place of Business, Etc. Borrower hereby
understands and agrees that if, at time hereafter, Borrower or any Subsidiary
elects to move its Executive Office, or if Borrower or any Subsidiary elects to
change its name, identity or its organization structure, Borrower will notify
Lender in writing at least thirty (30) days prior thereto and, at Lender's
request, comply (or cause its Subsidiary to comply) with Section 3.2.6 hereof to
the extent Lender determines that any new or additional actions need to be
undertaken in regard thereto.
5.10. Waivers. With respect to each of the Collateral Locations, Borrower
will use its reasonable best efforts to obtain Landlord Agreements, to insure
the priority of its security interest in that portion of the Collateral situated
at such locations. Should Borrower be unable to obtain any such Landlord
Agreements, Borrower understands that Lender may impose rent reserves on the
Borrowing Base for each affected Collateral Location.
5.11. Preservation of Existence. Borrower shall preserve and maintain (and
cause its Subsidiaries to preserve and maintain) its organizational existence,
rights, franchises and privileges in its Home State, and qualify and remain
qualified to do business in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties.
5.12. Compliance With Laws. Borrower and each of its Subsidiaries shall
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which would or could
reasonably be expected to result in a Material Adverse Change. Without limiting
the foregoing, each of Borrower and its Subsidiaries shall obtain and maintain
all permits, licenses and other authorizations which are required under, and
otherwise comply with, all federal, state, and local laws and regulations.
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5.13. Certain Required Notices. Promptly, upon its receipt of notice or
knowledge thereof, Borrower Agent will report to Lender: (i) any lawsuit or
administrative proceeding in which Borrower or any Subsidiary is a defendant
which, if decided adversely to Borrower or such Subsidiary, could reasonably be
expected to result in a Material Adverse Change; or (ii) the existence and
nature of any Default Condition or Event of Default;
5.14. Inventory Appraisals. Promptly, upon its receipt of notice thereof
from Lender, which notice may be given by Lender at any time that either (i) an
Event of Default exists or (ii) any Inventory Advances are outstanding, Borrower
shall, at its own expense, obtain an appraisal of its inventory from an
independent appraiser selected or approved by, Lender using an appraisal
methodology required or approved by Lender. For purposes hereof, Advances shall
be considered made, first, against Eligible Accounts and, then, against Eligible
Inventory (and repayments of Advances shall be considered made vice versa). In
such regard, any Advances outstanding made against Eligible Inventory shall be
considered as "Inventory Advances."
5.15. Compensation. Annually, on or prior to January 15 of each Fiscal
Year, Borrower Agent shall provide Lender with a copy of Borrower's compensation
plan for such Fiscal Year, including base salaries, bonuses and bases for
receipt of bonus payments.
6. NEGATIVE COVENANTS. Borrower covenants to Lender that from and after the
Closing Date, and so long as any amount remains unpaid on account of any of the
Obligations or this Agreement remains effective (whichever is the last to
occur), Borrower will not do (and will not permit any Subsidiary to do), any of
the things or acts set forth below, except with the prior written consent of
Lender:
6.1. Encumbrances. Create, assume, or suffer to exist any Lien, except for
Permitted Encumbrances.
6.2. Debt. Incur, assume, or suffer to exist any Debt, except for: (i) Debt
to Lender or any Affiliate of Lender; (ii) trade payables and contractual
obligations to suppliers and customers incurred in the ordinary course of
business; (iii) accrued pension fund and other employee benefit plan obligations
and liabilities (provided, however, that such Debt does not result in the
existence of any Event of Default or Default Condition under any other provision
of this Agreement); (iv) deferred taxes; (v) Debt resulting from endorsements of
negotiable instruments received in the ordinary course of its business; (vi)
Purchase Money Debt; (vii) Subordinated Debt; (viii) intercompany Debt and
intercompany lease obligations among the entities comprising Borrower, (ix) Debt
under worker's compensation self-insurance, (x) Debt described in Section 6.3,
(xi) Debt arising from repurchase obligations owed to floor plan lenders in the
ordinary course of business; and (x) other Debt (in addition to that described
in the preceding clauses (i) through (x)) in an aggregate principal amount not
in excess of the Materiality Threshold (as to all entities comprising Borrower,
combined) at any time.
6.3. Contingent Liabilities. Guarantee, endorse, become surety with respect
to or otherwise become directly or contingently liable for or in connection with
the obligations of any other person, firm, or corporation, except for (i)
endorsements of negotiable instruments for collection in the ordinary course of
business, (ii) repurchase agreements granted to floor plan lenders in the
ordinary course of business and (iii) other contingent liabilities (in addition
to those described in the preceding clauses (i) and (ii)) in an aggregate amount
not in excess of the Materiality Threshold (as to all entities comprising
Borrower, combined) at any time.
6.4. Redemption. Purchase, redeem, or otherwise acquire for value any of
its Equity Interests except that Borrower may accept stock for
payment of shares underlying its options.
6.5. Investments. Make any investment in cash or by delivery of property to
any Person, whether by acquisition of Equity Interests or Debt, or by loan,
advance or capital contribution, or otherwise, in any Person or property of a
Person (herein called, subject to the following exceptions, "Restricted
Investments"), except for: (i) assets acquired from time to time in the ordinary
course of business; (ii) current assets arising from the sale of goods or the
provision of services in the ordinary course of business; (iii) loans or
advances made to employees for salary, commissions, travel or the like, made in
the ordinary course of business not to exceed, in aggregate amount, the
Materiality Threshold (as to each Borrower); (iv) intercompany investments among
the entities comprising Borrower and (v) other investments made subsequent to
the Closing Date but prior to the Termination Date, not to exceed, in aggregate
amount, the Materiality Threshold (as to all entities comprising Borrower,
combined).
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6.6. Mergers. Dissolve or otherwise terminate its organizational status; or
enter into any merger, reorganization or consolidation (except for a merger,
reorganization or consolidation of NRV with or into CCI or of CCI with or into
NRV); or make any substantial change in the basic type of business conducted by
Borrower and its Subsidiaries, as of the Closing Date.
6.7. Business Locations. Transfer the Executive Office, or open new
Collateral Locations (other than Permitted Temporary Collateral Locations),
except upon at least thirty (30) days prior written notice to Lender and after
the delivery to Lender of financing statements, if required by Lender, in form
satisfactory to Lender, to perfect or continue the perfection of Lender's Lien
thereon.
6.8. Affiliate Transactions. Enter into, or be a party to, or permit any
Subsidiary to enter into or be a party to, any transaction with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to Borrower than
would be expected to be obtained in a comparable arm's length transaction with a
Person not an Affiliate.
6.9. Subsidiaries. Create any Subsidiary or divest itself of any assets
exceeding the Materiality Threshold by transferring them to any Subsidiary which
exists on the Closing Date or is hereafter created with Lender's consent (except
for transfers of assets among the entities comprising
Borrower).
6.10. Fiscal Year. Change its Fiscal Year, or permit any Subsidiary to have
a fiscal year different from the Fiscal Year of Borrower.
6.11. Disposition of Assets. Sell, lease or otherwise dispose of any of its
properties, including any disposition of property as part of a sale and
leaseback transaction, to or in favor of any Person, except as otherwise
expressly permitted, as to certain Collateral, in Article 3 and except for
sales, leases or other dispositions of property among the entities comprising
Borrower.
6.12. Federal Taxpayer Identification Number. Change or permit any
Subsidiary to change its federal taxpayer identification number without prior
written notice to Lender.
6.13. Subordinated Debt. Pay any Subordinated Debt except to the extent
expressly provided in the Subordination Agreement or as Lender otherwise may
consent from time to time.
6.14. Restrictions on Subsidiaries. Enter into or assume any agreement
(other than the Loan Documents) prohibiting or otherwise restricting (i) the
creation or assumption of any Lien upon its or any Subsidiaries' properties, or
(ii) the ability of any Subsidiary to pay dividends or make other distributions
or transfers to Borrower.
6.15. Different Business. Engage in any businesses other than businesses of
the type engaged in by Borrower and its Subsidiaries as of the Closing Date.
7. FINANCIAL COVENANTS. Holdings covenants to Lender that, from and after
the Closing Date and so long as any amount remains on unpaid account of any of
the Obligations or this Agreement remains effective (whichever is the last to
occur), it will comply with the financial covenants set forth below.
7.1. Minimum Tangible Net Worth. Holdings shall maintain a minimum Tangible
Net Worth of at least the following amounts, measured monthly at the end of each
Fiscal Month: (i) from the Closing Date through December 31, 2002, $98,000,000;
(ii) from January 1, 2003 through December 31, 2003, $100,626,000; (iii) from
January 1, 2004 through December 31, 2004, $101,466,000; and (iv) from and after
January 1, 2005, $110,483,000. As used herein, "Tangible Net Worth" shall mean
Holdings' book net worth, determined on a consolidated basis for Holdings and
its Consolidated Subsidiaries in accordance with GAAP, with inventory calculated
on a FIFO basis, minus all assets of Holdings and such Subsidiaries constituting
(i) goodwill, patents, copyrights, trademarks, trade names and other intangible
assets, (ii) write-ups of assets, (iii) unamortized debt discount and expense,
(iv) deferred charges, and (v) any Debts owing to such Person from any
shareholders, officers or directors of such Person, or from any Affiliates or
Subsidiaries of such Person. For purposes hereof, any minority interest in any
Subsidiary shown on Holdings' balance sheet shall be excluded from its net worth
and be included in its total liabilities.
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Notwithstanding the foregoing, if and so long as Excess Availability (as
hereinafter defined), determined as of the last day of each Fiscal Month, equals
or exceeds Five Million Dollars ($5,000,000), the foregoing covenant shall not
apply. As used herein, "Excess Availability" shall mean the amount (if any) on
any date by which (i) the Gross Uncapped Excess Availability, as then most
recently reported to and computed by Lender, exceeds (ii) the greater of (A)
outstanding Advances plus the amount available for drawing under each
outstanding Letter of Credit plus outstanding Reimbursement Obligations on such
date, or (B) the daily mean average of outstanding Advances, amounts available
for drawing under outstanding Letters of Credit and outstanding Reimbursement
Obligations during the Fiscal Month in question.
7.2. Capital Expenditures. Holdings and its Consolidated Subsidiaries shall
not expend, in Capital Expenditures, more than Four Million Dollars
($4,000,000), in the aggregate, for all such expenditures in any one Fiscal
Year. As used herein, "Capital Expenditures" shall mean all expenditures made in
respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, having a useful life of more than one (1)
year, including, without limitation, those arising in connection with the direct
or indirect acquisition of such assets by way of increased product or service
charges or offset items or in connection with Capital Leases. "Capital Leases"
shall mean any leases of property than, in accordance with GAAP, should be
reflected as liabilities on the balance sheet of a Person.
8. EVENTS OF DEFAULT. The occurrence of any events or conditions set forth
below shall constitute an Event of Default hereunder, provided that any
requirement for the giving of notice or the lapse of time, or both, has been
satisfied:
8.1. Obligations. Borrower shall fail to make any payment on any of its
Obligations, when due, and such Default Condition shall continue for three (3)
or more Business Days without cure.
8.2. Misrepresentations. Any representations or warranties made herein or
in any of the Loan Documents or in any Guaranty or in any certificate or
statement furnished at any time hereunder or in connection with any of the Loan
Documents or any Guaranty shall prove to have been untrue or misleading in any
material respect when made or furnished.
8.3. Certain Covenants. Borrower shall default in the observance or
performance of any covenant or agreement contained in Articles 5 (excepting
Sections 5.8, 5.11 and 5.12), 6 or 7.
8.4. Other Covenants. Borrower, any Subsidiary or any Guarantor shall
default in the observance or performance of any covenant or agreement contained
herein, in any of the other Loan Documents or any Guaranty (other than a default
the performance or observance of which is dealt with specifically elsewhere in
this Article 8) unless (i) with respect to this Agreement, such default is cured
to Lender's satisfaction within thirty (30) days after the sooner to occur of
receipt of notice of such default from Lender or the date on which such default
first becomes known to Borrower and (ii) with respect to any other Loan Document
or Guaranty, such default is cured to Lender's satisfaction within any
applicable grace, cure or notice and cure period contained therein or within the
thirty (30) day period described in the preceding clause (i), whichever is the
later.
8.5. Other Debts. Borrower, any Subsidiary or any Guarantor shall default
in connection with any agreement for Debt exceeding the Materiality Threshold
with any creditor, including Lender, which entitles said creditor to accelerate
the maturity thereof.
8.6. Voluntary Bankruptcy. Borrower, any Subsidiary or any Guarantor shall
file a voluntary petition in bankruptcy or a voluntary petition or answer
seeking liquidation, reorganization, arrangement, readjustment of its debts, or
for any other relief under the Bankruptcy Code, or under any other act or law
pertaining to insolvency or debtor relief, whether state, Federal, or foreign,
now or hereafter existing; Borrower, any Subsidiary or any Guarantor shall enter
into any agreement indicating its consent to, approval of, or acquiescence in,
any such petition or proceeding; Borrower, any Subsidiary or any Guarantor shall
apply for or permit the appointment by consent or acquiescence of a receiver,
custodian or trustee of Borrower, any Subsidiary or any Guarantor for all or a
substantial part of its property; Borrower, any Subsidiary or any Guarantor
shall make an assignment for the benefit of creditors; or Borrower, any
Subsidiary or any Guarantor shall be or become Insolvent; or Borrower, any
Subsidiary or any Guarantor shall admit, in writing, its inability or failure to
pay its debts generally as such debts become due.
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8.7. Involuntary Bankruptcy. There shall have been filed against Borrower,
any Subsidiary or any Guarantor an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts or for any
other relief under the Bankruptcy Code, or under any other act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign, now or
hereafter existing; Borrower, any Subsidiary or any Guarantor shall suffer or
permit the involuntary appointment of a receiver, custodian or trustee of
Borrower, any Subsidiary or any Guarantor or for all or a substantial part of
its property; or Borrower, any Subsidiary or any Guarantor shall suffer or
permit the issuance of a warrant of attachment, execution or similar process
against all or any substantial part of the property of Borrower, any Subsidiary
or any Guarantor; or any motion, complaint or other pleading is filed in any
bankruptcy case of any person or entity other than Borrower, any Subsidiary or
any Guarantor and such motion, complaint or pleading seeks the consolidation of
Borrower's, any Subsidiary's or any Guarantor's assets and liabilities with the
assets and liabilities of such person or entity and such proceeding shall
continue undismissed and unstayed for a period of sixty (60) days.
8.8. Damage, Loss, Theft or Destruction of Collateral. There shall have
occurred material uninsured damage to, or loss, theft or destruction of, any
Collateral having a value, based on the lower of its depreciated cost or market
value, exceeding the Materiality Threshold.
8.9. Judgments. A final judgment or order for the payment of money is
rendered against Borrower, any Subsidiary or any Guarantor in an amount
exceeding the Materiality Threshold (exclusive of amounts covered by insurance)
and either (x) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (y) a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect for
any period of sixty (60) consecutive days.
8.10. Disavowal of Certain Obligations. Any Person (other than Lender)
party to a Guaranty or Subordination Agreement shall disavow its obligations
thereunder; or any such Guaranty or Subordination Agreement is alleged to be, or
determined by any governmental authority to be, invalid, unenforceable or
otherwise not binding on any Person party thereto (other than Lender), in whole
or in part.
8.11. Material Adverse Change. There shall occur any Material Adverse
Change.
8.12. Change of Control, Etc. Any Person, or group of Persons acting in
concert, not in Control of Holdings on the Closing Date shall obtain Control of
Holdings.
8.13. Change in Management, Etc. Holdings shall fail to maintain generally
executive management of Borrower satisfactory to Lender having sufficient skill
and experience in Borrower's industry to manage Borrower competently and
efficiently.
9. REMEDIES. Upon the occurrence or existence of any Event of Default, or
at any time thereafter, without prejudice to the rights of Lender to enforce its
claims against Borrower for damages for failure by Borrower to fulfill any of
its obligations hereunder, subject only to prior receipt by Lender of payment in
full of all Obligations then outstanding in a form acceptable to Lender, Lender
shall have all of the rights and remedies set forth below, and it may exercise
any one, more, or all of such remedies, in its sole discretion, without thereby
waiving any of the others; provided, however, that, in addition to the
foregoing, if the Event of Default is in respect of Section 8.6 or 8.7, then,
automatically, immediately upon such Event of Default occurring, without
necessity of any further action on Lender's part, all commitments of Lender
hereunder and under all other Loan Documents shall terminate, and all
Obligations shall be immediately due and payable.
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9.1. Acceleration of the Obligations. Lender, at its option, may terminate
all commitments of Lender hereunder and under all other Loan Documents, and
declare all of the Obligations to be immediately due and payable, whereupon the
same shall become immediately due and payable without presentment, demand,
protest, notice of nonpayment or any other notice required by law relative
thereto, all of which are hereby expressly waived by Borrower, anything
contained herein to the contrary notwithstanding. If any note of Borrower to
Lender constituting Obligations, including, without limitation, any of the
Notes, shall be a demand instrument, however, the recitation of the right of
Lender to declare any and all Obligations to be immediately due and payable,
whether such recitation is contained in such note or in this Agreement, as well
as the recitation of the above events permitting Lender to declare all
Obligations due and payable, shall not constitute an election by Lender to waive
its right to demand payment under a demand at any time and in any event, as
Lender in its discretion may deem appropriate. Thereafter, Lender, at its
option, may, but shall not be obligated to, accept less than the entire amount
of Obligations due, if tendered, provided, however, that unless then agreed to
in writing by Lender, no such acceptance shall or shall be deemed to constitute
a waiver of any Event of Default or a reinstatement of any commitments of Lender
hereunder or under all other Loan Documents.
9.2. Default. If Lender so elects, by further written notice to Borrower,
Lender may increase the rate of interest charged on the Notes then outstanding
for so long thereafter as Lender further shall elect by an amount not to exceed
the Default Rate.
9.3. Remedies of a Secured Party. Lender shall thereupon have the rights
and remedies of a secured party under the UCC in effect on the date thereof
(regardless whether the same has been enacted in the jurisdiction where the
rights or remedies are asserted), including, without limitation, the right to
take possession of any of the Collateral or the proceeds thereof, to sell or
otherwise dispose of the same, to apply the proceeds therefrom to any of the
Obligations in such order as Lender, in its sole discretion, may elect. Lender
shall give Borrower written notice of the time and place of any public sale of
the Collateral or the time after which any other intended disposition thereof is
to be made. The requirement of sending reasonable notice shall be met if such
notice is given to Borrower at least ten (10) days before such disposition.
Expenses of retaking, holding, insuring, preserving, protecting, preparing for
sale or selling or the like with respect to the Collateral shall include, in any
event, reasonable attorneys' fees and other legally recoverable collection
expenses, all of which shall constitute Obligations.
9.4. Repossession of the Collateral. Lender may take the Collateral or any
portion thereof into its possession, by such means (without breach of the peace)
and through agents or otherwise as it may elect (and, in connection therewith,
demand that Borrower assemble the Collateral at a place or places and in such
manner as Lender shall prescribe), and sell, lease or otherwise dispose of the
Collateral or any portion thereof in its then condition or following any
commercially reasonable preparation or processing, which disposition may be by
public or private proceedings, by one or more contracts, as a unit or in
parcels, at any time and place and on any terms, so long as the same are
commercially reasonable and Borrower hereby waives all rights which Borrower has
or may have under applicable law to notice and to a judicial hearing prior to
seizure of any Collateral by Lender.
9.5. Direct Notification. Lender may, additionally, in its sole discretion,
at any time that an Event of Default exists, direct Account Debtors to make
payments on the Accounts Receivable Collateral, or portions thereof, directly to
Lender, and the Account Debtors are hereby authorized and directed to do so by
Borrower upon Lender's direction, and the funds so received shall be also
deposited in the Concentration Account, or, at the election of Lender, upon its
receipt thereof, be applied directly to repayment of the Obligations in such
order as Lender, in its sole discretion, shall determine, until all Obligations
are paid and satisfied in full.
9.6. Other Remedies. Unless and except to the extent expressly provided for
to the contrary herein, the rights of Lender specified herein shall be in
addition to, and not in limitation of, Lender's rights under the UCC, as amended
from time to time, or any other statute or rule of law or equity, or under any
other provision of any of the Loan Documents, or under the provisions of any
other document, instrument or other writing executed by Borrower or any third
party in favor of Lender, all of which may be exercised successively or
concurrently.
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10. MISCELLANEOUS
10.1. Waiver. Each and every right granted to Lender under this Agreement,
or any of the other Loan Documents, or any other document delivered hereunder or
in connection herewith or allowed it by law or in equity, shall be cumulative
and may be exercised from time to time. No failure on the part of Lender to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right. No waiver by Lender of any Default Condition or Event of Default shall
constitute a waiver of any subsequent Default Condition or Event of Default.
10.2. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF GEORGIA.
10.3. Survival. All representations, warranties and covenants made herein
and in the Loan Documents shall survive the execution and delivery hereof and
thereof. The terms and provisions of this Agreement shall continue in full force
and effect, notwithstanding the payment of one or more of the Notes or the
termination of the Line of Credit, until all of the Obligations have been paid
in full and Lender has terminated this Agreement in writing.
10.4. Assignments. No assignment hereof or of any Loan Document shall be
made by Borrower without the prior written consent of Lender. Lender may assign,
or sell participations in, its right, title and interest herein and in the Loan
Documents at any time hereafter without notice to or consent of Borrower.
10.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement.
10.6. Reimbursement. Borrower shall pay to Lender on demand all reasonable
out-of-pocket costs and expenses that Lender pays or actually incurs in
connection with the negotiation, preparation, consummation, amendment,
modification, enforcement and termination of this Agreement and the other Loan
Documents, including, without limitation: (a) fees and disbursements of legal
counsel; (b) costs and expenses of lien and title searches insurance; (c) actual
taxes, fees and other charges for recording any mortgages, filing any financing
statements and continuations, and other actions to perfect, protect and continue
the Lien of Lender in the Collateral; (d) sums paid or incurred to pay for any
amount or to take any action required of Borrower under the Loan Documents that
Borrower fails to pay or take; (e) costs of appraisals, inspections, field
audits and verifications of the Collateral, including, without limitation, costs
of travel, for inspections of the Collateral and Borrower's operations by
Lender; (f) costs and expenses of preserving and protecting the Collateral; and
(g) after an Event of Default, costs and expenses (including fees and
disbursements of legal counsel) paid or incurred to obtain payment of the
Obligations, enforce the Lender's Lien in any Collateral, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of the Loan
Documents or to defend any claim made or threatened against Lender arising out
of the transactions contemplated hereby (including, without limitation,
preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Loan Documents
regarding costs and expenses to be paid to Borrower. All of the foregoing costs
and expenses may, in the discretion of Lender, be charged as Advances. Borrower
will pay all expenses incurred by it in the transaction. In the event Borrower
becomes a debtor under the Bankruptcy Code, Lender's secured claim in such case
shall include interest on the Obligations and all fees, costs and charges
provided for herein (including, without limitation, reasonable attorneys' fees
actually incurred) all for the extent allowed by the Bankruptcy Code.
10.7. Successors and Assigns. This Agreement and Loan Documents shall be
binding upon and inure to the benefit of the successors and permitted assigns of
the parties hereto and thereto.
10.8. Severability. If any provision this Agreement or of any of the Loan
Documents or the application thereof to any party thereto or circumstances shall
be invalid or unenforceable to any extent, the remainder of such Loan Documents
and the application of such provisions to any other party thereto or
circumstance shall not be affected thereby and shall be enforced to the greatest
extent permitted by law.
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10.9. Notices. All notices, requests and demands to or upon the respective
parties hereto shall be deemed to have been given or made when received, if
either personally delivered, delivered by a recognized national overnight
courier service or delivered by the U.S. Post Office, by registered or certified
mail, postage prepaid; in each case, addressed as follows: (i) for Lender, care
of the address of Lender inscribed beneath its signature hereinbelow and (ii)
for Borrower, care of the address set forth as its Executive Office (or to such
other address as may be designated hereafter in writing by the respective
parties hereto).
10.10. Entire Agreement; Amendments. This Agreement, together with the
remaining Loan Documents, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof. Neither this Agreement nor any
Loan Document may be changed, waived, discharged, modified or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement is sought.
10.11. Time of Essence. Time is of the essence in this Agreement and the
other Loan Documents.
10.12. Interpretation. No provision of this Agreement or any Loan Document
shall be construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority by reason of
such party having or being deemed to have structured or dictated such provision.
10.13. Lender Not a Joint Venturer. Neither this Agreement nor any Loan
Document shall in any respect be interpreted, deemed or construed as making
Lender a partner or joint venturer with Borrower or as creating any similar
relationship or entity, and Borrower agrees that it will not make any contrary
assertion, contention, claim or counterclaim in any action, suit or other legal
proceeding involving Lender and Borrower.
10.14. JURISDICTION. BORROWER AGREES THAT ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF GEORGIA OR THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF GEORGIA, ATLANTA DIVISION, ALL AS LENDER MAY ELECT. BY EXECUTION OF
THIS AGREEMENT, BORROWER HEREBY SUBMITS TO EACH SUCH JURISDICTION, HEREBY
EXPRESSLY WAIVING WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS PRESENT
OR FUTURE DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.
10.15. ACCEPTANCE. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
SHALL NOT BECOME EFFECTIVE UNLESS AND UNTIL DELIVERED TO LENDER AT ITS PRINCIPAL
OFFICE IN ATLANTA, ▇▇▇▇▇▇ COUNTY, GEORGIA AND ACCEPTED IN WRITING BY LENDER AT
SUCH OFFICE AS EVIDENCED BY ITS EXECUTION HEREOF (NOTICE OF WHICH DELIVERY AND
ACCEPTANCE ARE HEREBY WAIVED BY BORROWER).
10.16. Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a Saturday, Sunday or
any other day in which national banks within the State of Georgia are legally
authorized to close, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest hereunder or under the Notes.
10.17. Cure of Defaults by Lender. If, hereafter, Borrower defaults in the
performance of any duty or obligation to Lender hereunder or under any Loan
Document, Lender may, at its option, but without obligation, cure such default
and any costs, fees and expenses incurred by Lender in connection therewith
including, without limitation, for the purchase of insurance, the payment of
taxes and the removal or settlement of liens and claims, shall be deemed to be
advances against the Master Note, whether or not this creates an overadvance
thereunder, and shall be payable in accordance with its terms.
10.18. Attorney-in-Fact. Borrower hereby designates, appoints and empowers
Lender irrevocably as its attorney-in-fact, effective during any time that an
Event of Default exists, either in the name of Borrower or the name of Lender,
at Borrower's cost and expense, (i) to do any and all actions which Lender may
deem necessary or advisable to carry out the terms of this Agreement or any
other Loan Document upon the failure, refusal or inability of Borrower to do so
and (ii) to ask for, demand, ▇▇▇ for, collect, compromise, compound, receive,
receipt for and give acquittances for any and all sums owing or which may become
due upon any of the Collateral and, in connection therewith, to take any and all
actions as Lender may deem necessary or desirable to realize upon any
Collateral; and Borrower hereby agrees to indemnify and hold Lender harmless
from any costs, damages, expenses or liabilities arising against or incurred by
Lender in connection therewith other than those arising out of the gross
negligence or wilful misconduct of Lender or its Affiliates.
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10.19. Sole Benefit. The rights and benefits set forth in this Agreement
and the other Loan Documents are for the sole and exclusive benefit of the
parties hereto and thereto and may be relied upon only by them.
10.20. Indemnification. Borrower will hold Lender, its respective
directors, officers, employees, agents, Affiliates, successors and assigns
harmless from and indemnify Lender, its respective directors, officers,
employees, agents, Affiliates, successors and assigns against, all loss,
damages, costs and expenses (including, without limitation, reasonable
attorney's fees, costs and expenses) actually incurred by any of the foregoing,
whether direct, indirect or consequential, as a result of or arising from or
relating to any "Proceedings" (as defined below) by any Person, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any Person under any statute, case or regulation, including, without
limitation, any federal or state securities laws or under any common law or
equitable case or otherwise, arising from or in connection with this Agreement,
and any other of the transactions contemplated by this Agreement, except to the
extent such losses, damages, costs or expenses are due to the willful misconduct
or gross negligence of Lender or its Affiliates. As used herein, "Proceedings"
shall mean actions, suits or proceedings before any court, governmental or
regulatory authority and shall include, particularly, but without limitation,
any actions concerning environmental laws, regulations or rules. At the request
of Lender, Borrower will indemnify any Person to whom Lender transfers or sells
all or any portion of its interest in the Obligations or participations therein
on terms substantially similar to the terms set forth above. Lender shall not be
responsible or liable to any Person for consequential damages which may be
alleged as a result of this Agreement or any of the transactions contemplated
hereby. The obligations of Borrower under this Section shall survive the
termination of this Agreement and payment of the Obligations.
10.21. JURY TRIAL WAIVER. EACH OF BORROWER AND LENDER HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF
THE LOAN DOCUMENTS, OBLIGATIONS OR THE COLLATERAL.
10.22. Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement, and all
references in this Agreement to Articles, Sections, Subsections, paragraphs,
clauses, subclauses or Exhibits shall refer to the corresponding Article,
Section, Subsection, paragraph, clause, subclause of, or Exhibit attached to,
this Agreement, unless specific reference is made to the articles, sections or
other subdivisions divisions of or Exhibit to, another document or instrument.
Wherever in this Agreement reference is made to any instrument, agreement or
other document, including, without limitation, any of the Loan Documents, such
reference shall be understood to mean and include any and all amendments thereto
or modifications, restatements, renewals or extensions thereof. Wherever in this
Agreement reference is made to any statute, such reference shall be understood
to mean and include any and all amendments thereof and all regulations
promulgated pursuant thereto. Whenever any matter set forth herein or in any
Loan Document is to be consented to or be satisfactory to Lender, or is to be
determined, calculated or approved by Lender, then, unless otherwise expressly
set forth herein or in any such Loan Document, such consent, satisfaction,
determination, calculation or approval shall be in Lender's sole discretion,
exercised in good faith and, where required by law, in a commercially reasonable
manner, and shall be conclusive absent manifest error.
10.23. Publicity. Lender may post notice of this transaction in trade
publications and other media, including through the use of "tombstones," and may
include Borrower's name and other selected data about the transaction of a
general nature so long as Lender first consults with Borrower and limits such
notices in accordance with Borrower's reasonable direction. Borrower shall not
use the name of Lender, or use any "logo," trade style, trade name or other
likeness or image of Lender in any advertising, publication or other public
disclosures except with Lender's prior written consent or where required to do
so by applicable law (in which latter event, however, Borrower first shall
consult with Lender in regard thereto and limit, as directed by Lender, such
publication to the extent permissible to do so under applicable law.)
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10.24. Counterclaims. Borrower waives any right to interpose any claim,
deduction, setoff or counterclaim of any sort (other than compulsory
counterclaims) that Borrower may have, or allege, as against Lender or any of
its Affiliates in any action or proceeding instituted by Lender to endorse the
payment of any obligations or the performance of any Loan Document, all of which
claims, deductions, setoffs or counterclaims shall and must be brought against
Lender or any of its Affiliates, as the case may be, if at all by a separate and
independent action or proceeding initiated by Borrower.
10.25. TM Services. To the extent that at any time or from time to time
hereafter Lender arranges for, or gives assurances on Borrower's behalf in
regard to, any TM Services (as hereinafter defined), Borrower acknowledges and
agrees that: (i) Lender shall have no duty, obligation or liability whatsoever
to Borrower in respect thereof, including, without limitation, as to (A) their
initiation, continuation, suspension or termination, (B) any actions (or
omissions) of the party(ies) providing such services or any other Person, or (C)
any charges, fees or other costs associated therewith; (ii) if this Agreement is
terminated, Borrower shall cease obtaining all TM Services and if Borrower shall
fail to do so, Lender may do so itself on behalf of Borrower under the power of
attorney granted in Section 10.18; and (iii) the indemnity of Borrower granted
in Section 10.20 shall extend to and include, without limitation, any cost,
damage, loss or expense occasioned by Lender's arrangement of, or the giving of
assurances in regard to, any TM Services. As used herein, "TM Services" shall
mean all treasury management services, including, without limitation, foreign
exchange, automated clearing house (ACH) services, controlled disbursements and
wire transfer and deposit actively performed by any financial institutions on
behalf of Borrower.
11. CONDITIONS PRECEDENT. Unless waived in writing by Lender at or prior to
the execution and delivery of this Agreement, the conditions set forth below
shall constitute express conditions precedent to any obligation of Lender
hereunder.
11.1. Loan Documents. Receipt by Lender of this Agreement and the following
Loan Documents, each to be duly executed by Borrower and each other Person party
thereto:
(a) An initial Borrowing Base Certificate duly completed by Borrower Agent,
to be in substantially the form of Exhibit A;
(b) An initial Collateral Status Certificate, duly completed by Borrower
Agent, to be in substantially the form of Exhibit B;
(c) An initial Compliance Certificate, duly completed by Borrower Agent, to
be in substantially the form of Exhibit C;
(d) If applicable, IP Security Agreements, to be in substantially the form
of Exhibit D-1, as to patents, and Exhibit D-2, as to trademarks
(e) Landlord's Agreements, with respect to any landlords and warehouse
operators with whom Borrower has any Collateral on the Closing Date, to be in
substantially the form of Exhibit E-1, as to landlords, and Exhibit E-2, as to
warehouse operators;
(f) The Master Note, to be substantially in the form of Exhibit F;
(g) An initial Notice of Borrowing, duly completed by Borrower Agent, to be
in substantially the form of Exhibit G;
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(h) A Telephone Instructions Letter, duly completed, to be in substantially
the form of Exhibit H;
(i) A Blocked Account Agreement, to be in substantially the form of Exhibit
I;
(j) A Secretary's Certificate from the corporate Secretary of Borrower (or
similar officer or representative, if Borrower is not a corporation) certifying
as to the Borrower's Organization Documents and the Person(s) authorized to
execute the Loan Documents on Borrower's behalf, to be in substantially the form
of Exhibit J;
(k) An opinion of counsel from Borrower's counsel, to be in substantially
the form of Exhibit K;
(l) A disbursement instructions letter, duly completed, to be in
substantially the form of Exhibit L;
(m) A payoff letter from each creditor of Borrower whose credit is being
refinanced pursuant hereto, duly completed, to be in substantially the form of
Exhibit M;
(n) A stock pledge agreement in respect of Equity Interests in NRV and CCI
owned by Holdings, to be substantially in the form of Exhibit N;
(o) A negative pledge agreement in respect of Borrower's real property, to
be substantially in the form of Exhibit O; and
(p) Such other Loan Documents as may be referred to herein or contemplated
hereby, or as other may be required by Lender in its credit judgment.
11.2. No Default. No Default Condition or Event of Default shall have
occurred.
11.3. No Material Change. No Material Adverse Change shall have occurred.
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IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed
as of the day and year set forth below as the Closing Date.
"BORROWER"
NATIONAL R.V. HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and Treasurer
NATIONAL R.V., INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and Treasurer
COUNTRY COACH, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
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Accepted by Lender in Atlanta, Georgia
as of August 28, 2002
(the "Closing Date")
"LENDER"
UPS CAPITAL CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
Address for Notices:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
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